## Facts

- Tetra Laval BV (Tetra Pak group) held a dominant position in aseptic carton packaging systems for liquid foods.
- Sidel SA was a leading producer of PET stretch-blow-moulding machinery used to make plastic beverage bottles.
- The notified transaction was a conglomerate merger between firms active in technologically related, non-competing markets within liquid-food packaging.
- The European Commission prohibited the acquisition under the EU Merger Regulation, reasoning that Tetra could use its carton dominance to foreclose competition in PET equipment markets and that the deal would remove Sidel as a potential competitive constraint.
- The Court of First Instance annulled the prohibition (and a related divestiture decision), finding the Commission’s prospective economic analysis insufficiently supported and containing assessment errors.
- The Commission appealed, arguing the annulment reflected excessive judicial interference and an improperly heightened proof standard for conglomerate effects.

## Issues

1. What level of judicial review applies to merger decisions involving complex economic assessments, and whether the lower court exceeded that role.
2. What evidentiary standard governs a prohibition based on predicted anti-competitive “conglomerate effects,” such as leveraging and foreclosure.
3. Whether the Commission must discount predicted exclusionary conduct because such conduct could be unlawful and deterred by detection and sanctions.
4. Whether, and how, the Commission must evaluate behavioural commitments offered to address predicted conglomerate effects.

## Decision

- The Court of Justice (Grand Chamber) dismissed the Commission’s appeal and left the annulment of the prohibition decision in place.
- The Court held the lower court did not exceed proper judicial review by scrutinizing whether the Commission’s evidence was accurate, reliable, consistent, and sufficient to support its conclusions.
- The Court accepted that conglomerate merger control is forward-looking, but required that prohibitions rest on a sufficiently cogent and consistent body of evidence.
- The Court clarified that the Commission is not required, in each case, to assess deterrence arising from the illegality of exclusionary conduct and the risk of sanctions.
- The Court agreed that the Commission must meaningfully assess commitments capable of addressing the identified competition concerns and may not dismiss them without adequate reasoning.

## Legal Principles

- Commission merger decisions involving complex economic appraisal remain subject to in-depth judicial review for manifest error, misuse of powers, or exceeding discretion, including review of evidentiary soundness.
- A prohibition based on predicted conglomerate foreclosure must be supported by a sufficiently cogent and consistent body of evidence demonstrating likely anti-competitive effects.
- Dominance in one market does not, by itself, justify a finding that a conglomerate merger will strengthen dominance; the authority must establish the causal link, ability and incentive to engage in exclusionary strategies, and likely foreclosure impact.
- The Commission need not quantify how unlawfulness and potential sanctions would deter future exclusionary conduct when assessing the likelihood of such conduct post-merger.
- In assessing compatibility, the Commission must take into account structural and behavioural commitments that are capable of eliminating the identified competition concerns, with reasoned analysis.

## Conclusion

The Court of Justice upheld the annulment of the Commission’s prohibition of a conglomerate merger, confirming that while the Commission has discretion in economic matters, a prohibition must be grounded in coherent, reliable evidence supporting predicted leveraging and foreclosure, and commitments must be evaluated with adequate reasoning.


Comm’n v. Tetra Laval BV, Case C-12/03 P, [2005] E.C.R. I-987 (C.J. 2005)