NoL369/6 OfficialJournaloftheEuropeanCommunities 31.12.85
COMMISSION DECISION
of2December1985
relatingtoaproceedingunderArticle85oftheEECTreaty
(IV/30.971-BP/Kellogg)
(OnlytheEnglishtextisauthentic)
(85/560/EEC)
business,BPhasundertaken researchand
developmentintocatalysts.BPisalsoaminor
producerofammonia.TheMWKelloggCompany
(MWK)isasubstantialAmericanprocessplant
designerandcontractor .THECOMMISSION OFTHEEUROPEAN COMMUNITIES ,
HavingregardtotheTreatyestablishingtheEuropean
EconomicCommunity ,
HavingregardtoCouncilRegulationNo17of6February
1962,FirstRegulationimplementing Articles85and86of
theTreaty(')aslastamendedbytheActofAccessionof
Greece,andinparticularArticles6and8thereof,
Havingregardtothenotificationsubmittedon1June1983
byBPInternationalLimitedandtheMWKelloggCompany
concerningthejointdevelopmentofadesignforthe
constructionofammonia-making plant,
Havingregardtothesummaryofthenotification
published(2)pursuanttoArticle19(3)ofRegulation
No17,
AfterconsultingtheAdvisoryCommitteeonRestrictive
PracticesandDominantPositions,Theproductandthemarket
4.Thegoodsorservicesaffectedbythearrangementsare
plantfortheproductionofammonia,designsforthe
constructionofsuchplantknow-howusefulforthe
operation,construction ,designanddevelopmentof
suchplant,andcatalystforuseinsuchplant.
5.Ammoniaplantdesignisconstantlyevolving.There
arealargenumberofdesignersofandcontractorsfor
suchplant(atleast10well-knownnames,among
themMWK).MWKwasresponsibleforthedesignof
about20%ofpresentcapacityinwesternEurope.
Whereas :
I.FACTS
Thenotification
1.On1June1983theCommissionwasrequestedbyBP
InternationalLimitedandtheMWKelloggCompany
toexemptunderArticle85(3)certainoftheir
arrangements .
2.Thesearrangementsconcernthejointdevelopmentof
adesignfortheconstructionofammonia-making
plant.Theparties'interestsinammoniaplantdevelopment
6.InthecourseoftheirR&Doncatalystsforrefining,
BPdiscoveredacatalystpossiblyeffectiveforthe
productionofammoniaandhavedoneanumberof
yearsfurtherresearchonthis.BPwishtoexploitthis
bothinplantoperatedbythemselvesandinplanttobe
soldtootherammoniaproducers.Thecatalystcannot
beusedcommerciallyuntilaprocessthatwillmake
useofithasbeendevelopedwiththecooperationof
BP'sresearchanddevelopmentstaff.BPhaveno
experienceinthedesign,constructionorcommercial
exploitationofdesignsforsuchaprocess.BPhas,
therefore,soughtapartner.MWKhasasmallprocess
plantdevelopmentdepartmentwhichdoesnot
undertakeresearchintocatalysts,butwhichiswilling
tocooperatewithBP'sresearchanddevelopmentstaff
inthedevelopmentofsuchaprocess.Theyhave,
therefore,enteredintothefollowingarrangements .Theparties
3.BPInternationalLimited(BP)isacompanywithinthe
BPgroup.TheprincipalbusinessofBPisoil
production,refiningandtrading.InthecontextofthisThearrangements
7.BPandMWKwillcooperateinthedevelopmentof
designsfortheconstructionofammoniaplantusing(»)OJNo13,21.2.1962,p.204/62.
(2)OJNoC224,4.9.1985,p.2.

31.12.85 OfficialJournaloftheEuropeanCommunities NoL369/7
BPscatalyst.Ajointdevelopmentagreementprovides
thateachpartyshallremaintheowneroftheirprior
know-how,shallownseverally(takingoutpatentsas
applicable)know-howdevelopedbyeach
individually,andshallownjointlyanyjointly
developedknow-how.Eachhasanirrevocable
world-widenon-exclusiverighttouseandsub-license
jointpatents.10.Thejointdevelopment agreementcontainsthe
principlesofalicensingagreementwherebyMWK
willexploittheprocessbylicensingtherighttouseit
totheownersoroperatorsofplant,andpayBPa
percentageofthefeeitreceivesinrespectofsuch
licences.Thejointdevelopmentagreementcontains
provisionsforMWK'sfeetobefixedasafunctionof
thecostsavingthatuseofBP'scatalystisexpectedto
makepossibleoverexistingdesignsofplant.
11.Thedurationforeseenforthejointdevelopment
agreementisaboutsixyears-thatistosayabouta
yearafterthefirstcommercialplantusingthecatalyst
becomesoperational(thedurationisdefinedasafixed
numberofyearsfollowingalternativestagesinthe
development).Thereareprovisionsforearlier
terminationinawidevarietyofcircumstances ,
includingprojectfailureorifMWKdevelopamore
attractiveprocess.Thelicensingagreementistolast
for15years,renewable .8.InpursuanceotthisagreementBPacceptsthe
followingrestrictions :
8.1.nottodiscloseinformationaboutthecatalyst
forotherdevelopmentprojectsinthefieldofammonia
production ;
8.2.nottosupplythecatalystduringthelifeofthe
jointdevelopmentagreement (otherthantoMWK's
customersforthenewprocess,tocompaniesintheBP
grouportocompaniesthatmightmanufacturethe
catalyst)withoutMWK'sconsent(thisrestrictionis
themeansbywhichBPgivesMWKalimitedexclusive
righttoexploitanynewdesign);
8.3.touseitsbestendeavours,butnotamounting
toanabsoluteobligationtoensurethat,ifthefirst
commercialplantusingthenewprocessforthe
productionofammoniaisbuiltfortheBPGroup,then
theBPGroupwilluseMWKasthedesign
contractor .Theparties'submissions
12.Thepartiesbelievethatthesuccessfuldevelopmentof
theprocesswillrepresentaconsiderabletechnical
advancemakingpossiblesubstantialenergysavings
which,intheirturn,shouldbereflectedinlower
ammoniaprices.
13.ThepartiessubmitthatBPandMWKarenot
competitorsandwouldbeunlikelytobecome
competitors .9.MWKacceptsthefollowingrestrictions :
9.1.nottocarryoutindependently ,orin
cooperationwiththirdparties,otherresearchand
developmentinthefieldofgraphite-based ammonia
synthesiscatalysts;
9.2.nottospendmoreondevelopingother
ammoniaprocesses(withtheexceptionofthoseusing
thetraditionaliron-basedcatalyst)withoutinforming
BP(thistogetherwiththenexttworestrictions
constitutesthemeansbywhichBPisputonnoticethat
itmightwishtoexerciseitsrighttofindanother
partnershouldMWKnotpromotethenewprocess
actively);
9.3.notto,commercialize anynewammonia
processusingiron-basedcatalystslikelytobemore
commerciallyattractivethantheprocessusingBP's
catalystwithoutinformingBP;
9.4.nottobidforammoniaplantsotherthanby
wayofofferingthejointly-developed processwithout
informingBP.14.Theyfurthersubmitthatthedevelopmentrequiresthe
commitmentofsubstantialresourcesbybothofthem,
andrequiresBPtodivulgetoMWKthefruitsofmany
yearsofcostlyresearcheffort.Restrictions,that
otherwisewouldfallundertheprohibitionofArticle
85(1)oftheTreaty,arenecessarytobringthese
about.Withoutacceptingtherestrictionat9.1above,
MWKcouldnotdevotesufficientresourcestothe
jointdevelopmentnorensurethatanyotherfirmwith
whichitmightcooperatedidnotbenefitfromthe
fruitsofBP'searlierresearch.Therestrictionsat9.2to
9.4abovearetheminimumnecessarytoallowBPto
exerciseitsoptiontoexploittheprocesswithout
MWKshouldMWKnotdevelopormarketthenew
processactively.Therestrictionsat8abovearethe
minimumnecessarytoallowMWKanadequate
returnfromasuccessfuldevelopmentandfollow
earlierCommissionprecedentsofwhatmaybe
exemptedinsuchcooperations .
Followingthepublicationofanoticepursuantto
Article19(3)ofRegulationNo17,theCommission
receivednocommentsfrominterestedthirdparties.

NoL369/8 OfficialJournaloftheEuropeanCommunities 31.12.85
arrangementswerenotifiedtotheCommissionon
1June1983.Itappearsappropriate,therefore,
pursuanttoArticles6(1)and8(1)ofRegulation
No17,toadoptsuchadecisionforaperiodof
7yearswitheffectfromthatdate,
HASADOPTEDTHISDECISION :
Article1
PursuanttoArticle85(3)oftheEECTreaty,theprovisions
ofArticle85(1)areherebydeclaredinapplicableforthe
periodfrom1June1983to31May1990tothejoint
developmentandrelatedagreementsfortheconstructionof
ammonia-making plantnotifiedtotheCommissionon
1June1983bythepartiesnamedinArticle2.II.LEGALASSESSMENT
15.(a)Therestrictionslistedat8and9above,andmore
particularlytherestrictiononthesupplyofthe
catalystbyBPandtherestrictionsonthe
developmentorsaleofotherprocessesbyMWK
fallundertheprohibitionofArticle85(1)since
theirfreedomofcommercial decisionisthus
restricted;iftheproductissuccesfullydeveloped,
therestrictionscouldhaveanappreciableeffect
upontradebetweenMemberStatesbecause
ammoniaisproducedinthemajorityofthose
States;
(b)Theagreementisnotexemptedbyvirtueof
CommissionRegulation (EEC)No418/85of
19December1984ontheapplicationofArticle85
(3)oftheTreatytocategoriesofresearchand
developmentagreements('),sinceseveralofits
clauses(seeparagraphs8.2,9.3and9.4above)go
beyondthescopeoftheRegulationinsofarasthey
giverisetorestrictionsontheexploitationof
productsandprocesseswhichhavenotbeenjointly
developedbythepartiestotheagreementand
whicharenotcoveredbyArticles4and5ofthe
Regulation.
(c)Thesuccessfuldevelopmentoftheprocesswill
promotetechnicalandeconomicprogress,
particularlyenergysaving,fromwhichconsumers
willbenefit;therestrictionslistedappear
reasonableandnecessaryforthispurposeforthe
reasonsgiveninparagraph14aboveandthe
undertakingswillstillbefacedwithsubstantial
competitors (seeparagraph5).Adecision
pursuanttoArticle85(3)may,therefore,be
taken.
(d)Theforeseendurationofthejointdevelopment is
aboutsixyears(seeparagraph11above).TheArticle2
ThisDecisionisaddressedto:
1.BPInternationalLimited,
BritannicHouse,
MoorLane,
UK-London EC2Y9BU.
2.TheMWKelloggCompany,
3GreenwayPlazaEast,
Houston,
USA-Texas77046.
DoneatBrussels,2December1985.
FortheCommission
PeterSUTHERLAND
MemberoftheCommission
(1)OJNoL53,22.2.1985,p.5.