(Taxation of costs – Solicitors’ and barristers’ fees – Economists’ fees – VAT)

Order of the Court of First Instance (Fifth Chamber, Extended Composition), 28 June 2004

Summary of the Order

1.Procedure – Costs – Taxation – Recoverable costs – Definition

(Rules of Procedure of the Court of First Instance, Art. 91(b))

2.Procedure – Costs – Taxation – Matters to be taken into account

(Rules of Procedure of the Court of First Instance, Art. 91(b))

3.Procedure – Costs – Taxation – Recoverable costs – Definition – Involvement of more than one lawyer

(Rules of Procedure of the Court of First Instance, Art. 91(b))

4.Procedure – Costs – Taxation – Recoverable costs – Definition – Expenses necessarily incurred by the parties – Involvement of more than one lawyer – Aggregation of barrister’s and solicitor’s fees – Whether permissible – Limits

(Rules of Procedure of the Court of First Instance, Art. 91(b))

5.Procedure – Costs – Taxation – Recoverable costs – Definition – Expenses necessarily incurred by the parties – Economist’s fees – Whether permissible in cases essentially involving economic appraisals

(Rules of Procedure of the Court of First Instance, Art. 91(b))

6.Procedure – Costs – Taxation – Recoverable costs – Definition – Value added tax – Exclusion in the case of a taxable person

(Rules of Procedure of the Court of First Instance, Art. 91(b))

1.It follows from Article 91(b) of the Rules of Procedure of the Court of First Instance that recoverable costs are limited, first, to those incurred for the purpose of the proceedings before the Court and, second, to those which were necessary for that purpose.

By virtue of those principles, the amount of recoverable costs cannot exceed the amount of expenses necessarily incurred by an applicant for the purpose of the proceedings before the Court. An applicant is not therefore entitled to rely on what was said in a judgment of the Court of First Instance, on views expressed by the Commission or by a national court following that judgment or, more generally, on the need for effective judicial review in order to obtain more than that to which it is entitled under Article 91(b) of the Rules of Procedure.

Furthermore, the rules which apply to the fixing of the amount of recoverable costs are laid down in the Rules of Procedure and cannot be inferred, by analogy, from the national procedural rules to which the applicant refers.

(see paras 13-15)

2.The Community Courts are not empowered to tax the fees payable by the parties to their own lawyers, but may determine the amount of those fees to be recovered from the party ordered to pay the costs. When ruling on an application for taxation of costs, the Court of First Instance is not obliged to take account of any national scale of lawyers’ fees or any agreement in that regard between the party concerned and his agents or advisers.

In the absence of Community provisions laying down fee-scales, the Court must make an unfettered assessment of the facts of the case, taking into account the purpose and nature of the proceedings, their significance from the point of view of Community law as well as the difficulties presented by the case, the amount of work generated by the proceedings for the agents and advisers involved and the financial interests which the parties had in the proceedings.

(see paras 17-18)

3.As regards the extent of the work which proceedings may have obliged an applicant’s advisers to undertake, the primary consideration of the Court is the total number of hours of work which may appear to be objectively necessary for the purpose of the proceedings before the Court, irrespective of the number of lawyers who may have provided the services in question. In that regard, the ability of the Court to assess the value of work carried out is dependent on the accuracy of the information provided.

4.It is for the Court to determine whether, and to what extent, the fees which a party seeks to recover represent expenses necessarily incurred for the purpose of the proceedings as provided for in Article 91(b) of the Rules of Procedure.

As regards cases before the Community Courts, there exists no legal or deontological obstacle to a party being represented solely by either a solicitor or a barrister of England and Wales for the purpose of both the written and the oral procedure. However, it does not follow that where a client decides to be represented by both a solicitor and counsel, the fees due to each of them are not to be regarded as costs necessarily incurred for the purpose of the proceedings, as provided for in Article 91(b) of the Rules of Procedure.

In taxing costs in those circumstances, the Court must examine the extent to which the services supplied by all the advisers concerned were necessary for the conduct of the legal proceedings and satisfy itself that the fact that both categories of lawyers were instructed did not entail any unnecessary duplication of costs. When the applicant’s action seeks annulment of a Commission decision adopted following an administrative procedure during which the applicant was represented by the same team of lawyers, the costs necessarily incurred before the Court consist essentially of costs relating to the preparation and drafting of pleadings and responses to measures of organisation or inquiry ordered by the Court and to attendance at the hearing. It follows that where, for example, a client decides, on the advice of his solicitor, to retain counsel for advice as to whether to bring an action for annulment and counsel is instructed to draft pleadings and briefed to appear at the hearing, the costs which are necessarily incurred by the solicitor are limited to those involved in instructing counsel, acting upon counsel’s advice, engrossing and lodging the pleadings and attending upon counsel at the hearing.

(see paras 41-45)

5.Given the essentially economic nature of the findings made by the Commission in the context of merger control, the involvement of economic advisers or experts specialising in that field may sometimes prove necessary and entail costs which may be recovered under Article 91(b) of the Rules of Procedure of the Court of First Instance.

(see para. 55)

6.Where an applicant is a taxable person, he is entitled to recover from the tax authorities value added tax paid on goods and services purchased by him, and thus does not represent an expense for him. In such an event, he cannot claim reimbursement of value added tax on costs which are recoverable under Article 91(b) of the Rules of Procedure.

(see para. 79)

ORDER OF THE COURT OF FIRST INSTANCE (Fifth Chamber, Extended Composition) 28 June 2004 (1)

(Taxation of costs – Solicitors' and barristers' fees – Economists' fees – VAT)

In Case T-342/99 DEP,

Airtours plc, represented by M. Nicholson, solicitor, with an address for service in Luxembourg,

applicant,

Commission of the European Communities, represented by R. Lyal, acting as Agent, with an address for service in Luxembourg,

defendant,

APPLICATION for taxation of the costs to be recovered from the Commission by Airtours plc following the judgment of the Court of First Instance of 6 June 2002 in Case T-342/99 Airtours v Commission [2002] ECR II-2585,

THE COURT OF FIRST INSTANCE OF THE EUROPEAN COMMUNITIES (Fifth Chamber, Extended Composition),

composed of: P. Lindh, President, R. García-Valdecasas, J.D. Cooke, P. Mengozzi and M.E. Martins Ribeiro, Judges,

Registrar: H. Jung,

makes the following

Judgment

This request for a preliminary ruling concerns the interpretation of Directive 2011/92/EU of the European Parliament and of the Council of 13 December 2011 on the assessment of the effects of certain public and private projects on the environment (OJ 2012 L 26, p. 1), as amended by Directive 2014/52/EU of the European Parliament and of the Council of 16 April 2014 (OJ 2014 L 124, p. 1) (‘Directive 2011/92’).

The request has been made in proceedings between, on the one hand, Waltham Abbey Residents Association and, on the other hand, An Bord Pleanála (Planning Board, Ireland; ‘the Board’), Ireland and the Attorney General (Ireland), concerning authorisation granted by the Board for a strategic residential housing development.

Legal context

European Union law

Directive 2011/92

Recitals 7 to 9 of Directive 2011/92 state:

‘(7) Development consent for public and private projects which are likely to have significant effects on the environment should be granted only after an assessment of the likely significant environmental effects of those projects has been carried out. …

(8) Projects belonging to certain types have significant effects on the environment and those projects should, as a rule, be subject to a systematic assessment.

(9) Projects of other types may not have significant effects on the environment in every case and those projects should be assessed where the Member States consider that they are likely to have significant effects on the environment.’

Article 2(1) of that directive provides:

‘Member States shall adopt all measures necessary to ensure that, before development consent is given, projects likely to have significant effects on the environment by virtue, inter alia, of their nature, size or location are made subject to a requirement for development consent and an assessment with regard to their effects on the environment. Those projects are defined in Article 4.’

Under Article 3(1) of that directive:

‘The environmental impact assessment shall identify, describe and assess in an appropriate manner, in the light of each individual case, the direct and indirect significant effects of a project on the following factors:

…

(b) biodiversity, with particular attention to species and habitats protected under [Council Directive 92/43/EEC of 21 May 1992 on the conservation of natural habitats and of wild fauna and flora (OJ 1992 L 206, p. 7), as amended by Council Directive 2013/17/EU of 13 May 2013 (OJ 2013 L 158, p. 193) (“Directive 92/43”)] and Directive 2009/147/EC [of the European Parliament and of the Council of 30 November 2009 on the conservation of wild birds (OJ 2010 L 20, p. 7)];

…’

Article 4 of Directive 2011/92 provides:

‘1. Subject to Article 2(4), projects listed in Annex I shall be made subject to an assessment in accordance with Articles 5 to 10.

(a) a case-by-case examination;

(b) thresholds or criteria set by the Member State.

Member States may decide to apply both procedures referred to in points (a) and (b).

Where a case-by-case examination is carried out or thresholds or criteria are set for the purpose of paragraph 2, the relevant selection criteria set out in Annex III shall be taken into account. Member States may set thresholds or criteria to determine when projects need not undergo either the determination under paragraphs 4 and 5 or an environmental impact assessment, and/or thresholds or criteria to determine when projects shall in any case be made subject to an environmental impact assessment without undergoing a determination set out under paragraphs 4 and 5.

Where Member States decide to require a determination for projects listed in Annex II, the developer shall provide information on the characteristics of the project and its likely significant effects on the environment. The detailed list of information to be provided is specified in Annex IIA. The developer shall take into account, where relevant, the available results of other relevant assessments of the effects on the environment carried out pursuant to Union legislation other than this Directive. The developer may also provide a description of any features of the project and/or measures envisaged to avoid or prevent what might otherwise have been significant adverse effects on the environment.

The competent authority shall make its determination, on the basis of the information provided by the developer in accordance with paragraph 4 taking into account, where relevant, the results of preliminary verifications or assessments of the effects on the environment carried out pursuant to Union legislation other than this Directive. The determination shall made available to the public and:

(a) where it is decided that an environmental impact assessment is required, state the main reasons for requiring such assessment with reference to the relevant criteria listed in Annex III; or

(b) where it is decided that an environmental impact assessment is not required, state the main reasons for not requiring such assessment with reference to the relevant criteria listed in Annex III, and, where proposed by the developer, state any features of the project and/or measures envisaged to avoid or prevent what might otherwise have been significant adverse effects on the environment.

Member States shall ensure that the competent authority makes its determination as soon as possible and within a period of time not exceeding 90 days from the date on which the developer has submitted all the information required pursuant to paragraph 4. In exceptional cases, for instance relating to the nature, complexity, location or size of the project, the competent authority may extend that deadline to make its determination; in that event, the competent authority shall inform the developer in writing of the reasons justifying the extension and of the date when its determination is expected.’

Annex II.A of that directive contains the list of ‘information to be provided by the developer on the projects listed in Annex II’. That list reads as follows:

‘1. A description of the project, including in particular:

(a) a description of the physical characteristics of the whole project and, where relevant, of demolition works;

(b) a description of the location of the project, with particular regard to the environmental sensitivity of geographical areas likely to be affected.

(a) the expected residues and emissions and the production of waste, where relevant;

(b) the use of natural resources, in particular soil, land, water and biodiversity.

Annex III to that directive sets out the ‘criteria to determine whether the projects listed in Annex II should be subject to an environmental impact assessment’.

Directive 2014/52

Recitals 11 and 29 of Directive 2014/52 state:

‘(11) The measures taken to avoid, prevent, reduce and, if possible, offset significant adverse effects on the environment, in particular on species and habitats protected under [Directive 92/43] and Directive 2009/147 …, should contribute to avoiding any deterioration in the quality of the environment and any net loss of biodiversity, in accordance with the [European] Union’s commitments in the context of the [United Nations Convention on Biological Diversity, signed in Rio de Janeiro on 5 June 1992,] and the objectives and actions of the Union Biodiversity Strategy up to 2020 laid down in the [Communication from the Commission to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions] of 3 May 2011 entitled ‘Our life insurance, our natural capital: an EU biodiversity strategy to 2020’ [(COM(2011) 244 final)]

…

(29) When determining whether significant effects on the environment are likely to be caused by a project, the competent authorities should identify the most relevant criteria to be considered and should take into account information that could be available following other assessments required by Union legislation in order to apply the screening procedure effectively and transparently. In this regard, it is appropriate to specify the content of the screening determination, in particular where no environmental impact assessment is required. Moreover, taking into account unsolicited comments that might have been received from other sources, such as members of the public or public authorities, even though no formal consultation is required at the screening stage, constitutes good administrative practice.’

Directive 92/43

Article 6(3) of Directive 92/43 provides:

‘Any plan or project not directly connected with or necessary to the management of the site but likely to have a significant effect thereon, either individually or in combination with other plans or projects, shall be subject to appropriate assessment of its implications for the site in view of the site’s conservation objectives. In the light of the conclusions of the assessment of the implications for the site and subject to the provisions of paragraph 4, the competent national authorities shall agree to the plan or project only after having ascertained that it will not adversely affect the integrity of the site concerned and, if appropriate, after having obtained the opinion of the general public.’

Article 12(1) of that directive provides:

‘Member States shall take the requisite measures to establish a system of strict protection for the animal species listed in Annex IV(a) in their natural range, prohibiting:

(a) all forms of deliberate capture or killing of specimens of these species in the wild;

(b) deliberate disturbance of these species, particularly during the period of breeding, rearing, hibernation and migration;

(c) deliberate destruction or taking of eggs from the wild;

(d) deterioration or destruction of breeding sites or resting places.’

Point (a) of Annex IV to that directive mentions ‘all species’ of bats belonging to the suborder of ‘microchiroptera’.

Irish law

The applicant submits that, by analogy with English procedural rules, it is entitled to have its costs reimbursed on an indemnity basis. All the costs generated by the action should thus be repaid to it, unless they are unreasonably high or were unreasonably incurred. If it were otherwise, applicants would be deterred from bringing an action or would have an incentive to limit their exposure to costs, with the result that the Court of First Instance might not have all the factual, economic or legal matters before it to enable it to carry out its review adequately.

The Commission states that the case-law does not give scope for inflating the level of costs in order to punish the unsuccessful party.

Findings of the Court

Under Article 92(1) of the Rules of Procedure:

‘If there is a dispute concerning the costs to be recovered, the Court of First Instance hearing the case shall, on application by the party concerned and after hearing the opposite party, make an order, from which no appeal shall lie.’

Under Article 91(b) of the Rules of Procedure ‘expenses necessarily incurred by the parties for the purpose of the proceedings, in particular the travel and subsistence expenses and the remuneration of agents, advisers or lawyers’ are regarded as recoverable costs. It follows from that provision that recoverable costs are limited, first, to those incurred for the purpose of the proceedings before the Court of First Instance and, second, to those which were necessary for that purpose (orders of 24 January 2002 in Case T-38/95 DEP Groupe Origny v Commission [2002] ECR II-217, paragraph 28, and of 6 March 2003 in Joined Cases T‑226/00 DEP and T-227/00 DEP Nan Ya Plastics and Far Eastern Textiles v Council [2003] ECR II-685, paragraph 33).

By virtue of those principles, the amount of recoverable costs cannot exceed the amount of expenses necessarily incurred by the applicant for the purpose of the proceedings before the Court of First Instance. The applicant is not therefore entitled to rely on what was said in the judgment in Airtours, on views expressed by the Commission or by the House of Lords following that judgment or, more generally, on the need for effective judicial review in order to obtain more than that to which it is entitled under Article 91(b) of the Rules of Procedure.

Furthermore, the rules which apply to the fixing of the amount of recoverable costs are laid down in the Rules of Procedure and cannot be inferred, by analogy, from the English procedural rules to which the applicant refers.

It is therefore on the basis of Article 91(b) of the Rules of Procedure that the amount of the costs recoverable in this instance must be assessed.

Assessment of recoverable costs

It is settled case-law that the Community Courts are not empowered to tax the fees payable by the parties to their own lawyers, but may determine the amount of those fees to be recovered from the party ordered to pay the costs. When ruling on an application for taxation of costs, the Court of First Instance is not obliged to take account of any national scale of lawyers’ fees or any agreement in that regard between the party concerned and his agents or advisers (orders of the Court of First Instance in Case T-120/89 DEP Stahlwerke Peine-Salzgitter v Commission [1996] ECR II-1547, paragraph 27, and in Case T‑80/97 DEP Starway v Council [2002] ECR II-1, paragraph 26).

It has also consistently been held that, in the absence of Community provisions laying down fee-scales, the Court must make an unfettered assessment of the facts of the case, taking into account the purpose and nature of the proceedings, their significance from the point of view of Community law as well as the difficulties presented by the case, the amount of work generated by the proceedings for the agents and advisers involved and the financial interests which the parties had in the proceedings (order of the President of the Third Chamber of the Court of Justice in Case 318/82 DEP Leeuwarder Papierwarenfabriek v Commission [1985] ECR 3727, paragraph 3, and the order in Starway v Council, paragraph 27).

The purpose and nature of the proceedings, their significance from the point of view of Community law as well as the difficulties presented by the case

The applicant submits that the purpose and nature of the proceedings in this case raised novel and complex economic and legal issues, to which the length of the Decision, the application and the judgment bears witness. It also points out that the judgment in Airtours has had a considerable impact in the sphere of merger control, both from the point of view of defining the notion of collective dominance and from the point of view of the efficacy of judicial review, as is clear from a number of articles in the press and academic legal writing in the wake of the judgment. In particular, the applicant draws attention to the fact that the Court of First Instance did not simply mechanically reapply the test laid down in the judgment in Case T-102/96 Gencor v Commission [1999] ECR II-753 but used the case to develop and refine the test to be applied to situations of collective dominance, particularly as regards whether the Commission may prohibit a concentration in an oligopolistic and non-collusive market.

The Commission acknowledges that the proceedings raised numerous issues of fact and law. It does not consider, however, that the case has had a decisive influence on the development of Community law. As regards the definition of collective dominance, the Commission contends that the key elements of that notion had already been examined in Gencor v Commission and that they have been amply explained in standard legal text books. The applicant cannot therefore claim that it has drawn the Commission back into the path of doctrinal rectitude after its attempt to apply new criteria in the Decision, since that claim is based on an incorrect and tendentious interpretation of the Decision. The Commission acknowledges, however, that there was disagreement as to the retaliation mechanism, a relatively minor issue. As regards the efficacy of judicial review, the Commission is unable to understand in what way this case is of particular significance, since the Court exercised detailed scrutiny in the same way as it does in any case. Furthermore, the Commission contends that, even though conduct of such a case demands considerable work, the costs claimed by the applicant are in any event excessive by far.

Findings of the Court

It must be stated at the outset that the action concerned the application of Council Regulation (EEC) No 4064/89 of 21 December 1989 on the control of concentrations between undertakings (OJ 1989 L 395, p. 1, corrected version in OJ 1990 L 257, p. 13) and, more specifically, a Commission decision, adopted following a full investigative procedure, declaring the proposed acquisition notified by the applicant to be incompatible with the common market. Furthermore, apart from the difficulties inherent in merger control, which requires a prospective analysis of the reference market, it was a feature of the Decision that it prohibited the proposed transaction on the ground that it would create a situation of collective dominance, something which involves a thorough examination of the effects of the transaction on competition.

Further, it should be stated that, even though two judgments of the Court of Justice and the Court of First Instance (Joined Cases C-68/94 and C-30/95 France and Others v Commission (Kali & Salz) [1998] ECR I-1375 and Gencor v Commission) had previously dealt with the notion of collective dominance in relation to Regulation No 4064/89, the term is nevertheless difficult to define and to apply.

Thus, this case raised new issues concerning (i) the definition and characteristics of collective dominance, which is not defined in the relevant legislation, (ii) the existence of tacit coordination between the members of a dominant oligopoly, (iii) the need to identify the deterrents which secure unity within such an oligopoly and (iv) – more generally – the level of proof required from the Commission when it intends to prohibit a concentration on the ground that it would result in the creation of a collective dominant position, the effect of which would be significantly to impede competition in the common market. In that regard, the Court notes that, unlike the situation in the Gencor case, which concerned the creation of a duopoly in relation to platinum, a raw material which is negotiable throughout the world, this case concerned the creation of an oligopoly on a market for holiday services, brought about by the removal of one of the four major United Kingdom tour operators. The concept of collective dominance was thus more difficult to apply in this instance.

Consequently, the case in question was important from the point of view of Community competition law and gave rise to a large number of complex economic and legal questions which had to be examined by the applicant’s advisers in bringing the action for annulment.

The financial interest which the parties had in the proceedings

The applicant submits that Airtours’ takeover of First Choice was valued at GBP 850 million, which represents a considerable financial interest and that the transaction could not be completed as a result of the Decision. The applicant was also deprived of the opportunity to expand and to achieve savings and synergies as a result of the proposed merger. Furthermore, it was also unable to take part in the subsequent consolidation of the tourism industry.

The Commission acknowledges that the applicant was deprived of an opportunity. It contends, however, that its financial interest is hard to evaluate because of the fact that it was unlikely that Airtours would have been in a position to acquire First Choice following the Court of First Instance’s judgment. The applicant’s financial interest was above all in defining its position for possible future operations. On that point, the Decision did not exclude Airtours from the subsequent market consolidation, since that consolidation (Cases COMP/M.2002 – Preussag/Thomson and COMP/M.2228 – C&N/Thomas Cook) took the form of cross-border mergers and there was nothing to prevent the applicant from pursuing such transactions.

Findings of the Court

The Decision blocked the takeover of an undertaking valued at around GBP 850 million. It follows, without there being any need to assess the way in which the relevant market evolved in the wake of the Decision, that this case was of major financial interest to the applicant.

The amount of work required by the proceedings from the applicant’s advisers

As a preliminary point, the Court notes that it follows from the foregoing considerations that the case did in fact require a substantial amount of work on the part of the applicant’s advisers.

However, it is important to state that the applicant’s advisers already had extensive knowledge of the case as they had represented Airtours throughout the full investigative administrative procedure. The applicant had thus already put forward, in the course of the administrative procedure, certain of the arguments advanced before the Court, as regards particularly the definition of the market and tacit coordination between the members of the dominant oligopoly. That factor, in part, facilitated the work and reduced the time which had to be devoted to preparation of the application (orders in Case T-65/96 DEP Kish Glass v Commission [2001] ECR II-3261, paragraph 25, and Nan Ya Plastics and Far Eastern Textiles v Council, paragraph 43).

Furthermore, it must be borne in mind that the primary consideration of the Court is the total number of hours of work which may appear to be objectively necessary for the purpose of the proceedings before the Court, irrespective of the number of lawyers who may have provided the services in question (orders of the Court of First Instance in Case T‑290/94 DEP Kaysersberg v Commission [1998] ECR II‑4105, paragraph 20, Case T-337/94 DEP Enso-Gutzeit v Commission [2000] ECR II-479, paragraph 20, and Nan Ya Plastics and Far Eastern Textiles v Council, paragraph 44). In that regard, the ability of the Court to assess the value of work carried out is dependent on the accuracy of the information provided (order of the Court of Justice of 9 November 1995 in Case C-89/85 DEP Ahlström and Others v Commission, not published in the ECR, paragraph 20, and the order in Stahlwerke Peine-Salzgitter v Commission, paragraph 31).

It is in the light of the foregoing considerations that the various classes of costs, recovery of which is sought from the Commission, must be assessed.

The applicant explains in that connection that the total amount claimed, GBP 1 464 441.55 excluding VAT (GBP 1 717 985.02 including VAT), can be broken down as follows:

GBP

Specialist legal advisers (Mr J. Swift QC and Mr R. Anderson, barrister) Fees VAT

279 375.00 48 890.62

Legal advisers (solicitors) Fees Disbursements (other than VAT) VAT

850 000.00 19 509.68 152 163.33

Economic advisers (Lexecon) Fees VAT

281 051.52 49 184.02

Economic Experts (Professors Binmore and Neven) Fees VAT

33 885.35 3 305.50

Counsel for service in Luxembourg Fees and disbursements

620.00

Total 1 464 441.55 (without VAT) 1 717 985.02 (with VAT)

Arguments of the parties

33By way of recoverable costs relating to legal advisers’ fees, the applicant claims, first, GBP 279 375 in respect of the fees marked by two barristers specialising in competition law (GBP 150 500 for Mr J. Swift QC and GBP 128 875 for Mr R. Anderson), who were involved throughout the proceedings before the Court of First Instance. In that regard, it points out that, as would have been the case before the English courts, the use of two barristers to supplement the work of the solicitors was justified by the importance and complexity of the case.

34The applicant also claims reimbursement of GBP 850 000 in respect of fees invoiced by its solicitors, Slaughter & May. In that respect, the team responsible for the proceedings included a partner (who worked 413 hours and 45 minutes on the case), assisted throughout by a senior solicitor (who worked 315 hours and 25 minutes) and by another solicitor (one solicitor initially spending 307 hours on the case before being replaced by another solicitor who worked 204 hours and 45 minutes towards the end of the case). The team also used a number of trainees at various stages of the proceedings. Thus, two trainees worked 115 hours and 100 hours and 15 minutes respectively at the stage of the application, another trainee spent 193 hours and 20 minutes on the case at the reply stage and 13 trainees spent between 15 minutes and 35 hours (a total of 110 hours and 30 minutes) on the case, which can be explained by the fact that the trainees rotate every three months and that the legal proceedings lasted almost three years. The applicant also points out that the firm spent 1 760 hours on the case and that it kept the core team responsible for the case to the minimum required in order to ensure that the service supplied to the client met the requisite standard.

35The applicant explains that of the 1 760 hours billed by the 19 lawyers from the firm who worked on the case from preparation of the application at the end of September 1999 until the hearing on 11 October 2001 around 500 hours were devoted to analysing the Decision and to preparing the application (October to December 1999), around 500 hours to analysing the defence and preparing the reply (from March to April 2000), some time was spent analysing the rejoinder (June 2000), around 100 hours were spent responding to the measures of organisation of procedure (July to August 2001) and around 500 hours on reviewing the report for the hearing and on preparing for and attending the hearing, which was attended by five people representing Airtours (September to October 2001).

36The Commission objects both to the number of lawyers (barristers and solicitors) involved, as well as to the level of fees and the number of hours billed.

37As regards the number of lawyers, it submits that only the fees of two, or at the very most three, lawyers can be regarded as recoverable. So the Commission maintains that Slaughter & May’s use of 19 persons entailed wasted effort. Although the Commission acknowledges that only six of those 19 persons spent substantial amounts of time on the case, it contends in any event that such a team is larger than necessary. In addition, that team was supplemented by two barristers, which was excessive and wholly unnecessary. That team of eight included three senior lawyers, when one, backed by a competent small team would have been enough. In comparison, the Commission’s case was prepared and presented by a single member of its Legal Service, with the support of two economists from the Directorate General for Competition, who had been involved in the administrative proceedings.

38As regards the number of hours spent on the case, the Commission denies that it was necessary or reasonable to spend over 1 760 hours on it (indeed well over 2 000 hours if the work of the two barristers is taken into account), given in particular the fact that those lawyers had already represented the applicant in the administrative procedure and that they were therefore well acquainted with the facts of the case and the economic debate. Moreover, the way that time was split between the various stages of the legal proceedings indicates that that time was wasted. Hence, it is hard to understand how it could be necessary to spend 500 hours (some three months’ work) analysing the Decision and preparing the application for annulment or how it was possible to spend the same number of hours analysing and replying to the Commission’s defence at a stage when there could be no further novelty to the case. Seven hundred hours would seem more reasonable than the 1 760 hours invoiced.

39The Commission contends that the level of fees charged is exorbitant. The bill of GBP 850 000 for 1 760 hours of work entails an hourly rate of almost GBP 500 per hour, in respect of all categories of lawyers involved (partner, senior assistant, assistant and trainee). At the time it was unusual for fees paid to all but the most senior partners in the best-known firms to exceed GBP 350. In Brussels, rates for lawyers specialising in Community law are generally lower. As a general rule, hourly rates for assistant solicitors would not have exceeded, depending on their experience, GBP 200, whilst those for trainees should have been in the vicinity of GBP 50 to GBP 80. Given the normal distribution of work between senior and junior staff and the fact that senior lawyers are paid more, a reasonable average hourly rate for a team could be expected to be well below GBP 200.

40In this case, the applicant chose to be represented both by solicitors and barristers (counsel). It therefore claims recovery of GBP 1 129 375 in respect of recoverable costs for the fees of its legal advisers, namely GBP 279 375 for the barristers’ fees and GBP 850 000 for the solicitors’ fees.

41Accordingly, it is for the Court to determine whether, and to what extent, those fees represent expenses necessarily incurred for the purpose of the proceedings as provided for in Article 91(b) of the Rules of Procedure.

42In a number of common-law jurisdictions, including that of England and Wales, it is a feature of the legal profession that it is split into two branches, solicitors, on the one hand, and counsel, on the other, between which there existed until recent times a division of complementary but distinct functions. The solicitor acted as his client’s adviser in many areas of the law; he did not have the right to appear before the higher courts but, where necessary, engaged the services of counsel for that purpose. Barristers specialised in the oral pleading of cases and could not be engaged directly by the client.

43As regards cases before the Community Courts, the relevant professional rules have been amended, so that there now exists no legal or deontological obstacle to a party being represented solely by either a solicitor or a barrister of England and Wales for the purpose of both the written and the oral procedure. However, it does not follow that where a client decides to be represented by both a solicitor and counsel, the fees due to each of them are not to be regarded as costs necessarily incurred for the purpose of the proceedings, as provided for in Article 91(b) of the Rules of Procedure.

44In taxing costs in those circumstances, the Court must examine the extent to which the services supplied by all the advisers concerned were necessary for the conduct of the legal proceedings and satisfy itself that the fact that both categories of lawyers were instructed did not entail any unnecessary duplication of costs. When, as in this instance, the applicant’s action seeks annulment of a Commission decision adopted following an administrative procedure during which the applicant was represented by the same team of lawyers, the costs necessarily incurred before the Court consist essentially of costs relating to the preparation and drafting of pleadings and responses to measures of organisation or inquiry ordered by the Court and to attendance at the hearing.

45It follows that where, for example, a client decides, on the advice of his solicitor, to retain counsel for advice as to whether to bring an action for annulment and counsel is instructed to draft pleadings and briefed to appear at the hearing, the costs which are necessarily incurred by the solicitor are limited to those involved in instructing counsel, acting upon counsel’s advice, engrossing and lodging the pleadings and attending upon counsel at the hearing.

46The Court must assess whether the fees claimed by the applicant are reasonable and necessary in the context of the proceedings, taking into account the complexity of the case and the work performed by the legal advisers involved.

In this case, it is, first, apparent from the documents before the Court that, although it is not possible to ascertain from the two barristers’ various fees notes how many hours they spent on the case, those documents none the less provide a brief description of the services carried out for the applicant. Thus, Mr Anderson’s fee notes cover preparation of a note on procedure before the Court of First Instance, perusal of papers at various stages of the proceedings, time spent advising in conference with the solicitors or in discussion with Mr Swift, drafting and reviewing the application, drafting the reply, research for and preparation of responses to the measures of organisation of procedure, preparation for the hearing and travel and subsistence expenses in Luxembourg. Likewise, Mr Swift’s fee notes describe his work on the pleadings (‘settling application’ or ‘reading and considering rejoinder’), time spent discussing the case with the solicitors or Mr Anderson in relation, in particular, to the responses to the measures of organisation of procedure and preparation for the hearing, and travel and subsistence expenses in Luxembourg. The Court thus finds that the barristers’ work concerned all stages of the proceedings before it.

Second, in addition to the two barristers referred to above, two senior solicitors with considerable experience of competition law were also involved in the case and were throughout assisted by a solicitor (one solicitor at the start of the proceedings and subsequently another at the end) and by more than a dozen trainees.

Furthermore, it can be seen from a comparison of the number of hours spent by the solicitors on the various stages of the Court proceedings and the barristers’ fee notes that the solicitors’ work largely coincided with the barristers’ work. By way of example, the applicant indicates that the solicitors devoted 500 hours to preparing the application, which represents 62 days’ work on the basis of 8 chargeable hours per day. Mr Anderson’s fee notes indicate that, having read the various documents between 9 and 12 November 1999, he drafted or reviewed the application between 15 November and 1 December 1999. Mr Swift’s fee notes also show that he spent 29 and 30 November 1999 settling the application. The barristers also worked, following the same procedures, on preparing and drafting the reply, whilst the applicant states that its solicitors devoted 500 hours to preparing that document.

Thus, the use of two barristers and two senior solicitors in tandem resulted in considerable duplication of labour, since their work served in part the same purpose.

Third, like the barristers, the solicitors’ firm had represented the applicant in the full investigative administrative procedure. Furthermore, the Commission’s pleadings merely rebutted the applicant’s arguments and did not introduce any new arguments liable to change the analysis set out in the application and the reply, which facilitated the work of the barristers and the solicitors in the Court proceedings.

In view of the foregoing, the Court finds that the time which the applicant claims was spent on the case is excessive and that it cannot all represent ‘expenses necessarily incurred’ for the purposes of Article 91(b) of the Rules of Procedure.

Furthermore, attention must be drawn to the fact that the information supplied by the applicant about the solicitors’ fees does not specify the hourly rate billed by the various categories of persons who worked on the case, namely a partner, a senior solicitor, two solicitors and a number of trainees. In the absence of such information, it must be stated that, if the sum claimed (GBP 850 000) is divided by the number of hours billed (1 760), the average hourly rate for those various categories of persons is around GBP 483. Although an hourly rate of that amount may in some circumstances be contemplated for the services of a particularly experienced professional, it undoubtedly cannot apply to all the categories of persons involved in this case, such as the senior solicitor, the assistant solicitors and the trainees, who together worked 1 346 of the 1 760 hours billed by the solicitors, that is to say 75% of the work.

Therefore, fixing the legal fees recoverable from the Commission at GBP 420 000, namely GBP 95 000 as regards Mr Swift, GBP 75 000 as regards Mr Anderson and GBP 250 000 as regards the solicitors, represents an equitable assessment.

The applicant submits that the involvement of economists was necessary in the present case.

In that regard, the Court notes that, given the essentially economic nature of the findings made by the Commission in the context of merger control, the involvement of economic advisers or experts specialising in that field may sometimes prove necessary and entail costs which may be recovered under Article 91(b) of the Rules of Procedure (see, in a different economic area, the orders in Case T-85/94 DEP and Case T-85/94 OP-DEP <i>Branco </i>v <i>Commission </i>[1998] ECR II-2667, paragraph 27, and Case T-271/94 DEP <i>Branco</i> v <i>Commission</i> [1998] ECR II‑3761, paragraph 21).

However, the number of economists involved in the legal proceedings is substantial. The case in question entailed the involvement of a team of three economic consultants, assisted by a number of researchers, and two further experts. The applicant does not explain, however, how this case could require the involvement of five economists.

As regards the recovery of GBP 281 051.52 in respect of Lexecon’s fees, the applicant states that the firm was involved at the stage of preparing the application, the stage of preparing the reply and the stage of responding to the measures of organisation of procedure, and that the value of its contribution is apparent from the <i>Airtours</i> judgment, in particular in the arguments relating to the definition of collective dominance and the need to establish the existence of a deterrent mechanism. In response to the Commission’s argument that it is incomprehensible that Lexecon should have spent 1 501 hours working on the case when it had already been involved in the administrative procedure, the applicant states that Lexecon’s involvement in that procedure ensured that there was no superfluous reading-in time.

The Commission observes that the amount claimed for Lexecon, which had already advised the applicant during the administrative procedure, is substantial. In its submission, no further analysis was necessary, since there was no difference between the economic questions raised in the administrative procedure and those raised before the Court. The Commission also notes that the applicant was not able to show any real contribution by Lexecon to the conduct of the case.

The sum claimed, GBP 281 051.52, covers 1 501 hours of work by a team of three persons, assisted by a number of researchers. In that regard, the only information supplied by the applicant concerns, first, a breakdown of the hours worked by the members of the team responsible for the case, Mr B. Bishop (18 hours at GBP 360 per hour), Mr A. Overd (643 hours at GBP 220 per hour), Ms D. Jackson (709 hours at GBP 180 per hour) and ‘Research Economists/Associates’ (131 hours at GBP 120 per hour) and, second, an indication that the work concerned ‘professional services’ provided between November 1999 and October 2001 without further detail.

Although the nature of the case could justify the involvement of one economic adviser at all stages of the proceedings before the Court, the number of hours billed appears excessive given that Lexecon had been involved in the administrative procedure and given the absence of detail in the fee notes supplied by the applicant.

Accordingly, the fees recoverable are fairly assessed by fixing the amount relating to Lexecon at GBP 30 000.

As regards recovery of GBP 18 900 in respect of Professor Binmore’s fees, the applicant points out that his work involved inter alia preparation of a report annexed to the application and referred to in the report for the hearing. The costs generated by that work are thus justified.

Similarly, as regards recovery of GBP 14 985.35 in respect of Professor Neven’s fees, the applicant submits that the Professor’s work involved inter alia preparation of a report annexed to the application and referred to in the report for the hearing. Furthermore, the Court referred on a number of occasions to another economic report by the same author prepared in the course of the administrative procedure. The costs generated by that work are thus justified.

The Commission contends that the work done by Professors Binmore and Neven was superfluous. It was natural that their reports should be mentioned in the report for the hearing, since that is the purpose of a document of that kind. Further, the applicant explains the significance of Professor Neven’s involvement by referring to submissions which he made during the administrative procedure, not during the legal proceedings.

It must be stated at the outset that the amount claimed by way of reimbursement of costs in relation to Professor Binmore’s fees (GBP 18 900) consists of (i) GBP 16 400 in respect of his role in preparing the documentation relating to the application and (ii) GBP 2 500 in respect of a report entitled ‘The Failure of the Commission to Understand the Economics of Tacit Collusion’, which was annexed to the reply.

The fee notes provided by the applicant do not give any information explaining what Professor Binmore’s role was in preparing annexes to the application. The various economic assessments annexed to the application consisted of extracts from various text books and journals. In that regard, the Court holds that, although those assessments allowed it to have the benefit of an overall economic view of certain aspects of the case in question, spending GBP 16 400 on assembling such documents cannot be regarded as an expense necessarily incurred.

The Court notes that the report entitled ‘The Failure of the Commission to Understand the Economics of Tacit Collusion’, prepared by Professor Binmore and annexed to the reply, examined the issue of economic concepts relating to tacit collusion and may thus be regarded as necessary for the purpose of the present case.

Consequently, the amount recoverable in respect of Professor Binmore’s fees is fairly assessed at GBP 4 500 (GBP 2 000 for the preparation of documents relating to the application and GBP 2 500 for the report).

The Court further notes that the amount which the applicant seeks to recover in respect of the costs of Professor Neven’s fees (GBP 14 985.35) includes, first, GBP 5 583.17 for preparation of a report entitled ‘Case No IV/M.1524 Airtours/First Choice: an Economic Analysis of the Commission Decision’, which was annexed to the application, second, GBP 3 479.40 in respect of Professor Neven’s contribution to preparing the reply and his preparation of a report entitled ‘<i>Airtours </i>v <i>Commission </i>of the European Communities – Case T-342/99: Collective Dominance in the Commission’s Statement of Defence, A Comment’, which was annexed to the reply, and third, GBP 5 922.78 in respect of preparation for and attending the hearing.

In that regard, the Court observes that Professor Neven’s contribution to the legal proceedings was necessary to allow the Court to have available a precise, detailed and well-argued economic report relating to a number of aspects of the present case in relation to both the Decision and the substance of the defence.

As a consequence, given that the costs relating to Professor Neven’s fees were objectively necessary for the purpose of the proceedings before the Court, recovery of the amount incurred in that regard, GBP 14 985.35, must therefore be allowed.

In conclusion, the Court will make an equitable assessment of the fees recoverable by fixing the amount in respect of the applicant’s economic advisers and experts at GBP 49 485.35 (GBP 30 000 for Lexecon’s contribution, GBP 4 500 for Professor Binmore’s contribution and GBP 14 985.35 for Professor Neven’s contribution).

The applicant claims reimbursement of GBP 620 for fees in respect of costs for service in Luxembourg, which are necessarily incurred. The Commission has not submitted any observations on this point.

Since the fees in respect of service in Luxembourg were necessarily incurred when the application was lodged and since the amount is not disputed by the Commission, their recovery must therefore be allowed.

The applicant seeks recovery of GBP 19 509.68 for costs relating to disbursements other than VAT on the ground that those disbursements relate to reasonable photocopying charges, travel and subsistence (including for more than one lawyer and for the economic advisers) and must be regarded as expenses necessarily incurred. The Commission has not submitted any observations on this point.

Since these disbursements are not challenged by the Commission, the Court must allow them as recoverable costs and order their reimbursement.

The applicant seeks recovery of GBP 253 543.47 in respect of VAT on recoverable costs, which is also recoverable (order in <i>Leeuwarder</i> <i>Papierwarenfabriek</i> v <i>Commission</i>, paragraph 4).

The Commission challenges that analysis and refers in this connection to paragraph 20 of the order of the Court of Justice of 16 December 1999 in Case C‑137/92 P-DEP <i>Hüls</i> v <i>Commission</i>, not published in the ECR.

The Court notes that, since the applicant is a taxable person, it is entitled to recover from the tax authorities VAT paid on goods and services purchased by it. VAT thus does not represent an expense for it and, accordingly, it cannot claim reimbursement of VAT on costs which are recoverable from the Commission under Article 91(b) of the Rules of Procedure. There can be no reimbursement of VAT on legal fees and disbursements, since it is not disputed that the applicant was able to deduct the amounts paid in that respect and thus has not had to bear those amounts itself (see, to that effect, the order in <i>Hüls</i> v <i>Commission</i>, paragraph 20).

Conclusion

In view of the foregoing, the amount of costs recoverable by the applicant from the Commission is fixed at GBP 489 615.03 excluding VAT, namely GBP 420 000 in respect of legal fees (GBP 95 000 as regards Mr Swift, GBP 75 000 as regards Mr Anderson, and GBP 250 000 as regards the solicitors), GBP 30 000 in respect of Lexecon’s fees, GBP 4 500 in respect of Professor Binmore’s fees, GBP 14 985.35 in respect of Professor Neven’s fees, GBP 620 in respect of costs for service and GBP 19 509.68 in respect of disbursements other than VAT.

Since that amount takes account of all the circumstances of the case up to the date of this order, there is no need to give a separate ruling on the application for reimbursement of the expenses incurred by the applicant for the purpose of these proceedings for the taxation of costs (see, to that effect, the orders in <i>Groupe Origny</i> v <i>Commission</i>, paragraph 44, and <i>Nan Ya Plastics and Far Eastern Textiles</i> v <i>Council</i>, paragraph 49).

On those grounds,

THE COURT OF FIRST INSTANCE (Fifth Chamber, Extended Composition) hereby orders:

The total amount of the costs to be paid by the Commission to Airtours is fixed at GBP 489 615.03 (four hundred and eighty-nine thousand, six hundred and fifteen pounds and three pence).

Luxembourg, 28 June 2004.

Registrar

President

Language of the case: English.