This will help MyTravel

In a landmark lawsuit, the flights operator MyTravel has launched a €743 million lawsuit seeking damages against EU competition chiefs on Wednesday night after the EU blocked its 1999 merger with UK rival First Choice.

The European Commission blocked the €1.4 billion deal after concerns that the tie-up would create anti-competitive monopolies in the European travel operators market.

It is the first time a company has sought damages from the commission for using its veto powers in EU merger decisions.

MyTravel alleges the commission’s block cost the company half a billion euros in lost profits, and sees the EU as negligent in their handling of the deal.

The action was permissible after the Luxembourg-based Court of First Instance, Europe’s second-highest law court, quashed the commission’s veto in 2002.

After annulling the commission decision in June 2002, EU judges took issue with the commission’s market analysis of the deal, saying the investigation from competition authorities lacked “cogent evidence” and was “vitiated by a series of errors.”

MyTravel, or Airtours as it was known then, announced a claim for damages early this year and formally lodged their application for compensation on Wednesday evening.

Brussels regulators will fear that the challenge will pave the way for a series of new lawsuits against the commission seeking legal damages for misconduct and negligence in their merger analyses.

The French electrical equipment group Schneider has threatened the commission by tabling a €1 billion lawsuit for blocking acquisition of rival Legrand.

Brussels, however, vigorously defended itself in the face of the charges.

“The commission believes it is not liable for the alleged damages and the court will conclude that the case should be rejected,” it said, as reported in Financial Times Europe.

Whilst having EU court backing, the damages sought by MyTravel will not be easy to come by.

EU law dictates that companies must prove the commission to be willfully negligent in order to bring monetary redress for competition decisions.

The European Court of Justice, of which the First court is a part, will also be conscious of protecting Brussels regulators from a series of heavy fines incurred by successful lawsuits from disgruntled companies.

Wednesday’s events were just the initial steps of a case which could drag on in the courts.

Insiders claim it could take two years to be resolved.

An EU official on Friday told EUpolitix.com admitted that the action breaks new ground, but was confident over the final call.

“This question has never come up before.”

“But there is a great difference between annulment of the commission’s decision and judging on extra contractual liabilities.”

“Wilfull negligence would have to be shown – evidence that in certain cases doesn’t correspond to reality.”

He continued that “the action might be landmark but it really depends whether they win or not.”

Asked if the commission was gnashing its teeth over the removal of its veto powers, the insider simply stated, “It is not a question of being happy or unhappy over the court decision – we are a soulless institution not prone to feelings.”