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Decision in case 1585/2018/MH on how the European Commission dealt with concerns raised by an Italian region about a steel plant acquisition

The case is about how the European Commission dealt with concerns surrounding the acquisition of a steel plant in Italy. An Italian region complained to the Ombudsman that the Commission had not given it sufficient opportunity to raise its concerns, before approving the acquisition under the EU Merger Rules.

The Commission’s competition department had a call with the complainant before it approved the acquisition. On that call, it gave the complainant reasonable explanations about why its legal concerns were not relevant to the Commission’s assessment. It also became apparent during that call that the complainant was focussing on the environment rather than on competition matters. The Commission thus referred it to the relevant department, in line with the principles of good administration. The complainant then had the opportunity to provide that department with further information on its environmental concerns.

The Ombudsman therefore closed the inquiry with a finding of no maladministration.

Background to the complaint

1. The complainant is an Italian region. Its complaint is about how the Commission dealt with its concerns in the context of the Commission’s assessment of a steel plant acquisition (the ‘acquisition’), under the EU’s Merger Rules[1]. Under those rules, the Commission must assess, in advance, whether certain types of mergers and acquisitions may reduce competition in the European Union.  

2. In November 2017, the Commission publicly announced that it would conduct an in-depth investigation into the acquisition. It did so because it had competition concerns.

3. In mid-April 2018, the complainant wrote to the Commissioner for Competition, raising concerns about the new owner’s environmental and industrial plans for the steel plant. It offered to meet with the Commissioner to provide information of “potential interest” to the merger assessment.

4. On 7 May 2018, the Commission announced its approval of the acquisition under the Merger Rules. The complainant considered that it should have had the opportunity to raise its concerns, before the Commission took its decision. It therefore turned to the Ombudsman on 10 September 2018.

The inquiry

5. The Ombudsman opened an inquiry into how the Commission dealt with the complainant’s concerns surrounding the steel plant.

6. During the inquiry, the Ombudsman met with staff from the Commission and inspected the relevant documents on the file.

Arguments presented to the Ombudsman

7. The complainant considered that the Commission did not give it sufficient opportunity to make known its concerns, before it took the decision to approve the acquisition. The complainant wanted the Commission to review its decision in the light of its environmental and legal concerns.

8. During the inspection meeting, the Commission explained that its competition department (the Directorate-General for Competition) had had a telephone call with the complainant on 27 April 2018, in which the complainant raised its concerns about the new owner’s environmental and business plans for the steel plant. The complainant also claimed that the plant could not be sold, as it was subject to “judicial seizure” and as there was litigation pending before the Italian courts.

9. During that call, the competition department informed the complainant that the outcome of the merger assessment did not have any implications as far as the legal situation of the steel plant was concerned. The assessment was based on other factors. Under the Merger Rules, the Commission could assess competition concerns only.[2]  Since the complainant’s concerns were environmental, the Commission suggested that it raise them with the Commissioner for Environment. The complainant did so on 2 May 2018. The Commission’s Directorate-General for Environment replied on 4 May 2018, requesting information from the complainant about why it considered the Italian authorities were acting contrary to EU law. The complainant replied on 10 September 2018.

10. In its comments on the inspection meeting report, the complainant expressed its satisfaction with how the Commission’s department for environment had dealt with its concerns.

The Ombudsman's assessment

11. In assessing acquisitions under the EU Merger Rules, the Commission can deal with potential competition problems only[3].

12. When the complainant contacted the Commission during the merger procedure, it did not request treatment as an “interested third party” under the Merger Rules[4]. Therefore, there was no legal obligation on the Commission to inform the complainant of “the nature and subject matter of the proceedings[5], nor to give it the opportunity to make known its views.

13. Nonetheless, the Commission gave the complainant the opportunity to raise its concerns about the steel plant in a telephone call with its competition department of 27 April 2018.

14. As confirmed by the documents inspected, during that call, the Commission’s competition department gave the complainant reasonable and adequate explanations about why the legal issues in Italy surrounding the steel plant were not relevant to the merger assessment.  

15. It also became clear, during that call that the complainant’s concerns related mainly to the environment, rather than competition. As it could not deal with these concerns, the competition department immediately referred the complainant to the relevant Commission department, in line with the principles of good administration[6].

16. In light of this, and given that the complainant was satisfied with the way the Commission’s department for environment dealt with its concerns, the Ombudsman finds no maladministration in this case.

Conclusion

Based on the inquiry, the Ombudsman closes this case with the following conclusion:

There was no maladministration in how the European Commission dealt with the complainant’s concerns.

The complainant and the Commission will be informed of this decision.

 

Emily O'Reilly

European Ombudsman

Strasbourg, 09/09/2019

 

[1] Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (the EU Merger Regulation), available at: https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:32004R0139

[2] The Commission also informed the complainant that it had evaluated environmental issues when conducting an in-depth State aid investigation involving the steel plant in 2017.

[3] Article 2 of the EU Merger Regulation requires the Commission to take into account, when assessing mergers, the need to maintain and develop effective competition, the parties’ market positions and economic and financial power, and whether the parties have the possibility to eliminate competition.

[4] Under the Article 18(4) of the EU Merger Regulation any “natural or legal persons showing a sufficient interest” in the outcome of a merger procedure can request that the Commission recognise them formally as an interested third party.

[5] See the following FAQs: https://ec.europa.eu/competition/hearing_officers/faq.html 

[6] In particular, Article 15(1) of the Code of Good Administrative Behaviour states that “[i]f a letter or a complaint to the institution is addressed or transmitted to a Directorate General, Directorate, or Unit which has no competence to deal with it, its services shall ensure that the file is transferred without delay to the competent service of the institution”. See: https://www.ombudsman.europa.eu/en/publication/en/3510