On February 26 2015 the Supreme Administrative Court finally issued its judgment in Severní energetická. The Supreme Administrative Court abolished the Brno Regional Court's controversial judgment establishing the rights of third parties (ie, mostly competitors) to appeal a merger approval decision by the Competition Authority. The Supreme Administrative Court held that since third parties are not parties to administrative proceedings, they are not entitled to challenge merger approval decisions.

At the beginning of the court proceedings, Severní energetická submitted an action against the decision of the authority's chairman, denying it the right to appeal against the merger approval decision based on it not being a party to the merger approval proceedings. Severní energetická argued that the authority had ignored its objections submitted during the proceedings and that the merger approval decision regarding Libute Investment's acquisition was incorrect.

Surprisingly, the Brno Regional Court stated that Severní energetická was entitled to appeal the parts of the merger approval decision dealing with its objections. The court held that since third parties have a right to submit objections during merger clearance proceedings, they must also have a right to have the authority's decision on the objections reviewed. The judgment caused many practical problems and delayed the merger clearance proceedings.

The authority, as well as the parties to the merger clearance proceedings, challenged the Brno Regional Court's decision before the Supreme Administrative Court.

Meanwhile, the authority tried to deal with the unclear situation based on the Brno Regional Court judgment. In cases where the authority has received an objection from a third party during merger clearance proceedings, it has published a press release on its website on the day of the decision and set a 15-day period from this date in which third parties have a right to file an appeal. If an appeal was submitted, the authority refused to mark the legal force on the merger approval decision until the chairman decided on the appeal.

After almost two years, the Supreme Administrative Court annulled the controversial Brno Regional Court judgment, finding that third parties which are not the parties to administrative proceedings have no right to appeal a merger approval decision. The Supreme Administrative Court pointed out both legal and practical issues.

According to the Supreme Administrative Court, the right of third parties to file objections cannot be understood as their subjective right. It is only the authority's manner of collecting information that is important for an approval decision.

However, the Supreme Administrative Court left open the possibility for the third parties to challenge the merger approval decision by other means. Besides abolishing the Brno Regional Court judgment and returning the case, the Supreme Administrative Court also instructed the Brno Regional Court to reconsider Severní energetická and third parties' general right to challenge merger approval decisions in cases where they feel affected by an acquisition.

A new Brno Regional Court judgment is awaited.

For further information on this topic please contact Jitka Linhartová at Schoenherr by telephone (+420 225 996 500) or email (j.linhartova@schoenherr.eu). The Schoenherr website can be accessed at www.schoenherr.eu.

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