EU General Court annuls Commission Decision in case COMP/M.7000 — Liberty Global/Ziggo (premium sports channels)
Court's reasoning:
"Findings of the Court
49 It is clear from settled case-law that the statement of reasons required by Article 296 TFEU must be appropriate to the measure at issue and must disclose in a clear and unequivocal fashion the reasoning followed by the institution which adopted the measure in question in such a way as to enable the persons concerned to ascertain the reasons for the measure and to enable the competent European Union Court to exercise its power of review. The requirements to be satisfied by the statement of reasons depend on the circumstances of each case, in particular the content of the measure in question, the nature of the reasons given and the interest which the addressees of the measure, or other parties to whom it is of direct and individual concern, may have in obtaining explanations. It is not necessary for the reasoning to go into all the relevant facts and points of law, since the question whether the statement of reasons meets the requirements of Article 296 TFEU must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the matter in question (see judgment of 10 July 2008, Bertelsmann and Sony Corporation of America v Impala, C?413/06 P, EU:C:2008:392, paragraph 166 and the case-law cited).
50 The institution which adopted the measure is not required, however, to define its position on matters which are plainly of secondary importance or to anticipate potential objections. Moreover, the degree of precision of the statement of the reasons for a decision must be weighed against practical realities and the time and technical facilities available for making the decision. Thus, the Commission does not infringe its duty to state reasons if, when exercising its power to examine concentrations, it does not include precise reasoning in its decision as to the appraisal of a number of aspects of the concentration which appear to it to be manifestly irrelevant or insignificant or plainly of secondary importance to the appraisal of the concentration. Such a requirement would be difficult to reconcile with the need for speed and the short timescales which the Commission is bound to observe when exercising its power to examine concentrations and which form part of the particular circumstances of proceedings for control of those concentrations (judgment of 10 July 2008, Bertelsmann and Sony Corporation of America v Impala, C?413/06 P, EU:C:2008:392, paragraph 167).
51 In that regard, while it is true that the Commission is not obliged, in the statement of reasons for decisions adopted under the legislation relating to the control of concentrations, to take a position on all the information and arguments relied on before it, including those which are plainly of secondary importance to the appraisal it is required to undertake, it nonetheless remains the case that it is required to set out the facts and the legal considerations having decisive importance in the context of the decision. The reasoning must in addition be logical and must not disclose any internal contradictions (judgment of 10 July 2008, Bertelsmann and Sony Corporation of America v Impala, C?413/06 P, EU:C:2008:392, paragraph 169).
52 Furthermore, it is clear from the case-law that a claim that there is no, or only an inadequate, statement of reasons constitutes a plea of infringement of an essential procedural requirement, which, as such, is different from a plea that the grounds of the decision are inaccurate, the latter plea being a matter to be reviewed by the Court when it examines the substance of that decision (see judgment of 19 June 2009, Qualcomm v Commission, T?48/04, EU:T:2009:212, paragraph 175 and the case-law cited).
53 It is in the light of those considerations that the second plea put forward by the applicant must be examined.
54 By that plea, the applicant submits, in essence, that the Commission failed to state its reasons for not analysing the possible vertical anti-competitive effects on the market for premium pay TV sports channels. More specifically, the applicant takes the view that the Commission failed to state its reasons for not analysing the risk of foreclosure by Liberty Global, as a wholesale supplier of a premium pay TV sports channel, namely Sport1, of access to that input by downstream competing distributors, like itself.
55 In that regard, it must be pointed out that, as the Commission stated in its defence, the statement in recital 101 of the contested decision that the segment encompassing the supply of premium pay TV sports channels did not constitute an affected market applied to horizontal effects only.
56 Furthermore, it must be stated that the contested decision contains a statement of reasons regarding the vertical effects on the market for the wholesale supply of premium pay TV channels, including the possible narrower market for premium pay TV film channels (recitals 213 to 247 of the contested decision), and the vertical effects on the market for the wholesale acquisition of basic pay and premium pay TV channels (for the purposes of the present action, recitals 258 to 277 and 430 to 439, in particular, of the contested decision).
57 However, the fact remains that the contested decision does not analyse the effects of the transaction on the possible market for the wholesale supply and acquisition of premium pay TV sports channels, in which the only two channels present would be Sport1, which is owned by Liberty Global, and Fox Sports, which is owned by a third party. It is true that the contested decision refers to Sport1 and Fox Sports on several occasions. However, it does not contain any analysis regarding the vertical effects which would arise out of the proposed concentration if the relevant product market were defined as that of the wholesale supply and acquisition of premium pay TV sports channels. Consequently, all the references to Sport1 and Fox Sports in the contested decision are made within another analytical framework.
58 In that regard, it must be pointed out that, as is apparent from recitals 84 to 86 of the contested decision and from the answers to the questions put by the Court at the hearing, the Commission acknowledged that the market for the wholesale supply and acquisition of pay TV channels could be further segmented according to whether they consisted of film or sports channels. The Commission added, in recital 86 of the contested decision, that that question could ‘be left open as the assessment of the proposed transaction would remain the same’. It follows that the Commission left open the precise definition of the relevant product market because, even if there were additional segmentation, the concentration could be declared to be compatible with the internal market because there were no competition concerns.
59 That approach of leaving open the precise definition of the relevant market required the Commission to explain, at least briefly, the reasons why the proposed transaction, including the vertical effects on the possible market for the wholesale supply and acquisition of premium pay TV sports channels, did not raise any competition concerns, in such a way as to enable the persons concerned to ascertain the reasons for that view and to enable the EU judicature to exercise its power of review with regard to the Commission’s assessment.
60 The importance of a statement of reasons on that point cannot be underestimated. According to settled case-law, a proper definition of the relevant market is a necessary precondition for any assessment of the effect of a concentration on competition (judgments of 31 March 1998, France and Others v Commission, C?68/94 and C?30/95, EU:C:1998:148, paragraph 143, and of 7 June 2013, Spar ?sterreichische Warenhandels v Commission, T?405/08, not published, EU:T:2013:306, paragraph 116). The EU judicature has accepted that the Commission could leave open the definition of the relevant product market to the extent that none of the possible market definitions could lead to a finding of a significant impediment to effective competition following the concentration, provided it was clearly and unequivocally demonstrated by the reasons given by the Commission in the decision in question (see, to that effect, judgment of 8 July 2003, Verband der freien Rohrwerke and Others v Commission, T?374/00, EU:T:2003:188, paragraphs 107 and 110).
61 It must be stated that, when questioned on that point by the Court at the hearing, the Commission admitted that the contested decision did not contain any express reasoning regarding that question, even though it also admitted that a market for the wholesale supply and acquisition of premium pay TV sports channels was conceivable.
62 Furthermore, as the Commission admits in its defence and as is apparent from the annexes to the application, the applicant alleged on a number of occasions during the administrative procedure that there were vertical concerns relating specifically to Sport1.
63 It follows that, on that point, the contested decision does not satisfy the requirements for the statement of reasons required by Article 296 TFEU."
Link to the ruling https://curia.europa.eu/juris/document/document.jsf?text=&docid=196107&pageIndex=0&doclang=EN&mode=lst&dir=&occ=first&part=1&cid=1855455 .