Schneider Electric Damages Judgment: A New Era in EC Merger Control?

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Juan Rodriguez, Aug 06, 2007

The judgment of the Court of First Instance (CFI) of July 11, 2007 awarding damages to Schneider Electric is unlikely to lead to a flood of merger-related damages litigation against the European Commission. But, unless it is overturned on appeal, the judgment has broken new ground in the Community Court’s case law under Article 288(1) of the EC Treaty. Schneider’s claim gave the CFI its first opportunity to apply Article 288(1) to a merger investigation under the EC Merger Regulation. Given this novelty, the Court was faced with the task of applying a body of law derived largely from cases involving agriculture and external trade to a complex merger control situation.

Article 288(1): Law and Policy

The CFI and ECJ’s case law under Article 288(1) stretches back to the late 1960s and shows consistently that claimants have to discharge a heavy evidential burden in order to obtain damages. They must prove, first, that the conduct at issue amounts to a “grave and manifest disregard” of the limits of the institution’s discretion, and second, that the losses claimed flow directly from the erroneous conduct. The “grave and manifest” test has been used by the Court to distinguish “excusable” errors, which do not trigger liability under Article 288(1), from errors that are of such gravity as to call for pecuniary compensation. In applying the test for causation, the Court has found the …

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