This week, GN Store Nord A/S ("GN") revealed that it
intends to bring a claim for compensation of the losses it suffered
as a result of the German Federal Cartel Office's
("BKartA") prohibition of the sale of its hearing aid
business GN ReSound to Sonova Holding AG (then Phonak Holding AG)
("Sonova") in 2007 by the BKartA. In GN's Q2
interim report, which was published this week, GN stated that it
"will file a claim against the BKartA", without revealing
any further details.
The claim arises from proceedings dating back to 2 October 2006,
when the original agreement was signed between GN and Sonova to
sell GN ReSound to Sonova. Following an in-depth Phase II
investigation by the BKartA, the intended transaction was
prohibited in April 2007. The BKartA reasoned that the three
largest hearing-aid manufacturers in Germany, Sonova, Siemens and
Otikon, together formed an oligopoly, which had a position of
collective dominance on the market for hearing-aids in Germany,
with a market share of approximately 80% of the market. Their
closest competitors, GN ReSound and Widex together only held under
10% of the market. This prohibition decision led to the parties
abandoning the transaction.
GN, together with Sonova, appealed against the BKartA decision
at the Court of Appeal in Düsseldorf (Oberlandesgericht),
which confirmed the BKartA's prohibition of the transaction in
late 2008. In a further appeal to the Federal Supreme Court
(Bundesgerichtshof), Germany's highest court overturned the
decision of the BKartA in April 2010, ruling that the BKartA's
prohibition of the transaction was not justified.
Following an earlier press statement in May 2010 in which GN
stated it was contemplating its legal options, the announcement
this week shows that GN is planning to file a complaint against the
BKartA for compensation of its losses, which the company alleges
are approx. € 1 billion (up to July 2010). Sonova
has said that it has no intention of pursuing a claim for
The BKartA has stated that it considers the damages claimed by
GN as "unjustified". Under German law, GN will have
to base its claim on a "breach of duty of office", which
requires GN to prove that the BKartA has acted incorrectly, that is
"intentionally or negligently" in prohibiting the
intended transaction. As the Court of Appeal upheld the
BKartA's initial assessment of the transaction, this could
prove hard to establish. The bar is still set very high for damages
claims and, since the introduction of the merger regime in Germany
in 1973, no similar action for damages has succeeded. The Federal
Republic of Germany would be the likely defendant in the case.
On a European level, the General Court (previously the Court of
First Instance) awarded damages, for the first time in 2007, to
Schneider Electric, a French company who had intended to merge with
its competitor Legrand in 2001, a merger that the European
Commission had prohibited. However, in Europe as in Germany,
even if allowed in principle, the evidential threshold for such
damages claims is very high
To view Community Week, Issue 484; 13th August 2010
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