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Conglomerate effects · Tetra Laval

Tetra Laval: how far a conglomerate theory can reach

A prohibition on a leveraging theory, struck down. The annulment held on appeal, and the evidentiary bar was set.

Conglomerate mergers join firms in neighbouring markets rather than direct competitors. The worry is leverage: that the combined firm could tie or bundle its way to dominance. In 2001 the Commission prohibited Tetra Laval's acquisition of Sidel on exactly that theory.

The General Court annulled the prohibition in 2002 (T-5/02), and in 2005 the Court of Justice dismissed the Commission's appeal (C-12/03), letting the annulment stand. The lasting holding: a theory that turns on how the merged firm will behave in future must rest on convincing evidence. The more indirect the chain of effects, the more the Commission has to prove.

Tetra Laval is why conglomerate cases are rare and carefully built. Forced to re-examine the deal, the Commission cleared it with conditions in 2003, and every leveraging theory since is argued against the standard these judgments set.

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M.2416 · TETRA LAVAL / SIDEL: court journey

Commission decision annulled

4
court proceedings
  1. 05/07/2001

    Phase II

    Art. 6(1)(c)

  2. 30/10/2001

    Prohibited

    Art. 8(3)

  3. 25/10/2002

    Withdrawn

    Aborted / withdrawn

  4. 25/10/2002

    T-5/02turning point

    General Court · Annulled · challenge to the decision

  5. 25/10/2002

    T-80/02turning point

    General Court · Annulled · challenge to the decision

  6. 13/01/2003

    Phase I + remedies

    Art. 6(1)(b) with conditions & obligations

  7. 15/02/2005

    C-12/03

    Court of Justice · Upheld (dismissed) · appeal of the GC judgment

  8. 15/02/2005

    C-13/03

    Court of Justice · Upheld (dismissed) · appeal of the GC judgment

One decision and the EU court proceedings that reviewed it, ordered in time. Follow-on orders are collapsed into their judgment.