Judgment

Judgment of the Tribunal in connection with an application by Akzo Nobel N.V. (“AkzoNobel”) for a review under section 120 Enterprise Act 2002 (“the Act”) of a decision by the Competition Commission (“the Commission”) contained in a report dated 21 December 2012 (“the Report”), which sets out the Commission’s conclusions as regards the anticipated acquisition by AkzoNobel of Metlac Holding S.r.l. (“the Transaction”). In the Report, the Commission found that the Transaction would lead to a substantial lessening of competition (“SLC”) in the market for the supply of metal packaging coatings for beer and beverage cans in the UK. The Commission concluded that the only effective remedy for the SLC would be the prohibition of the Transaction.

AkzoNobel applied to the Tribunal for a review of the Report, averring that the Commission erred: (i) in law in its interpretation of section 86(1)(c) of the Act and/or misdirected itself in the application of that section, in concluding that AkzoNobel, a company registered in the Netherlands, carries on business in the UK and could, therefore, be the subject of a prohibition order; (ii) in law in finding that Metlac competes more aggressively on price than other competitors (PPG Industries, Inc. (“PPG”) and The Valspar Corporation (“Valspar”), which finding was the basis for the Commission’s theory of harm and SLC finding; and (iii) in maintaining in the Report a finding that the Transaction would lead to a loss of competition in innovation when there was no evidence to support that conclusion.

On the first ground, the Tribunal concluded that the Commission had not erred in law and/or misdirected itself as to its power to prohibit the Transaction. The Tribunal was satisfied, having regard to the functional and operational structure of the Akzo Nobel Group, as found by the Commission, that Akzo Nobel was “a person carrying on business in the United Kingdom” for the purpose of section 86(1)(c) of the Act. The Commission, therefore, had jurisdiction to prohibit the Transaction.

In relation to the second ground, the Tribunal concluded that the Commission had not erred in finding that Metlac competes more aggressively on price than its competitors. The Commission drew on three sources of evidence in its analysis of Metlac’s competitiveness on pricing: (a) a subset of the responses provided to the German Bundeskartellamt’s survey of customer views and pricing in the coatings market as part of that authority’s investigation of the Transaction under German law; (b) responses to the Commission’s survey of customer views (which were gathered by various means, including by written questionnaire, oral hearings and written follow-up questions); and (c) the Commission’s own pricing data. The Tribunal found that: (i) the Commission’s analysis of, (ii) the reliance placed upon, and (iii) the conclusions drawn from, each of the three sources were rational and that the Commission had properly investigated the reasons why Metlac is able to offer lower prices than PPG and Valspar.

In respect of the third ground, the Tribunal held that the Commission had a sufficient evidential basis upon which to conclude that the Transaction might lead to a loss of competition in innovation. The Tribunal held that the assessment of the evidence was a matter principally for the Commission and involved at least an element of economic prediction. On that basis, the Tribunal concluded that the Commission was entitled to reach the conclusion it did.

As a result, the Tribunal unanimously dismissed all three of AkzoNobel’s grounds of review.