Commission ordered to pay 400 million euros to Schneider

(B2) Schneider has just won a legal battle. To everyone's surprise, the Court of First Instance of the EC recognized, yesterday in Luxembourg, the responsibility of the European Commission in the exercise of its power as a competition authority, for the failed merger Schneider-Legrand . An unprecedented judgment! (the stop: case T-351/03)

The case dates back to 2001. Schneider and Legrand had seen their merger project, which was to create the world number one in electrical equipment, blocked by the European Commission. If this veto had been canceled soon after by European justice (first stop), Schneider had paid a heavy price. In the meantime, he had to resell it to the investment funds Wendel and KKR for 3,6 billion euros, a company acquired for 5,4 billion euros. Dead loss! Stung, Henri Lachman, the CEO had decided to attack the European executive by asking him … 1,6 billion euros in damages.

The General Court, usually very reluctant to admit the responsibility of the European institutions, did not mince its words. Composed in particular of the Frenchman Hubert Legal, the Fourth Chamber of the Court found that the Commission had committed what could be called gross negligence. According to the judges, "the serious and manifest disregard by the Commission of Schneider's rights of defense constitutes a sufficiently serious violation of Community law". A violation that can "find neither justification nor explanation in the particular constraints weighing on the services of the Commission".

Two damages. The court recognizes two grounds for compensation to Schneider: the resumption of control of the concentration operation after the first judgment of the Court and the reduction in the sale price that Schneider had to agree to Wendel/KKR to obtain a postponement of the effect of this assignment (at the rate of two-thirds for the latter loss).

Assess the harm. The two parties will have to agree now on the amount of compensation. Which is no small feat. We are talking about a loss of around 400 million euros at the very least. (i.e. four years of exercise of the Progress programme, of social solidarity, valid for the 27 Member States). An independent expert will be commissioned to try to see clearly. But the legal battle does not seem to be over. The European Commission should quickly seize the Court of Justice to try to have this judgment quashed. The Schneider-Europe soap opera is not quite over.

Budget snag. Whatever the outcome of this second, possible, appeal (which is not suspensive in particular), the European institutions will also have to find out how to pay the slate. The amount ever envisaged in terms of damages raises several questions: where to find this sum (in the budget)? How to do ? It is not an easy task when we know that the heads of government and the Parliament took long months to agree on a few billion budget, we measure the difficulty of the problem.

(NGV)

NB: remember that the Legrand works council and the European council of the Legrand group opposed the merger and intervened in the first case (that of the Schneider-Legrand concentration) alongside the European Commission.