Axel Springer Wins German Federal Court of Justice Appeal

September 25, 2007

Cleary Gottlieb represented Axel Springer AG in its successful challenge in the German Federal Court of Justice, Germany’s highest appellate court for civil and criminal cases, of an earlier decision of the Düsseldorf Court of Appeal. On September 29, 2006, the Court of Appeal rejected as inadmissible an appeal brought by Axel Springer against a decision of the Federal Cartel Office prohibiting Axel Springer’s planned merger with ProSiebenSat.1, finding that the appeal had become moot following the parties’ decision to abandon the transaction. Nonetheless, the Court of Appeal allowed a further appeal to the Federal Court of Justice on points of law.

On September 25, 2007, following a two-hour hearing, the Federal Court of Justice granted Axel Springer’s appeal, annulled the Court of Appeal’s decision and remanded the case. Axel Springer argued that its appeal was admissible because the FCO’s prohibition decision would stand in the way of any fresh attempt to acquire ProSiebenSat.1 and preclude Axel Springer from re-negotiating any such deal, arguments the Federal Court of Justice followed. The previous case law left insufficient room for judicial review, and the European Courts allow appeals in comparable cases.

The Court of Appeal will now review the matter on the merits to decide whether the FCO’s prohibition was justified, in particular whether the concentration resulting from the proposed merger would have reinforced existing dominant positions on the market for TV advertising and on newspaper markets. Axel Springer is convinced that the FCO erred in prohibiting the merger, which involved no horizontal or vertical issues, notably because it made an insufficient analysis of conglomerate effects.