Order — ECLI:EU:C:2010:280
Date: 2010-05-20
Language of the case: English
Court formation: Second Chamber
Subject matter: Competition;Agreements, decisions and concerted practices;Dominant position
Procedure: Action for annulment;Appeal;Application as to costs
Origin: Netherlands

summary complaints relating to errors of various kinds committed by the Court of First Instance in carrying out its own assessments. 92. In its first objection the Commission complains that the Court of First Instance overstepped the bounds of judicial review by rejecting its conclusion as to the foreseeable growth in PET packaging for long-life (UHT) milk of up to .1% of that market segment. In particular, according to the Commission, the Court of First Instance unlawfully and without reasoning overturned the conclusion reached by the institution, merely finding that ‘the use of PET will not actually increase for UHT milk and, consequently, for approximately half of the LDP market’. (81) 93. The objection seems to me to hit the mark. Indeed, I agree with the Commission that with that terse statement (especially if we look at the text of the judgment in the language of the case) the Court of First Instance incorrectly substituted its own point of view for the Commission’s, formulating its own autonomous prediction of future developments in the market. 94. Contrary to what Tetra maintains, the Court of First Instance’s laconic assertion contains no criticism of the logic, coherence or appropriateness of the reasoning developed by the Commission on the basis of the elements available. Instead, that assertion clearly shows that the Court of First Instance took those elements into direct consideration in order to draw from it its own distinct conclusion that use of PET would not increase for the packaging of UHT milk or, consequently, for approximately half the LDP market. By so doing, that court therefore plainly overstepped the bounds of its judicial review (see paragraphs 82 to 89 above). 95. The Commission’s objections relating to the Court of First Instance’s opinion concerning the estimated increased use of PET for packaging fresh milk (increase put at 10-15%) and flavoured milk and milk-based drinks (increase put at up to 25%) seem to me to be equally well founded. 96. In this respect I agree first of all with the Commission that the conclusion that ‘the growth estimates adopted by the Commission … are not really very convincing’ (82) is invalidated by an incomplete or inaccurate assessment of the relevant factors and is not, in any case, supported by adequate reasoning. 97. As, in fact, the Commission has correctly observed, in stating its reasons for that conclusion: (i) the Court of First Instance did not even mention the extensive market investigation carried out by the Commission, which showed that market participants in the sector expected levels of growth even higher than those finally accepted by the Commission. (83) It is, by the way, clear that, contrary to what Tetra maintains, the mere fact that the Commission opted for more prudent predictions can in no way justify the failure to assess one of the factors which the Commission had taken into account in arriving at its own conclusion; (ii) the Court of First Instance appears to have distorted the sense of one of the studies considered in the decision (and placed in the file at its request), (84) in which, examining the foreseeable growth of PET, it stated that: ‘for aseptic packaging, the Warrick report predicts only minimal growth, of 1%, for flavoured milk, and a slight decline for other milk-based drinks’. (85) It would indeed seem from that passage that the predictions of the Warrick report referred to the increase in PET for packaging flavoured milk and other milk-based drinks, whereas reading of the document clearly shows (and this is, moreover, not denied by Tetra) that those predictions referred only to the volume of the products concerned to be packaged, irrespective of the material used; (iii) the Court of First Instance did not make any serious criticisms of the Commission’s reasoning. but did no more than remark that: ‘the PCI report, the only independent study to concentrate on the LDP market, predicts growth as a result of which PET use will be 9.2% of the fresh non-flavoured market in 2005’ (and that is a proportion not far distant from that predicted by the Commission); ‘for aseptic packaging, the Warrick report predicts only minimal growth, of 1%, for flavoured milk, and a slight decline for other milk-based drinks’ (which as we have seen is misleading, for those predictions did not relate to increased use of PET), ‘whilst the Pictet report does not give any specific forecasts for LDPs’; and ‘the PCI report provides the only proof which might possibly support the forecast of a 25% market share for PET in other milk-based drinks’ (a proportion corresponding exactly to that predicted by the Commission). (86) As may easily be established, those summary observations concerning ‘independent studies’ (87) do not satisfactorily explain why, in the Court of First Instance’s opinion, the Commission’s estimates were not ‘very convincing’, especially when it is borne in mind that those estimates – based on a series of factors – were already more cautious than those appearing in the market investigation carried out by the Commission. 98. The Court of First Instance’s statement that ‘generally, the contested decision does not explain adequately how PET could displace HDPE as the main material competing with carton by 2005, especially in the important fresh-milk packaging segment’ also appears inadequately reasoned to me. (88) 99. As rightly pointed out by the Commission, the Court of First Instance as a matter of fact came to that conclusion without in any way criticising, or indeed even mentioning, the assessments made by that institution – on the basis of the findings of its market investigation and of information provided in independent studies – concerning the competitive advantages of PET in comparison with HDPE. (89) 100. That the Court of First Instance referred particularly to fresh-milk packaging raises the doubt that it did not take any account at all of those assessments, seeing that the contested decision reveals that that product was one of those for which PET offered major competitive advantages compared to HDPE. In the decision it is in fact clearly stated that ‘[t]he Commission’s market investigation confirmed PCI’s suggestion that PET has marketing advantages over HDPE, in particular, where visibility can be achieved’, (90) and especially for those products, such as fresh milk, which do not need a light barrier. (91) As observed by the Commission, the failure to take those assessments into consideration seems furthermore to be confirmed by the part of the judgment concerning the possible effects of leveraging, in which, wrongly substituting its own assessments for those of the Commission, the Court of First Instance tersely affirmed that ‘fresh milk is not a product for which the marketing advantages offered by PET have any particular importance’. (92) 101. I would add, moreover, that the Court of First Instance’s conclusion as to the reasons given for the decision finds no valid justification in the subsequent statement that ‘the Commission does not dispute either the overall figure of 17.3% for the use of HDPE for LDPs given by Canadean for 2000 … or the forecast [again Canadean’s] that that figure could reach 19.5% by 2005’. (93) 102. Indeed I agree with the Commission that the Court of First Instance made reference to the Canadean study (commissioned by Tetra) without considering that the Commission had explained that it did not regard the predictions made in that study as generally reliable. The Court of First Instance ought instead to have taken account of the Commission’s criticisms that, on the one hand, that study had wrongly ‘used a model which considers previous growth as an indicator of future growth and ignores the future technological developments particular to barrier technology’ and that, on the other, given ‘that the decision to package products in PET is said to be customer-driven, a study [such as Canadean’s] excluding customer views is not particularly robust’. (94) 103. Given the foregoing, I consider that the Commission’s various charges in respect of foreseeable growth in the use of PET for packaging liquid dairy products must be upheld. 104. I believe, however, that the charge relating to the assessment of the foreseeable growth in the use of PET for packaging juices cannot be upheld. 105. In that objection, the Commission complains in particular that the Court of First Instance stated that, although ‘the Commission itself acknowledged that the growth in question would be due mainly to a switch from glass to PET, it did not conduct any analysis of the glass market’. (95) By so doing, according to the Commission, the Court of First Instance ignored important evidence as to the decline of glass for non-premium products, which the Commission took as a basis in the contested decision, later examining them in more detail in its defence. According to the Commission, to proceed in such a way confirms that the Court of First Instance erred in regarding as unimportant factors not mentioned in the contested decision, but referred to in the pleading in support of the necessarily more general considerations contained in the decision. 106. In that connection I must, nevertheless, agree with Tetra that the Court of First Instance did not make any mistake in asserting that the Commission had made no analysis of the market for glass, seeing that, apart from some vague and fleeting references, there is no trace of any such analysis in the decision. Contrary, therefore, to what the Commission maintains, that gap in the investigation could certainly not be filled by subsequent statements made in the pleadings, since the evidence and the assessments on which the decision was based had to be clearly indicated in that act and could not be supplied only later in connection with proceedings before the Court of First Instance. (96) 107. Finally, the Commission’s last objection seems to me to be well founded, in which it complains that the Court of First Instance took into account that ‘the cost of PET is higher than that of carton’ in assessing whether it was likely that Tetra’s customers would switch from carton to PET as a result of leveraging. (97) 108. In fact, I agree with the Commission that no clear conclusion was reached in the contested decision as to the vexed question of the difference in cost between PET and carton and that, as a result, it was not open to the Court of First Instance to enter into the merits of that complex economic assessment, by deciding for itself that PET cost more than carton. 109. On this point, in contrast to what Tetra submits and is affirmed in a later passage of the judgment under appeal, (98) I do not think that the Commission by implication accepted the finding of the Warrick report that, with regard to aseptic packaging, PET is 30 to 40% more expensive than carton. After recalling the conclusions at which that study arrived, the Commission as a matter of fact stated that its ‘market investigation did not produce a clear picture of the relative costs of PET- and carton-packaging systems’, since the persons questioned had given contradictory answers. (99) It seems plain enough to me that even if that last assertion does not in some way cast doubt on the findings of the Warrick study, it certainly does not make it possible to hold that the Commission by implication confirmed them. 110. Nor, moreover, do I think it possible to discern, as Tetra would have it, confirmation of the greater cost of PET in the Commission’s statement that some customers ‘indicated that they would consider a switch from carton to PET only if carton prices rose by a significant amount of 20% or more’. (100) That assertion does no more, in fact, than report the point of view of certain customers questioned by the Commission in the ambit of its market investigation: an investigation which, as we have seen, ‘did not produce a clear picture of the relative costs of PET- and carton-packaging systems’. 111. As matters stand, it seems clear to me that, while the Court of First Instance could possibly have found that the Commission’s investigation was incomplete, or have criticised the logic, consistency and appropriateness of its reasoning, it definitely could not carry out its own assessment of the information in that institution’s possession in order to conclude that PET was ‘more expensive than carton’. c) Conclusions on the first ground of appeal 112. In the light of all the considerations set out above, I believe that the first ground of appeal is in part well founded and that, in particular, the Commission’s objections concerning foreseeable growth in the use of PET for packaging of liquid dairy products and the difference in cost between PET and carton must be upheld. Concerning the ground of appeal relating to the requirement that the unlawful nature of certain behaviour should be taken into consideration and that purely behavioural commitments should be taken into account 113. By its second ground of appeal, the Commission criticises certain general assessments made by the Court of First Instance in respect of ‘leveraging’ (see paragraphs 36 to 39 above), charging the Court with having asked it to take into consideration as a possible deterrent to such a practice: (i) the unlawfulness of given conduct inherent in that practice which would have led to abuse of a dominant position; (101) .(ii) the purely behavioural commitments offered by Tetra, which consist of nothing more than a promise not to act abusively. 114. Referring to the first aspect, the Commission recalls that Regulation 4064/89 introduced prior control of concentrations in order to avoid structural changes to the market that might involve abusive conduct. Where an undertaking dominant on one market acquires an undertaking operating on another neighbouring market, the concentration must be prohibited if the entity created by the merger would have the means and incentives to engage in abuses permitting it to oust its competitors from that other market. (102) In the Commission’s view, therefore, by asking it to assess also whether economic incentives to abuse the dominant position held by the merged entity could not be counterbalanced by the disincentives of the unlawful nature of abuse, the Court of First Instance has misinterpreted Article 2 of the Regulation. 115. Furthermore, according to the Commission, yet another misinterpretation of that provision led the Court of First Instance to assert that ‘it is also appropriate to distinguish, on the one hand, between a situation where a merger having conglomerate effects immediately changes the conditions of competition on the second market and results in the creation or strengthening of a dominant position on that market due to the dominant position already held on the first market and, on the other hand, a situation where the creation or strengthening of a dominant position on the second market does not immediately result from the merger, but will occur, in those circumstances, only after a certain time and will result from conduct engaged in by the merged entity on the first market where it already holds a dominant position. In this latter case, it is not the structure resulting from the merger transaction itself which creates or strengthens a dominant position within the meaning of Article 2(3) of the Regulation, but rather the future conduct in question’. (103) In the Commission’s opinion, indeed, in that latter case too, contrary to what the Court of First Instance maintains, it is the merger that creates or strengthens the dominant position since it has the direct immediate effect of bringing about the conditions in which abuse is not only possible but also economically rational. 116. Lastly, the Commission maintains that there are insuperable legal and practical obstacles to the engaging in an analysis of the possible deterrent effect of the unlawfulness of certain conduct. It would as a matter of fact be impossible to assess with a sufficient degree of certainty the inclination of particular undertakings to engage in unlawful conduct and the effect that the danger of being discovered and penalised might have on their actions. 117. With regard next to the second of those aspects, concerning the behavioural commitments offered by Tetra (see paragraph 113 above), the Commission remarks that, given the purpose of prior control under Regulation 4064/89, commitments not to abuse a dominant position created or strengthened by a merger are unacceptable, because they do not make it possible to put right the structural problems which the Regulation seeks to avoid. In its view, by requiring it to take into consideration such commitments, the Court of First Instance has therefore infringed the provisions of the Regulation, in particular Articles 2 and 8(2). In any case, according to the Commission, the Court of First Instance incorrectly stated that that institution had not taken account of the commitments offered by Tetra, since it is clear from the decision that those commitments had been analysed and rejected not only for reasons of principle, but also because they were ‘extremely difficult, if not impossible, to monitor’. (104) 118. I do not find those arguments of the Commission persuasive. 119. The criticisms made of the Court of First Instance would in fact be justified only if the decision revealed that, as the Commission maintained in its reply and at the hearing, the merger would lead to structural changes in the market which would immediately and automatically create a second dominant position which the new entity could abuse by foreseeable actions on its part. 120. However, as Tetra rightly emphasises, the decision does not say that the merged entity would immediately and automatically acquire a dominant position on the PET packaging equipment markets, but predicts that that would happen only subsequently, by means of abuse of the dominant position already held by Tetra in carton. 121. That is clearly shown in, for example, the passage in the decision in which we read that the ‘bringing together of Tetra’s dominant position in carton packaging and Sidel’s leading position in PET packaging equipment … would create a market structure which would enable the merged entity to leverage its dominant position in aseptic carton packaging to acquire a dominant position in the PET packaging equipment market’. (105) From that passage it is to be deduced, in fact, that the merger would immediately create a market structure giving the merged entity the means and incentives to engage in certain leveraging practices and subsequently to acquire, by means of those practices, a dominant position in the PET packaging equipment markets. 122. As matters stand, the Court of First Instance rightly declared that the Commission ought to have taken into consideration the various factors that might have influenced the likelihood of the merged entity’s behaving in such a way as to enable it to acquire the predicted dominant position on the PET packaging equipment plant. 123. In other words, as stressed by Tetra, the Court of First Instance correctly found that, just as the Commission had assessed the economic incentives for engaging in such conduct, so it ought to have taken into consideration the possible disincentive in that respect of the unlawful nature of the conduct in question (which would have involved abuse of Tetra’s pre-existing dominant position in carton) or of the commitments into which that company had offered to enter. 124. Contrary to what the Commission maintains, by asking it to take into consideration the unlawful nature of certain conduct brought about by leveraging and the relevant commitments offered by Tetra, the Court of First Instance did not require the Commission to assess the likelihood of the merged entity’s abusing the dominant position created by the merger. It simply requested that the Commission should assess the likelihood that, by exploiting Tetra’s pre-existing dominant position in carton, the new entity might acquire a dominant position in the PET-packaging-equipment markets: that is to say, to assess whether the merger would lead to the creation of a dominant position for the purposes of Article 2 of Regulation 4064/89. 125. Nor, moreover, do I believe that there were insurmountable legal and practical obstacles to carrying out the assessment requested by the Court of First Instance. The latter did not in fact expect the Commission to establish with certainty whether the unlawfulness of the conduct in question or the commitments proposed by Tetra would deter that undertaking from engaging in such conduct, nor on the other hand did it expect the Commission to demonstrate that the economic incentives identified in the decision would definitely drive Tetra to engage in that conduct. The Court of First Instance simply asked the Commission to take account of those factors in the ambit of its predictions, assessing, for example, whether – in view of the normal business practices in that sector – the Commission, the competent national authorities or injured competitors could easily learn of any unlawful conduct. 126. Lastly, the Commission’s argument that the Court of First Instance wrongly ignored its analysis of the commitments as to conduct offered by Tetra does not seem to me to be persuasive. As that company rightly remarks, the Commission did no more than make the brief and unsupported assertion that the commitments in question were ‘extremely difficult, if not impossible, to monitor’, but made no adequate assessment of how they might possibly impinge on the merged entity’s future conduct or, in particular, of whether they might constitute a significant disincentive to engaging the predicted leveraging practices. 127. Given the foregoing, it must be concluded that the Commission’s allegations have not been justified. I repeat that it would have been otherwise had it been apparent from the decision that the merger would have brought about structural changes in the market liable to lead to the immediate and automatic creation of a dominant position on the PET markets. That is what the Commission maintained in its reply and at the hearing but, as we have seen, it is not what appears in the contested decision. 128. Having regard to the foregoing considerations, I therefore consider that the second ground of appeal must be rejected. The ground of appeal relating to the definition of distinct markets for SBM machines depending on their end use 129. By its third ground of appeal the Commission criticises the Court of First Instance for not having upheld the Commission’s assessment relating to the definition of distinct markets for SBM machines (high- and low-capacity) used for the packaging of ‘sensitive’ products. In that regard, the Commission formulates various grounds of complaint, distinguishing in particular between those relating to the characteristics of the supply of, and those relating to the characteristics of the demand for, those machines. 130. Beginning with supply-side characteristics, the Commission challenges the conclusion that ‘the contested decision fails to provide sufficiently convincing evidence to demonstrate the allegedly specific characteristics of SBM machines used for packaging sensitive products’. (106) In its opinion, to put it extremely briefly, the Court of First Instance arrived at that conclusion without taking account of the information provided in the decision and defence as to the adaptation of SBM machines to suit customers’ particular requirements and mistakenly based its own conviction on statements which Tetra made to the contrary at the hearing. 131. I think, however, that that company holds a strong position when it insists that the contested decision clearly asserts that ‘the majority of SBM machines are “generic”’, but that, ‘[n]evertheless, a PET packaging line, of which the SBM machine is only one component, is usually tailored to the specific products filled by the customer’. (107) Contrary therefore to the Commission’s submission, it was clear from the contested decision that SBM machines were for the most part generic, that is to say suitable for packaging various kinds of products, whereas PET-packaging lines, of which such machines were just one component, were generally ‘tailored’ to the specific products to be packaged. 132. In the light of that reasoning in the decision, it was possible therefore for the Court of First Instance correctly to state that ‘[t]he mere fact that each SBM machine must be installed in a PET line in order to be useful to its purchaser does not justify that specific characteristics of other PET equipment in that line should be attributed to the SBM machines themselves’. (108) 133. With regard next to the further information supplied in the defence concerning the technical adaptations which must be made to SBM machines also in order for them to be integrated in specific PET-packaging lines, the Court of First Instance correctly responded that ‘the contested decision makes no reference to this information’. (109) As I have said, in fact, the evidence and the assessments on which the decision was based ought to have been clearly indicated in that act and could not be supplied only later in connection with proceedings before the Court of First Instance (see paragraph 106 above). 134. In view of the foregoing, the assessments subsequently made by the Court of First Instance in order to counter, in light of evidence furnished by Tetra, the subsequent technical arguments developed in the defence must be considered to be irrelevant. Although the Court of First Instance would have done better not to have ventured into that sort of appraisal, that does not alter the fact that it was not in any event open to the Commission to introduce evidence in proceedings before that court to which it had made no reference in the contested decision. 135. Having said that in connection with the grounds of challenge relating to the supply-side characteristics of SBM machines, I can now turn to those relating to demand-side characteristics. 136. In this respect, it has to be made clear that these grounds of challenge refer to the reasoning used by the Commission in defining specific markets for SBM machines used for the packaging of ‘sensitive’ products having regard to the price discrimination in the past practised by Sidel with regard to customers intending to package such products and to the possible continuance of that practice by the new entity. 137. That reasoning was based, in particular, on the twofold theoretical premiss that ‘a distinct group of customers for the relevant product may constitute a narrower, distinct product market when such a group could be subject to price discrimination’ and that ‘[t]his will usually be the case when two conditions are met: (a) it is possible to identify clearly the group to which an individual customer belongs at the moment it purchases the relevant products and (b) trade among customers or arbitrage by third parties should not be feasible’. (110) Starting from that premiss, and considering that the conditions set out therein had been satisfied in the case in point, the Commission reached the conclusion that there existed distinct markets for SBM machines used for the packaging of ‘sensitive’ products. 138. By the grounds of challenge now under consideration, the Commission objects to the assessments made in the judgment under appeal relating to that reasoning, alleging in particular that the Court of First Instance: (i) wrongly omitted to take into consideration the price discrimination practised in the past by Sidel, on the grounds that it ‘cannot constitute sufficiently convincing evidence that the merged entity will continue to behave in a similar way’, since ‘[u]nlike Sidel prior to the merger, the merged entity would be bound not only by the commitments but also by the various obligations limiting Tetra's conduct’; (111) (ii) wrongly omitted to take into consideration many of the Commission’s observations about the possibility of identifying those customers that intended to use SBM machines to package ‘sensitive’ products and, in any case, that it misunderstood the relevance of those observations, and (iii) misunderstood and wrongly failed to take into consideration the Commission’s observations about the impossibility of buying a given producer’s machines from other persons (who would essentially be other customers seeking to sell second-hand). 139. Nor do those objections appear to me to be well founded. 140. With regard to the first of them, I have in fact to concur with Tetra that the statement challenged has nothing to do with the identification of specific markets for SBM machines used for packaging of ‘sensitive’ products. Far from relating to the definition of the relevant markets, that statement is in point of fact to be found in that part of the judgment which examines the ‘ways in which the merged entity could engage in leveraging’, and indicates in particular that ‘the leveraging practices which may be taken into consideration by the Court are limited to those which, at least probably, do not constitute an abuse of a dominant position on the aseptic carton markets’ and refers to the need to take into account the commitments offered by Tetra (see paragraph 43 above). 141. Contrary to what is alleged in the appeal, I believe therefore that the Court of First Instance properly considered and understood the various passages in which the Commission’s reasoning is set out. The Court of First Instance none the less found that that reasoning was in essence vitiated by a defect in logic, seeing that the fact that it is possible for the new entity to identify those customers who intend to package ‘sensitive’ products (and in consequence to practise price discrimination against them) ‘does not preclude those customers from turning to other suppliers of SBM machines if they become dissatisfied with the conditions offered by the merged entity’. (112) 142. Although it is terse in the extreme, it seems to me that we may in substance concur with that appraisal by the Court of First Instance. I in fact consider that, even if the new entity should be capable of identifying those customers who intend to package ‘sensitive’ products and, in view of its being impossible for those customers to buy its machines from other persons, should decide to demand from them a higher price than that asked of the other customers, that would not of itself make it possible to identify specific markets for SBM machines used for the packaging of ‘sensitive’ products, inasmuch as – as the Court of First Instance stated – the customers ‘discriminated against’ could turn to other suppliers that did not operate the same pricing policy. 143. To my mind, in other words, the fact that a single operator (not followed by its competitors) adopts a pricing policy that discriminates against a particular group of customers does not of itself make it possible to identify a specific market in relation to that group of customers, for the presence of other operators that do not practise the same policy may prevent the establishment of essentially different market conditions for the group of customers in question. 144. Therefore I do not think that the Court of First Instance erred in law in criticising the Commission’s reasoning based on the price-discrimination operated in the past by Sidel and on the possible continuance of such a practice by the new entity. 145. Having regard to all the foregoing considerations, I therefore believe that the third ground of appeal must be rejected. The ground of appeal relating to the strengthening of Tetra’s dominant position in carton 146. In its fourth ground of appeal the Commission challenges the Court of First Instance’s conclusion that ‘the evidence relied on in the contested decision does not establish to the requisite legal standard that the effects of the modified merger on Tetra’s position, principally on the aseptic carton markets, would, by eliminating Sidel as a potential competitor, be such as to fulfil the conditions of Article 2(3) of the Regulation’. (113) 147. In that regard, the Commission objects, first, that the Court of First Instance did not recognise that a reduction in ‘potential’ competition from the PET equipment markets would in itself lead to a strengthening of Tetra’s dominant position in carton. The Court of First Instance was wrong to require it to show that any such reduction in potential competition would tend ‘to strengthen Tetra’s dominant position in relation to its competitors on the aseptic carton markets’, (114) , given that that strengthening was not to be assessed with reference to Tetra’s competitors, but to the unavoidable consequences that reduction of ‘potential’ competition from PET would have for customers and consumers in the form of a price rise (or a failure to lower prices) for carton and less innovation in products. 148. According to the Commission, furthermore, in view of its submissions in connection with the first ground of appeal, the Court of First Instance was mistaken when it found that the Commission’s assessment concerning the reduction in ‘potential’ competition was vitiated by the fact that growth in the use of PET for packaging of ‘sensitive’ products ‘will probably be much less marked than the Commission believes’. (115) 149. The Commission also disputes the Court of First Instance’s finding that it had not on any view been ‘shown that, in the event of elimination or significant reduction of competitive pressure from the PET markets, Tetra would have an incentive not to reduce its carton packaging prices and would stop innovating’. (116) 150. On this point it begins by remarking that the Court of First Instance’s assessment of the effects of a reduction in ‘potential’ competition on carton prices was invalidated by the mistaken conviction that PET costs were higher than carton costs (here it refers to what it said in the first ground of appeal). Still in relation to that assessment, the Commission then criticises the comments made thereupon by the Court of First Instance, on account of the fact that the Court reprimanded it for failing to explain why Tetra’s competitors would not benefit from a rise in carton prices: by so doing, the Court of First Instance did not, in the Commission’s opinion, consider that those competitors were ex hypothesi marginalised by Tetra’s strongly dominant position. In addition, the Commission charges the Court of First Instance with failing to take into account the effects on carton prices of the fact that, as a result of acquiring the major operator on the PET markets, Tetra could safely assume that most of those of its customers who had switched from carton to PET would in any case be ‘recaptured’ through Sidel. 151. Again with reference to the effects of a reduction of ‘potential’ competition on innovation, the Commission alleges that the Court of First Instance overestimated the possible response of competitors marginalised by Tetra’s dominant position. Finally, according to the Commission, the Court of First Instance erred: on the one hand, by passing over the difference between the pressure to innovate caused by the growth in the use of PET and the pressure proceeding from Tetra’s competitors in the carton markets and, on the other, by claiming that recent innovations made by that company were not due to pressure exerted by PET. 152. Before evaluating those objections, it is necessary to specify that, as observed by Tetra, the ‘potential’ competition referred to in connection with this ground of appeal did not consist of competition on the part of undertakings able to enter the carton-packaging markets which might therefore have represented potential competitors of Tetra on those markets. On the contrary, the issue was plainly indirect competition proceeding from undertakings active on markets distinct from the carton-packaging markets (although closely neighbouring), which produced machinery for packaging in a material, PET, which was regarded by the Commission from the economic point of view as a ‘weak substitute’ for carton. (117) From this point on I shall therefore refer to indirect rather than potential competition exerted by PET. 153. Having said that, I must agree with Tetra that it cannot be held that a reduction in indirect competition, proceeding from the acquisition of the leading undertaking operating on a neighbouring market, leads of itself to the strengthening of a dominant position within the meaning of Article 2 of Regulation No 4064/89. In view of the well-known notion of ‘dominant position’ used in the Court of Justice’s case-law, it falls instead to be determined whether such a reduction in indirect competition may increase the ‘economic strength’ of the dominant undertaking, with the result that it is in a position to impede yet further (or with greater facility) ‘effective competition’s being maintained on the relevant market’ and has the power to behave still more ‘independently of its competitors, its customers and ultimately of the consumers’. (118) 154. It therefore follows also that it is to that concept that the Court of First Instance ought more correctly to have referred in its analysis, instead of asserting that it was for the Commission to show that a reduction in indirect competition by PET could have strengthened ‘Tetra’s dominant position in relation to its competitors on the aseptic carton markets’. Nevertheless, I believe that this is not such a particularly serious mistake as to vitiate the conclusion reached by the Court of First Instance, since the latter did in any case assess, and find to be marred by several errors, the reasoning developed by the Commission in showing the effects that the predicted reduction in indirect competition by PET would have for customers and consumers in the shape of a rise (or a reduction that never took place) in carton prices and less innovation of the products. 155. Likewise, I consider that the conclusion arrived at by the Court of First Instance is not vitiated by the errors it may have made in respect of the assessment of foreseeable growth in the use of PET for packaging of liquid dairy products (see paragraphs 103 and 112 above). (119) 156. Undoubtedly, the finding that growth in the use of PET for packaging of ‘sensitive’ products ‘with the exception of growth in FFDs and tea/coffee drinks, will probably be much less marked than the Commission believes’ led the Court of First Instance to hold that ‘it is not possible, on the basis of the evidence relied on in the contested decision, to determine, with the certainty required to justify the prohibition of a merger, whether the implementation of the modified merger would place Tetra in a situation where it could be more independent than in the past in relation to its competitors on the aseptic carton markets’. (120) Yet the Court of First Instance did not come to a stop with that assertion, but went on with its analysis, reaching the conclusion ‘that the two factual elements regarding Tetra’s future conduct, on which the Commission relies in order to prove the alleged negative effects which the modified merger would have on the aseptic carton markets, have, on any view, not been established to the requisite legal standard’ (emphasis added). In particular, as we have seen, according to the Court of First Instance ‘it has not been shown that, in the event of elimination or significant reduction of competitive pressure from the PET markets, Tetra would have an incentive not to reduce its carton packaging prices and would stop innovating’. (121) 157. So, moving on to consider the Commission’s objections to that conclusion, I shall start by remarking that, contrary to what the Commission maintains, the Court of First Instance’s assessment of the effects of a reduction in indirect competition by PET on the prices of carton is not, to my mind, invalidated by the mistaken belief that PET costs were higher than those of carton (concerning the mistake actually made by the Court of First Instance, see paragraphs 111 and 112 above). 158. As a matter of fact, I would point out that, referring to the Commission’s notion that the merger would enable Tetra to avoid the reduction in carton prices which it would otherwise have been led to make, the Court of First Instance stated that: (i) ‘As regards the “more price-sensitive” carton customers who indicated to the Commission, during its market investigation, “that they would only consider a switch from carton to PET if carton prices rose by a significant amount of 20% or more” … , it is clear that a lowering of carton prices is not necessary to keep them in the carton markets. In finding simply that “[t]hese same price-sensitive customers would presumably be dissuaded from making a switch from carton to PET if a carton-price reduction increased the price difference between a carton and PET packaging line” …, the contested decision does not explain why, without the merger, Tetra would be obliged to make such price reductions in order to keep those customers. These customers would not switch to PET unless carton prices rose by at least 20% or there was a corresponding reduction in PET prices’; (122) (ii) ‘Inasmuch as the Commission pleads before the Court that, once the merger is implemented, it is possible that Tetra might find it more easy to raise its prices on the aseptic carton markets for those customers, it does not explain, in particular, why this would not enable Tetra’s competitors on the carton markets who are also active on the PET market, such as SIG and Elopak, to benefit from this’; (123) (iii) ‘As for beverage producers who will switch from carton to PET for commercial reasons despite the fact that PET is considerably more costly than carton, a reduction in carton prices would not necessarily persuade those “non-price-sensitive customers” to keep carton packaging’; (124) iv) ‘The contested decision does not show why companies active in the PET equipment markets which, without the modified merger, “would be expected to compete vigorously to gain market share from carton” …, would modify their behaviour following the transaction in question here. If the pressure from Sidel were to disappear, the contested decision does not explain why, if Sidel’s competitors had not been marginalised through successful leveraging, the other companies active in the PET equipment markets would no longer be able to promote the advantages of PET to Tetra’s customers on the carton markets’. (125) 159. As may easily be verified, with those statements the Court of First Instance pointed out flaws of logic inherent in the Commission’s reasoning, but never founded its own opinion on the mistaken persuasion that the costs of PET were greater than those of carton, even in (iii), which contains the only reference to that aspect. Careful reading of that passage makes it clear, indeed, that the Court of First Instance was doing no more than refer to the Commission’s claim that some customers would in any case switch to PET, despite its ‘being more expensive or despite no change at all in carton prices’, (126) logically deducing therefrom that ‘a reduction in carton prices would not necessarily persuade those “non-price-sensitive customers” to keep carton packaging’. 160. Having made it clear, therefore, that the Court of First Instance’s assessment is not vitiated by the mistaken belief that PET costs are higher than those of carton, I would observe that I do not consider well founded the Commission’s objection concerning (ii) above, by which that institution charges the Court of First Instance with incorrectly failing to take into account the fact that Tetra’s competitors on the carton markets were ex hypothesi marginalised by the strongly dominant position held by that company. 161. On this subject, first of all I agree with Tetra that such an objection runs the risk of proving too much. If one did no more than consider theoretically that, by virtue of its dominant position, Tetra could by definition ‘behave to an appreciable extent independently of its competitors’ (127) in the carton markets, and therefore even raise prices without any fear of a response on their part, it would be hard to explain why, if the merger did not take place, that company, given its dominant position in carton, should not be able to do the same and ought rather to fear the indirect competition of operators active solely on neighbouring markets (Sidel), which produced machinery for packaging in a material regarded as just a ‘weak substitute’ for carton. 162. I would furthermore remark that, contrary to what would appear to emerge from the Commission’s appeal, the Court of First Instance did not take into consideration Tetra’s competitors active solely on carton markets, but also those competitors already active on PET markets. It therefore referred to operators which could benefit from a rise in the price of carton in the PET markets too and which could therefore exert greater competitive pressure by virtue of the concomitant presence on the markets of the two packaging materials, considering also that they, ‘unlike the merged entity, would not be subject to any constraints as to joint offers of carton and SBM machines’. (128) 163. Still in relation to the effect of reduction in indirect competition by PET on carton prices, I do not, in short, believe to be well founded the Commission’s objection that the Court of First Instance failed to consider that, as a result of acquiring the leading operator on the PET markets, Tetra would have greater liberty to raise carton prices, knowing that through Sidel it could recapture most of the customers that had for that reason switched to PET. 164. As rightly emphasised by Tetra, the Court of First Instance really cannot be reproached for not considering that aspect, when it had not been developed in the contested decision. In any event, I would note that, even following the acquisition of Sidel, for Tetra’s customers to switch from carton to PET would certainly not be a matter of economic indifference to the new entity. In point of fact it is obvious that the certain loss of Tetra’s customers on markets which it dominated and on which it was in a position to make big profit margins could be offset only in part by the hope of recapturing those customers on markets, such as those of PET, under full development and notable for lively competition. (129) 165. Coming next to the effects of reduction in indirect competition by PET upon innovation, I would remark that the ground of complaint relating to the overestimation of the response of Tetra’s competitors must be rejected for the same reasons, mutatis mutandis, as set out in relation to the similar complaint concerning the effects on carton prices (see paragraphs 161 and 162 above). 166. Lastly, as regards the ground of challenge in which the Commission alleges that the Court of First Instance did not adequately consider the kind of pressure to innovate created by the growth in the use of PET and that it mistakenly held that the recent innovations made by Tetra were not due to the pressure exerted by that material, I too think that the Commission is in fact raising questions of fact that the Court of Justice has no jurisdiction to resolve (see paragraphs 59 to 61 above). 167. In the light of all the foregoing considerations, I consider that the fourth ground of appeal must be rejected. The ground of appeal relating to the creation of a dominant position for Tetra in SBM machines 168. In its final ground of appeal the Commission criticises the Court of First Instance’s conclusion that ‘the contested decision does not prove to the requisite legal standard that by 2005 the merged entity could acquire a dominant position on the market for low- and high-capacity machines, thereby fulfilling the conditions of Article 2(3) of the Regulation as regards those markets’. (130) 169. Here I shall straight away briefly examine the summary objections raised by the Commission concerning errors supposedly committed by the Court of First Instance in relation to both the SBM machine markets (low- and high- capacity), in order to assess next whether the errors actually identified are such as to invalidate the conclusion reached by the Court of First Instance. a) The objections raised by the Commission 170. Starting with the allegations relating to the low-capacity SBM machines, the Commission first of all objects that the Court of First Instance referred to the share of the market held by Sidel during the period 1998 to 2000 (which was less than 40%), without taking into account the fact that the contested decision shows that in 2001 that share rose to a level of between 40 and 50%. (131) 171. I believe, however, that, as pointed out by Tetra, the Court of First Instance could legitimately take into account the period from 1998 to 2000, since that was the period in essence referred to by the Commission. The paragraph of the decision mentioned by the Commission (as, furthermore, in an earlier paragraph quoted by the Court of First Instance (132) ) in fact showed the market-shares held by Sidel, Tetra and their chief competitors ‘during the period 1998-2000’, whilst only in a footnote were Sidel and Tetra’s shares in 2001 mentioned (and they were not, moreover, compared with those held for the same period by their main competitors). 172. Just as baseless seems to me the next objection in which the Commission challenges the Court of First Instance for asserting that ‘with Tetra’s exit from that market, the merged entity’s position will remain basically unchanged as compared to Sidel’s current position’, (133) without taking into account the immediate strengthening of Sidel’s position proceeding from a series of factors indicated in the decision (Tetra’s financial and commercial power, the ‘first-mover’s’ advantage it enjoys vis-à-vis customers seeking to switch from carton to PET and its dominant position in carton). (134) 173. In point of fact I agree with Tetra that those factors were indicated generally in the decision (but on the other hand no account was taken of the commitments offered by that company) in order to stress the new entity’s leadership and global strength due also to its presence on all the markets concerned and not to highlight a particular and immediate strengthening of Sidel’s position on the low-capacity SBM machine market. As matters stand, I consider that the Court of First Instance could legitimately declare that, as a result of Tetra’s leaving that market, the new entity’s position would remain in essence unchanged in relation to Sidel’s. 174. Lastly, I do not think it possible to accept the objection relating to the Court of First Instance’s statement that ‘the contested decision does not contain a sufficient analysis of current and future use of low-capacity SBM machines’ either. (135) 175. With that objection the Commission charges the Court of First Instance with basing its decision on two irrelevant aspects: first, the importance of low-capacity SBM machines in packaging non-‘sensitive’ products, which is irrelevant if the segmentation of the market in SBM machines proposed by the Commission is accepted; second, the proportion of customers that would opt for high- or low-capacity SBM machines for the packaging of ‘sensitive’ products, (136) a proportion that also is of no relevance to the assessing of Tetra’s ability to leverage its dominant position in carton in order to gain a dominant position in the market for low-capacity SBM machines too. 176. With regard to the first aspect, it is nevertheless easy to establish that the Commission’s assessment of the definition of specific markets for SBM machines for the packaging of ‘sensitive’ products has not been accepted (see paragraph 145 above). As regards the second, I observe that it is not at all clear that choices made by customers intending to package ‘sensitive’ products in PET would be irrelevant in assessing development in the market for low-capacity SBM machines and the opportunity for the new entity to gain a dominant position in it. More generally, I cannot see how the Court of First Instance can be reproached for ascertaining whether the Commission’s assessment concerning the acquiring of such a dominant position was based on an accurate and thorough analysis of the dynamics of the relevant market. 177. Turning then to the grounds of complaint relating to the high-capacity SBM machine market, I shall observe immediately that the objection raised by the Commission alleging that the Court of First Instance failed to take into account the immediate strengthening of Sidel’s position as a result of the factors referred to in paragraph 172, (137) must, in my opinion, mutatis mutandis, be rejected for the same reasons as those set out in paragraph 173. 178. On the other hand, the objection relating to the Court of First Instance’s assertion that ‘the “first-mover” advantage [enjoyed by Tetra vis-à-vis customers intending to switch to PET] has been overestimated’ (138) appears to me to be in part well founded. 179. In fact, I consider that with regard to the packaging of liquid dairy products the Commission rightly argues that the assessment made by the Court of First Instance is marred by errors it committed in relation to its estimates of growth in the use of PET (see paragraph 103 above) and, in particular, the relationship between that material and HDPE (see paragraph 98 above). The judgment under appeal makes it apparent that, as regards the packaging of the products in question, the Court of First Instance considered ‘overestimated’ the first-mover advantage, in substance: (i) because ‘[t]he foreseeable growth in PET use among Tetra’s … customers on the aseptic carton market is not considerable’; (139) and (ii) because ‘[a]s regards fresh milk in particular, the contested decision does not give an adequate explanation of the relationship between HDPE and PET’. (140) 180. By contrast, I believe that that part of the Commission’s objection cannot be accepted which criticises the assessment of the first-mover advantage in relation to customers intending to switch from glass to PET, alleging in particular that the Court of First Instance: (i) failed to take into consideration the fact that only rarely do customers packaging drinks in glass use that material exclusively; (ii) distorted the facts when it stated that, with reference to those customers, Tetra’s competitors ‘active on the glass and PET packaging markets’, such as SIG, Krones and KHS, could ‘enjoy a … “first-mover” advantage’. (141) 181. In fact I agree with Tetra that those arguments of the Commission’s must be rejected, since they are based on matters not mentioned in the contested decision (142) (see paragraph 106 above) and, in any event, especially as regards (ii), raise questions of fact which the Court of Justice has no jurisdiction to resolve (see paragraphs 59 to 61 above). 182. Then that objection seems to me baseless in which the Commission charges the Court of First Instance with stating: first, that ‘the contested decision should have examined in more detail the ability of that competition to resist leveraging on the part of the merged entity’; (143) and, second, that ‘the Commission committed an error in under-estimating the importance of SIG’s current position on the market for high-capacity machines and by playing down the positions held on that market by the merged entity’s other principal competitors, in particular SIPA and Krones’. (144) 183. I do not in fact believe that, as the Commission submits, the Court of First Instance distorted the contents of the decision (in particular, by denying that it contained any analysis of Sidel’s position on the SBM machine markets vis-à-vis its competitors) (145) or that it substituted its own point of view for that of the Commission. 184. Rather, the Court of First Instance simply found that, in view of the considerable and unchallenged increase in market-shares recorded in recent years by those three competitors of Sidel (SIG, SIPA and Krones), and having regard to the timely observations made by Tetra during the administrative procedure, the Commission ought not to have confined itself to the generic observations contained in the decision, but ought to have examined more particularly those three companies’ competitive power and ability to respond. The Court of First Instance did actually remark that it was only in relation to SIG that the contested decision contained any specific assessment (which cannot, it seems to me, be disputed in any substance) and considered that those assessments did not adequately answer the specific and pertinent points raised by Tetra. (146) It is from that point of view, therefore, that the statement must be read that in the decision the position of those three companies was ‘underestimated’ or ‘played down’: meaning, that is, that the Commission did not give the consideration of their position that attention which, given the circumstances of the case, was necessary. 185. Furthermore, I would add that the part of the objection that goes so far as to accuse the Court of First Instance of distorting the facts in the definition of certain advantages enjoyed by Sidel’s competitors raises questions of fact which the Court of Justice has no jurisdiction to resolve (see paragraphs 59 to 61 above). 186. On the other hand the final objection, concerning the opportunity for converters to resist leveraging, does seem to me to be well founded. In this objection the Commission alleges that the Court of First Instance did not provide adequate reasons for its statements, did not answer the arguments put forward by the Commission in its decision and unlawfully substituted its own point of view for that of the appellant. 187. Indeed, I agree with the Commission that the Court of First Instance did not adequately explain what were the errors, the deficiencies of investigation or flaws of logic that, in its view, invalidated the Commission’s conclusion that converters were ‘to a certain extent dependent on Sidel and would continue to be dependent on the merged entity’. (147) Without making any assessment of the wide-ranging analysis carried out by the Commission in order to arrive at that conclusion, (148) the Court of First Instance did in fact no more than assert: (i) that, ‘given the current level of existing competition, also in the high-capacity SBM machine market, the finding of the converters’ dependency on Sidel is not convincing’; (ii) that, ‘if the sales conditions offered by the merged entity were to become less attractive, converters could always purchase such machines from one of Sidel’s current competitors ’. (149) 188. From what i apparently to be understood, the Court of First Instance therefore found the Commission’s conclusion that the converters were dependent on Sidel ‘not convincing’ just because they could have bought SBM machines from that company’s competitors. By so doing, the Court of First Instance failed, however, to consider that, although the Commission had acknowledged that converters could ‘turn to other suppliers of SBM machines for purchases of new machinery and design and testing of preforms’, none the less – in the light of its market analysis – it considered that ‘switching costs and the continued need to use the large number of Sidel machines they have already acquired will prolong converters’ current degree of dependency on Sidel’. (150) 189. It therefore seems obvious to me that, while the Court of First Instance might possibly discover mistakes, deficiencies of investigation or flaws of logic in the Commission’s reasoning, it could not reject the conclusion reached by that institution without stating sufficient reasons. I would moreover observe that the line of argument used by Tetra to justify the Court of First Instance’s opinion as to the converters’ chance to respond, regardless of its merits, cannot make good the defective reasoning which mars the judgment under appeal. b) The effect of the errors detected on the conclusion arrived at by the Court of First Instance 190. Of the foregoing considerations the following must, to my mind, be regarded as well founded: (i) the objection concerning the first-mover advantage, in so far as it relates to the packaging of LDPs (see paragraphs 178 and 179 above), and (ii) the objection concerning the opportunity for converters to resist leveraging (paragraph 186 above). 191. I consider, nevertheless, that the errors made by the Court of First Instance and made clear in those objections are not such as to vitiate the conclusion reached by that court, ‘that the contested decision does not prove to the requisite legal standard that by 2005 the merged entity could acquire a dominant position on the market for low- and high-capacity machines, thereby fulfilling the conditions of Article 2(3) of the Regulation as regards those markets’. (151) 192. Indeed, that conclusion seems to me to be most certainly justified by the many defects in the decision which the Court of First Instance has identified in assessments not challenged in these proceedings or challenged in objections here held to be unfounded. Since there is no need to dwell on this point, drawing up a long list of the defects in question, I can confine myself to the observation that, in addition to the flaws identified in the course of assessments which have been the subject of unsuccessful objections in this ground of appeal, it is necessary to bear in mind the defects relating to: (i) the failure to take into consideration, as a possible disincentive to leveraging, the unlawfulness of certain conduct and the commitments as to conduct offered by Tetra (defect identified in the assessments unsuccessfully challenged in the second ground of appeal); (ii) the identification of specific markets for SBM machines for packaging ‘sensitive’ products (defect identified in assessments unsuccessfully challenged in the third ground of appeal). 193. It follows therefore that acceptance of the two objections mentioned in paragraph 190 cannot of itself vitiate the conclusion arrived at by the Court of First Instance in relation to the creation of a dominant position on the low- and high-capacity SBM machine markets. Concluding considerations on the outcome of the appeal 194. In the light of all the foregoing considerations, it must be found that, even though various of the objections raised by the Commission have proved to be founded, they are not enough to vitiate the conclusions arrived at by the Court of First Instance concerning the strengthening of Tetra’s dominant position on the carton markets and the creation of a dominant position on the low- and high-capacity SBM machine markets. 195. In such a situation I must point out that, in accordance with settled case-law, ‘where the grounds of a judgment of the Court of First Instance disclose an infringement of Community law but the operative part of the judgment is shown to be well founded for other legal reasons, the appeal must be dismissed’. (152) 196. Taking into account, therefore, that the operative part of the judgment under appeal, relating to the annulment of the decision, is certainly well founded on the many grounds of law that support the Court of First Instance’s conclusions as to the strengthening of Tetra’s dominant position on the carton markets and the creation of a dominant position on the low- and high-capacity SBM machine markets, I consider that the Commission’s appeal must be dismissed. Costs 197. In the light of Article 69(2) of the Rules of Procedure, and having regard to the conclusions I have reached concerning the dismissal of the appeal, I consider that the Commission must bear the costs. IV – Conclusion 198. In the light of the foregoing conclusions, I propose that the Court should declare that: – the appeal is dismissed; – the Commission is to bear the costs. 1 – Original language: Italian. 2 – Council Regulation (EEC) No 4064/89 of 21 December 1989 on the control of concentrations between undertakings (OJ 1989 L 395, p. 1; corrigendum in OJ 1990 L 257, p. 13). Regulation No 4064/89 was amended by Council Regulation (EC) No 1310/97 of 30 June 1997 (OJ 1997 L 180, p. 1). 3 – What is meant by ‘concentrations’ is explained in Article 3 of the Regulation, while Article 1(2) and (3) makes clear in what circumstances a concentration may have a ‘Community dimension 4 – See in particular paragraphs 40 and 44 of the decision. 5 – This footnote is not relevant in the English version. 6 – See in particular paragraphs 12 and 45 of the decision. 7 – Paragraph 55, in which it is explained that ‘PET and carton have traditionally been used for packaging different beverages. This is mainly due to different physical characteristics of these packaging solutions. Carton is non-transparent and hence suitable for oxygen and light-sensitive products but cannot withstand carbonation. PET is transparent and can withstand carbonation but has been traditionally less suitable for oxygen and light-sensitive products. As a result, carton has been used mainly for LDPs (primarily white milk) and juices whereas PET has been principally used for water (still and carbonated) and soft (carbonated drinks) 8 – Paragraph 57. 9 – Paragraph 103. 10 – Paragraph 163. 11 – Paragraph 164. 12 – With regard to those systems, it ought to be borne in mind that ‘[p]ackaging of liquid food in PET bottles requires a combination of distinct machinery and, if required, a barrier technology. There are three distinct stages in the packaging process: (a) production of plastic preforms, the preproduction tubes used to make PET bottles; (b) production of empty PET bottles using the plastic preforms in specialised stretch blow-moulding machines (SBM machines) and (c) filling of the finished PET bottles with the liquid using a dedicated filling machine’ (paragraph 20 of the contested decision). In the PET packaging systems ‘[l]iquids are packaged in two main ways: in-house by the liquid producers themselves and by “bottle converters”. In-house packaging requires the purchase of packaging equipment and installation of packaging lines at the premises of the beverage company. By contrast, converters produce empty packages, which are then either filled by filling companies or sold to beverage companies for filling in-house (paragraph 15 of the decision). 13 – Paragraph 188. 14 – Paragraph 199. In this regard I would point out that ‘for oxygen-sensitive products (such as juices or beer), the gas-barrier properties of a PET bottle need to be enhanced. … To enhance the barrier properties of PET a barrier technology is applied onto the standard PET bottle. … For light-sensitive products such as UHT white milk, a light barrier needs to be added’ (paragraphs 22-24 of the decision). 15 – Paragraph 204. In this connection, I would note that ‘non-aseptic filling machines are generally used for carbonated drinks, mineral water, edible oils and fresh milk. Aseptic PET filling machines are used for ambient juices, fruit or flavoured still drinks, ready-to-drink tea and coffee drinks and liquid dairy products’ (paragraph 21 of the decision). 16 – Paragraph 206. 17 – Paragraph 209. With regard to such systems, it is helpful to note that, ‘unlike PET with its distinct stages of production (preforms, empty bottles, filling), the liquid-food carton business is one of integrated pack construction, filling and sealing … All these operations are done on one carton packaging machine within the beverage company’s factory … There are distinct aseptic and non-aseptic carton machines and the distinction between aseptic and non-aseptic carton packaging runs throughout the packaging process’ (paragraph 28 of the decision). 18 – Paragraph 212. 19 – Paragraph 231. 20 – Paragraph 259. 21 – Paragraph 263. 22 – Paragraphs 269 and 270. 23 – Paragraph 282. 24 – Paragraph 290. 25 – Paragraph 324. 26 – Paragraph 337. 27 – Paragraph 389. 28 – Paragraphs 397 and 399. 29 – Paragraph 408. 30 – Paragraph 410. 31 – Paragraph 424. 32 – Paragraph 451. 33 – Paragraph 452. 34 – Article 1 of the operative part. 35 – Paragraphs 83-118. 36 – By ‘modified merger’ the Court of First Instance means ‘the merger as modified by the commitments’ (paragraph 81). 37 – Paragraph 124. 38 – Paragraph 132. 39 – Paragraph 140. 40 – Paragraph 141. 41 – Paragraph 145. 42 – In this connection, summarising the contents of the decision, the Court of First Instance noted that ‘the leveraging from the aseptic carton market … would manifest itself – in addition to the possibility of the merged entity’s engaging in practices such as tying sales of carton packaging equipment and consumables to sales of PET packaging equipment and forced sales – firstly, by the probability of predatory pricing by the merged entity; secondly, by price wars, and, thirdly, by the granting of loyalty rebates’ (paragraph 156). 43 – Paragraph 158. 44 – Paragraph 159. 45 – Paragraph 160. 46 – Paragraph 161. 47 – Paragraph 162. 48 – Paragraph 199. 49 – Paragraph 195. 50 – Paragraph 201. 51 – Paragraph 214. Nevertheless, the Commission did not commit an error on that point, according to the Court of First Instance, with regard to the forecast growth in FFDs and tea/coffee drinks (paragraph 215). 52 – Paragraph 216. 53 – Paragraph 216. 54 – Paragraph 218. 55 – Paragraph 224. 56 – Ibid. 57 – Paragraph 225. 58 – Paragraph 254. 59 – Paragraph 269. 60 – Paragraph 283. 61 – Paragraph 306. 62 – Paragraph 308. 63 – Paragraph 309. 64 – Paragraph 323. 65 – Paragraph 333. 66 – Paragraph 336. 67 – Paragraph 336. 68 – Paragraphs 337 and 338. 69 – Case C-7/95 P John Deere v Commission [1998] ECR I-3111, paragraphs 21 and 22. To the same effect, see, inter multos, Case C-53/92 P Hilti v Commission [1994] ECR I-667, paragraphs 42 and 43, and Case C-8/95 P New Holland Ford v Commission [1998] ECR I-3175, paragraph 26. 70 – [Footnote not relevant to the English-language version of this text]. 71 – Joined Cases C-68/94 and C-30/95 France and Others v Commission [1998] ECR I-1375 (‘Kali and Salz’). 72 – Paragraph 228. 73 – Paragraph 162 of the judgment under appeal; italics added. 74 – Paragraph 153 of the judgment under appeal; italics added 75 – As we have seen, that provision states: on the one hand, that ‘a concentration which does not create or strengthen a dominant position as a result of which effective competition would be significantly impeded in the common market or in a substantial part of it shall be declared compatible with the common market’ (Article 2(2)); and, on the other, that ‘a concentration which creates or strengthens a dominant position as a result of which effective competition would be significantly impeded in the common market or in a substantial part of it shall be declared incompatible with the common market’ (Article 2(3)). 76 – Joined Cases C-204/00 P, C-205/00 P, C-211/00 P, C-213/00 P, C-217/00 P and C-219/00 P Aalborg Portland and Others v Commission [2004] ECR I-0000, paragraph 279. To the same effect, see inter multos Case 42/84 Remia and Others v Commission [1985] ECR 2545, paragraph 34, and Joined Cases 142/84 and 156/84 BAT and Reynolds v Commission [1987] ECR 4487, paragraph 62. 77 – Cited above, paragraphs 223 and 224. 78 – This for example is the kind of review carried out in paragraphs 229-231 and 245 of Kali and Salz. 79 – This type of review underlies for example the finding made in the last sentence of paragraph 241 in Kali and Salz 80 – It seems that the assessments made by the Court of Justice in paragraphs 228, 239, 241 (except the last sentence), 246 and 247 of Kali and Salz are referable to this type of review. 81 – Paragraph 211 of the judgment. 82 – Paragraph 212. 83 – On this point, paragraph 142 of the decision states: ‘Generally, market participants suggested significant growth in PET use in the short term in the “sensitive” products. For those participants who felt able to quote the proportion of the “sensitive” products that would be packaged in PET in 2005, the Commission found that on average PET would represent around 40% on milk, 30% in juice, 40% in FFDs and over 50% in ice tea’. 84 – In that regard, see paragraphs 75 and 76 of the judgment under appeal 85 – Paragraph 212. 86 – The quotations are again from paragraph 212 of the judgment. 87 – ‘Independent studies’ means those not commissioned by Tetra. 88 – Paragraph 212. 89 – See, in particular, paragraphs 80, 95-97 and 101-102 of the decision. 90 – Paragraph 97 of the decision. 91 – It is clear from the decision that while ‘UHT white milk requires a light barrier’, ‘fresh milk can successfully [be] packaged in standard PET without any barrier properties’ (paragraphs 76 and 77). Furthermore, according to Tetra, limitations on the use of PET because of the need for a light barrier ‘apply only to UHT white milk’. In that respect, Tetra notes that ‘technical solutions to provide a light barrier for PET’ ‘involve high costs and complex manufacturing technology, raise recycling issues and eliminate transparency of the bottle which is one of the major advantages of PET’ (paragraph 74 of the decision). 92 – Paragraph 289. 93 – Paragraph 212, end. 94 – Paragraph 123 of the decision. 95 – Paragraph 213. 96 – It is clear from the Court of Justice’s case-law that ‘a failure to state the reasons cannot be remedied by the fact that the person concerned learns the reasons for the decision during the proceedings before the [Community judicature]’ (Case 195/80 Michel v Parliament [1981] ECR 2861, paragraph 22). To essentially the same effect, see Case C-343/87 Culin v Commission [1990] ECR I-225, paragraph 15, and Joined Cases C-15798 and C-105/99 Italy and Sardegna Lines v Commission [2000] ECR I-8855, paragraph 70. 97 – Paragraph 288 of the judgment under appeal. That assertion as to the difference in cost between PET and carton is then repeated by the Court of First Instance in paragraph 326 in connection with the assessment of the reduction of potential competition in the carton markets. 98 – Paragraph 326. 99 – Paragraph 92. Referring to the findings of its market investigation, the Commission stated in particular that: ‘Some market participants stated that for most applications and in particular for products requiring a barrier, PET is more expensive. The majority of respondents, however, were not able to identify the precise cost differences; for many, this was because they did not have experience in both materials. However, some third parties (notably those with greater experience in PET) informed the Commission that for them PET was actually cheaper than carton’ (paragraph 92). 100 – Paragraph 397 of the decision 101 – On this point, I would note that ‘leveraging from the aseptic carton market … would manifest itself – in addition to the possibility of the merged entity engaging in practices such as tying sales of carton packaging equipment and consumables to sales of PET packaging equipment and forced sales – firstly, by the probability of predatory pricing by the merged entity, secondly, by price wars; and, thirdly, by the granting of loyalty rebates’ (paragraph 156 of the judgment under appeal). 102 – In this connection, in its reply and at the hearing the Commission stated that a structural change in market conditions as a result of which the merged entity acquired such means and incentives constitutes the immediate creation of a dominant position on the other market. 103 – Paragraph 154 of the judgment under appeal. 104 – Paragraph 431 of the decision. 105 – Paragraph 342 of the contested decision. To the same effect, see also paragraph 330, in which it is stated: ‘By acquiring Sidel, Tetra would ensure that its dominant position in aseptic carton packaging was retained and strengthened by eliminating Sidel as a source of competitive constraint. In addition, leveraging its dominant position in carton, Tetra/Sidel would have the ability to reach a level of dominance in PET equipment and in particular SBM machines of high and low capacity in the relevant end-use segments’ (emphasis added). Similar assertions are made in many passages of the decision, such as, for example, paragraphs 331, 359 and 389. 106 – Paragraph 261 of the judgment under appeal. 107 – Paragraph 177 of the contested decision. 108 – Paragraph 265 of the judgment under appeal. 109 – Ibid. 110 – Paragraph 178 of the decision. 111 – Paragraph 223 of the judgment. 112 – Paragraph 268. 113 – Paragraph 333 of the judgment. 114 – Paragraph 323. Emphasis added by the Commission. 115 – Paragraph 324. 116 – Paragraph 325. 117 – See in particular paragraph 332 of the contested decision, which states that carton and PET are ‘technical substitutes in that both packaging materials can package the relevant end-use product segments’, and might be considered ‘weak substitutes’ in an economic sense. To that effect see also paragraph 163 of the decision (referred to in paragraph 10 above), in which moreover attention is drawn to the fact that the definition of the markets for packaging in PET and carton may change in the future. 118 – Case 85/76 Hoffman-La Roche v Commission [1979] ECR 461, paragraph 38; emphasis added. 119 – It is in this connection to be borne in mind that the Commission’s objection concerning errors allegedly committed by the Court of First Instance in assessing the foreseeable growth of the use of PET for packaging of juices has been considered to be without foundation (paragraph 104, above). 120 – Paragraph 324 121 – Paragraph 325 122 – Paragraph 327. 123 – Ibid. 124 – Paragraph 328. 125 – Ibid. 126 – The quotation is taken from paragraph 397 of the decision, where it is stated that many of the companies questioned in the scope of the market investigation carried out by the Commission ‘clearly stated that they have already switched or would switch from carton to PET despite PET’s being more expensive or despite no change at all in carton prices’. 127 – See Hoffmann-La Roche v Commission, cited above, paragraph 38. 128 – Paragraph 330. 129 – Clearly things would be otherwise (at least in part), were the new entity successful in leveraging Tetra’s position in carton in order to drive towards Sidel those of its customers wishing to switch to PET and thus to acquire a dominant position on some or all of the PET markets. However, given that the assessments made on that subject by the Commission have been dropped by the Court of First Instance, that scenario cannot be taken into consideration. 130 – Paragraph 307 of the judgment. 131 – The Commission would appear to refer to paragraph 272 of the judgment under appeal, in which it is stated that ‘[t]he Commission admits in the contested decision that, in low-capacity SBM machines, Sidel had “a market share of [30-40%] both in terms of capacity and by unit sales in the EEA in 2000” (paragraph 233)’. In order to demonstrate the Court of First Instance’s error, the Commission refers instead to paragraph 266 of the decision. Since, for reasons of confidentiality, the version of the decision published in the Official Journal does not contain the exact share but just a bracket given for information purposes, it seems to me to be proper to follow the same yardstick in my Opinion. 132 – See the previous footnote. 133 – Paragraph 280 of the judgment under appeal. 134 – On this subject, the Commission refers to paragraphs 376 to 387 of the contested decision. 135 – Paragraph 280. 136 – On this point the Commission mentions in particular the Court of First Instance’s statement that ‘a significant proportion of the SBM machines used to package sensitive products will, in all likelihood, be low-capacity machines’ (paragraph 279 of the judgment). 137 – Here the Commission refers in particular to the statement that ‘Tetra would add nothing to the merged entity on this market [high-capacity SBM machines]’ (paragraph 284 of the judgment). 138 – Paragraph 288. 139 – Paragraph 288... 140 – Paragraph 289. With reference to the relationship between HDPE and PET, the Court of First Instance considers in particular that ‘it is at least as likely that Tetra's existing customers who wish to switch part of their fresh milk production to plastic will choose HDPE rather than PET’ (ibid.). 141 – Paragraph 290. 142 – Only in relation to (i) does the Commission attempt to find a pretext in the decision for its assertions (paragraphs 14 and 335). Nevertheless, far from demonstrating that the decision makes it clear that glass customers are only rarely exclusively glass customers, the Commission quotes passages in which it is stated generally that ‘[i]ncreasingly, beverage companies use a mix of different materials to package their products’, providing the single example of Coca Cola as a drink which ‘can be found in glass, PET and aluminium cans’ (paragraph 14). 143 – Paragraph 294. 144 – Paragraph 297. 145 – On this subject, the Commission refers in particular to paragraphs 232 to 248, 293 to 300, 303 to 310 and 369 to 387 of the decision. 146 – See, in particular, the observations in paragraph 295 of the judgment under appeal. 147 – Paragraph 310. 148 – See paragraphs 303 to 310 of the decision. 149 – Paragraph 305 of the judgment. For our purposes here no particular importance seems to attach to the later clarification that ‘SIG and Elopak could also offer [to converters] carton equipment if the converters’ customers want the joint supply of PET and carton packaging equipment’, since the Commission had in no manner linked the converters’ dependency on Sidel or on the merged entity to the need for joint supplies of PET and carton packaging equipment. 150 – Paragraph 310 of the decision. 151 – Paragraph 307 of the judgment. 152 – Case C-312/00 P Commission v Camar and Tico [2002] ECR I-11355, paragraph 57. To the same effect see Case C-30/91 P Lestelle v Commission [1992] ECR I-3755, paragraph 28; Case C-320/92 P Finsider v Commission [1994] ECR I-5697, paragraph 37, and Case C-210/98 P Salzgitter v Commission [2000] ECR I-5843, paragraph 58.