Judgments nº T-417/05 of Court of First Instance of the European Communities, July 14, 2006

• Resolution Date: July 14, 2006
• Issuing Organization: Court of First Instance of the European Communities
• Decision Number: T-417/05

(Competition – Concentrations – Regulation (EC) No 139/2004 – Electricity market – Decision declaring that a concentration lacks a Community dimension – Calculation of turnover – Accounting standards – Adjustments – Burden of proof – Rights of the defence)

In Case T‑417/05,

Endesa, SA, established in Madrid (Spain), represented by J. Flynn, QC, S. Baxter, solicitor, M. Odriozola Alén, M. Muñoz de Juan, M. Merola, J. García de Enterría Lorenzo‑Velázquez and J. Varcárcel Martínez, lawyers,

applicant,

v

Commission of the European Communities, represented by F. Castillo de la Torre, É. Gippini Fournier, A. Whelan and M. Schneider, acting as Agents,

defendant,

supported by

Kingdom of Spain, represented by N. Díaz Abad, abogado del Estado,

and by

Gas Natural SDG, SA, established in Barcelona (Spain), represented by F. González Díaz, J. Jiménez de la Iglesia and A. Leis García, lawyers,

interveners,

Application for annulment of the Commission Decision of 15 November 2005 declaring that a concentration has no Community dimension (Case COMP/M.3986 – Gas Natural/Endesa),

THE COURT OF FIRST INSTANCE OF THE EUROPEAN COMMUNITIES (Third Chamber),

composed of M. Jaeger, President, V. Tiili and O. Czúcz, Judges,

Registrar: J. Palacio González, Principal Administrator,

having regard to the written procedure and further to the hearing on 9 March 2006,

gives the following

Judgment

Legal context

Regulations concerning the control of concentrations

1 Article 1 of Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (OJ 2004 L 24, p. 1) (‘the Regulation’) provides:

‘1. Without prejudice to Article 4(5) and Article 22, this Regulation shall apply to all concentrations with a Community dimension as defined in this Article.

2. A concentration has a Community dimension where:

(a) the combined aggregate worldwide turnover of all the undertakings concerned is more than EUR 5 000 million; and

(b) the aggregate Community‑wide turnover of each of at least two of the undertakings concerned is more than EUR 250 million,

unless each of the undertakings concerned achieves more than two‑thirds of its aggregate Community‑wide turnover within one and the same Member State.

…’

2 Article 5 of the Regulation, entitled ‘Calculation of turnover’ provides:

‘1. Aggregate turnover within the meaning of this Regulation shall comprise the amounts derived by the undertakings concerned in the preceding financial year from the sale of products and the provision of services falling within the undertakings’ ordinary activities after deduction of sales rebates and of value added tax and other taxes directly related to turnover. The aggregate turnover of an undertaking concerned shall not include the sale of products or the provision of services between any of the undertakings referred to in paragraph 4.

Turnover, in the Community or in a Member State, shall comprise products sold and services provided to undertakings or consumers, in the Community or in that Member State as the case may be.

…’

3 According to Article 19 of that regulation:

‘1. The Commission shall transmit to the competent authorities of the Member States copies of notifications within three working days and, as soon as possible, copies of the most important documents lodged with or issued by the Commission pursuant to this Regulation. …

2. The Commission shall carry out the procedures set out in this Regulation in close and constant liaison with the competent authorities of the Member States, which may express their views upon those procedures. …’

4 According to Article 21 of the Regulation:

‘2. Subject to review by the Court of Justice, the Commission shall have sole jurisdiction to take the decisions provided for in this Regulation.

3. No Member State shall apply its national legislation on competition to any concentration that has a Community dimension.’

5 Article 22 of the Regulation provides:

‘1. One or more Member States may request the Commission to examine any concentration as defined in Article 3 that does not have a Community dimension within the meaning of Article 1 but affects trade between Member States and threatens to significantly affect competition within the territory of the Member States of States making the request.

Such a request shall be made at most within 15 working days of the date on which the concentration was notified, or if no notification is required, otherwise made known to the Member State concerned.

2. The Commission shall inform the competent authorities of the Member States and the undertakings concerned of any request received pursuant to paragraph 1 without delay.

Any other Member State shall have the right to join the initial request within a period of 15 working days of being informed by the Commission of the initial request.

All national time-limits relating to the concentration shall be suspended until, in accordance with the procedure set out in this Article, it has been decided where the concentration shall be examined. As soon as a Member State has informed the Commission and the undertakings concerned that it does not wish to join the request, the suspension of its national time-limits shall end.

3. The Commission may, at the latest 10 working days after the expiry of the period set in paragraph 2, decided to examine the concentration where it considers that it affects trade between Member States and threatens to significantly affect competition within the territory of the Member State or States making the request. If the Commission does not take a decision within this period, it shall be deemed to have adopted a decision to examine the concentration in accordance with the request.

The Commission shall inform all Member States and the undertakings concerned of its decision. It may request the submission of a notification pursuant to Article 4.

The Member State or States having made the request shall not longer apply their national legislation on competition to the concentration.

…’

6 Article 17(3) of Commission Regulation (EC) No 802/2004 of 7 April 2004 implementing the Regulation (OJ 2004 L 133, p. 1) provides:

‘The right of access to the file shall not extend to confidential information, or to internal documents of the Commission or of the competent authorities of the Member States. The right of access to the file shall equally not extend to correspondence between the Commission and the competent authorities of the Member States or between the latter.’

7 Article 1 of Regulation (EC) No 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the application of international accounting standards (OJ 2002 L 243, p. 1) provides:

‘This Regulation has as its objective the adoption and use of international accounting standards in the Community with a view to harmonising the financial information presented by the companies referred to in Article 4 in order to ensure a high degree of transparency and comparability of financial statements and hence an efficient functioning of the Community capital market and of the Internal Market.’

Rules relating to company accounts

8 Article 4 of Regulation No 1606/2002, entitled ‘Consolidated accounts of publicly traded companies’, provides:

‘For each financial year starting on or after 1 January 2005, companies governed by the law of a Member State shall prepare their consolidated accounts in conformity with the international accounting standards adopted in accordance with the procedure laid down in Article 6(2) if, at their balance sheet date, their securities are admitted to trading on a regulated market of any Member State within the meaning of Article 1[13] of Council Directive 93/22/EEC of 10 May 1993 on investment services in the securities field.’

9 Commission Regulation (EC) No 1725/2003 of 29 September 2003 adopting certain international accounting standards in accordance with Regulation No 1606/2002 (OJ 2003 L 261, p. 1) provides:

‘Article 1

The international accounting standards set out in the Annex are adopted.

…’

10 International Accounting Standard IAS 18, entitled ‘Revenue’, annexed to Regulation No 1725/2003 provides:

‘Definitions

7. The following terms are used in this Standard with the meanings hereby specified:

Revenue is the gross inflow of economic benefits during the period arising in the course of the ordinary activities of an enterprise when those inflows result in increases in equity, other than increases relating to contributions from equity participants.

Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction.

8. Revenue includes only the gross inflows of economic benefits received and receivable by the enterprise on its own account. Amounts collected on behalf of third parties such as sales taxes, goods and services taxes and value added taxes are not economic benefits which flow to the enterprise and do not result in increases in equity. Therefore, they are excluded from revenue. Similarly, in an agency relationship, the gross inflows of economic benefits include amounts collected on behalf of the principal and which do not result in increases in equity for the enterprise. The amounts collected on behalf of the principal are not revenue. Instead, revenue is the amount of commission.’

11 Commission Regulation (EC) No 707/2004 of 6 April 2004 amending Regulation No 1725/2003 (OJ 2004 L 111, p. 3) provides:

‘Article 1

In the Annex to Regulation … No 1725/2003, SIC‑8 First‑time application of IASs as the primary basis of accounting is replaced by the text set out in the Annex to this Regulation.

Article 2

This Regulation shall enter into force on the 20th day following that of its publication in the Official Journal of the European Union.

…’

12 The annex to Regulation No 707/2004, entitled ‘IFRS 1 – First‑time adoption of International Financial Reporting Standard states:

‘36. To comply with IAS 1...