Case T‑417/05

(Competition – Concentration – Regulation (EC) No 139/2004 – Electricity market – Decision declaring that a concentration lacks a Community dimension – Calculation of turnover – Accounting standards – Adjustments – Burden of proof – Rights of the defence)

Summary of the Judgment

1.Competition – Concentrations – Examination by the Commission – Obligation to take a decision on a request for referral within a period of 10 days

(Council Regulation No 139/2004, Art. 22(3))

2.Competition – Concentrations – Examination by the Commission

(Council Regulation No 139/2004)

3.Competition – Concentrations – Examination by the Commission – Commission’s powers limited to transactions with a Community dimension

(Art. 10 EC; Council Regulation No 139/2004, Art. 1(1) and (21))

4.Competition – Concentrations – Examination by the Commission – Commission’s obligations vis-à-vis a complainant complaining of a breach of the notification requirement

(Council Regulation No 139/2004)

5.Competition – Concentrations – Concentration having a Community dimension – Criteria for assessment

(Council Regulation No 139/2004, Art. 5)

6.Competition – Concentrations – Concentration having a Community dimension – Criteria for assessment

(European Parliament and Council Regulation No 1606/2002, Art. 4; Council Regulation No 139/2004, Art. 5; Commission Regulation No 707/2004)

7.Competition – Concentrations – Concentration having a Community dimension – Criteria for assessment

(Council Regulation No 139/2004; Commission Notice 98/C 66/04)

8.Competition – Concentrations – Concentration having a Community dimension – Criteria for assessment

(Art. 95(1) EC; European Parliament and Council Regulation No 1606/2002; Council Regulation No 139/2004, Arts 1 and 5)

9.Competition – Concentrations – Concentration having a Community dimension – Criteria for assessment

(Council Regulation No 139/2004; Commission Notice 98/C 66/04, points 26 and 27)

10.Competition – Concentrations – Concentration having a Community dimension – Criteria for assessment

(Council Regulation No 139/2004; Commission Notice 98/C 66/04, points 26 and 27)

11.Competition – Concentrations – Concentration having a Community dimension – Criteria for assessment

(Council Regulation No 139/2004, Art. 5(1); Commission Notice 98/C 66/04, points 9 and 13)

1.Article 22(3) of Regulation No 139/2004 on the control of concentrations between undertakings requires the Commission to take a decision on a request for referral within a period of 10 days and provides that if no decision is taken an implicit decision agreeing to referral will exist.

With regard to the issue of determining the Community dimension of the concentration, the Commission is not required to give a ruling on the dimension before adopting a decision on the request for referral, since, if that were so, it would not be in a position to examine that question with all due care.

(see para. 64)

2.Regulation No 139/2004 on the control of concentrations between undertakings does not lay down any specific procedure for establishing the Community dimension of a concentration. The fact that the Commission did not inform the complainant about the procedure whereby it intended to examine whether or not the concentration had a Community dimension would only affect the legality of the decision adopted at the end of that procedure if it led to infringement of the rights of the defence.

(see paras 72-73)

3.As regards the Commission’s having exclusive competence to examine concentrations with a Community dimension, it does not follow automatically that the Commission has exclusive competence to determine whether a concentration has such a dimension.

In that regard, according to the wording of Regulation No 139/2004 on the control of concentrations between undertakings, it is incumbent first of all on undertakings to make the initial assessment of a concentration’s dimension and to determine as a result which authorities should be notified of the planned concentration. Then when a concentration is notified not to the Commission but to the authorities of one or more Member States, it is for those authorities, in particular in the light of the obligation of loyal cooperation contained in Article 10 EC, and in the light of Article 21 of the regulation, which provides that the Commission has exclusive competence to examine whether concentrations having a Community dimension are compatible with the corresponding prohibition on Member States applying their national competition law to such concentrations, to check that the concentration referred to them does not have a Community dimension, specifying that it is always possible for the Commission to decide that, contrary to the opinion of the authorities of the Member States the concentration does have a Community dimension and falls within its exclusive competence.

(see paras 98-99)

4.Regulation No 139/2004 on the control of concentrations between undertakings makes no specific provision expressly requiring the Commission to ensure on its own initiative that any concentration which is not notified to it does not actually have a Community dimension. However, when a complaint is referred to it by an undertaking which considers that a concentration that has not been notified to the Commission has a Community dimension, the Commission is required to decide on the principle of its competence as supervising authority. In that context, in principle, it is for the complainant to prove the merits of its complaint, on the understanding that it is for the Commission, in the interest of sound administration, to conduct a thorough and impartial examination of the complaints made to it and to provide reasoned answers to the complainant’s arguments with a view to establishing that the concentration falls within the Commission’s exclusive competence.

(see para. 100)

5.In the context of determining whether a concentration has a Community dimension, the Commission cannot be required to ensure on its own initiative in every case that the audited accounts submitted to it give a true and fair view of the position and to carry out an examination of all the adjustments that may be envisaged. It is only when its attention is drawn to specific problems that the Commission must examine them.

(see para. 115)

6.In the context of determining whether a concentration has a Community dimension, Regulation No 139/2004 on the control of concentrations between undertakings refers necessarily, for practical reasons, to the turnover in the preceding financial year. The reason for this is that there are normally audited accounts only for the last complete financial year, the accounts for more recent periods lack the safeguards provided by audited accounts.

As regards a concentration which took place in 2005, the accounts for the preceding financial year, within the meaning of Article 5 of the regulation, are those for 2004. An undertaking having an obligation to prepare annual accounts that are to be audited only has one sort of official accounts namely those which have been prepared and audited in accordance with the relevant law. Under Article 4 of Regulation No 1606/2002 on the application of international accounting standards, the IFRS were not applicable and obligatory until 2005. ‘Reconciliation’ of the accounts for 2004 with IFRS principles is provided for under Regulation No 707/2004 amending Regulation No 1725/2003 adopting certain international accounting standards in accordance with Regulation No 1606/2002, in order to facilitate the transition between the old and the new standards by providing shareholders and investors with a reference point with which to compare the 2005 accounts, the first accounts prepared according to the new standards. Moreover, the ‘reconciled’ accounts for 2004, prepared for comparative purposes only, do not provide the same safeguards as the official accounts prepared according to the general accounting principles and subject to audit. It follows that the fact that the new IFRS accounting rules were in force on the date a public offer in 2005 was announced, is irrelevant.

(see paras 128-129)

7.If the Community system in relation to mergers allows account to be taken of events that have taken place in the life of the undertaking since the end of the last accounting year, such as transfers or acquisitions of undertakings during the current financial year, that premiss is designed, in principle, as is clear from the Notice on the calculation of turnover under Regulation No 4064/89 on the control of concentrations between undertakings, to take into account changes that have taken place in the financial position of the undertaking and not to conduct a full review of the accounting treatment of a financial position which has remained stable. It would run counter to the requirements of legal certainty and speed pursued by the Community legislature to make applicability of the Community merger regulation dependent in every case on a complete review by the Commission of the accounting systems of the undertakings concerned.

(see para. 132)

8.The objective of measuring the economic strength of undertakings does not oblige the Commission, in an individual case in which Articles 1 and 5 of Regulation No 139/2004 on the control of concentrations between undertakings apply, to make an overall assessment of the merits of the various accounting approaches provided for by Community law, in particular where accounts exist which have been audited according to just one of those standards where the standard concerned was in fact the one required by both national law and the Community law applying at the relevant time.

On the other hand, the fact that the Community legislature envisaged that the international accounting standards adopted under Regulation No 1606/2002 on the application of international accounting standards should result in a true and fair view of the financial position of an undertaking does not imply ipso facto the technical superiority of such standards for the purpose of Article 5 of Regulation No 139/2004 on concentrations in comparison with the accounting standards applicable under the laws of the Member States up to 1 January 2005. Regulation No 1606/2002, adopted on the basis of Article 95(1) EC, constitutes a harmonisation measure and does not contain any value judgments with regard to the various national standards.

(see paras 144-145)

9.It is clear from that Notice on the calculation of turnover under Regulation No 4064/89 on the control of concentrations between undertakings, that the turnover of the undertakings concerned must be calculated on the basis of reliable, objective and easily identifiable figures. Although paragraph 26 of the notice states that ‘as a general rule therefore the Commission will refer to audited or other definitive accounts …’ and ‘is, in any case, reluctant to rely on management or any other form of provisional accounts in any but exceptional circumstances’, that does not mean that the notice places audited accounts on an equal footing with ‘other definitive accounts’. Paragraph 26 of the notice cannot be interpreted as offering a number of options from which it is possible to choose freely, but as being designed to cover particular situations in which there are no audited accounts for the preceding year. Paragraph 27 of the notice moreover only refers to the most recent audited accounts and not to ‘other definitive accounts’.

(see para. 146)

10.The exceptional circumstances which allow the Commission to rely on management or any other form of provisional accounts, mentioned in paragraphs 26 and 27 of the Notice on the calculation of turnover under Regulation No 4064/89 on the control of concentrations between undertakings, refer solely, except as regards differences with regard to the accounting standards of States that are not members of the European Union, to significant, permanent changes affecting the financial position of the undertakings concerned (acquisitions or divestments subsequent to the date of the audited accounts).

(see para. 179)

11.As stated in paragraph 9 of the Notice on the calculation of turnover under Regulation No 4064/89 on the control of concentrations between undertakings, the concept of ‘turnover’ as used in Article 5 of the regulation refers explicitly to ‘the amounts derived from the sale of products and the provision of services’.

By way of exception, the notice envisaged the possibility, in certain circumstances, of calculating the turnover in a different way than by reference to the aggregate of sales of products or the provision of services. In that regard, paragraph 13 of the notice states that the turnover of a service undertaking which acts as an intermediary may consist solely of the amount of commissions which it receives. This paragraph of the notice concerns a particular category of intermediaries within the services sector only, whose sole remuneration is the amount of commission they receive. It is therefore an exception to the general rule that the relevant turnover must be calculated on the basis of the total amount of sales. The concept of intermediary must therefore be interpreted strictly.

It follows that as the activity of distributors involves, in particular, purchasing electricity or gas from their suppliers and then distributing it and selling it to the end consumers, it cannot be classified as the provision of services limited to supplying a product on behalf of generators and other operators. Such an undertaking cannot therefore from a legal point of view be regarded as a mere intermediary within the meaning of paragraph 13 of the notice nor can it in principle be covered by the exception envisaged in it, since the revenue derived from distribution falls within the undertakings’ ordinary activities within the meaning of Article 5(1) of Regulation No 139/2004.

(see paras 203, 208, 210-211, 216)

14 July 2006 (*)

(Competition – Concentrations – Regulation (EC) No 139/2004 – Electricity market – Decision declaring that a concentration lacks a Community dimension – Calculation of turnover – Accounting standards – Adjustments – Burden of proof – Rights of the defence)

In Case T‑417/05,

Endesa, SA, established in Madrid (Spain), represented by J. Flynn, QC, S. Baxter, solicitor, M. Odriozola Alén, M. Muñoz de Juan, M. Merola, J. García de Enterría Lorenzo‑Velázquez and J. Varcárcel Martínez, lawyers,

applicant,

Commission of the European Communities, represented by F. Castillo de la Torre, É. Gippini Fournier, A. Whelan and M. Schneider, acting as Agents,

defendant,

supported by

Kingdom of Spain, represented by N. Díaz Abad, abogado del Estado,

and by

Gas Natural SDG, SA, established in Barcelona (Spain), represented by F. González Díaz, J. Jiménez de la Iglesia and A. Leis García, lawyers,

interveners,

Application for annulment of the Commission Decision of 15 November 2005 declaring that a concentration has no Community dimension (Case COMP/M.3986 – Gas Natural/Endesa),

THE COURT OF FIRST INSTANCE OF THE EUROPEAN COMMUNITIES (Third Chamber),

composed of M. Jaeger, President, V. Tiili and O. Czúcz, Judges,

Registrar: J. Palacio González, Principal Administrator,

having regard to the written procedure and further to the hearing on 9 March 2006,

gives the following

Legal context

Regulations concerning the control of concentrations

1.Article 1 of Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (OJ 2004 L 24, p. 1) (‘the Regulation’) provides:

‘1. Without prejudice to Article 4(5) and Article 22, this Regulation shall apply to all concentrations with a Community dimension as defined in this Article.

(a) the combined aggregate worldwide turnover of all the undertakings concerned is more than EUR 5 000 million; and

(b) the aggregate Community‑wide turnover of each of at least two of the undertakings concerned is more than EUR 250 million,

unless each of the undertakings concerned achieves more than two‑thirds of its aggregate Community‑wide turnover within one and the same Member State.

…’

2.Article 5 of the Regulation, entitled ‘Calculation of turnover’ provides:

‘1. Aggregate turnover within the meaning of this Regulation shall comprise the amounts derived by the undertakings concerned in the preceding financial year from the sale of products and the provision of services falling within the undertakings’ ordinary activities after deduction of sales rebates and of value added tax and other taxes directly related to turnover. The aggregate turnover of an undertaking concerned shall not include the sale of products or the provision of services between any of the undertakings referred to in paragraph 4.

Turnover, in the Community or in a Member State, shall comprise products sold and services provided to undertakings or consumers, in the Community or in that Member State as the case may be.

…’

3.According to Article 19 of that regulation:

‘1. The Commission shall transmit to the competent authorities of the Member States copies of notifications within three working days and, as soon as possible, copies of the most important documents lodged with or issued by the Commission pursuant to this Regulation. …’

4.According to Article 21 of the Regulation:

‘2. Subject to review by the Court of Justice, the Commission shall have sole jurisdiction to take the decisions provided for in this Regulation.

5.Article 22 of the Regulation provides:

‘1. One or more Member States may request the Commission to examine any concentration as defined in Article 3 that does not have a Community dimension within the meaning of Article 1 but affects trade between Member States and threatens to significantly affect competition within the territory of the Member States of States making the request.

Such a request shall be made at most within 15 working days of the date on which the concentration was notified, or if no notification is required, otherwise made known to the Member State concerned.

Any other Member State shall have the right to join the initial request within a period of 15 working days of being informed by the Commission of the initial request.

All national time-limits relating to the concentration shall be suspended until, in accordance with the procedure set out in this Article, it has been decided where the concentration shall be examined. As soon as a Member State has informed the Commission and the undertakings concerned that it does not wish to join the request, the suspension of its national time-limits shall end.

The Commission shall inform all Member States and the undertakings concerned of its decision. It may request the submission of a notification pursuant to Article 4.

The Member State or States having made the request shall not longer apply their national legislation on competition to the concentration.

…’

6.Article 17(3) of Commission Regulation (EC) No 802/2004 of 7 April 2004 implementing the Regulation (OJ 2004 L 133, p. 1) provides:

‘The right of access to the file shall not extend to confidential information, or to internal documents of the Commission or of the competent authorities of the Member States. The right of access to the file shall equally not extend to correspondence between the Commission and the competent authorities of the Member States or between the latter.’

7.Article 1 of Regulation (EC) No 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the application of international accounting standards (OJ 2002 L 243, p. 1) provides:

‘This Regulation has as its objective the adoption and use of international accounting standards in the Community with a view to harmonising the financial information presented by the companies referred to in Article 4 in order to ensure a high degree of transparency and comparability of financial statements and hence an efficient functioning of the Community capital market and of the Internal Market.’

8.Article 4 of Regulation No 1606/2002, entitled ‘Consolidated accounts of publicly traded companies’, provides:

‘For each financial year starting on or after 1 January 2005, companies governed by the law of a Member State shall prepare their consolidated accounts in conformity with the international accounting standards adopted in accordance with the procedure laid down in Article 6(2) if, at their balance sheet date, their securities are admitted to trading on a regulated market of any Member State within the meaning of Article 1[13] of Council Directive 93/22/EEC of 10 May 1993 on investment services in the securities field.’

9.Commission Regulation (EC) No 1725/2003 of 29 September 2003 adopting certain international accounting standards in accordance with Regulation No 1606/2002 (OJ 2003 L 261, p. 1) provides:

‘Article 1

The international accounting standards set out in the Annex are adopted.

…’

10International Accounting Standard IAS 18, entitled ‘Revenue’, annexed to Regulation No 1725/2003 provides:

‘Definitions

Revenue is the gross inflow of economic benefits during the period arising in the course of the ordinary activities of an enterprise when those inflows result in increases in equity, other than increases relating to contributions from equity participants.

Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction.

8. Revenue includes only the gross inflows of economic benefits received and receivable by the enterprise on its own account. Amounts collected on behalf of third parties such as sales taxes, goods and services taxes and value added taxes are not economic benefits which flow to the enterprise and do not result in increases in equity. Therefore, they are excluded from revenue. Similarly, in an agency relationship, the gross inflows of economic benefits include amounts collected on behalf of the principal and which do not result in increases in equity for the enterprise. The amounts collected on behalf of the principal are not revenue. Instead, revenue is the amount of commission.’

11Commission Regulation (EC) No 707/2004 of 6 April 2004 amending Regulation No 1725/2003 (OJ 2004 L 111, p. 3) provides:

‘Article 1

In the Annex to Regulation … No 1725/2003, SIC‑8 First‑time application of IASs as the primary basis of accounting is replaced by the text set out in the Annex to this Regulation.

Article 2

This Regulation shall enter into force on the 20th day following that of its publication in the Official Journal of the European Union.

…’

12The annex to Regulation No 707/2004, entitled ‘IFRS 1 – First‑time adoption of International Financial Reporting Standard states:

‘36. To comply with IAS 1 Presentation of Financial Statements, an entity’s first IFRS financial statements shall include at least one year of comparative information under IFRSs.

47. An entity shall apply this IFRS if its first IFRS financial statements are for a period beginning on or after 1 January 2004. Earlier application is encouraged. …’

Commission Notice on calculation of turnover

13According to paragraph 26 of the Commission Notice on calculation of turnover under Council Regulation (EEC) No 4064/89 on the control of concentrations between undertakings (OJ 1998 C 66, p. 25) (‘the Notice’):

‘The Commission seeks to base itself upon the most accurate and reliable figures available. As a general rule therefore, the Commission will refer to audited or other definitive accounts. However, in cases where major differences between the Community’s accounting standards and those of a non‑member country are observed, the Commission may consider it necessary to restate these accounts in accordance with Community standards in respect of turnover. The Commission is, in any case, reluctant to rely on management or any other form of provisional accounts in any but exceptional circumstances (see the next paragraph). Where a concentration takes place within the first months of the year and audited accounts are not yet available for the most recent financial year, the figures to be taken into account are those relating to the previous year. Where there is a major divergence between the two sets of accounts, and in particular, when the final draft figures for the most recent years are available, the Commission may decide to take those draft figures into account.’

14According to paragraph 27 of the Notice:

‘Notwithstanding paragraph 26, an adjustment must always be made to account for acquisitions or divestments subsequent to the date of the audited accounts. This is necessary if the true resources being concentrated are to be identified. Thus if a company disposes of part of its business at any time before the signature of the final agreement or the announcement of the public bid or the acquisition of a controlling interest bringing about a concentration, or where such a divestment or closure is a pre‑condition for the operation the part of the turnover to be attributed to that part of the business must be subtracted from the turnover of the notifying party as shown in its last audited accounts. Conversely, the turnover to be attributed to assets of which control has been acquired subsequent to the preparation of the most recent audited accounts must be added to a company’s turnover for notification purposes.’

Facts

15The appellant, Endesa, SA, is a commercial company listed in particular on the Madrid stock exchange. It heads the Endesa Group, the largest electricity group in Spain, with a presence in Italy, France, Portugal, Poland and Latin America.

16Gas Natural SDG, SA, (‘Gas Natural’) is a commercial company listed on the Madrid stock exchange. It heads the Gas Natural Group, a group of undertakings providing services in the energy sector, which operates mainly in the supply, distribution and marketing of natural gas in Spain, Italy and Latin America. It is also developing activities in the electricity sector, mainly in the production and marketing of electricity, a sector in which it is a new entrant.

17On 5 September 2005 Gas Natural announced its intention to launch a bid for Endesa’s entire share capital, resulting in a concentration under Article 3 of the Regulation. The bid was declared hostile by Endesa’s administrative bodies.

18On 12 September 2005 Gas Natural notified the Spanish competition authorities of the concentration.

19Shortly after the announcement of Gas Natural’s bid, Endesa wrote to the Commission, informing it that it considered the concentration had a Community dimension within the meaning of Article 1 of the Regulation. According to Endesa, this meant that the concentration should be notified to the Commission under Article 4 of the Regulation and also that the Spanish competition authority had no power to give a ruling on that concentration.

20On 19 September 2005 Endesa requested the Commission to give a ruling on whether it was competent to examine the concentration in view of its Community dimension.

21In those communications Endesa stated in particular, first, that the figures to be taken into account for the 2004 turnover were those calculated on the basis of the new International Financial Reporting Standards (‘IFRS’) rather than those given in the audited accounts and, second, that a number of other adjustments should be made to those figures in order to comply with the provisions of the Commission Notice on calculation of turnover. On the basis of the figures thus obtained Endesa considers that it did not achieve more than two‑thirds of its aggregate turnover in the Community in Spain in 2004.

22On 20 September 2005 the Portuguese competition authority requested the Commission to agree to referral of the concentration on the basis of Article 22 of the Regulation. On 22 September 2005 the Commission informed the other Member States of that request for referral, giving them the opportunity to join it. On 28 September 2005 the Spanish competition authority informed the Commission that it did not wish to join the Portuguese request. On 7 October 2005 the Italian authority informed the Commission that it wished to join the Portuguese request. The Commission rejected those requests for referral on 27 October 2005, on the grounds that the national authorities had not demonstrated to what extent the concentration affected intra‑Community trade and free competition, and concluded that it was not the authority best placed to look into the matter.

23On 26 September 2005 the Commission wrote to Gas Natural asking it to clarify the basis on which it had notified the concentration to the Spanish competition authority and to send it its observations on Endesa’s arguments. Gas Natural replied to that letter on 3 October 2005. In its reply it said that in order to identify the competent competition authority it had used the figures published in Endesa’s audited accounts for 2004. According to Gas Natural, those accounts show that in 2004 Endesa (like Gas Natural) had achieved over two-thirds of its aggregate turnover in the Community in Spain.

24Also on 26 September 2005 the Commission wrote to Endesa asking it for some clarification regarding its communications. On 4 October 2005 it sent Endesa a copy of Gas Natural’s observations on its initial communications, asking for its comments on them. Endesa replied to those requests on 5 and 7 October 2005, respectively.

25On 6 October 2005 the Spanish competition authority informed the Commission that it did not agree with the arguments put forward by Endesa and stated that it considered it was competent to assess the concentration in question.

26On 25 October 2005 the Commission sent Gas Natural a copy of Endesa’s communications of 5 and 7 October 2005, giving it an opportunity to reply to them. On 26 October 2005 the Commission invited Gas Natural, Endesa and the Spanish competition authority to send it their opinions on the interpretation of Article 5 of the Merger Regulation in the light of paragraph 40 of the Commission Notice mentioned above. At the same time it sent the Spanish competition authority a copy of Endesa’s communications of 5 and 7 October 2005, giving it the opportunity to express its opinion on all the matters at issue.

27On 27 October 2005 the Spanish competition authority informed the Commission that it had no further observations to make on the adjustments and sent the Commission its opinion on the interpretation of Article 5 of the Merger Regulation in the light of paragraph 40 of the relevant Commission Notice. On 2 November 2005 Gas Natural and Endesa made known their views on this. Furthermore, Gas Natural provided further comments on the adjustments proposed by Endesa, on the basis of Endesa’s communications of 5 and 7 October 2005. In its comments Gas Natural proposed further adjustments which it considered had been overlooked by Endesa. On 4 November 2005 a copy of those proposed adjustments was sent to Endesa, which made known its observations on them on 9 November 2005.

28On 15 November 2005 the Commission adopted the decision declaring the lack of Community dimension (Case COMP/M.3986 – Gas Natural/Endesa) which is the subject of this action (‘the Decision’).

29With regard to the national procedure for control of concentrations, the Spanish Minister for the Economy decided on 7 November 2005 to launch the ‘second phase’ of that procedure, by sending the file from the Servicio de Defensa de la Competencia (Competition Service, ‘the SDC’) to the Tribunal de Defensa de la Competencia (Competition Court, ‘the TDC’).

30On 20 December 2005 the Comisión Nacional de la Energía (National Energy Commission, ‘the CNE’) issued its opinion on the concentration, in which it recommended that the concentration should be authorised subject to certain conditions.

31On 5 January 2006 the TDC issued its opinion, in which it recommended that the concentration should be prohibited.

32On 3 February 2006 the Spanish Council of Ministers authorised the concentration subject to certain conditions.

33On 21 March 2006 Commercial Court No 3, Madrid suspended the concentration.

Procedure

34Endesa brought the present action by application lodged at the Registry of the Court of First Instance on 29 November 2005. By means of a separate application lodged on the same day, the applicant requested that its action be dealt with under an expedited procedure in accordance with Article 76a of the Rules of Procedure of the Court of First Instance.

35By a separate document lodged at the Registry of the Court of First Instance on 29 November 2005 the applicant submitted an application both for suspension of operation of the Decision and for a ruling that the Commission should call on the Spanish competition authorities to suspend all national procedures.

36By letters lodged at the Registry of the Court of First Instance on 2 and 9 December 2005, Gas Natural and the Kingdom of Spain applied for leave to intervene in support of the defendant under Article 115(1) and (2) of the Rules of Procedure.

37Both applications for leave to intervene were served on the parties, in accordance with Article 116(1) of the Rules of Procedure.

38By letter lodged at the Registry of the Court of First Instance on 15 December 2005, the applicant requested that certain information in the documents in the case should not be disclosed to any intervening parties under the second sentence of Article 116(2) of the Rules of Procedure.

39On 15 December 2005, the Third Chamber of the Court of First Instance, to which the case was assigned, decided to grant the application for an expedited procedure.

40By orders of 16 December 2005 the President of the Third Chamber of the Court of First Instance granted Gas Natural and the Kingdom of Spain leave to intervene and reserved the decision on the merits of the request for confidentiality.

41By letters lodged at the Registry of the Court of First Instance on 3 and 4 January 2006, respectively, Gas Natural and the Kingdom of Spain raised objections to the confidential treatment of certain information in the documents in the case which had been sent to them.

42By letter lodged at the Registry of the Court of First Instance on 11 January 2006 the applicant withdrew the request for confidentiality in respect of Gas Natural as regards the report prepared by Deloitte, SL, annexed to the application.

43Gas Natural and the Kingdom of Spain lodged their statements in intervention on 12 and 13 January 2006 respectively.

44On 19 January 2006 the Commission lodged its defence.

45By order of 24 January 2006 the President of the Third Chamber of the Court of First Instance partially granted the request for confidentiality lodged by the applicant, ordered that the interveners should be sent a non‑confidential version of all the documents in the case and requested them to submit further observations relating to those documents at the hearing. It also reserved the costs.

46By order of 1 February 2006 (T‑417/05 R Endesa v Commission [2006] ECR II‑0000), the President of the Court of First Instance, considering that the applicant had not established that it was at risk of suffering serious and irreparable harm in the absence of interim measures, dismissed the application for such measures and reserved the costs.

47Upon hearing the report of the Judge‑Rapporteur, the Court of First Instance (Third Chamber) decided to open the oral procedure and, by way of measures of organisation of procedure, requested the parties to answer a number of written questions. The parties complied with those requests within the prescribed time‑limits.

48The oral arguments of the parties and their answers to the oral questions were heard at the hearing on 9 March 2006.

Forms of order sought

49Endesa claims that the Court should:

– declare its application admissible;

– annul the decision;

– order the Commission to pay the costs.

The Commission contends that the Court should:

– dismiss the application;

– order the applicant to pay the costs, including those relating to the interlocutory proceedings.

The Kingdom of Spain contends that the Court should:

– dismiss the application;

– order the applicant to pay the costs.

Gas Natural contends that the Court should:

– dismiss the application;

– order the applicant to pay the costs.

Law

53In support of its action, the applicant puts forward five pleas: (i) procedural irregularities, (ii) reversal of the burden of proof and failure to state reasons, (iii) failure to use the accounts drawn up in accordance with the IAS/IFRS, (iv) rejection of proposed adjustments, and (v) infringement of the criteria set out in the Notice, lack of analysis and failure to state reasons, and misuse of powers.

First plea: procedural irregularities

First part: adoption of decisions on the requests for referral prior to adoption of the Decision

– Arguments of the parties

54Endesa maintains that it is clear from the Regulation that any decision based on Article 22 of that regulation must relate to a concentration which complies with the thresholds laid down in one or more national rules and has no Community dimension. Thus the Article 22 mechanism allows the Commission to have competence with regard to concentrations which should not, in principle, fall within its competence.

It follows that, under Article 22 of the Regulation, the absence of a Community dimension is an essential pre‑condition for a referral decision. Therefore, according to Endesa, since it had formally requested the Commission to adopt a position on the Community dimension of the concentration, the Commission had a choice between rejecting the request without initiating a procedure because it considered it to be manifestly unfounded, or to initiate a procedure and give a formal ruling on which authority was the competent authority before deciding on the requests for referral. It adds that the fact that the time‑limit for ruling on requests for referral is laid down in the Regulation (10 working days after the expiry of the period set for the national authorities to join one or more requests) does not justify reversing the logical order for examination by the Commission. Since the Regulation does not set out any procedural steps for determining the authority, only steps concerning actual competence (through the Article 22 rules on referral), the time‑limit laid down for the latter steps should apply by analogy to the former. If the Commission did not have all the information necessary in order to take a decision and it needed to ask for more information, its request for information should have automatically suspended the time‑limit by which it had to take its decision and, necessarily, the time‑limits for adopting all the measures resulting from that time‑limit, including the decision based on Article 22.

56Endesa maintains that in the present case 38 days elapsed between the first request for referral and the Commission decision to reject the requests of the Italian Republic and the Portuguese Republic. By adopting the decisions on referral before determining the national or Community dimension of the concentration the Commission prejudged the result of the Decision, although it did include a purely formal reservation on this point in the Decision. That is clear from the grounds of the Decision on the requests for referral, which states in particular that the Commission is not the authority best placed to give a ruling on the concentration in question. Regardless of the basis for that statement, it is clear that it provides a premature judgment on at least one of the assessments which the Commission is required to make as part of the examination of a concentration with a Community dimension, namely the assessment of any requests for referral based on Article 9 of the Regulation.

57The Commission, supported by the interveners, argues that this plea is simply irrelevant, that there is no similarity between the situation of a Member State which submits a request under Article 22 and a situation in which an undertaking requests the Commission to adopt a position on its own competence, and that the decisions taken on the requests submitted under Article 22 did not prejudge the questions concerning Community competence since the Commission made an express ruling on those requests without prejudice to that aspect.

58Endesa maintains that the Decision should have been adopted before the decision on the requests for referral under Article 22 of the Regulation and that the absence of a Community dimension constituted an essential pre‑condition for a referral decision.

59Article 22(1) of the Regulation provides that ‘[o]ne or more Member States may request the Commission to examine any concentration … that does not have a Community dimension within the meaning of Article 1 but affects trade between Member States and threatens to significantly affect competition within the territory of the Member State or States making the request. …’

60It should be remembered that on 19 September 2005 Endesa requested the Commission to give a ruling on whether it was competent to examine the concentration. On 20 September 2005 the Portuguese competition authority requested the Commission to agree to examine the concentration on the basis of Article 22 of the Regulation. After the Commission sent that request for referral to the other Member States the Italian competition authority informed the Commission on 7 October 2005 that it wished to join the request of the Portuguese competition authority. The Commission rejected those requests for referral on 27 October 2005, on the grounds that it had not been demonstrated that the concentration threatened to affect competition in Portugal and Italy and that the Commission was in a better position to assess such effects.

Second part: lack of transparency and infringement of the rights of the defence

– Argument of the parties

– Findings of the Court

Third part: failure to suspend the national procedure

– Arguments of the parties

– Findings of the Court

Second plea: reversal of the burden of proof and failure to state reasons

Arguments of the parties

Findings of the Court