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The empire's "egregious errors"

Posted by Richard Wednesday, July 11, 2007

Mr Barroso's empire took a little bit of a bashing yesterday, while he was holding forth in Strasbourg, when French-owned Schneider Electric scored an important legal victory in the EU Court of Justice in Luxembourg.

The case was about compensation to the French group for the commission's action in illegally blocking its merger with rival Legrand, another French electrical equipment maker, six years ago. Schneider had already acquired majority control of its rival and, as a result of the commission's incompetence, had been forced to sell its holding at a loss.

A year later, the EU court overruled the commission after it found that Barroso's officials had committed "egregious errors" in making their ruling. On the basis of the court's finding, Schneider then filed a second case, demanding an eye-watering €1.6 billion in compensation, rather putting into the shade the €225 million the EU lost directly through fraud last year.

This, we are told by The Financial Times is the first time the commission has been ordered to pay damages for getting a merger case wrong, but "legal experts" are stating that the ruling could set a far-reaching precedent for other groups. There is already one other compensation case pending before the EU court.

The court has not agreed the sum demanded by Schneider but instead has asked an independent expert to determine the precise figure. But it does affirm that Schneider had the right to compensation both for the expenses it incurred as a result of having to file a second merger notification to the commission and, more importantly, for "the reduction in the divestiture price which Schneider had to concede" when it sold on Legrand.

Whatever the final outcome, this is going to cost the commission – i.e., the taxpayers of the EU member states – dear, although it is doubtful whether le petit empereur will even have his dinner money docked as a result. Instead, he will continue to rule supreme, with the apparent approval of the UK's provincial governor, Gordon Brown.

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