Judgment in the EDEKA/Tengelmann case

With an order dated 23 August 2017 on case no. VI - Kart 5/16 (V), Düsseldorf Higher Regional Court ruled on an appeal in the EDEKA/Tengelmann case. The article entitled “Erledigungseintritt und Fortsetzungsfeststellungsinteresse i.S.v. § 71 Abs. 2 S. 2 GWB bei Erlass einer Ministererlaubnis – Anmerkung zur Entscheidung des OLG Düsseldorf in Sachen EDEKA/Tengelmann” in the legal journal Neue Zeitschrift für Kartellrecht 2018, page 33 onwards, provides an overview of the background to the proceedings and analyses the court’s examination of the grounds for a decision becoming moot when a ministerial authorisation exists. The court’s failure to define the term “becoming moot” more precisely is then critically assessed and the significance of the interest in a precedent being set for a group of cases regarding legitimate interest in the continuation of proceedings for a declaratory judgment is emphasised.

Background to the proceedings

The parties involved launched an appeal against the Federal Cartel Office’s prohibition of the merger of the EDEKA Group with the Tengelmann Group, in the course of which the Federal Minister for Economic Affairs ultimately granted his approval to the merger in accordance with sec. 42 of the German Act against Restraints of Competition (Gesetz gegen Wettbewerbsbeschränkungen – GWB). Contrary to the Federal Cartel Office and some Tengelmann Group companies, the companies of the EDEKA Group in particular held the opinion that the proceedings had not become moot due to the ministerial authorisation, but continued with the appeal. Düsseldorf Higher Regional Court therefore had to answer the questions of whether the ministerial authorisation had led to the decision becoming moot within the meaning of sec. 71(2) sentence 2 GWB and whether the appeal can in this case be upheld as an appeal for the continuation of proceedings for a declaratory judgment.

Ministerial authorisation as the reason for the decision becoming moot

The court held that the initial prohibition on the merger being executed, and thus also the grievance under sec. 41(1) sentence 1 GWB, had been extinguished by the ministerial authorisation. The occurrence of the conditions subsequent connected with the authorisation also depended entirely on the conduct of the merger parties and therefore did not change the fact of the decision becoming moot. The defence that in any demerger proceedings under sec. 41(3) GWB it also needs to be clarified whether the Federal Cartel Office was right in prohibiting the merger, is countered by Düsseldorf Higher Regional Court by stating the peculiarities of the ministerial authorisation: a merger carried out on the basis of the authorisation is, firstly, withdrawn from demerger; secondly, a condition for granting such authorisation is the essential legality of the prohibition. The court concludes that the ministerial authorisation led to the decision becoming moot within the meaning of sec. 71(2) sentence 2 GWB. But in preparing an official liability case it sees a legitimate legal interest in upholding the appeal as an appeal for the continuation of proceedings for a declaratory judgment.

No definition of the term of “becoming moot”

Düsseldorf Higher Regional Court ultimately correctly affirms that the decision became moot. But it fails to consider the concept in more depth. According to supreme court case law and the literature, a decision becomes moot when the contested order can no longer have any legal impact, thus becoming irrelevant and as a consequence the legal grievance of the appellant is extinguished. More specifically worded, a decision becomes moot when the original subject of the appellant’s interest in legal protection is eliminated. This is also taken into account by the case decided by Düsseldorf Higher Regional Court: first, the issuance of a ministerial authorisation is comparable with the withdrawal of the prohibition injunction by the cartel authority; this is eliminated as the subject of the original interest in legal protection. Also, regardless of a ministerial authorisation, the negative consequences of any demerger are no longer to be considered the subject of the original interest in legal protection.

Appellants’ interest in a precedent being set

The acknowledgement of the appellants’ interest in a precedent being set as a legal interest within the meaning of sec. 71(2) sentence 2 GWB by Düsseldorf Higher Regional Court is ultimately correct and only brief grounds are stated since the facts are broadly undisputed. Along with the other groups of cases where a legitimate interest exists in the continuation of proceedings for a declaratory judgment, such as the risk of repetition and interest in rehabilitation, the interest in a precedent being set is becoming increasingly important in the meantime. If an appeal for continuation of proceedings for a declaratory judgment is based on an interest in a precedent being set, the appeal proceedings must be capable of clarifying a preliminary question of intended follow-up proceedings to assert compensation claims. Such follow-up proceedings must be announced with substantiation by the appellant, for example by explaining how the damage is calculated and how much it amounts to, and must not be obviously hopeless. Whether the latter condition is necessary has not been decided so far by the supreme court, but it would be desirable for reasons of procedural economy.

In the EDEKA/Tengelmann case, Düsseldorf Higher Regional Court applies the formula of a decision becoming moot that is applied primarily in case law and ultimately comes to the correct decision. A more detailed specification of the term of becoming moot would have been helpful and would have clarified several parts of the decision. The decision strikingly demonstrates the practical relevance of an interest in a precedent being set for a group of cases.