Thomas Cook loses £518m EU compensation claim

10th Sep 2008

Thomas Cook has lost its legal battle to claim £518m in compensation from the European Commission over the competition regulators erroneously blocking its takeover of First Choice.
The European Court of First Instance (CFI) had previously agreed with MyTravel, which is owned by Thomas Cook, that the EC was wrong to ban its 1999 takeover of First Choice. However the CFI has ruled yesterday that this error in itself was not sufficient to make the EC liable for compensation.It deemed that the EC was only liable to pay compensation in cases where it “manifestly and gravely infringed” EU law. However it ruled that this was not the case with MyTravel and First Choice.

MyTravel, which merged with Thomas Cook of Germany last year, had accused the EC of “disregarding the limits of its power” when it blocked the £850 million takeover and demanded compensation for lost synergies and the costs of aborting the deal.

The judgment was keenly awaited by competition experts, who said the case raised far more significant issues than one disgruntled company’s bid for compensation.
Marc Israel, a partner at law firm Macfarlanes, said the EC would be “hugely relieved” at today’s judgment.

Thomas Cook Group, which has two months to appeal the ruling, said: “The company is disappointed with this decision, which insulates the European Commission from the consequences of its wrongful conduct.”


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