CJEU. The irregularity committed by the Commission is not the determining cause of UPS’ alleged loss of profit and therefore cannot justify a compensation payment

By deciding not to go ahead with acquiring TNT as soon as the decision at issue was announced, UPS broke the causal link between the Commission’s infringement and the alleged damage

In 2013[1], the Commission declared a notified concentration between UPS and TNT, two undertakings specialising in the express delivery of small packages, to be incompatible with the internal market. While announcing publicly that it would not go ahead with that concentration, UPS brought an action before the General Court seeking the annulment of the Commission decision. By judgment of 7 March 2017[2], the General Court upheld that action and, by judgment of 16 January 2019[3], the Court of Justice dismissed the appeal brought by the Commission against the General Court judgment. In the meantime, the Commission declared a concentration between TNT and FedEx, a competitor of UPS, to be compatible with the internal market[4].

In late 2017, UPS brought an action for damages against the Commission seeking compensation for the economic losses allegedly suffered due to the unlawfulness of the incompatibility decision adopted in 2013. Those losses included the costs associated with its participation in the procedure for the control of the concentration between FedEx and TNT, the payment to TNT of a contractual termination fee following the cancellation of the merger agreement concluded with TNT, and loss of profit resulting from the fact that it was impossible to implement that merger agreement. The General Court dismissed that action in February 2022[5].

UPS requests that the Court of Justice set aside the 2022 judgment of the General Court.

By its judgment delivered today, the Court of Justice dismisses UPS’ appeal.

First, the Court of Justice observes that, by disputing the circumstances in which the merger agreement concluded with TNT was terminated, UPS does not call into question the General Court’s legal reasoning, but rather the factual assessment made by that court. However, unless the facts have been distorted, which has not been demonstrated in the present case, the appeal procedure does not allow the facts as established by the General Court to be disputed.

Second, the Court of Justice confirms that the payment of the termination fee stemmed from a contractual obligation which was included in the merger agreement. In so doing, the parties to the agreement together took on the risk that the proposed transaction would not obtain prior approval from the Commission. However, the harmful consequences of contractual commitments freely consented to by the addressee of a Commission decision cannot constitute the determining cause of the damage suffered as a result of illegalities vitiating that decision.

Lastly, the Court of Justice finds that the General Court correctly established that there was no causal link in relation to the three separate types of damage alleged; therefore, UPS’ action for damages, which is required to demonstrate the existence of such a link, cannot in any way succeed.

[1] Commission Decision C(2013) 431 of 30 January 2013 declaring a concentration incompatible with the internal market and the functioning of the EEA Agreement (Case COMP/M.6570 – UPS/TNT Express); see also Commission press release IP/13/68.
[2] Judgment of the General Court of 7 March 2017, United Parcel Service v Commission, T-194/13 (see also CP No 23/17).
[3] Judgment of the Court of Justice of 16 January 2019, Commission v United Parcel Service, C-265/17 P (see also CP No 3/19).
[4] Decision of 8 January 2016 declaring a concentration compatible with the internal market and the functioning of the EEA Agreement (Case M.7630 – FedEx/TNT Express), a summary of which has been published in the Official Journal of the European Union.
[5] Judgment of the General Court of 23 February 2022, United Parcel Service v Commission, T‑834/17 (see also CP No 34/22).

:: Judgment of the Court in Case C-297/22 P | United Parcel Service v Commission