C-3/75

applicant, v

Commission of the European Communities, 200, rue de la Loi, Brussels, represented by D. R. Gilmour, Legal Adviser, with an address for service in Luxembourg at the office of Pierre Lamoureux, Legal Adviser to the Commission, 4 boulevard Royal,

defendant,

HAMBROS BANK LTD. AND JESSEL SECURITIES LTD ., of London, represented by Richard York, Queen's Counsel, Konrad Schiemann, Barrister, both of Gray's Inn and the Inner Temple, and Michael Lee, Solicitor, of London, with an address for service in Luxembourg at the Chambers of Messrs Walter and Loesch, 2 rue Goethe; and

British Steel Corporation, represented by Mark Waller, Barrister, of Gray's Inn, and Lawrence Collins, Solicitor, of London, with an address for service in Luxembourg at the Chambers of E. Arendt, 34 B rue Philippe II,

intervening,

By decision of 5 December 1974 (Com. potential purchaser of the shareholding 74 — 2087), the Commission authorized of JSL in JFB, namely Dunford the acquisition by the British Steel Hadfields Ltd., (hereinafter referred to as Corporation (hereinafter referred to as 'DHL'), to refrain from any action 'BSC' of a holding of shares giving it similar to that proposed by BSC until a control of Johnson & Firth Brown Ltd. decision had been reached on such (hereinafter referred to as 'JFB'). application as DHL might make in that JFB is a holding company owning the regard. entire share capital of thirteen On 5 December 1974, the Commission undertakings producing or using steel. decided to authorize, subject to certain 36 % of the capital of JFB is owned by conditions, the acquisition by BSC of a Jessel Securities Ltd. (hereinafter referred controlling shareholding in JFB. to as 'JSL'). Amongst the conditions to which the At the end of 1974, BSC offered to decision was made subject was the purchase the shareholding of JSL in JFB requirement that BSC should divest itself and expressed an intention, if that offer of all rights whether held directly or were accepted, to make a public offer for indirectly in or over the share capital of the remainder of the shares. two subsidiaries of JFB. JFB, fearing that its business and its On 10 January 1975, JFB lodged an employees would be unfavourably application for the annulment of the affected, emphasized the risks involved decision of 5 December 1974. in such an operation and asked the By a separate document it made an Commission to take interim measures of application under the second and third protection under the third subparagraph paragraphs of Article 39 of the ECSC of Article 66 (5) of the ECSC Treaty. Treaty and Article 33 of the Statute of On 21 November 1974, the Commission the Court of Justice of the ECSC for decided, by virtue of that article, to interim measures to the effect first that require BSC to refrain from any action the Judge adjudicating upon the which would result in the acquisition by application should order the suspension BSC directly or indirectly of a of the operation of the decision in controlling minority of the share capital question, secondly that he should order of JFB until a decision had been taken BSC and DHL to refrain from any action by the Commission on the substance of which would result in the acquisition the matter. directly or indirectly of any holding, or The reasons given for this decision of the any further holding, in the share capital Commission were in particular the of JFB and thirdly that he should order possibility of control of JFB by BSC, the JSL and Hambros Bank Limited not to dominant position of BSC within the deal in any way, without the prior meaning of Article 66 (7) and the consent of the Court, with the possibility that Article 66 might be shareholding in JFB. infringed by the proposed transaction. By observations lodged on 15 January On 27 November 1974, the Commission the Commission contended that the decided under the third subparagraph of application should be dismissed, at least Article 66 (5) to require another in part.

By observations lodged on 15 January Court to control the legality of the 1975 Hambros Bank Limited (hereinafter Commission's action might be lost as it referred to as 'HBL') and JSL made what would be faced by a fait accompli; amounts to an application to intervene that there could be no reasonable and claimed that the relief sought by JFB objection to the reinstatement, pending in the form of an order against them not the proceedings before the Court, of the to take any action whatsoever with same restrictions as were imposed by the regard to the capital of JFB without the Commission itself pending the outcome prior consent of the Court should be of the administrative proceedings —

the case. JFB applies for the adoption of urgent measures consisting in: Finally JFB asks that the second subparagraph of Article 84 (2) of the — the suspension of the operation of the Commission's decision; Rules of Procedure should be applied in view of the exceptional urgency of the — an order requiring BSC and DHL to matter. refrain from any action which would The Commission, after recalling the result in the acquisition directly or previous history of the case, emphasizes indirectly of any holding or any the financial difficulties of JSL which, further holding in the share capital of whilst owning 35 % of the share capital

ORDER OF 16. 1.1975 — CASE 3/75 R

that moreover a change in the commercial status quo does not that, secondly, the Court could order necessarily constitute a source of that Article 2 (1) of the decision ('At the irreparable damage in a situation where latest within one year of the entry into force of this authorization the British Community control is applicable to any take-over or merger the realization of Steel Corporation shall, whether by sale which, as envisaged by the Treaty, or otherwise, divest itself of all rights, necessarily involves such changes; whether held directly or indirectly, in or

not be found. It submits that, in spite of the shares in view of its difficult the fact that the Court cannot substitute financial situation;

that any attempt to sell through the essential, in DHL's submission, that JSL market would substantially depress the and HBL should be required not to deal market price, from which it follows that in any way with the relevant a successful realization can only be shareholding in JFB, so as to ensure that achieved by a sale to a single purchaser the position of one potential purchaser or to a consortium; vis-à-vis others should not be prejudiced. that, under the terms of the various BSC applies to intervene in the charges, all the banks are now entitled to proceedings, giving as the reason for its sell JSL's shares in JFB; that HBL should interest the fact that the decision in not be placed at a disadvantage as question refers to it. It submits that that compared with other banks nor should decision is perfectly lawful; any order of the Court preclude sales to that JFB still has to demonstrate that it strangers with no interest that could has a prima facie case to bring the bring the transaction within Article 66. substantive proceedings and a prima HBL maintains that in law the relief facie case that those proceedings will sought against JSL and HBL is in any succeed; event unnecessary, there being no that JFB hardly appears to have been evidence that the grant of that relief is acting under the spur of urgency as it necessary or desirable to achieve the has waited more than four weeks before objectives of the Community or of lodging its application for the adoption Article 66 in particular; of interim measures; that, in any event, no restriction should that JFB has not shown that any damage be imposed on JSL and HBL if BSC is which it might suffer is irreversible, in left free to act, and finally that no that, if BSC purchased the shares, it interim relief should be granted without could ultimately sell them again. BSC an undertaking by JFB and BSC that, states that it would in fact be prepared should JFB ultimately fail in their to undertake not to dispose of the two substantive application, they will subsidiaries pending the hearing of the indemnify JSL and HBL if necessary. substantive application. HBL accordingly contends that the third BSC further points out that JFB is claim in the application should be applying for an interim measure against dismissed and that JFB should be a person, BSC, against whom no relief is ordered to pay the costs. sought in the substantive proceedings. In its telex message DHL refers to the BSC draws attention to the fact that restriction on competition to which the British legislation in any event prevents taking of control of JFB by BSC would its acting without the approval of the lead. DHL points out that it has not national authorities and that that

3 To grant the application would result in making the creditors of JSL, who are entitled to a considerable quantity of shares in JFB, suffer damage at least as serious and as irreparable as that which the latter founds upon.

4 Those creditors may indeed have the gratest interest in selling as soon as possible the shares which constitute their security and this they would be prevented from doing if the operation of the Commission's decision, which is, after all, provisionally enforceable having regard to Article 39 of the ESCS Treaty, were to be suspended.

5 The application for suspension of operation of that decision should accordingly be refused.

6 It remains none the less necessary to limit the damage which JFB might suffer from the provisional operation of the decision of the Commission if, by reason of the assumption of control by BSC, the substantive application were to escape consideration by the Court or if important decisions as to the future of the undertaking were to result from that assumption of control.

7 It is therefore appropriate to make the operation of the Commision's decision subject to two conditions designed to keep the position as stable as possible in the interests of all parties until judgment on the substantive application — that is to say first the non-exercise by BSC of the voting rights attached to any

JOHNSON & FIRTH BROWN v COMMISSION

1. The application for suspension of operation of the decision of the Commission of 5 December 1974 (Com. 74 — 2087) is refused;

2. However, the operation of the Commission's decision shall be subject, until judgment on the substantive application, to two conditions:

— the non-exercise by BSC of the voting rights attached to any shares which it may acquire in JFB;

— the suspension of the operation of Article 2 (1) of the decision;

3. The costs are reserved.

So done and ordered at Luxembourg on 16 January 1975.