EU Merger Boss Fights to Restore Credibility

BRUSSELS, Belguim -- EU merger chief Mario Monti vowed Friday to restore his credibility after a top European court threw out a ban on Tetra Laval's bid for French bottle maker Sidel in a second crushing reversal this week.

Tetra Laval, the privately-owned Swedish group which is the world's largest packaging firm, quickly said it hoped the European Commission would now approve the 1.7 billion euro ($1.66 billion) bid so his firm could take control of Sidel.

Monti said the rulings were a setback, but insisted he was already working on reforms to restore the commission's image at a time when appeals in key cases, such as its ban on General Electric's bid for Honeywell and its probe of Microsoft, are still pending.

"Our record in the merger area is less glorious after these three court rulings ... this is an important setback for us," he told a news conference. "We will recover your trust and of the economic and legal communities, just rest assured of that."

The ruling by the European Court of First Instance sent shares in Sidel leaping 12.8 percent at 40.04 euros.

Tetra said it was determined to get the bid back on track. Victory would mark the first time a company has completed a deal over the objections of the commission by winning in court.

"We are very happy that the court has listened to us and has upheld our arguments," Tetra Laval's chairman Goran Grosskopf told a telephone conference for the media.

"Now we need to go back to the commission and reconfirm our intention to acquire Sidel. We hope for a speedy process this time," he said. "We believe that we can have a positive decision early next year."

The commission lost a case Tuesday when the court overturned its ban on French giant Schneider Electric SA buying rival Legrand SA. This came after a June ruling that the EU executive was wrong to stop British travel group Airtours taking over rival First Choice.

The court rejected one relatively minor Tetra argument, but the commission lost on many more key points, including the anticompetitive effects of a merger and whether the combined group would have future market dominance.

It said the commission's economic analysis was "based on insufficient evidence and some errors of assessment."

The third loss of a case this year raised concerns that Monti's authority had been crippled and spurred renewed demands for an independent body to review the work of Monti's staff before any final decision is made to reject a merger.

Monti said broad reforms were already being worked on. He dismissed any idea he would step down after the defeats.

"I have been devoting all my energies in the last three years to this task and I will continue to do so, to steer the competition ship of the commission, a ship which has served Europe well over the years. It is important to do so precisely when navigation becomes more rough." He rejected scrapping the EU's model of merger control in favor of that of the United States.

"It would be damaging, in the light of a momentary setback, to throw away the EU model. ... We have to work to improve it."