Monti pledges to speed reform of M&A rules

Mario Monti, the European Competition Commissioner, promised speedy reforms of the rules governing mergers and acquisitions yesterday, in an effort to quell growing criticism of his decisions.

The European Court of Justice (ECJ) is expected tomorrow to overturn Mr Monti's 1999 decree that blocked an attempt by Airtours to create Britain's biggest holiday company by acquiring its rival First Choice.

And the commissioner has faced criticism from lawyers and multinational corporations who accuse him of acting as judge, jury and executioner on cross-border deals.

Mr Monti told a competition conference in Brussels that he would draw up proposals for change and new, transparent guidelines by the end of this year. He also promised a code of practice dictating how the European Commission should conduct merger investigations.

"It is an ambitious programme with a strict timetable, but it is one I am very keen to stick to, not just because of the inherent importance of tackling many of the reform issues promptly, but also because of the prospect of the [European Union's] pending enlargement."

Competition experts expect the ECJ to declare that the European Commission defined the travel industry too narrowly when it ruled that a combined Airtours/First Choice would dominate the holiday market. The ruling, which follows an appeal by Airtours, now renamed MyTravel, will throw future competition decisions by Brussels wide open.

It will come as a blow to Mr Monti, and could open the door for further appeals from companies such as WorldCom and Sprint, and GE and Honeywell, which saw merger hopes dashed by Brussels. A former lawyer at the Commission said: "The [Commission] took a very contentious decision. It was Mr Monti's first big competition decision and he defined the market too narrowly."

Airtours launched its £850m hostile bid to acquire First Choice in early 1999. Most industry observers expected the deal to be approved after the then UK competition minister, Kim Howells, gave the combined group the green light. Few expected Brussels to intervene.

Mr Monti's block was based on the idea ­ termed collective dominance ­ that if the British market for tour operators was reduced from four players to three, the remaining operators would gang up on the consumer to collude on issues such as pricing and capacity.

Mr Monti said yesterday that he had "an open mind" on whether the wording of rules on dominance should be changed.