Groupe Eurotunnel SA v Competition Commission & Ors [2013] CAT 30 (04 December 2013) [2013] CAT 30

"The OFT shall... make a reference to the Commission if the OFT believes that it is or may be the case that - (a) a relevant merger situation has been created; and (b) the creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services."

"Subject to subsections (6) and (7) and section 127(3), the Commission shall, on a reference under section 22, decide the following questions - (a) whether a relevant merger situation has been created; and (b) if so, whether the creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services."

"For the purposes of this Part, a relevant merger situation has been created if - (a) two or more enterprises have ceased to be distinct enterprises at a time or in circumstances falling within section 24; and (b) the value of the turnover in the United Kingdom of the enterprise being taken over exceeds £70 million."

"For the purposes of this Part, a relevant merger situation has also been created if - (a) two or more enterprises have ceased to be distinct enterprises at a time or in circumstances falling within section 24; and (b) as a result, one or both of the conditions mentioned in subsections (3) and (4) below prevails or prevails to a greater extent."

"4.68 In total, the assets purchased and staffing arrangements put in place by [Eurotunnel] to be taken into account for this assessment comprise: (a) vessels which were of suitable design and of sufficient number to operate a passenger and freight transport business on the short-sea route; these vessels were in a condition from which they were able to be brought into operation within two months of the acquisition taking place; (b) those former SeaFrance employees who now comprise some three-quarters of the staff engaged in running the [MyFerry] service; (c) brand and goodwill carrying some, but limited, positive value; and (d) customer lists, though given the difficulty in assessing their value, we have not attached any weight to these in our assessment. 4.69 Together [Eurotunnel] and the SCOP brought these assets under common control for the purposes of section 26 of the Act. 4.70 On the other hand, [Eurotunnel] did not acquire control of ex-SeaFrance customer and supplier contracts. For the reasons given above, we have concluded that this absence is of some, but limited, relevance to the 'enterprise' assessment. 4.71 On balance, and taking all of the above factors into account including the length of time between the end of SeaFrance's operations and the start of [MyFerry's] operations, we have concluded that, in the context of the particular industry concerned, the components referred to in paragraph 4.68 above do meet the statutory definition of an 'enterprise', and constitute the activities, or part of the activities, of a business. 4.72 We are satisfied that the assets acquired from the liquidator are under [Eurotunnel's] control. As described above, we are also satisfied that the ex-SeaFrance staff employed by the SCOP have also ceased to be distinct from [Eurotunnel's] other businesses."

"The transaction was completed on 2 July 2012. On the same date, [Eurotunnel] and the SCOP signed a Memorandum of Understanding. The reference was made to the [Commission] on 29 October 2012. The statutory time limit has therefore been observed."

"...the SCOP challenges the Commission's finding that it has jurisdiction to consider the merger. This is the subject of Grounds 1 to 4. In short: (1) the Commission erred in concluding that [Eurotunnel] and the SCOP were 'associated persons'; (2) but, if they were 'associated persons', the Commission erred in concluding that two enterprises ceased to be distinct because the 'associated persons' only obtained assets (i.e. the vessels) which did not constitute an enterprise; (3) alternatively, if they were not 'associated persons', the Commission erred in concluding that [Eurotunnel] had material influence over the SCOP; and (4) further or alternatively, there was no proper basis for the Commission to find that [Eurotunnel] acquired " the activities of a business " (being the definition of an "enterprise" under section 129 of the Act) in circumstances where SeaFrance had ceased all activity some 7½ months before the transaction took place."

"As the Commission and the Secretary of State submit, the Tribunal must avoid blurring the distinction which Parliament clearly drew between a section 120 review and an appeal on the merits. We shall need to bear this distinction in mind when we come to deal with the specific points raised by Sky in relation to the factual basis upon which the Commission reached the challenged findings. It is one thing to allege irrationality or perversity, it is another to seek to persuade the Tribunal to reassess the weight of the evidence and, in effect, to substitute its views for those of the Commission. The latter is not permissible..."

"In my judgment this is not a pure question of fact, but rather a mixed question of fact and law. Once it is determined what by description the article is and what are its characteristics it is a matter of law whether it is a knife within the section of the Act..."

"...The water is, however, a little deeper when we consider the nature of the question, a very familiar question, whether a statutory measure applies to a particular set of facts. For this question is ambiguous. It may mean: is the statute to be construed so as to cover the accepted facts? That is a question of law. Or it may mean: are the facts to be judged as falling within the accepted meaning of the statute? That is a question of fact..."

"We have examined a range of evidence relating to the interactions between [Eurotunnel] and the SCOP leading up to, during and after the transaction took place. In our view, on balance there is a significant body of evidence which taken together indicates that the SCOP acted together with [Eurotunnel] in preparing [Eurotunnel's] bid, and its involvement was instrumental in securing the SeaFrance assets for [Eurotunnel]. In particular: (a) [Eurotunnel] and the SCOP were in advanced discussions over the SeaFrance project from (at least) January 2012. (b) From an early stage, [Eurotunnel] and the SCOP presented a united front in public and to third parties. [Eurotunnel] made several statements to the press referring to its proposed relationship with the SCOP and the importance of that relationship to its bid. Mr Giguet of the SCOP told us that when he first met the President of the Calais Chamber of Commerce (in January/February 2012) he described himself as follows: 'I represent the SCOP but also have the agreement of Eurotunnel'. Mr Giguet also told us that [Eurotunnel] invited him to join them for the meeting at the Court. (c) Mr Giguet was paid by [Eurotunnel] during the period April to June 2012, acting as [Eurotunnel's project director, while at the same time acting (in a voluntary and unpaid position) as member of the directoire for the SCOP (a position he had held since December 2011). (d) [Eurotunnel's] own internal considerations of the proposed acquisition were informed by the SCOP's business plan: (i) in January 2012 the SCOP's business plan was presented to the [Eurotunnel] board; and (ii) the document 'Groupe Eurotunnel Newlink Project - Proposed Structure' dated 26 April 2012 states: 'The financial simulations presented are based on the 'BP SCOP' (e.g. the business plan prepared by the former workers of SeaFrance), which has been reviewed only lightly by Eurotunnel to date'. (e) In its offer to the liquidator, [Eurotunnel] made repeated reference to a partnership with the SCOP, for example: a partnership is envisaged entered into in the long term between EUROTUNNEL and the SCOP that will specifically reunite the former SEAFRANCE employees; and The project for which Group EUROTUNNEL is signing up is intended, however, to allow a partnership with the former SEAFRANCE employees who will be part of the SCOP, so as to rekindle the operations previously undertaken by SeaFrance. (f) The Court order (the Order) approving [Eurotunnel] as the acquirer of the SeaFrance assets makes reference to the arrangement with the SCOP and in particular states: However, Eurotunnel said in its bid that the ships would remain under the French flag and that 535 former SeaFrance employees would be hired by an operating company under the project. The ships would be purchased by a special purpose company and leased to an operating company supported by a previously existing SCOP...without any performance guarantee being provided. While job creation is not a criterion established for the sole realization of assets in liquidation, it remains a significant factor in the subjective assessment. (g) Completion of the purchase of the liquidation assets took place on 2 July 2012. On the same date, [MyFerry] and the SCOP signed a Memorandum of Understanding."

"two or more persons acting together to together secure or exercise control of a body of persons corporate or unincorportate or to together secure control of any enterprise or assets"

"The point is a simple one: if - because of the effect of section 127 - [Eurotunnel] and the SCOP are to be treated as a single person at the time of the acquisition of the vessels, the question for the Commission was whether the enterprise (or enterprises) owned or operated by [Eurotunnel]/SCOP (i.e. the deemed single person) "ceased to be distinct" from another enterprise which [Eurotunnel]/SCOP acquired through the transaction. The answer to that question is plainly: no. That is because, what was acquired by [Eurotunnel]/SCOP through the transaction was not an enterprise."

"Moving on to Ground 2, SCOP and Eurotunnel are associated persons. Then we assess the question, for the purposes of deciding whether enterprises are brought under common control, SCOP and Eurotunnel are a single person. What is it that has been brought under common control? We say it plainly is those transaction assets, the vessels plus the goodwill and customer lists. There is no finding that those transaction assets alone amount to an enterprise. The finding that an enterprise was acquired depends on the labour also having been acquired. You can see that from para 4.15 of the Report, to which we have already gone in passing, but we can go back to if it is of assistance. The Commission says that SCOP's Ground 2 is somehow a minute chronological dissection of the detailed mechanics of the transaction. It is not, it is simply looking at what the Commission considered, and the Commission considered the transaction, the acquisition of the vessels and the other limited assets from the liquidation trustee. The Commission found that those enterprises ceased to be distinct - i.e. Eurotunnel and any enterprises that were controlled by Eurotunnel and/or the SCOP at that time, ceased to be distinct with those transaction assets on 2 nd July 2012. The reference was then made at the end of October, i.e. three days before the four month deadline for a reference to be made, after the date of the transaction. The single point here is that when you ask yourself what was brought under the control of the deemed single person, the SCOP Eurotunnel single person, which we hypothesise for the purposes of Ground 2, what was brought under common control as at 2 nd July 2012 were the vessels, goodwill and customer lists. What already existed with the deemed single person was Eurotunnel's range of assets and activities, including the tunnel itself, and SCOP's labour. The associated persons already had control of the tunnel and the Eurotunnel staff, and the labour that the SCOP had gathered together. So what happened was, on 2 nd July 2012, assuming there is a single associated person, that single associated person acquired vessels, customer lists and goodwill, and it was brought under common control with tunnel, Eurotunnel staff, SCOP labour. In other words, it was brought under common control with the assets and activities of both Eurotunnel and SCOP, but it was not an enterprise that was brought under common control. What was brought was less than an enterprise. It was the vessels, goodwill and customer lists, which the [Commission] has not found constituted an enterprise, and indeed does not constitute an enterprise. If we are dealing with it in mathematical terms, essentially what the [Commission] has done wrong here is that it has put the SCOP labour on the wrong side of the equation when it is deciding whether or not two enterprises cease to be distinct. Instead of considering a situation where Eurotunnel acquired labour and vessels and goodwill and customer lists, which may have constituted an enterprise if it had actually been active at the time, it looked at a situation where the single deemed person acquired vessels, goodwill and customer lists, and then said, "

"...What happened was the SCOP was established - it was established by its founder member subscribers - it then, because it was established, got more subscribers very rapidly so that by December it had a substantial number of subscribers, the majority of whom are ex-SeaFrance employees. It then considered the possibility of getting vessels itself, it was not able to do so. It then looked around for other opportunities by which it could fulfil its commercial objectives which were finding employment for its subscribers. It therefore supported the bid. The transactions goes through whereby Eurotunnel gets the vessels from the liquidator with SCOP supporting it and saying: "

"55. The key phrase in section 127(1)(a) is: "... for the purpose of deciding whether ..."

"When [MyFerry] launched operations on 20 August 2012, the SCOP had 256 employees on the ships and a further 126 employees operating at the ports of Dover and Calais, which was enough to launch two ships. The SCOP continued to recruit staff from its subscribers and had sufficient personnel to operate all three ships at full capacity by 13 February 2013. Almost all of the staff now employed by the SCOP were subscribers of the SCOP on its registration in December 2011."

"(1) For the purposes of this Part any two enterprises cease to be distinct if they are brought under common ownership or common control (whether or not the business to which either of them formerly belonged continues to be carried on under the same or different ownership or control). (2) Enterprises shall, in particular, be treated as being under common control if they are - (a) enterprises of interconnected bodies corporate; (b) enterprises carried on by two or more bodies corporate of which one and the same person or group of persons has control; or (c) an enterprise carried on by a body corporate and an enterprise carried on by a person or group of persons having control of that body corporate. (3) A person or group of persons able, directly or indirectly, to control or materially to influence the policy of a body corporate, or the policy of any person in carrying on an enterprise but without having a controlling interest in that body corporate or in that enterprise, may, for the purposes of subsections (1) and (2), be treated as having control of it. (4) For the purposes of subsection (1), in so far as it relates to bringing two or more enterprises under common control, a person or group of persons may be treated as bringing an enterprise under his or their control if - (a) being already able to control or materially to influence the policy of the person carrying on the enterprise, that person or group of persons acquires a controlling interest in the enterprise or, in the case of an enterprise carried on by a body corporate, acquires a controlling interest in that body corporate; or (b) being already able materially to influence the policy of the person carrying on the enterprise, that person or group of persons becomes able to control that policy."

"The SCOP's economic dependence on [Eurotunnel] is such as to confer on [Eurotunnel] 'material influence' over the SCOP, and therefore its employees. We may treat material influence as amounting to 'control' for the purposes of section 26 of the Act, which would mean that the SCOP's assets were also part of those assets brought under 'common control' with the Eurotunnel business, and therefore relevant for the 'enterprise' test."

"4.41 The important relationship between [Eurotunnel] and the SCOP also raises the question of whether [Eurotunnel] has 'material influence' over the SCOP, and therefore over its employees. 4.42 The SCOP argues that [Eurotunnel] cannot exercise material influence over the SCOP, because [Eurotunnel] has no equity interest in, nor ability to participate in strategic decisions of, the SCOP, and because its undertakings to the French Competition Authority (FCA) limit [Eurotunnel's] ability to negotiate contracts for the [MyFerry] service. 4.43 However, as envisaged throughout the bidding process by [Eurotunnel], the SCOP and the Court, when [Eurotunnel] acquired the liquidation assets, at the same time [Eurotunnel] (via [MyFerry]) also entered into contractual arrangements with the SCOP under which the Vessels are chartered to the SCOP under a bareboat charter, and the SCOP operates the ferry service under a service contract, using staff employed by it. 4.44 Under these arrangements, the SCOP is economically dependent on its relationship with [Eurotunnel] (and/or [Eurotunnel's] subsidiary [MyFerry]). In particular: (a) The document 'Groupe Eurotunnel NewLink Project-Proposed Structure' describes this reliance as follows: 'given the obvious economic dependence of SCOP vis-à-vis company B [MyFerry], although Eurotunnel is not a shareholder of SCOP, this does not limit the financial responsibility of Eurotunnel [in] case of troubles in SCOP (financial distress, social restructuring, etc'. (b) [Eurotunnel] told us in early January 2013 that in order to ensure the continued survival of the SCOP, [MyFerry] was providing working capital in the form of paying in advance and non claiming contractual price reductions, though it has since started to recoup the value of these price reductions. The SCOP confirmed that [MyFerry] had been paying for crossings in advance. (c) The SCOP has no viable source of income other than [Eurotunnel]. The contract between the SCOP and [Eurotunnel] requires the SCOP to undertake its short-sea crossings exclusively for [MyFerry] and not to market any transport service in its own name or on its own behalf for a period of at least three years. [Eurotunnel] disagreed with this interpretation of the contract. It stated that a more appropriate interpretation of the relevant clause was that 'in consideration for [MyFerry's] undertakings, the SCOP will perform the services and will not sell them to the market in its own name'. In this regard, we note first that [Eurotunnel] does not translate the 'et pour son compte' and second that, taken together, clauses 7.1 and 7.2 indicate that the SCOP is effectively required to act exclusively for [MyFerry], at least on the cross-Channel route, as, in addition to the restrictions referred to above, the SCOP may not enter into any bareboat charters with any other vessel owner on the cross-Channel route without the prior agreement of [MyFerry]. (d) Further, it is clear that the SCOP is not in a position to establish its own service. The document 'Groupe Eurotunnel Newlink Project-Proposed Structure' rejected this option because the SCOP would not have been able to raise the necessary finance. The SCOP confirmed that this remained the case and it was likely to continue to do so for three years. (e) Finally, Jean-Michel Giguet was recruited by [Eurotunnel], and is both the CEO of the SCOP and a manager of [MyFerry]. 4.45 Taking into account all of the above factors, we have therefore concluded that, in the light of the SCOP's economic reliance on its arrangements with [Eurotunnel] and [Eurotunnel's] subsidiary [MyFerry], [Eurotunnel] (and/or [MyFerry]) has a degree of influence and/or control over the SCOP, and therefore the SCOP's employees, which is 'material' in the context of its jurisdictional assessment. We consider that, taking into account all the circumstances of this case, it is appropriate to treat this material influence as amounting to control within the meaning of section 26 of the Act."

" 'Material influence' 3.2.8 The ability to exercise 'material influence' is the lowest level of control that may give rise to a relevant merger situation. In assessing material influence in the context of the Act, the Authorities will conduct a case-by-case analysis, focusing on the overall relationship between the acquirer and the target and on the acquirer's ability materially to influence policy relevant to the behaviour of the target entity in the marketplace. The policy of the target includes its strategic direction and its ability to define and achieve its commercial objectives. 3.2.9 The acquirer's ability to influence the target's policy can arise through the exercise of votes at shareholders' meetings, together with any additional supporting factors that might suggest that the acquiring party exercises an influence disproportionate to its shareholding. Material influence may also arise as a result of the ability to influence the board of the target and/or through other arrangements. 3.2.10 In considering whether material influence may be present by virtue of a shareholding in a particular case, the Authorities will consider not only the ownership of the shareholding but also whether, as a matter of practice, the acquiring party is able to exert influence... 3.2.11 In addition to the ability materially to influence policy through the voting of shares, the Authorities' determination may also turn on whether the acquirer is able materially to influence the policy of the target entity through board representation. Indeed, it is possible that board representation alone could, in certain circumstances, confer material influence. 3.2.12 The Authorities may also consider whether any other factors, such as agreements with the company, enable the acquirer materially to influence policy. These might include the provision of consultancy services to the target or might, in certain circumstances, include agreements between firms that one will cease production and source all its requirements from the other. Financial arrangements may in certain circumstances confer material influence where the conditions are such that one party becomes so dependent on the other that the latter gains material influence over the company's commercial policy."

"81. Further, and in the alternative to Grounds 1 to 3, the Commission erred in concluding that there was [a relevant merger situation] since the assets acquired by [Eurotunnel] were not the activities of a business. 82. ...the Act is concerned with the merger of enterprises. Enterprise is defined under section 129 of the Act as the activities of a business . 83. It is clear from this language that the Act is concerned with the acquisition of pre-existing businesses - i.e. ones with activities. What must be acquired are the activities themselves, not merely the elements necessary to carry out the relevant activities. For example, on the basis that the vessels did not by themselves constitute an enterprise, [Eurotunnel] would not have been prevented from acquiring the vessels and manning those vessels by retraining existing staff members (had that been practically possible) or using another manning company."

"109. A business, especially a business as complex as conducting passenger and freight ferry services, is one that comprises a significant number of activities which require a combination of human and physical assets. Whether a particular combination of such assets that have been brought under common control is sufficient to describe them as comprising the activities of a business, or a part of one, so as to constitute an " enterprise " is, therefore, essentially a question of fact and degree that is principally a matter for the [Commission]. 110. This point is made clear in the [Commission's] Guidance, cited at paragraph 4.5 of the [Decision], and at paragraphs 4.13 and 4.14 where the [Commission] states: "... each assessment is independent and must be considered on its own unique facts...Ultimately, the question of whether any given combination of assets constitutes an 'enterprise' is a commercial assessment, requiring the balancing of competing factors in the context of the industry concerned ..."."

"In our view, however, although AAH did not in terms acquire the depots as going concerns, in reality it obtained much of the benefit of so acquiring them and it clearly acquired more than bare assets, as described in greater detail above."

"The second overarching point...is it is not disputed by the SCOP that [Eurotunnel] now operates a freight and passenger ferry service across the short sea, using the same vessels as SeaFrance on the same route, with a large proportion of ex-SeaFrance staff, targeting amongst others ex-SeaFrance customers and which [Eurotunnel] took to be a partnership [with the SCOP]. It is not in dispute that SCOP was formed for the very purpose of continuing the SeaFrance operations in so far as possible, and that it worked towards that objective for the entirety of the seven month pause in trading which took place during mainly the low season of 2011-2012. Nor is it disputed by the SCOP in its application that the transaction could be expected to lead to a substantial lessening of competition. If we take all those points together, we say it is very difficult to see how the SCOP can sensibly claim that none of the activities of the SeaFrance business came under the control of [Eurotunnel], and that the [Commission] was not therefore empowered to act to prevent what it saw as a lessening of competition."

"...Prior to making its bid, [Eurotunnel] anticipated that [MyFerry] would need funding of €[ " ] from 2012 to [ " ] to cover negative cash flow (including €[ " ] contingency), €10 million of which would be contributed by the former employees of SeaFrance and the balance by [Eurotunnel]."

"The court should be slow effectively to validate an invalid decision by refusing relief on the ground that the decision-maker should have taken a particular view of the facts when the decision-maker has not addressed his mind to those facts. In a word the exercise of the jurisdiction should be confined to clear and obvious cases. I cannot possibly conclude that, if properly directed, the Justices would have reached this conclusion...The evidence may well have been available and may be available now, but the position is not sufficiently clear or obvious to justify a refusal of relief."

"...the net effect of the common law is that in circumstances where you have an adjudicatory process subject to natural justice principles, which includes the Competition Commission as case law has established, that the position now in law is that closed procedures are absolutely prohibited without derogation or exception being permitted, only statute can permit closed procedures, a closed procedure being one where evidence is withheld from the party being investigated, which is relevant to the adjudicatory process." (b) In the alternative, Eurotunnel made a less extreme submission (Day 1/page 45): "

"A party which brings an appeal against a final determination is entitled to raise in that appeal an allegation that OFCOM lacked jurisdiction to investigate the matter referred to it. That ground may be one of a number of grounds in which the final determination is challenged. But the appellant is not precluded from raising the point by the fact that it could have brought an appeal against the initial decision to assume jurisdiction but chose not to do so."

"...an appeal to the Tribunal must be made by sending a notice of appeal to the Registrar so that it is received within two months of the date upon which the appellant was notified of the disputed decision or the date of publication of the decision, whichever is the earlier..."

"In our judgment a decision will normally be covered by section 120(1) if it is something that could form a ground of challenge in the appeal from the ultimate decision if it were not addressed and, if necessary, remedied on an interlocutory basis. No one argued that Sports Direct could not rely on the plea of non-disclosure as a ground of review when challenging the [Commission's] decision in a final report."

"I do not accept that the court would have viewed an early challenge in that way. It is more likely that such a challenge would have been considered premature and inappropriate. At the time when NICE refused to release the fully executable version, it was uncertain what the outcome of the appraisal process would be. The Final Appraisal Determination might have proved to be acceptable to Eisai, in which case the issue concerning release of the fully executable version would have been academic. Further, and very importantly, Eisai had a right of appeal to the Appeal Panel against that determination, and the grounds on which such an appeal lay included procedural unfairness. That might well have been viewed as providing an appropriate alternative remedy, rendering a judicial review challenge inappropriate at that stage."

"128. Absent two important exceptions, we do not therefore consider that it is possible to say, as matters stand at the moment, that proportionality is an independent ground of review under English law for the purposes of section 193(7) of the 2003 Act. 129. The two exceptions are as follows: (1) The proportionality ground of review does operate where there are derogations from EU and Human Rights Act rights (e.g. R v Secretary of State for Health, ex parte Eastside Cheese [1999] 3 CMLR 123 ; Interbrew v Competition Commission [2001] EWHC 367; R (Association of British Civilian Internees - Far Eastern Region) v Secretary of State for Defence [2003] 1 QB 1397 at paragraphs [32] to [37]; R (Sinclair Collis Limited) v Secretary of State for Health [2011] EWCA Civ 437 , [2012] 2 WLR 304 ; BAA Limited v Competition Commission [2012] CAT 3 at paragraph [20(2)]. (2) Equally, the proportionality ground of review operates when "built into" the legislation pursuant to which a power is exercised ( Somerville v Scottish Ministers [2007] UKHL 44 , [2007] 1 WLR 2734 at paragraph [147])."

"The basic issue in the investigation by the Monopolies Commission into the prices charged by the appellants in the United Kingdom for Librium and Valium and their derivatives ("the reference drugs") was the extent to which, consistently with the public interest, they should be permitted to recover from the proceeds of sale of these outstandingly successful products contributions to the cost of current research undertaken by the Hoffmann-La Roche group with a view to the discovery of new products and also a high profit margin to compensate for losses or profits at a lower level upon world-wide sales by the group of current or future less successful drugs. It was for the commission to arrive at its own conclusion as to whether the way in which the appellants took account of these two factors in determining the level of the prices at which the reference drugs were supplied in the United Kingdom operated or might be expected to operate against the public interest. The commission makes its own investigation into facts. It does not adjudicate upon a lis between contending parties. The adversary procedure followed in a court of law is not appropriate to its investigations. It has a wide discretion as to how they should be conducted. Nevertheless, I would accept that it is the duty of the commissioners to observe the rules of natural justice in the course of their investigation - which means no more than that they must act fairly by giving to the person whose activities are being investigated a reasonable opportunity to put forward facts and arguments in justification of his conduct of these activities before they reach a conclusion which may affect him adversely ."

"What does fairness require in the present case? My Lords, I think it unnecessary to refer by name or to quote from, any of the often-cited authorities in which the courts have explained what is essentially an intuitive judgment. They are far too well known. From them, I derive that (1) where an Act of Parliament confers an administrative power there is a presumption that it will be exercised in a manner which is fair in all the circumstances. (2) The standards of fairness are not immutable. They may change with the passage of time, both in the general and in their application to decisions of a particular type. (3) The principles of fairness are not to be applied by rote identically in every situation. What fairness demands is dependent on the context of the decision, and this is to be taken into account in all its aspects. (4) An essential feature of the context is the statute which creates the discretion, as regards both its language and the shape of the legal and administrative system within which the decision is taken. (5) Fairness will very often require that a person who may be adversely affected by the decision will have an opportunity to make representations on his own behalf either before the decision is taken with a view to producing a favourable result; or after it is taken, with a view to procuring its modification; or both. (6) Since the person affected usually cannot make worthwhile representations without knowing what factors may weigh against his interests fairness will very often require that he is informed of the gist of the case which he has to answer."

"In the application of the concept of fair play, there must be real flexibility, so that very different situations may be met without producing procedures unsuitable to the object in hand. That need for flexibility has been emphasised in a number of authoritative passages in the judgments cited to this court... It is only too easy to frame a precise set of rules which may appear impeccable on paper and which may yet unduly hamper, lengthen and, indeed, perhaps even frustrate (see per Lord Reid in Wiseman v Borneman , at p.308) the activities of those engaged in investigating or otherwise dealing with matters that fall within their proper sphere. In each case careful regard must be had to the scope of the proceeding, the source of its jurisdiction (statutory in the present case), the way in which it normally falls to be conducted and its objective."

"...a strong presumption in favour of disclosing to a party any material relating to him or her is the point at which the judge should start. It is true, as frequently emphasised, that the requirements of natural justice are not invariable, and that circumstances must alter cases. Nevertheless the opportunity to know about and respond to adverse materials is at the heart of a fair hearing."

"18. It is a proposition too obvious to require authority that what fairness demands in a particular situation will depend on the circumstances. In relation to permanent exclusion from a grant-maintained school Parliament has made it clear - as the common law would otherwise have done, given what is at stake in such cases - that the parent knows in some adequate form what is being said against the child. Where what is being said has taken at least two different and arguably inconsistent forms, fairness will ordinarily require enough disclosure to reveal the inconsistency. 19. A second, related, principle is that it is unfair for the decision-maker to have access to damaging material to which the person at risk - here the pupil through his parent - has no access."

"It emerged in argument that it was also said to be relevant for the claimant and the Panel to have the previous statements of the witnesses available in order to ascertain whether they had implicated the claimant in their first statements or whether they had said anything about the presence or conduct or actions of the claimant in their first statements. It was never suggested that there was anything in the first statements made by the other witnesses to implicate the claimant. It formed no part of the school's case against the claimant. The Panel could not have believed that there was anything in the first statements which implicated the claimant and, had they considered the issue, they would have been bound to conclude that they did not. Had anything in the statements implicated the claimant, it could hardly have helped the claimant to have it revealed. The next question, therefore, is whether there was anything in the first statements made by the witnesses which exculpated the claimant. Relying upon the case of R v The Headteacher and Independent Appeal Panel of Dunraven School ex parte B [2000] ELR 156, Mr Underwood submitted there had been unfairness arising out of the failure to disclose the statements to enable the claimant to address the Panel by reference to any exculpation which may have been present in the statements or, as I would understand the argument, any other matter in the statements which could have been prayed in aid of the claimant's position. In my judgment, the case of Dunraven cannot assist the claimant in this respect. There was manifest unfairness in Dunraven because the Panel were aware of evidence of which the claimant and his advisers were wholly unaware, which it had heard in other cases and which implicated the claimant. The observation made in connection with inconsistent statements must be understood in the context of the facts of that case and gives rise to no general principle that there must be full disclosure of all the statements made by any witness whose evidence is considered by an independent appeal panel. Fairness, when it arises for consideration, must be considered on the facts of each case."

"Mr. Buckley argued that the correct test is Wednesbury unreasonableness, because there could, he said, be no criticism of the way in which the panel reached its decision on 25 August. It is the substance of that decision, viz., the decision not to adjourn the hearing fixed for 2 September, which is in issue. I cannot accept that argument. It confuses substance and procedure. If a tribunal adopts a procedure which is unfair, then the court may, in the exercise of its discretion, seldom withheld, quash the resulting decision by applying the rules of natural justice. The test cannot be different, just because the tribunal decides to adopt a procedure which is unfair. Of course the court will give great weight to the tribunal's own view of what is fair, and will not lightly decide that a tribunal has adopted a procedure which is unfair, especially so distinguished and experienced a tribunal as the panel. But in the last resort the court is the arbiter of what is fair. I would therefore agree with Mr. Oliver that the decision to hold the hearing on 2 September is not to be tested by whether it was one which no reasonable tribunal could have reached."

"The issue that arises on this appeal is whether the court has the power to order a "closed material procedure" as described in the preliminary issue that was tried by Silber J for the whole or part of the trial of a civil claim for damages and, if so, in what circumstances it is appropriate to exercise the power. The preliminary issue was in these terms: "

"The essential features of a common law trial 10. There are certain features of a common law trial which are fundamental to our system of justice (both criminal and civil). First, subject to certain established and limited exceptions, trials should be conducted and judgments given in public. The importance of the open justice principle has been emphasised many times: see, for example, R v Sussex Justices, Ex p McCarthy [1924] 1 KB 256 , 259, per Lord Hewart CJ, Attorney General v Leveller Magazine Ltd [1979] AC 440, 449H-450B, per Lord Diplock, and recently R (Mohamed) v Secretary of State for Foreign and Commonwealth Affairs (No 2) (Guardian News and Media Ltd intervening) [2011] QB 218 , paras 38-39, per Lord Judge CJ. 11. The open justice principle is not a mere procedural rule. It is a fundamental common law principle. In Scott v Scott [1913] AC 417 , Lord Shaw of Dunfermline (p476) criticised the decision of the lower court to hold a hearing in camera as constituting "a violation of that publicity in the administration of justice which is one of the surest guarantees of our liberties, and an attack upon the very foundations of public and private security"

"If the right to be heard is to be a real right which is worth anything, it must carry with it a right in the accused man to know the case which is made against him. He must know what evidence has been given and what statements have been made affecting him: and then he must be given a fair opportunity to correct or contradict them." 13. Another aspect of the principle of natural justice is that the parties should be given an opportunity to call their own witnesses and to cross-examine the opposing witnesses. As was said by the High Court of Australia in Lee v The Queen (1998) 195 CLR 594, at para 32: "

"As I have observed in the associated case of Tariq v Home Office [2011] UKSC 35 , the right to know and effectively challenge the opposing case has long been recognised by the common law as a fundamental feature of the judicial process. I referred in my judgment in that case to various celebrated expressions of that principle and I need not repeat them here. The right to be informed of the case made against you is not merely a feature of the adversarial system of trial, it is an elementary and essential prerequisite of fairness. Without it, as Upjohn LJ put it in In re K (Infants) [1963] Ch 381, a trial between opposing parties cannot lay claim to the marque of judicial proceedings."

"This judgment is concerned with two connected questions: (i) Is it possible in principle for the Supreme Court to adopt a closed material procedure on an appeal? If so, (ii) Is it appropriate to adopt a closed material procedure on this particular appeal? A closed material procedure involves the production of material which is so confidential and sensitive that it requires the court not only to sit in private, but to sit in a closed hearing (ie a hearing at which the court considers the material and hears submissions about it without one of the parties to the appeal seeing the material or being present), and to contemplate giving a partly closed judgment (ie a judgment part of which will not be seen by one of the parties)."

"Open justice and natural justice 2. The idea of a court hearing evidence or argument in private is contrary to the principle of open justice, which is fundamental to the dispensation of justice in a modern, democratic society. However, it has long been accepted that, in rare cases, a court has inherent power to receive evidence and argument in a hearing from which the public and the press are excluded, and that it can even give a judgment which is only available to the parties. Such a course may only be taken (i) if it is strictly necessary to have a private hearing in order to achieve justice between the parties, and, (ii) if the degree of privacy is kept to an absolute minimum: see, for instance, A v Independent News and Media Ltd [2010] 1 WLR 2262 , and JIH v News Group Newspapers Ltd [2011] EWCA Civ 42 , [2011] 1 WLR 1645 . Examples of such cases include litigation where children are involved, where threatened breaches of privacy are being alleged, and where commercially valuable secret information is in issue. 3. Even more fundamental to any justice system in a modern, democratic society is the principle of natural justice, whose most important aspect is that every party has a right to know the full case against him, and the right to test and challenge that case fully. A closed hearing is therefore even more offensive to fundamental principle than a private hearing. At least a private hearing cannot be said, of itself, to give rise to inequality or even unfairness as between the parties. But that cannot be said of an arrangement where the court can look at evidence or hear arguments on behalf of one party without the other party ("the excluded party") knowing, or being able to test, the contents of that evidence and those arguments ("the closed material"), or even being able to see all the reasons why the court reached its conclusions." 4. In Al Rawi v Security Service [2012] 1 AC 531 , Lord Dyson made it clear that, although "the open justice principle may be abrogated if justice cannot otherwise be achieved" (para 27), the common law would in no circumstances permit a closed material procedure. As he went on to say at [2012] 1 AC 531 , para 35, having explained that, in this connection, there was no difference between civil and criminal proceedings: "the right to be confronted by one's accusers is such a fundamental element of the common law right to a fair trial that the court cannot abrogate it in the exercise of its inherent power. Only Parliament can do that"."

"I also accepted that you have to modify the procedure for an inquisitorial body - say, for cross-examination. No one is suggesting that you have to have cross-examination, but the bottom line of a closed procedure is that the defending company is not bereft of information that everyone else has and which is adverse to him. The way in which you give that information to the defending company may be myriad. There may be many different ways of doing it. In an inquisitorial procedure it does not have to be tested through cross-examination, the equivalent is that the information is disclosed, perhaps into a ring, and then a right of representation is given on that. There are different ways of achieving natural justice, even under an absolutist rule. You cannot just say that an adversarial court is the same as an inquisitorial tribunal."

"(1) This section applies to specified information which relates to- (a) the affairs of an individual; (b) any business of an undertaking. (2) Such information must not be disclosed- (a) during the lifetime of the individual, or (b) while the undertaking continues in existence, unless the disclosure is permitted under this Part."

"(1) A public authority [here: the Commission] which holds information to which section 237 applies may disclose that information for the purpose of facilitating the exercise by the authority of any function it has under or by virtue of this Act or any other enactment. (2) If information is disclosed under subsection (1) so that it is not made available to the public it must not be further disclosed by a person to whom it is so disclosed other than with the agreement of the public authority for the purpose mentioned in that subsection."

"(2) The first consideration is the need to exclude from disclosure (so far as practicable) any information whose disclosure the authority thinks is contrary to the public interest. (3) The second consideration is the need to exclude from disclosure (so far as practicable) - (a) commercial information whose disclosure the authority thinks might significantly harm the legitimate business interests of the undertaking to which it relates, or (b) information relating to the private affairs of an individual whose disclosure the authority thinks might significantly harm the individual's interests. (4) The third consideration is the extent to which the disclosure of the information mentioned in subsection (3)(a) or (b) is necessary for the purpose for which the authority is permitted to make the disclosure."

" (a) the desirability of Groups taking a consistent approach when applying the principles of disclosure; (b) the desirability of avoiding unnecessary burdens on business, the need to conduct investigations effectively and efficiently, the need to reach properly reasoned decisions within statutory and administrative timescales; (c) the need to disclose information supplied to the [Commission] so that interested persons (main parties or other interested persons) are able to comment on matters affecting them and so that they can draw to the [Commission's] attention any inaccuracies, incomplete or misleading information; (d) the need to protect some information provided to it in the course of its inquiries or reviews and the importance of maintaining the [Commission's] reputation for doing so; (e) the [Commission's] analysis as it affects them; and (f) the desirability of making sufficient information available to the public so that the public may become aware of the main issues arising in inquiries and reviews and are in a more informed position to provide information to the Group. These considerations may inform the Group as to whether particular information should be disclosed, to whom and the manner of disclosure."

"The [Commission's] rules require the [Commission] to publish a number of documents, notably the provisional findings and notice of possible remedies, during an investigation. Additionally, the [Commission] has developed a practice of consulting on its provisional decision on remedies (usually through disclosure to the merger parties in merger inquiries and publication in market investigations). The disclosure of provisional findings and a provisional decision on remedies is the main means by which the [Commission] ensures due process and fulfils its duty to consult on certain decisions under section 104 of the Act. When reviewing remedies, the [Commission] similarly publishes a provisional decision either before or as part of publishing a notice of intention to vary or terminate undertakings or orders."

"Finally, whilst Lord Mustill's sixth proposition refers to a person affected by a decision being informed of the "gist" of the case which he has to answer, what constitutes the "gist" of a case is acutely context-sensitive. Indeed, "gist" is a peculiarly vague term. Competition cases are redolent with technical and complex issues, which can only be understood, and so challenged or responded to, when the detail is revealed. Whilst it is obviously, in the first instance, for the Commission to decide how much to reveal when consulting, we have little doubt disclosing the "gist" of the Commission's reasoning will often involve a high level of specificity. Indeed, this can be seen in the Commission's practice, described in paragraph 7.1 of the CC7 Guidance, of disclosing its provisional findings as part of its consultation process..."

"137. [Eurotunnel] alleges that six items of information, listed below, should have been disclosed to it by the [Commission]: a. the break-even market share figures utilised by the [Commission] in its analysis of the minimum efficient scale required for a Dover-Calais service to be viable in the short term. The [Commission] disclosed ranges to [Eurotunnel] of 10-20% (assuming 20 sailings per day) and 5-15% (assuming 16 sailings per day). b. descriptions of DFDS's statements regarding the past and expected performance of its Dover-Calais and Dover-Dunkirk routes which were redacted from paragraphs 8.50-8.51 of the version of the Provisional Findings Report provided to [Eurotunnel]. The [Commission] told [Eurotunnel] that it could not disclose these descriptions to it, because of commercial confidentiality, but that a "sense" of the factors that the [Commission] took into account could be derived from paragraphs 8.71 and 8.72 of the Provisional Findings Report (which concluded that both [Eurotunnel] and DFDS anticipated making losses on the Dover-Calais route over the next 12 months and that both companies had the financial strength to sustain losses). c. information that the [Commission] redacted from paragraph 10 of the 29 April 2013 Remedies Working Paper which indicated that (i) the [Commission] had revised its views about the timing of DFDS's exit not only on the basis of statements in DFDS's 2012 Annual Financial Report but also because of comments made by DFDS, and (ii) that press articles confirming DFDS's intention to continue on the Dover-Calais were treated as weak evidence, because DFDS would want to maintain consumer confidence for as long as possible. DFDS's comments related to the expiry date of a charter agreement for one of the vessels that it was using on the short sea, namely, October 2013. d. the short run margin assumptions utilised by the [Commission] in its IPR and GUPPI calculations. e. all "primary evidence" submitted by DFDS and relied upon by the [Commission] in arriving at its conclusions on the issues of whether and if so when DFDS was likely to exit from the Dover-Calais route. f. any other evidence, regardless of whether or not it was submitted by DFDS and/or relied upon by the [Commission], (1) "which was pertinent to" the issues of whether and if so when DFDS was likely to exit from the Dover-Calais route and (2) "which [Eurotunnel] could have made use of in its response to the Provisional Findings and the [Commission]'s competition concerns"."

"140. The gist of the [Commission]'s reasoning on the issue of whether DFDS would exit from the Dover-Calais route was disclosed to [Eurotunnel] in the [Commission]'s Provisional Findings Report as well as through its supplemental letter of 7 March 2013 and its Remedies Working Paper. From those documents [Eurotunnel] was able to discern that the [Commission]'s provisional position was that: a. the minimum efficient scale of operation on the Dover-Calais route requires 16-20 sailings per day and three ships. This minimum efficient scale, considered along with other data, implies that a market share of between 5-15% (assuming 16 sailings per day) or 10-20% (assuming 20 sailings per day) in the freight and passenger markets is required in order for an operator to break even on the Dover-Calais route. b. there was significant excess capacity on the Dover-Calais route which could only be removed through the exit of either DFDS or [MyFerry] from the route. c. DFDS had made, and expected to make, losses on the Dover-Calais route over the next 12 months. d. [Eurotunnel] had significantly stronger incentives than DFDS to operate on the Dover-Calais route and to continue to sustain losses. [Eurotunnel] also had higher exit costs. e. [Eurotunnel] was prepared to continue to sustain losses until the end of [ " ] but there was no evidence that DFDS was prepared to sustain losses for as long a period (although both [Eurotunnel] and DFDS had the financial strength to sustain losses). f. accordingly, DFDS was more likely than [Eurotunnel] to exit the Dover-Calais route. g. the [Commission]'s initial view was that DFDS's exit would occur in the short to medium term but it subsequently altered its view and concluded that DFDS would exit in the short term. 141. This disclosure was adequate to enable [Eurotunnel] to provide informed submissions to the [Commission], and it did so."

"Our preliminary view is that re-entry would be unlikely because it would be difficult in these circumstances for DFDS/LD to establish credibility with freight customers that it was committed to the route."

"We agree that you do have to look at the facts of each case. At one end of the spectrum there may be a case where numbers are involved and you need to see the relevant numbers or data in order to understand the gist of what is being put. In other cases, more like the present, you need to know what the general position is..."

"The point is rather whether, when inquiries of third persons yield significant information inconsistent with that provided by the applicant, which will substantially affect the decision of the local authority, the local authority must put that information to the applicant and give him an opportunity to comment on it. In my judgment, a local authority is under that duty."

"The [Commission] considers that the divestiture of the...[MyFerry] business or the assets employed in the business, including the vessels Berlioz , Rodin and Nord Pas-de-Calais , is likely to be effective in addressing the [substantial lessening of competition]."

"33. The [Commission] is considering the practicability and effectiveness of possible remedies which would require [Eurotunnel] to cease operating [MyFerry] ferry services on certain routes: a. Ceasing operations on the short sea. The [Commission] considers that if [MyFerry] were to cease operations on the short sea, this would address the [substantial lessening of competition] because [MyFerry] would then no longer be operating in the same market as the Eurotunnel shuttle services (see section 6 of the provisional findings (market definition)). b. Ceasing operations on the Dover-Calais route. The [Commission] considers that if [MyFerry] were to cease operations on the Dover-Calais route, the adverse effects of the [substantial lessening of competition] would be reduced because the Dover-Calais ferry route is a closer substitute for the Eurotunnel services than are other ferry routes on the short sea. 34. In considering these possible remedies, the [Commission] will take into account the possible consequences for [Eurotunnel]'s arrangements with the SCOP. 35. The [Commission] invites views on the effectiveness of these remedies."

"Finally as is made clear in the response to the additional questions, the SCOP would be very happy to meet again with the [Commission] to answer any additional questions or queries."

"We have received representations from [Eurotunnel], SCOP and DFDS on the interpretation and implications of the [French] Court's Order, and in particular the clause of the Order that declares the vessels inalienable for a period of five years, for our ability to implement structural remedies in this case. The purpose of this appendix is to summarize these representations and set out our own interpretation of the Order based on a detailed analysis of the [French] Court minutes (the minutes) and the bid document submitted by [Eurotunnel] to the [French] Court. We consider...(a) the effect/scope of the order regarding the inalienability of the Vessels and in particular whether it is incompatible with the structural remedies that we are considering..."

"The SCOP also submitted that a remedy requiring [Eurotunnel] to cease operating ferry services into Dover would be incompatible with the order because it would not protect [Eurotunnel]'s labour-related commitments and would not avoid any speculative transaction to the detriment of creditors."

"We therefore do not accept SCOP's argument that the [French] Court's acceptance of [Eurotunnel]'s Offer combined with the inalienability clause by implication prevents the implementation of any remedies that could impact on the future of the SCOP."

"49 Shortly before 10 May 2013 [Eurotunnel] informed me that they would be attending a further hearing with the [Commission]. Following the hearing, around 15 May 2013, [Eurotunnel] informed me that the [Commission] appeared to be favouring a remedy that would prohibit [MyFerry] from operating out of Dover. 50. As a result, I sought further advice from Lamy et Associés concerning the compatibility of a prohibition order with the order of the Paris Court of 11 June 2012. This advice was sent to the [Commission] on 29 May 2013. ... 52. Only upon reading the [Commission]'s final report did I become aware that the [Commission] had also received legal opinions from [Eurotunnel] and DFDS (referred to in Appendix J of the Report) at least the latter of which contradicted the advice from Lamy et Associés."

"50. The remedies working papers is an internal [Commission] paper and there is no general obligation to disclose all working papers. In merger inquiries, it is generally appropriate to disclose working papers (or extracts) to main parties (and on occasion interested third parties) by providing the document to the party concerned. In this case, given that the [Commission] regarded SCOP and [Eurotunnel] as associated persons, consideration was given to whether for procedural fairness reasons SCOP should receive the [Commission]'s remedies working paper for comment. Taking into account the various representations that the [Commission] had received from [Eurotunnel] on the matter, it was decided that, against the background of a process that had already involved two rounds of public consultation on the remedies enabling interested parties to put forward their views, the sensitivity of the information relating to [Eurotunnel] in the working paper and the potential adverse impact on [Eurotunnel]'s share price if that information were to be provided to a third party, including SCOP, there should not be disclosure to SCOP. 51. With regard to the disclosure to SCOP of the legal opinions submitted by DFDS and [Eurotunnel] to the [Commission] on the interpretation and implications of the French...Court order, the issue of the correct interpretation of the Court order had already been publicly highlighted by the [Commission] as a relevant consideration in its assessment of appropriate remedies, most notably in the [Commission]'s supplementary notice of possible remedies published on its website on 2 April 2013...This notice gave SCOP as well as other third parties an opportunity to submit their views on the terms of the Court Order. In response to the supplementary notice SCOP submitted a second legal opinion dated 29 May 2013 on the correct interpretation of the Court Order..."

"...a remedies working paper, containing a detailed assessment of the different remedies options and setting out a provisional decision on remedies, will be sent to the main parties for comment following the response hearings...Third parties may also be consulted about the proposed scope of remedies and their views on any relevant customer benefits, and the remedies working paper may in some cases be published on the [Commission]'s website if the [Commission] deems a wider consultation to be necessary. The remedies working paper is not, however, usually published."

" (3) The [Commission], as decision-maker, must take reasonable steps to acquaint itself with the relevant information to enable it to answer each statutory question posed for it (in this case, most prominently, whether it remained proportionate to require BAA to divest itself of Stansted airport notwithstanding the MCC the [Commission] had identified, consisting in the change in government policy which was likely to preclude the construction of additional runway capacity in the south east in the foreseeable future): see e.g. Secretary of State for Education and Science v Tameside Metropolitan Borough Council [1977] AC 1014 , 1065B per Lord Diplock; Barclays Bank plc v Competition Commission [2009] CAT 27 at [24]. The [Commission] "must do what is necessary to put itself into a position properly to decide the statutory questions": Tesco plc v Competition Commission [2009] CAT 6 at [139]. The extent to which it is necessary to carry out investigations to achieve this objective will require evaluative assessments to be made by the [Commission], as to which it has a wide margin of appreciation as it does in relation to other assessments to be made by it: compare, e.g., Tesco plc v Competition Commission at [138]-[139]. In the present context, we accept Mr Beard's primary submission that the standard to be applied in judging the steps taken by the [Commission] in carrying forward its investigations to put itself into a position properly to decide the statutory questions is a rationality test: see R (Khatun) v Newham London Borough Council [2004] EWCA Civ 55 ; [2005] QB 37 at [34]-[35] and the following statement by Neill LJ in R v Royal Borough of Kensington and Chelsea, ex p. Bayani (1990) 22 HLR 406, 415, quoted with approval in Khatun : "

"The reasons for a decision must be intelligible and they must be adequate. They must enable the reader to understand why the matter was decided as it was and what conclusions were reached on the "principal important controversial issues", disclosing how any issue of law or fact was resolved. Reasons can be briefly stated, the degree of particularity required depending entirely on the nature of the issues falling for decision. The reasoning must not give rise to a substantial doubt as to whether the decision-maker erred in law, for example by misunderstanding some relevant policy or some other important matter or by failing to reach a rational decision on relevant grounds. But such adverse inference will not readily be drawn. The reasons need refer only to the main issues in the dispute, not to every material consideration. They should enable disappointed developers to assess their prospects of obtaining some alternative development permission, or, as the case may be, their unsuccessful opponents to understand how the policy or approach underlying the grant of permission may impact upon future such applications. Decision letters must be read in a straightforward manner, recognising that they are addressed to parties well aware of the issues involved and the arguments advanced. A reasons challenge will only succeed if the party aggrieved can satisfy the court that he has genuinely been substantially prejudiced by the failure to provide an adequately reasoned decision."

"...we do not consider the FCA's finding on this matter ... to be relevant to our consideration, as the FCA gathered evidence and carried out its analysis well before the impact of the [MyFerry] service on DFDS's performance could be assessed. The FCA also told us that it had not carried out a detailed review of internal documents and therefore based its views on a less extensive range of evidence."

"Our view is that re-entry would be unlikely because it would be difficult in these circumstances for DFDS/LD to establish credibility with freight customers 222 that it was committed to the route."

"Based on the views of freight customers we have received."

"Several major freight customers told us that critical considerations for them in determining which ferry operator to use were the frequency and reliability of the service because it was important that lorries and drivers were not waiting in port for long periods before the next sailing. They also noted that the credibility of new operators was important because a feature of the freight market was that freight companies and ferry operators agreed annual contracts around the calendar year end, and if the freight companies used a ferry operator that withdrew from the route part way through the year, they might fail to benefit from volume discounts or rebates with one of the remaining operators."

"[Eurotunnel] told us that it would take time to build freight traffic as freight customers would delay entering into a contract with a new operator until they were convinced that the operator would provide a reliable service..."

"In light of the relevance of the Convention right in Article 1P1 in this context, section 3(1) of the HRA requires that sections 134 and 138 should be read and given effect in a way compatible with that Convention right, which means that any such remedies must satisfy proportionality principles. Also, the [Commission] accepts in its published guidance that any such remedies must satisfy proportionality principles (paragraph 4.9 of the Competition Commission Guidelines on Market Investigation References, June 2003). There was common ground as to the formulation of the proportionality test to be applied by the [Commission] in taking measures under the Act (and by the Tribunal in reviewing its actions): "... the measure: (1) must be effective to achieve the legitimate aim in question (appropriate), (2) must be no more onerous than is required to achieve that aim (necessary), (3) must be the least onerous, if there is a choice of equally effective measures, and (4) in any event must not produce adverse effects which are disproportionate to the aim pursued" ( Tesco plc v Competition Commission [2009] CAT 6 at [137], drawing on the formulation by the Court of Justice in Case C-331/88 R v Ministry of Agriculture, Fisheries and Food, ex p. Fedesa [1990] ECR I-4023 , para. 13) In addressing proportionality, the following observation of the Tribunal at para. [135] of its judgment in Tesco should particularly be borne in mind: "[C]onsideration of the proportionality of a remedy cannot be divorced from the statutory context and framework under which that remedy is being imposed. The governing legislation must be the starting point. Thus the Commission will consider the proportionality of a particular remedy as part and parcel of answering the statutory questions of whether to recommend (or itself take) a measure to remedy, mitigate or prevent the [adverse effect on competition] and its detrimental effects on customers, and if so what measure, having regard to the need to achieve as comprehensive a solution to the [adverse effect on competition] and its effects as is reasonable and practicable.""

"10.61 [Eurotunnel] told us that it considered that the divestiture of just one vessel, in particular the Nord Pas-de-Calais , would be sufficient to remedy the [substantial lessening of competition] identified by the [Commission]. The basis of [Eurotunnel]'s argument was that, as we have concluded that the minimum efficient scale of operation on the Dover-Calais route requires two fully operational vessels and access to one additional vessel for back-up (see paragraph 8.32), an operator with only two vessels could not be in a position to operate effectively and therefore would not be able to operate a business of sufficient scale to give rise to a [substantial lessening of competition]. 10.62 We do not accept [Eurotunnel]'s argument as a matter of principle. The minimum efficient scale relevant for entry or for operations to be sustainable does not set the parameters for an effective remedy. The Act requires us to seek 'as comprehensive a solution as is reasonable and practicable' to the [substantial lessening of competition] resulting from the merger under consideration, and our starting point for considering the appropriate divestiture package is to reverse the completed merger. The comprehensive nature of the remedy required means that we are not required to make fine judgments over when the [substantial lessening of competition] we have identified has been reduced to merely an 'acceptable' lessening of competition. Further, the guidelines say that the [Commission] will seek remedies that have 'a high degree of certainty of achieving their intended effect', and that third parties should not bear significant risks that remedies will not have the requisite impact on the [substantial lessening of competition] or its adverse effects. In making this assessment, the [Commission] will seek to ensure that there is no realistic prospect of the [substantial lessening of competition] remaining. 10.63 In this case, reducing the scale of operation to below its minimum efficient scale does not, of itself, preclude any problem arising. For that to be so, we would require to be satisfied on two points: (a) that continued operation at below minimum efficient scale would not give rise to any realistic prospect of the effects of the [substantial lessening of competition] we have identified continuing to be felt; and (b) that there would be no realistic prospect that the operations conducted using business assets acquired as part of the transaction could, either immediately or at some future stage, be scaled back up so as once more to give rise to the [substantial lessening of competition] we have identified. 10.64 Further, on the facts: (a) We were not satisfied that the [substantial lessening of competition] would be addressed simply if [MyFerry] ferry services continued to operate at less than their minimum efficient scale: (i) the internalization effect might be reduced but would not be eliminated as [Eurotunnel] would continue to receive the revenues from the residual [MyFerry] operation; and (ii) the competition-weakening effect might still materialize if, as a result of [MyFerry]'s continuing operation, DFDS/LD did not expect to achieve sufficient market share to become profitable and exited the Dover-Calais route. (b) We also considered that it would be easier for [MyFerry] to increase the scale of its operation above the minimum efficient scale at a future point in time if it had continued to have a presence on the Dover-Calais route and customers remained familiar with the brand than if it exited the route. Further, the more business assets that were retained, the less investment that would be required to scale up again."

"In deciding the questions mentioned in subsection (3) [i.e. consequential matters to be determined on the finding of an anti-competitive outcome] the Commission shall in particular have regard to the need to achieve as comprehensive a solution as is reasonable and practicable to the substantial lessening of competition and any adverse effects resulting from it."

" Effectiveness 1.8. The [Commission] will assess the effectiveness of remedies in addressing the [substantial lessening of competition] and resulting adverse effects before going on to consider the costs likely to be incurred by the remedies. Assessing the effectiveness of a remedy will involve several distinct dimensions: (a) Impact on [substantial lessening of competition] and resulting adverse effects. The [Commission] views competition as a dynamic process of rivalry between firms seeking to win customers' business over time. Restoring this process of rivalry through remedies that re-establish the structure of the market expected in the absence of the merger (so-called structural remedies such as divestitures) should be expected to address the adverse effects at source. Such remedies are normally preferable to measures that seek to regulate the ongoing behaviour of the relevant parties (so-called behavioural remedies such as price caps, supply commitments or restrictions on use of long term contracts) as these are unlikely to deal with an [substantial lessening of competition] and its adverse effects as comprehensively as structural remedies and may result in distortions compared with a competitive market outcome. (b) Appropriate duration and timing. Remedies need to address the [substantial lessening of competition] effectively throughout its expected duration. Remedies that act quickly in addressing competitive concerns are preferable to remedies that are expected to have an effect only in the long term or where the timing of the effect is uncertain. The effect of a remedy should also be sustained for the likely duration of the [substantial lessening of competition]. (c) Practicality. A practical remedy should be capable of effective implementation, monitoring and enforcement. To enable this to occur, the operation and implications of the remedy need to be clear to the merger parties and other affected parties. The practicality of any remedy is likely to be reduced if elaborate and intrusive monitoring and compliance programmes are required. Remedies regulating ongoing behaviour are generally subject to the disadvantage of requiring ongoing monitoring and compliance activity. (d) Acceptable risk profile. The effect of any remedy is always likely to be uncertain to some degree. In evaluating the effectiveness of remedies, the [Commission] will seek remedies that have a high degree of certainty of achieving their intended effect. Customers or suppliers of merger parties should not bear significant risks that remedies will not have the requisite impact on the [substantial lessening of competition] or its adverse effects."

"10.134 We note that the SCOP is not a subsidiary of [Eurotunnel] and was not the party that was bidding for the SeaFrance assets, and as such, it was not in a position to seek competition clearance for the acquisition. However, as set out in paragraphs 4.35 to 4.38, we found significant evidence that the SCOP acted together with [Eurotunnel] from January 2012 in preparing [Eurotunnel]'s bid and that [Eurotunnel] and the Court both considered the SCOP relationship an important factor in making [Eurotunnel]'s bid the most attractive. As a result, we have concluded that [Eurotunnel] and the SCOP are associated persons within the meaning of section 127 of the Act in relation to the acquisition of the SeaFrance assets. It was therefore possible for the SCOP to make its participation in the transaction conditional on the transaction obtaining the approval of the relevant competition authorities. We therefore considered that there was no reason to depart from our guidance and that it was not necessary for us to take account of any costs to the SCOP and its members as a result of the prohibition remedy. 10.135 Even if we were minded to regard the employment of the SCOP members as relevant for the purposes of assessing the proportionality of the prohibition remedy, we considered that it would be appropriate to consider the net potential impact on employment bearing in mind the job losses at DFDS/LD that would be likely to result if DFDS/LD exits the Dover-Calais route. Moreover, DFDS told us that if it acquired the Berlioz and the Rodin it is very possible that DFDS/LD would hire some of the SCOP employees as it would need to hire an additional crew because one of the vessels it currently operates on the Dover-Calais route would be redeployed to another route. Taking into account the potential loss of employment at DFDS/LD and the SCOP, we considered that it is not appropriate for the [Commission] to place more weight on preserving the jobs of the SCOP members than those of the employees of DFDS/LD. We considered that the sustainable and efficient level of employment will be determined best through the process of competitive rivalry. 10.136 We also considered whether our assessment of the proportionality of the prohibition remedy should take account of the SCOP's €10 million contribution to funding the [MyFerry] business including some initial losses (see paragraph 8.62) and the members' contributions to the SCOP of 2 per cent per cent of their salaries. The €10 million represented a payment of €25,000 per ex-SeaFrance employee who joined the SCOP made by the liquidator under a scheme that had been agreed with SeaFrance for preserving employment in the region. As we have concluded that [Eurotunnel] and the SCOP are associated persons, we considered that we did not need to take into account that the SCOP and its members might not be able to recover these contributions. Even if we were minded to regard these contributions as relevant costs, we considered that they were significantly outweighed by the potential cost to consumers of the [substantial lessening of competition] discussed in paragraphs 10.138 and 10.139."

"There is nothing in the governing legislation, or in the general law, which requires the Commission to follow any particular formal procedure or methodology when it comes to consider the effectiveness of a possible remedy, or its relevant costs, adverse effects and benefits. ... The Commission can tailor its investigation of any specific factor to the circumstances of the case and follow such procedures as it considers appropriate."