Judgment of the Court of First Instance (Second Chamber) of 6 October 1994. - Tetra Pak International SA v Commission of the European Communities. - Competition - Dominant position - Definition of the product markets - Geographical market - Application of Article 86 to practices carried out by a dominant undertaking on a market which is distinct from the dominated market - Abuse - Tied sales - Exclusive sales - Unfair terms - Predatory prices - Discriminatory prices - Administrative procedure - Principle of good administration - Provision of proper minutes of the hearing - Orders - Fine. - Case T-83/91.



European Court reports 1994 Page II-00755

Swedish special edition Page II-00001

Finnish special edition Page II-00001



Summary

Parties

Grounds

Decision on costs

Operative part



Keywords

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1. Competition ° Administrative procedure ° Observance of the right to a fair hearing ° Hearings ° Drawing-up of minutes ° Requirement that they be exhaustive ° Limits

(Commission Regulation No 99/63, Art. 9(4))

2. Competition ° Dominant position ° Relevant market ° Definition ° Criteria

(EEC Treaty, Art. 86)

3. Competition ° Dominant position ° Relevant market ° Geographical definition ° Criteria

(EEC Treaty, Art. 86)

4. Competition ° Dominant position ° Concept ° Criteria for assessment ° Size of market shares

(EEC Treaty, Art. 86)

5. Competition ° Dominant position ° Obligations on dominant undertaking ° Conduct on a market neighbouring the dominated market ° Application of Article 86 even where there is no dominant position on the neighbouring market ° Conditions

(EEC Treaty, Art. 86)

6. Competition ° Dominant position ° Abuse ° Exclusive supply contracts ° System of tied sale

(EEC Treaty, Art. 86)

7. Competition ° Dominant position ° Abuse ° Undertaking creating obstacles to its competitors' activities on the market in products designed to be used with equipment manufactured by it ° Possibility of justification based on technical considerations or considerations relating to product liability or the protection of health ° Absence

(EEC Treaty, Art. 86)

8. Competition ° Dominant position ° Abuse ° Pricing at less than cost with a view to eliminating a competitor

(EEC Treaty, Art. 86)

9. Competition ° Dominant position ° Abuse ° Discriminatory pricing

(EEC Treaty, Art. 86)

10. Competition ° Administrative procedure ° Termination of infringements ° Commission' s power ° Orders addressed to undertakings ° Measures which may be prescribed

(Council Regulation No 17, Art. 3(1))

11. Competition ° Administrative procedure ° Termination of infringements ° Commission' s power ° Orders addressed to undertakings ° Recommendations made during the administrative procedure ° Additional measures imposed by the final decision ° Breach of the principle of the protection of legitimate expectations ° Absence

(Council Regulation No 17, Art. 3(1) and (3))

12. Competition ° Fines ° Amount ° Determination ° Right to be heard ° Procedure

(Council Regulation No 17, Art. 19; Commission Regulation No 99/63, Art. 7)

13. Competition ° Fines ° Amount ° Determination ° Criteria ° Complex infringement ° Obligation on the Commission to break down the amount between the various aspects of the infringement ° Absence

(Council Regulation No 17, Art. 15(2))

14. Competition ° Community rules ° Infringements ° Committed intentionally ° Concept

(Council Regulation No 17, Art. 15(2))

15. Competition ° Fines ° Amount ° Determination ° Criteria

(Council Regulation No 17, Art. 15(2))

Summary

1. The drawing-up of exhaustive minutes of the hearing of an undertaking alleged to have infringed the competition rules is an essential procedural requirement when it proves necessary so as to enable the Advisory Committee on Restrictive Practices and Monopolies to deliver its opinion and the Commission to adopt its decision with full knowledge of the facts, that is without being misled on an essential point by errors or omissions. That would not be the case if the minutes simply fail to record certain statements by a representative of the undertaking in question, which contain nothing of importance that was not in other observations submitted by representatives of that undertaking during the hearing and recorded in the minutes. In such a case, the omission does not prejudice the right of the undertaking concerned to a fair hearing and cannot have any effect on the outcome of the consultation procedure or the content of the final decision. It accordingly cannot vitiate the administrative procedure as a whole and so call in question the lawfulness of the final decision.

2. An undertaking' s possibly dominant position on a given market may be examined only once it has been established that the market in the relevant products is distinct from other sectors of the general market. The definition of the product market must take account of the overall economic context, so as to be able to assess the actual economic power of the undertaking in question. In order to assess whether an undertaking is in a position to behave to an appreciable extent independently of its competitors and customers and consumers, it is necessary first to define the products which, although not capable of being substituted for other products, are sufficiently interchangeable with its products, not only in terms of the objective characteristics of those products, by virtue of which they are particularly suitable for satisfying constant needs, but also in terms of the competitive conditions and the structure of supply and demand on the market.

3. In the scheme of Article 86 of the Treaty the geographical market must be defined so as to determine whether the undertaking concerned is in a dominant position in the Community or a substantial part of it. The definition of the geographical market accordingly calls for an economic assessment. That market can thus be defined as the territory in which all traders operate in the same or sufficiently homogeneous conditions of competition in so far as concerns specifically the relevant products, without its being necessary for those conditions to be perfectly homogeneous.

4. Holding approximately 90% of the market is in itself, in the absence of exceptional circumstances, evidence of the existence of a dominant position. It is clear that holding such market shares means that the position on the market of the undertaking concerned makes it an inevitable partner for other operators and guarantees it the freedom of conduct characteristic of a dominant position.

5. The special responsibility not to allow its conduct to impair genuine undistorted competition on the common market which Article 86 of the Treaty imposes on an undertaking in a dominant position on a given market must be understood as prohibiting it from engaging in any conduct which is such as to hinder the maintenance or the growth of the degree of competition still existing in a market where, as a result of the very presence of that undertaking, competition is weakened.

That is why the conduct of such an undertaking may be caught by and penalized under Article 86 even where it occurs on a market distinct from the dominated market, in so far as, because that market is closely linked to the dominated market and it is in a leading position on that market, it has freedom of conduct on that market compared with the other operators there present such as to impose on it, on that market also and without its being necessary to establish that it is in a dominant position, a special responsibility to maintain genuine undistorted competition.

6. The fact that an undertaking in a dominant position on a market imposes on the purchasers of the machines which it markets an obligation to obtain the raw materials to supply those machines exclusively from itself or a supplier designated by it is an abuse of a dominant position within the meaning of Article 86 of the Treaty. Where an undertaking in a dominant position directly or indirectly ties its customers by an exclusive supply obligation, that constitutes an abuse since it deprives the customer of the ability to choose his source of supply and denies other manufacturers access to the market. It is irrelevant that such a tied sale is in accordance with commercial usage, since a usage which may be acceptable in a normal situation, on a competitive market, cannot be accepted in the case of a market where competition is already restricted.

7. Article 86 of the Treaty prohibits an undertaking in a dominant position, which manufactures and markets both machines and the consumable products to supply them, from deciding of its own initiative and in reliance on technical requirements, product liability problems or considerations relating to the protection of public health or the protection of its reputation, that the two constitute an inseparable integrated system and consequently cannot be sold otherwise than by way of tied sale, thus denying possible competitors in the field of the consumable products access to the market.

8. Although it may be acceptable for an undertaking in a dominant position to sell at a loss in certain circumstances, that would not be the case where such selling was eliminatory. Although Community competition law recognizes that an undertaking in a dominant position has the right to take reasonable steps to protect its commercial interests, it does not countenance acts whose actual purpose is to strengthen that dominant position and abuse it. In particular, Article 86 of the Treaty prohibits an undertaking in a dominant position from eliminating a competitor by practising competition by means of price which does not come within the scope of competition on the basis of quality.

The existence of gross or semi-gross margins ° obtained by subtracting from the sale price the variable direct costs or the average variable costs, being the costs relating to the unit produced ° which are negative suggests that a pricing practice is eliminatory. An undertaking in a dominant position has no interest in applying prices below average variable costs (that is to say, those which vary depending on the quantities produced) except that of eliminating competitors so as to enable it subsequently to raise its prices by taking advantage of its monopolistic position, since each sale generates a loss equal to the total amount of the fixed costs (that is to say, those which remain constant regardless of the quantities produced) and at least part of the variable costs relating to the unit produced.

Furthermore, if the net margin is negative and the gross margin positive, that is to say, if the prices are below average total costs (fixed costs plus variable costs), but above average variable costs, those prices must be regarded as abusive if they are determined as part of a plan for eliminating a competitor. The period during which such prices are applied as part of a plan for damaging a competitor is accordingly a factor to be taken into consideration.

9. For an undertaking in a dominant position to apply prices which discriminate between users established in different Member States is prohibited by Article 86(c) of the Treaty. Although that provision does not preclude such an undertaking from setting different prices in the various Member States, in particular where the price differences are justified by variations in the conditions of marketing and the intensity of competition, the dominant undertaking has the right only to take reasonable steps to protect its commercial interests in that way. In particular, it may not apply artificial price differences in the various Member States such as to place its customers at a disadvantage and to distort competition in the context of an artificial partitioning of national markets.

10. Where an undertaking has abused its dominant position by both discriminatory or predatory pricing and loyalty rebates, the Commission, in prohibiting that undertaking, on all the markets where it is subject to Article 86, from granting certain customers any rebate or more favourable condition in whatever form without objective consideration, is within the limits of its power under Article 3(1) of Regulation No 17 to issue orders to bring the infringements to an end.

11. By imposing in its final decision certain additional measures designed to put an end to the infringement, over and above the measures which it had already recommended during the administrative procedure, the Commission does not act in disregard of the principle of the protection of legitimate expectations. Article 3(3) of Regulation No 17 simply empowers the Commission to address to the undertakings recommendations for termination of the abuses before taking a decision finding an infringement under that article. The effect of compliance with such recommendations by the undertaking in question can in no case be to restrict the Commission' s power under paragraph (1) of that article to impose, when it takes the decision, any measure it considers necessary in order to bring the abuses found to an end.

12. Article 19(1) of Regulation No 17 and Article 7(1) of Regulation No 99/63 expressly provide that, where the Commission proposes to impose a fine, the undertakings concerned must have the opportunity to make their submissions on the matters to which the Commission has taken objection. It is thus by way of their submissions on the duration, the gravity and the foreseeability of the anti-competitive nature of the infringement that the rights of the defence of the undertakings concerned are guaranteed before the Commission in relation to setting the amount of the fine.

13. The Commission is not bound to break down the amount of the fine between the various aspects of the abuse in order to enable the undertakings concerned to assess whether the fine imposed for abuse of a dominant position is of a proper amount and to put forward their defence and in order to enable the Community judicature to exercise its power of review. In particular, such a breakdown is impossible where all the infringements found are part of a coherent overall strategy and must accordingly be dealt with globally for the purposes both of applying Article 86 of the Treaty and of setting the fine. It is sufficient for the Commission to specify its criteria for setting the general level of the fine imposed. It is not required to state specifically how it took into account each factor mentioned among those criteria which contribute to setting the general level of the fine.

14. In order for an infringement of the competition rules of the Treaty to be regarded as committed intentionally, it suffices that the undertaking concerned could not have been unaware of the anti-competitive nature of its conduct, whether or not it was aware that it was infringing the competition rules of the Treaty.

15. In order to assess the gravity of the infringements of the Community competition rules attributable to an undertaking, with a view to determining a fine which is proportionate, the Commission may take into account the exceptional duration of certain infringements, the number and diversity of the infringements, which concerned all or almost all the group' s products and some of which affected all the Member States, the particular gravity of infringements forming part of a deliberate and coherent strategy seeking by various eliminatory practices towards competitors and by a policy of retaining customers to maintain artificially or to strengthen the undertaking' s dominant position on markets where competition was already limited, the particularly harmful effects of the abuses in terms of competition and the benefit gained by the applicant from its infringements.

A fine corresponding to approximately 2.2% of the total turnover of a given year is therefore not disproportionate. It falls within the parameters laid down by Article 15(2) of Regulation No 17, according to which the amount of the fine may be up to 10% of the turnover in the preceding business year of the undertaking concerned.

Parties

In Case T-83/91,

Tetra Pak International SA, whose registered office is in Pully (Switzerland), represented initially by Christopher Bellamy QC, then by John Swift QC, of the Bar of England and Wales, and by Michel Waelbroeck and Alexandre Vandencasteele, of the Brussels Bar, and by Vivien Rose and, initially, Stephen Morris, then Rhodri Thompson, of the Bar of England and Wales, with an address for service in Luxembourg at the Chambers of Ernest Arendt, 8-10 Rue Mathias Hardt,

applicant,

v

Commission of the European Communities, represented by Julian Currall, of the Legal Service, acting as Agent, assisted by Nicholas Forwood QC and David Lloyd Jones, of the Bar of England and Wales, with an address for service in Luxembourg at the office of Georgios Kremlis, of the Legal Service, Wagner Centre, Kirchberg,

defendant,

APPLICATION for the annulment of Commission Decision 92/163/EEC of 24 July 1991 relating to a proceeding pursuant to Article 86 of the EEC Treaty (IV/31043 °Tetra Pak II) (OJ 1992 L 72, p. 1),

THE COURT OF FIRST INSTANCE

OF THE EUROPEAN COMMUNITIES (Second Chamber),

composed of: J.L. Cruz Vilaça, President, C.P. Briët, A. Kalogeropoulos, A. Saggio and J. Biancarelli, Judges,

Registrar: H. Jung,

having regard to the written procedure and further to the hearing on 22 March 1994,

gives the following

Judgment

Grounds

Facts and procedure

1 By Decision 92/163/EEC of 24 July 1991 relating to a proceeding pursuant to Article 86 of the EEC Treaty (IV/31043 ° Tetra Pak II) (OJ 1992 L 72, p. 1) (hereinafter "the Decision") the Commission found that Tetra Pak International SA (hereinafter "Tetra Pak") was in a dominant position on the markets in aseptic machines and cartons intended for the packaging of liquid foods in the European Economic Community (hereinafter "the Community") and that it abused that position within the meaning of Article 86 of the EEC Treaty from at least 1976 until 1991 both on those markets and on the markets in non-aseptic machines and cartons. The Commission imposed a fine of ECU 75 million on Tetra Pak and ordered it to bring to an end the infringements found.

2 Tetra Pak, whose registered office is in Switzerland, coordinates the policy of a group of companies, originally Swedish, which has acquired a global dimension. The Tetra Pak group specializes in equipment for the packaging of liquid and semi-liquid food products, mainly milk, in cartons. Its activities cover both the aseptic and the non-aseptic packaging sectors. They consist essentially in manufacturing cartons and, using the group' s own technology, carton-filling machines.

3 It is apparent from the information given in the Decision that the consolidated turnover of the Tetra Pak group amounted to ECU 2.4 billion in 1987 and ECU 3.6 billion in 1990. Approximately 90% of that turnover is in the carton sector and the remaining 10% in the field of packaging equipment and associated operations. The proportion of that turnover arising in Community territory amounts to a little more than 50%. In the Community, Italy is one of the countries, if not the country, in which Tetra Pak is most firmly established. The consolidated turnover of the seven Italian companies within the group stood at ECU 204 million in 1987.

4 The Decision is one of a series of three concerning Tetra Pak. The first is Commission Decision 88/501/EEC of 26 July 1988 relating to a proceeding under Articles 85 and 86 of the EEC Treaty (IV/31.043 ° Tetra Pak I (BTG licence)) (OJ 1988 L 272, p. 27) (hereinafter "the Tetra Pak I decision") in which the Commission found that by acquiring, through the purchase of the Liquipak group, the exclusivity of a patent licence for a new aseptic milk-packaging process called "ultra-high temperature" (hereinafter "UHT"), Tetra Pak had infringed Article 86 of the Treaty from the date of the acquisition until the exclusivity came to an end. That decision was challenged in an action which was dismissed by the Court of First Instance in its judgment in Case T-51/89 Tetra Pak v Commission [1990] ECR II-309. The second decision is Decision 91/535/EEC of 19 July 1991 declaring the compatibility with the common market of a concentration (Case No IV/M068 ° Tetra Pak/Alfa-Laval) (OJ 1991 L 290, p. 35), by which the Commission, on the basis of Article 8(2) of Council Regulation (EEC) No 4064/89 of 21 December 1989 on the control of concentrations between undertakings (corrected version published in OJ 1990 L 257, p. 13), declared the acquisition by Tetra Pak of Alpha-Laval AB to be compatible with the common market.

5 So far as concerns the products in issue in this case, the figures given in the Decision (recital 6) show that some 90% of cartons were used in 1983 for the packaging of milk and other liquid dairy products. According to the same source, in 1987 that share was approximately 79%, of which 72% was for packaging milk. Approximately 16% of cartons were at that time used for packaging fruit juice. Other products (wine, mineral water, tomato-based products, soups, sauces and baby food) accounted for only 5% of cartons used.

6 As regards the packaging of milk, it should be noted that milk is sold mainly in a pasteurized form (fresh milk) or after an ultra-high temperature treatment under aseptic conditions which makes it possible to attain a storage period of several months in a non-refrigerated environment (UHT milk). As for "sterilized" milk, according to the Decision such milk now has only a relatively small market share in the Community.

7 In the aseptic sector, Tetra Pak manufactures the so-called "Tetra Brik" system, designed for packaging UHT milk in particular. According to information supplied by the applicant, that system was launched on the German market in 1968 and in the other European countries from 1970 onwards. In that process, the cartons are delivered to the user in the form of rolls, which are sterilized in the filling machine itself by being soaked in a hydrogen peroxide bath and are then used to package the liquid as it flows in an aseptic environment. In the same sector, only one competitor of Tetra Pak, PKL, controlled by the Swiss company SIG (Société Industrielle Générale), also manufactures a system of aseptic packaging in brick-type cartons, known as "Combiblocs". In contrast to Tetra Pak' s continuous packaging process, those cartons are pre-shaped at the time of packaging. For technical reasons and because in practice the manufacturers of aseptic machines also provide the cartons to be used in their own machines, possession of an aseptic-filling technique is the key to market entry both for machines and for aseptic cartons.

8 In contrast, non-aseptic packaging, in particular of fresh pasteurized milk, does not require the same degree of sterility and so calls for less sophisticated equipment. On the non-aseptic carton market, Tetra Pak initially used brick-type cartons and continues to do so, but its main product on that market is now a gable-top carton, the "Tetra Rex". That carton is in direct competition with the "Pure-Pak" carton produced by the Norwegian group Elopak (hereinafter "Elopak").

9 Tetra Pak manufactures its own machines for non-aseptic packaging. Moreover, like Elopak and PKL but only occasionally, it also distributes machines manufactured by some ten small producers, the main ones being Nimco, Cherry Burrel and Shikoku.

10 The documents before the Court indicate that Tetra Pak has patented the basic technology which it has developed in relation to machines, cartons and processes, and also the modifications made subsequently to those products and certain techniques, such as the method of folding the carton. The latest patents protecting the aseptic Tetra Brik cartons, developed in the 1960s, will expire in the early years of the next century (recital 22 of the Decision). As both parties have indicated, Tetra Pak has granted no manufacturing licences for its cartons in the Community.

11 The Decision also indicates that distribution of Tetra Pak machines and cartons in the Community is ° with the exception of the distributors working for Liquipak, taken over by Tetra Pak ° wholly undertaken by the network of Tetra Pak subsidiaries (recital 21).

12 During the period in question, various standard-form contracts for the sale and leasing of machines and the supply of cartons were in force between Tetra Pak and its customers in the various Member States of the Community. The content of the clauses incorporated in those contracts which had an effect on competition was summarized in recitals 24 to 45 of the Decision as follows:

"2.1. Conditions of sale of Tetra Pak equipment (Annex II.1)

(24) Standard purchase contracts exist in the following five countries: Greece, Ireland, Italy, Spain and the United Kingdom. For each clause, the country or countries in which it is applicable are indicated in brackets.

2.1.1. Equipment configuration

(25) In Italy, Tetra Pak reserves an absolute right of control over the equipment configuration by prohibiting the buyer:

(i) from adding accessories to the machine (Italy);

(ii) from making modifications to the machine, and adding or removing anything to or from it (Italy);

(iii) from moving the machine (Italy).

2.1.2. Operation and maintenance of equipment

(26) There are five clauses concerning the operation and maintenance of equipment, which are intended to give Tetra Pak an exclusivity and a right of inspection in this area:

(iv) it has an exclusive right to maintain and repair equipment (all countries except Spain);

(v) it has an exclusive right to supply spare parts (all countries except Spain);

(vi) it has the right to provide, free of charge, assistance, training, maintenance and updating services not requested by the client (Italy);

(vii) there is a sliding scale for part of the charges made for assistance, maintenance and technical updating (with a possible discount of up to 40% of the basic monthly charge) depending on the number of cartons used on all Tetra Pak machines of the same type (Italy);

(viii) the purchaser is required to inform Tetra Pak of any improvements or modifications to the equipment and to grant Tetra Pak ownership of any resulting intellectual property right (Italy).

2.1.3. Cartons

(27) There are four clauses relating to cartons which also give Tetra Pak an exclusive right of control over the product:

(ix) the purchaser must use only Tetra Pak cartons on the machines (all countries);

(x) the purchaser must obtain supplies of cartons from Tetra Pak or a supplier designated by Tetra Pak (all countries);

(xi) the purchaser is required to inform Tetra Pak of any improvements or technical modifications made to the cartons and to grant Tetra Pak ownership of any resulting intellectual property rights (Italy);

(xii) Tetra Pak reserves the right to inspect the wording to be used on cartons (Italy).

2.1.4. Inspections

(28) Two clauses are more specifically concerned with monitoring the purchaser' s compliance with his contractual obligations:

(xiii) the purchaser is required to submit a monthly report (Italy);

(xiv) Tetra Pak has the right to carry out inspections without notice (Italy).

2.1.5. Transfer of ownership or use of equipment

(29) Two clauses in the contract limit the purchaser' s right to resell or transfer the equipment to third parties:

(xv) the purchaser is required to obtain Tetra Pak' s agreement before selling or transferring the use of the equipment (Italy), resale is subject to conditions (Spain), and Tetra Pak reserves the right to repurchase the equipment at a pre-arranged fixed price (all countries); failure to comply with this clause may give rise to a specific penalty (Greece, Ireland, United Kingdom);

(xvi) the purchaser must ensure that any third party to whom he resells the equipment assumes all his obligations (Italy, Spain).

2.1.6. Guarantee

(30) (xvii) The guarantee given on the equipment applies only if the purchaser complies with all of his contractual obligations (Italy) or, at the very least, uses only Tetra Pak cartons (other countries).

2.2. Conditions for the leasing of Tetra Pak equipment (Annex II.2)

(31) Standard lease contracts exist in all countries within the Community except Greece and Spain.

These contracts include the majority of the clauses contained in purchase contracts, adapted to the circumstances of leasing.

Other conditions are specific to leasing but invariably pursue the same goal, i.e. maximum reinforcement of the links between Tetra Pak and its customer.

2.2.1. Equipment configuration

(32) Clauses (i), (ii) and (iii) (Italy in the case of clause (i); all countries in the case of clause (ii); France, Ireland, Italy, Portugal, United Kingdom in the case of clause (iii)) are included.

(xviii) An additional clause requires the leaseholder to use only cases, outer packages and/or containers supplied by Tetra Pak for transport purposes (Germany, Belgium, Italy, Luxembourg, the Netherlands) or if the conditions are equal to give preference to obtaining supplies from Tetra Pak (Denmark, France).

2.2.2. Operation and maintenance of equipment

(33) Clauses (iv) and (v) (all countries) are included, granting Tetra Pak exclusive rights.

Likewise, clause (viii) appears, conferring on Tetra Pak ownership of the intellectual property rights to any modifications made by the user (Belgium, Germany, Italy, Luxembourg, the Netherlands) or, at the very least, requiring the leaseholder to grant an operating licence to Tetra Pak (Denmark, France, Ireland, Portugal, United Kingdom).

2.2.3. Cartons

(34) Contracts also contain clauses (ix) (all countries) and (x) (Italy) concerning the exclusive use of Tetra Pak cartons, clause (xi) conferring on Tetra Pak ownership of the rights to any improvements (Denmark, Italy) or, at the very least, requiring leaseholders to grant an operating licence to Tetra Pak (France, Ireland, Portugal, United Kingdom), and clause (xii) giving Tetra Pak the right to inspect the wording or brand names which the client wishes to use on the cartons (Germany, Spain, Greece, Italy, the Netherlands, Portugal, United Kingdom).

2.2.4. Inspections

(35) In the case of sale, the leaseholder must return a monthly report (clause (xiii) ° all countries), failure to do so giving rise to fixed-rate invoicing (Belgium, Luxembourg, the Netherlands), and allow the premises at which the equipment is installed to be inspected (clause (xiv) ° all countries) without notice (all countries except Denmark, Germany, Ireland, Portugal and the United Kingdom).

(xix) A further clause allows Tetra Pak to examine ° at any time (Denmark, France) ° the accounts of the company leasing the equipment (all countries) and (depending on the country) its invoices, correspondence or any other documents necessary to check the number of cartons used.

2.2.5. Transfer of the lease, sub-leasing, transfer of use or use on behalf of third parties

(36) In the case of sale, ownership may be subsequently transferred only where very restrictive conditions are complied with.

(xx) The terms of lease contracts likewise exclude the transfer of the lease, sub-leasing (all countries) or even simple commission work on behalf of third parties (Italy).

2.2.6. Guarantee

(37) The wording of lease contracts is less precise than that of purchase contracts: they link the guarantee to compliance with 'instructions' given by Tetra Pak concerning the 'maintenance' and 'proper handling' of the machine (all countries). However, the terms 'instructions' , 'maintenance' and 'proper handling' are sufficiently broad to be interpreted as also including at least the sole use of Tetra Pak spare parts, repair and maintenance services and packaging materials. Such an interpretation is confirmed by the written and oral replies given by Tetra Pak to the statement of objections.

2.2.7. Fixing of rental and conditions of payment

(38) The rental is made up of the following components (all countries):

(a)(xxi) A 'base rental' payable at the time the machine is placed at the leaseholder' s disposal. Its amount is not necessarily any lower than the selling price of the machines concerned and in fact makes up almost the total sum of present and future rental payments (more than 98% in some cases);

(b) an annual rent, payable quarterly in advance;

(c)(xxii) a monthly production rental, the amount of which decreases according to the number of cartons used on all Tetra Pak machines of the same type. This component replaces the sliding scale of charges ° set at a similar level ° for part of the maintenance costs payable in the case of sale (see clause (vii));

In some countries (Germany, France, Portugal), there is a specific penalty if this fee is not paid within the prescribed period.

2.2.8. Term of the lease

(39) The term of the lease and the conditions for its termination vary from one Member State to another:

(xxiii) The minimum term of the lease ranges from three years (Denmark, Ireland, Portugal, United Kingdom) to nine years (Italy).

2.2.9. Penalty clause

(40) (xxiv) Over and above the usual damages and interest, Tetra Pak reserves the right to impose a penalty on any leaseholder who infringes any of his obligations under the contract, the amount of such penalty being fixed at Tetra Pak' s discretion, up to a maximum threshold, according to the gravity of the case (Italy).

2.3. Conditions for the supply of cartons (Annex II.3)

(41) Standard supply contracts exist in Greece, Ireland, Italy, Spain and the United Kingdom: they are compulsory whenever a client purchases rather than leases a machine.

2.3.1. Exclusive supplies

(42) (xxv) The purchaser must undertake to obtain supplies of all packaging materials to be used on the given Tetra Pak machine(s) (all countries) and on any other Tetra Pak machine purchased subsequently (Italy) solely from Tetra Pak.

2.3.2. Contract term

(43) (xxvi) The contract is signed for an initial period of nine years, renewable for a further period of five years (Italy) or for the period during which the purchaser remains in possession of the machine (Greece, Ireland, Spain, United Kingdom).

2.3.3. Fixing of prices

(44) (xxvii) Cartons are delivered at the price applicable at the time of order. No system of adjustment or indexing is provided for (all countries).

2.3.4. Wording

(45) Contracts again include Tetra Pak' s right to inspect the wording or brand names which the client wishes to use on cartons (clause (xii)).

13 As regards more specifically the structure of supply on the market in systems for the aseptic packaging of liquid foods in cartons in the Community, it is apparent from the Decision that it is quasi-monopolistic, with Tetra Pak holding 90 to 95% of the sector at the date of the Decision (recital 12). In 1985, Tetra Pak held approximately 89% of the market in aseptic cartons and 92% of that in aseptic machines in the same territory (Annexes I.1 and I.2 to the Decision). Tetra Pak' s only real competitor on that market, PKL, held almost all of the remaining market share of 5 to 10%.

14 The structure of the non-aseptic sector is more open but is still oligopolistic. At the time when the Decision was adopted, Tetra Pak held 50 to 55% of the market in the Community (recital 13 of the Decision). In 1985, it held approximately 48% of the market in non-aseptic cartons and 52% of that in non-aseptic machines in the territory of the twelve current Member States (Annexes I.1 and I.2 to the Decision). For its part, Elopak held, in 1985, some 27% of the market in non-aseptic machines and cartons, followed by PKL which had approximately 11% of that market. Elopak distributed solely on the market in aseptic machines, before acquiring the "packaging machine" division of Ex-Cell-O in 1987. The remaining 12% of the market in non-aseptic cartons was at that time divided between three companies, whose respective markets remained concentrated in one or more countries, Schouw Packing (Denmark, +/- 7%, half-owned by Elopak), Mono- Emballage/Scalpak (France/ Netherlands, +/- 2.5%) and Van Mierlo (Belgium, +/- 0.5%). Those companies manufactured their own cartons, generally under licence (Ex-Cell-O acquired by Elopak in 1987, Nimco, Sealright etc.). On the market in machines, they acted only as distributors. The 13% or so of the market in non-aseptic machines left in the Community by Tetra Pak, Elopak and PKL was shared between ten or so small manufacturers, the main ones being Nimco (US, +/- 4%), Cherry Burrel (US, +/- 2.5%) and Shikoku (Japan, +/- 1%).

15 In the sector covering the packaging of fresh liquid foods in cartons, Elopak is accordingly Tetra Pak' s main competitor. Its operations have not so far extended into the aseptic sector. It is apparent from the Decision (recital 3) that the ratio between Tetra Pak and Elopak as far as their respective turnover figures are concerned could be estimated in 1987 at 7.5:1. Elopak operates in Italy via a subsidiary, Elopak Italia (Milan). According to the Decision, that company does not produce cartons in Italy but imports them from other subsidiaries of the group.

16 On 27 September 1983, Elopak Italia filed a complaint with the Commission against Tetra Pak Italiana and its associate companies in Italy. The group considered that Tetra Pak had attempted over the years to reduce Elopak' s competitiveness in Italy by engaging in trading practices amounting to an abuse within the meaning of Article 86. Those practices essentially involved, according to Elopak, the sale of Tetra Rex cartons at predatory prices, the imposition of unfair conditions on the supply of machines for filling those cartons and, in certain cases, the sale of that equipment at prices which were also predatory. Elopak finally reported attempts at excluding it from certain advertising media.

17 On 16 December 1988, the Commission decided to initiate proceedings in this matter. The statement of objections was sent to Tetra Pak by letter of 20 December 1988. A hearing took place on 21 and 22 September 1989.

18 Following discussions with the Commission on the points which remained in dispute after the hearing, Tetra Pak undertook in a letter sent to the Commission on 1 February 1991 (Annex 7 to the Decision) to abandon its system of exclusive tied sales and as a result to amend its standard-form contracts; the new standard-form contracts (Annex 3 to the application) were annexed to that letter. The Commission accepted those undertakings and expressed the view, in recital 180 of the Decision, that they concerned implementation of the orders set out in points 1, 4 and 5 of the third paragraph of Article 3 of the Decision, quoted in paragraph 21 below.

19 The Commission found as follows in Article 1 of the Decision: "Taking advantage of its dominant position on the so-called aseptic market in machines and cartons intended for the packaging of liquid foods, Tetra Pak has, at least since 1976, infringed the provisions of Article 86 of the EEC Treaty on both these aseptic markets and on the neighbouring and associated markets in non-aseptic machines and cartons by means of a variety of practices aimed at eliminating competition and/or maximizing, to the detriment of users, the profits which could be drawn from the positions it had acquired."

20 The essential elements of those infringements were summarized in the Decision as follows:

"1. the pursuit of a marketing policy aimed at severely restricting supply and compartmentalizing the national markets within the Community;

2. the imposition on users of Tetra Pak products in all Member States of numerous contractual clauses ° as listed under numbers (i) to (xxvii) ° having the essential object of unduly binding them to Tetra Pak and of artificially eliminating potential competition;

3. the charging of prices for cartons which have been shown to discriminate between users in different Member States and, at least in Italy, eliminate competitors;

4. the charging of prices for machines which have been shown to

° discriminate between users in different Member States,

° discriminate, at least in Italy, between users within the same country, and

° eliminate competitors, at least in Italy and the United Kingdom;

5. various specific practices aimed, at least in Italy, at eliminating competitors and/or their technology from certain markets."

21 The Commission ordered the applicant in Article 3 of the Decision to bring to an end the infringements found, in so far as it had not already done so, by adopting in particular the following measures:

"1. Tetra Pak shall amend or, where appropriate, delete from its machine purchase/lease contracts and carton supply contracts the clause listed under numbers (i) to (xxviii) so as to eliminate the aspects which have been found by the Commission to be abusive. The new contracts shall be submitted to the Commission;

2. Tetra Pak shall ensure that any differences between the prices charged for its products in the various Member States result solely from the specific market conditions. Any customer within the Community shall be supplied by any Tetra Pak subsidiary it chooses, and at the price it practises;

3. Tetra Pak shall not practise predatory or discriminatory prices and shall not grant to any customer any form of discount on its products or more favourable payment terms not justified by an objective consideration. Thus, discounts on cartons should be granted solely according to the quantity of each order, and orders for different types of carton may not be aggregated for that purpose;

4. Tetra Pak may not refuse orders, at prevailing prices, on the ground that the orderer is not an end-user of Tetra Pak products;

5. Tetra Pak shall inform any customer purchasing or leasing a machine of the specifications which packaging cartons must meet in order to be used on its machines."

22 Those are the circumstances in which, by application lodged at the Registry of the Court of First Instance on 18 November 1991, Tetra Pak sought the annulment of the Decision. Upon hearing the report of the Judge-Rapporteur, the Court of First Instance decided to open the oral procedure without any preparatory inquiry. Pursuant to the measures of organization of procedure laid down in Article 64 of the Rules of Procedure, the parties were requested to provide certain documents, and to reply in writing to a number of questions, before the date of the hearing. The hearing took place on 22 March 1994.

Forms of order sought

23 The applicant claims that the Court should:

(i) annul the Decision;

(ii) in any event annul in whole or in part Article 1 and/or Article 2 and/or Article 3 and/or Article 4 of the Decision;

(iii) in any event quash or reduce the fine imposed in Article 2;

(iv) order the Commission to pay the costs;

(v) order that Tetra Pak be reimbursed for any expenses incurred in providing security for payment of the fine.

The defendant contends that the Court should:

(i) dismiss the application as unfounded;

(ii) order the applicant to pay the costs.

The claim seeking annulment of the Decision

24 In support of its claim for annulment, the applicant relies on four pleas, alleging disregard of the principle of good administration, failure to provide proper minutes of the hearing, non-infringement by the applicant of Article 86 of the Treaty, and, finally, abuse by the Commission of its power to issue orders.

The first plea of disregard of the principle of good administration

Summary of the arguments of the parties

25 The applicant claims that during the administrative procedure the Commission acted improperly and inconsistently. It submits that, whilst the purpose of the administrative procedure is to prepare the way for a decision finding infringement, that procedure must also provide "the undertakings concerned with an opportunity to bring the practices complained of into line with the rules of the Treaty" (judgment of the Court of Justice in Joined Cases 96 to 102, 104, 105, 108 and 110/82 IAZ v Commission [1983] ECR 3369, paragraph 15).

26 In this case, the applicant argues that throughout the administrative procedure it demonstrated its willingness to comply in future with the competition rules of the Treaty. The Commission failed to fulfil its obligation to assist it in such endeavours and continually shifted its position as to the basis upon which a solution was being sought, constantly raising new points, re-opening issues that had been resolved and thus indefinitely delaying the conclusion of an agreement. In the light of the Commission' s conduct, the applicant was entitled to expect that, if it met the Commission' s demands, an agreement could be reached before the Decision was taken.

27 In those circumstances, the applicant claims that the Commission frustrated its legitimate expectations and disregarded its rights as a defendant by refusing to acknowledge that it had willingly put an end to the infringements and by issuing orders to it going well beyond what had been agreed during the negotiations. It submits that the Commission has thus breached the principle of good administration and that the Decision should be annulled, or alternatively that the measures designed to put an end to the infringement and imposed in the Decision should be annulled or reduced.

28 The Commission considers that it did not breach the principle of good administration. It submits that had the applicant really wished voluntarily to change the practices complained of, it would not have waited for six years of preliminary investigation and two and a half years of administrative proceedings to elapse in order to do so.

29 As for the applicant' s legitimate expectations, the Commission observes that no legitimate expectation of escaping the consequences of past actions can arise merely because of a change of conduct for the future. In any event, the Commission never gave the applicant any basis for taking that view, which moreover has not been disputed by the latter.

Assessment of the Court

30 It should be noted first that the time taken by the Commission to investigate the matter, from the filing of the complaint in 1983 until the initiation of the procedure and the statement of objections in 1988, cannot in this case constitute an infringement of the principle of good administration since it is attributable to the scale and difficulty of an investigation concerning Tetra Pak' s commercial policy in its entirety during a particularly long period of time.

31 Furthermore, although a complaint had been filed as early as 1983, the procedure initiated on 9 December 1988 and the statement of objections sent to it by letter of 20 December 1988, Tetra Pak did not undertake to give up its system of exclusive tied sales until the beginning of 1991, in its letter of 1 February 1991 to the Commission (Annex 7 to the Decision), to which were annexed the new standard-form contracts (Annex 3 to the application). The Court accordingly considers that the applicant cannot complain that the Commission disregarded the principle of good administration.

32 It follows that the first plea must be rejected as unfounded.

The second plea of failure to provide proper minutes of the hearing

Summary of the arguments of the parties

33 The applicant claims that the draft minutes of the hearing which were submitted to the Advisory Committee on Restrictive Practices and Monopolies (hereinafter "the Advisory Committee") were so incomplete and defective that it was impossible for that committee to give its opinion in full knowledge of the facts. Although the applicant submitted a list of corrections, these concerned only minor points and the applicant had no opportunity to fill important gaps in the text of that draft.

34 The applicant alleges specifically that the statement made by Mr Severi, the managing director of Tetra Pak Italiana, concerning the effect which the proposal to oblige all Tetra Pak group companies to publish price lists to which they would be obliged to adhere would have on his company, was not recorded in the minutes. That is a serious omission, in that it concerns the main issues raised by the orders set out in the Decision seeking to bring the infringement to an end.

35 The Commission considers that the provision of draft verbatim minutes of the hearing enabled the Advisory Committee to rule in full knowledge of the facts. In particular, it disputes that Mr Severi was heard in connection with the obligation to publish price lists. Moreover, the point attributed to Mr Severi had been made several times in the course of the administrative procedure and appeared in the draft minutes.

Assessment of the Court

36 As a preliminary point, it is important to note that Regulation No 99/63/EEC of the Commission of 25 July 1963 on the hearings provided for in Article 19(1) and (2) of Council Regulation No 17 (OJ, English Special Edition 1963-1964, p. 47) provides in Article 1 that the Commission shall hear the undertaking concerned before consulting the Advisory Committee. Moreover, so far as concerns the oral stage of the hearing, Article 9(4) of that regulation provides that the essential content of the statements made by each person heard is to be recorded in minutes which are to be read and approved by him.

37 The drawing-up of exhaustive minutes of the hearing is an essential procedural requirement when, in a given case, it proves necessary so as to enable the Advisory Committee to deliver its opinion and the Commission to adopt its decision with full knowledge of the facts, that is without being misled on an essential point by errors or omissions. That would not be the case if the minutes of the hearing simply fail to record certain statements by a representative of the undertaking in question, which contain nothing of importance that was not in other observations submitted by representatives of that undertaking during the hearing and recorded in the minutes. In such a case, the omission does not prejudice the right of the undertaking concerned to a fair hearing and cannot have any effect on the outcome of the consultation procedure or the content of the final decision. It accordingly cannot vitiate the administrative procedure as a whole and so call in question the lawfulness of the final decision.

38 In this case, it is noteworthy that the only omissions in the minutes of the hearing specified by the applicant and disputed by the Commission relate to a statement by one of the applicant' s representatives which essentially concerns a proposal by the Commission to oblige each of Tetra Pak' s national subsidiaries to publish a price list for both machines and cartons. However, it is apparent from an examination of the minutes that the applicant' s argument concerning those price lists was in any event fully expounded by one of its advisers and recorded in the minutes.

39 It follows that the omission alleged by the applicant has not prejudiced its right to a fair hearing and cannot accordingly vitiate the administrative procedure.

40 The second plea must therefore be rejected as unfounded.

The third plea of non-infringement by the applicant of Article 86 of the Treaty

41 There are two limbs to this plea. The applicant submits, first, that it is not in a dominant position in the common market or any substantial part of it. It maintains, secondly, that the conduct complained of in the Decision did not constitute an abuse within the meaning of Article 86.

1 ° The existence of a dominant position

42 The applicant considers that it is not in a dominant position within the meaning of Article 86. It disputes, first, the definition in the Decision of the product market (A). It contests, secondly, the definition of the geographical market (B). It asserts, thirdly, that it is not in a dominant position on the markets in aseptic products and disputes in any event that Article 86 is applicable on the markets in non-aseptic products, which neighbour the markets allegedly dominated (C).

A ° The product market

43 The Decision defines four markets in the relevant products: the market in machinery for the aseptic packaging of liquid foods in cartons and the corresponding market for cartons (hereinafter "aseptic markets") and the market in machinery for the non-aseptic packaging of liquid foods in cartons and the corresponding market in cartons (hereinafter "non-aseptic markets"; recitals 9, 11 and 92 to 97, incorporating by reference recitals 29 to 39 of the Tetra Pak I decision). The applicant considers that the relevant market is a "complex" market encompassing all liquid food packaging systems.

44 It must accordingly be ascertained whether the aseptic markets and the non-aseptic markets are separate markets, distinct both from each other and from packaging systems using other materials (1). It must also be ascertained whether machines and cartons form separate markets, which the applicant disputes (2).

1. The aseptic and the non-aseptic carton markets are not separate markets

Summary of the arguments of the parties

45 The applicant' s preliminary submission is that systems for the aseptic packaging of non-UHT products are not covered by the Decision. The Commission erroneously took the view that the state of competition in the market in aseptic systems used for packaging non-UHT products, such as fruit juices for which there are numerous packaging systems that can be substituted for aseptic cartons, was the same as that in the market in aseptic systems used for packaging long-life milk, which requires UHT-treatment. That error is traceable to recital 14 of the Tetra Pak I decision, where it is stated that in the EEC "most long-life fruit juices are also UHT-treated and packed aseptically." The aseptic markets were thus defined, in recital 11 of the Decision, as the markets in machines and cartons designed for the packaging of "UHT-treated liquid foods."

46 In challenging the definition given in the Decision of the markets in the relevant products, the applicant argues that the Commission should have ascertained specifically whether the various packaging systems on the market are sufficiently interchangeable for each category of liquid foods, characterized by specific packaging needs.

47 It concludes from this that, in both the aseptic and the non-aseptic sectors, the definition of the relevant markets given in the Decision is too wide, in that it includes machinery and cartons used to package liquid food products other than milk without sufficiently analysing the market in packaging systems for those products. The Commission simply extrapolated to those products the conclusions which it had reached concerning the packaging of milk.

48 The applicant also concludes that the definition of the four relevant markets mentioned above is moreover too restrictive, in that it insulates the markets in aseptic packaging systems from the markets in non-aseptic systems and the markets in systems using cartons from the markets in systems using other materials. The applicant argues that within the market in liquid food packaging systems there are markets which are differentiated according to the category of product to be packaged. Those markets are wider than the markets defined in the Decision.

49 In that connection, the applicant complains that the Commission applied the test of perfect "substitutability" in the short term at the level of the final consumer, instead of that of sufficient substitutability in the long term at the packaging stage.

50 The applicant stresses in particular that the Commission defined the relevant markets exclusively by reference to consumer demand. However, demand is led not by consumers but by retailers and packers, as regards both the content ° namely the product whether fresh or long-life ° and the packaging. In those circumstances, slight price differences on Tetra Pak' s products may be decisive, since the choice of packaging is, for the packer, the principal component of the costs subject to his control. The Commission did not in this case carry out an investigation of the degree of interchangeability for Tetra Pak' s customers of the various forms of packaging, contrary to its practice in particular in the Tetra Pak/ Alfa-Laval case, cited above.

51 According to the applicant, the correct application of the test of sufficient "substitutability" demonstrates first that the various aseptic or non-aseptic systems, using cartons or other materials, are sufficiently interchangeable for the packaging of liquid foods other than milk. In those circumstances, none of the Commission' s three principal arguments relating to the milk sector, namely that (1) only aseptic carton packaging is suitable for UHT milk; (2) UHT milk has special qualities of taste and preservation and is associated with a particular type of packaging; and (3) consumers do not regard different types of milk and their associated packages as totally interchangeable, is applicable in the fruit juice and other non-dairy product sector.

52 Secondly, there is also sufficient interchangeability between the various systems for packaging liquid dairy products other than milk. For certain of those products, such as cream, the consumer does not draw a distinction between fresh, long-life and sterilized goods. Thirdly, in the pasteurized milk sector, non-aseptic cartons are sufficiently interchangeable with glass or plastic bottles and plastic pouches.

53 Fourthly, in the general milk sector, aseptic cartons are sufficiently interchangeable with the other types of packaging, both aseptic and non-aseptic. That interchangeability is intensified by consumer awareness of the environmental impact of packaging and by legislation favouring returnable packaging. In addition, the packaging market has become a buyers' market. In that context, contrary to the arguments put forward by the Commission, the absence of perfect substitutability as between pasteurized milk and UHT milk at consumer level does not mean that the alleged monopoly supplier of an aseptic packaging system can profitably raise his price to his customers without running the risk that for packaging milk those customers would choose a well-established non-aseptic system. Furthermore, new systems for aseptic packaging in plastic or glass bottles pose real substitution threats. In France, for example, Tetra Pak' s principal customers, Candia and Lactel, have installed lines for packaging UHT milk in plastic bottles and so captured over 5% of the market since 1987. Since then, the aseptic Tetra Brik has lost 30% of the French market in semi-skimmed milk (accounting for 10% of total UHT milk). In Germany, the system for aseptic packaging in returnable glass bottles, offered by Bosch and SEN, has recently been widely sold. Aseptic plastic pouches have been marketed successfully in Spain and UHT milk packed in cans is sold in the United Kingdom.

54 After considering the question of demand substitutability, Tetra Pak also briefly deals with the complementary test of supply substitutability. It observes that an undertaking operating on neighbouring markets, which is not a current manufacturer of aseptic carton-packaging systems, may easily gain entry to the aseptic markets.

55 The Commission disputes all the applicant' s submissions concerning the definition of the product market. It specifies, first, that the definition of the aseptic markets, in recital 11 of the Decision, also covers systems for packaging fruit juices, since it refers to the technology which characterizes the systems for packaging UHT-treated products and does not take account of the use to which they are put. That definition is not vitiated by the reference in recital 14 of the Tetra Pak I decision to "UHT-treated" fruit juices, the inaccuracy of which is admitted by the Commission.

56 The Commission rejects the complaint that the definition of the aseptic markets is too wide in that it includes systems for packaging non-dairy products. It maintains essentially that, as a matter of economics, it was not necessary to analyse that sector separately, given that milk is the predominant sector.

57 The Commission considers furthermore that the four markets defined in the Decision do indeed constitute separate markets. It notes first that cross-price elasticity of demand by packers, which enables the markets in packaging systems to be defined, depends on cross-price elasticity on the markets in the final products.

58 In those circumstances, the Commission submits in substance that, for packers, aseptic cartons were not sufficiently interchangeable with non-aseptic packaging, because there is no perfect interchangeability between UHT milk and pasteurized milk at the level of the final consumer. In addition, it argues that there were no aseptic packaging systems using other materials, sufficiently interchangeable with aseptic carton-packaging systems, during the period in question, given the characteristics of those products for the users and the fact that aseptic cartons were in practice the only type of packaging used for UHT milk from 1976 to 1987.

59 Moreover, both in the pasteurized milk sector and the UHT milk sector the recently-observed shifts in final consumer demand from one type of packaging to another reflect "structural trends" linked to external factors such as changes in consumer preferences depending on environmental factors. Demand is accordingly not sensitive to slight but significant variations in the relative prices of the different types of packaging.

Assessment by the Court

60 Before considering whether the definition of the four aseptic and non-aseptic markets given in the Decision is valid, the exact content of that definition in the aseptic sector must be determined.

61 Contrary to the applicant' s arguments, the Decision seeks to encompass in the two aseptic markets, mentioned above, all aseptic machinery and cartons, whether used for the packaging of UHT milk or for the packaging under aseptic conditions of liquid foods not needing UHT treatment, such as fruit juice. The aseptic markets are expressly defined in recital 11 of the Decision as "(a) the market for machinery incorporating technology for the sterilization of cartons and the packaging in those cartons, under aseptic conditions, of UHT-treated liquid foods; and (b) the corresponding market for packaging cartons". It is clear from this that those markets are determined exclusively by reference to the technological characteristics of machinery and cartons for packaging UHT-treated products, on the basis that the machinery and cartons with those characteristics are also used for the aseptic packaging of non-UHT-treated products. That interpretation is confirmed by Article 1 of the Decision, which simply finds the existence of a dominant position on the "so-called aseptic markets in machines and cartons intended for the packaging of liquid foods", without making any reference to the use to which that equipment is put.

62 It is therefore for the Court to consider whether the four markets so defined by the Decision were indeed markets distinct from other sectors of the general market in systems for packaging liquid food products.

63 A preliminary point to note is that, according to settled case-law, the definition of the market in the relevant products must take account of the overall economic context, so as to be able to assess the actual economic power of the undertaking in question. In order to assess whether an undertaking is in a position to behave to an appreciable extent independently of its competitors and customers and consumers, it is necessary first to define the products which, although not capable of being subsituted for other products, are sufficiently interchangeable with its products, not only in terms of the objective characteristics of those products, by virtue of which they are particularly suitable for satisfying constant needs, but also in terms of the competitive conditions and the structure of supply and demand on the market (see the judgment of the Court of Justice in Case 322/81 Michelin v Commission [1983] ECR 3461, paragraph 37).

64 In this case, the "interchangeability" of aseptic packaging systems with non-aseptic systems and of systems using cartons with those using other materials must be assessed in the light of all the competitive conditions on the general market in systems for packaging liquid food products. Accordingly, in the specific context of this case, the applicant' s approach of dividing that general market into differentiated sub-markets depending on whether the packaging systems are used for packaging milk, dairy products other than milk or non-dairy products by virtue of the specific characteristics of the packaging of those different categories of products, in which the possibility exists that various kinds of substitutable equipment may be used, would lead to a compartmentalization of the market which would not reflect economic reality. There is a comparable structure of supply and demand for both aseptic and non-aseptic machinery and cartons, however they are used, since all belong to one sector, the packaging of liquid food products. Whether they are used for packaging milk or other products, aseptic and non-aseptic machinery and cartons not only share the same characteristics of production but also satisfy identical economic needs. In addition, a not insignificant proportion of Tetra Pak' s customers operate in both the milk sector and the fruit juice sector, as the applicant has admitted. In all those respects, therefore, this case is distinguishable from the situation contemplated in the judgment in Case 85/76 Hoffmann-La Roche v Commission [1979] ECR 461, relied on by the applicant, in which the Court of Justice had first considered the possibility of finding that there were two separate markets for one product which, unlike in this case, was used in two ways in wholly distinct sectors, one "bio-nutritive" and the other "technological" (paragraphs 28 and 29). Furthermore, as both parties have submitted, Tetra Pak machinery and cartons of the same type were uniformly priced whether they were intended for packaging milk or other products, which confirms that they belong to a single product market. There is accordingly no need, contrary to the applicant' s arguments, to find that there are differentiated sub -markets for packaging systems of the same type depending on whether they are used for packaging a particular category of products. GROUNDS CONTINUED UNDER DOC.NUM : 691A0083.1

65 Accordingly, in order to ascertain whether the four markets defined in the Decision were indeed separate markets during the period in question, it is necessary ° as the Commission submits ° to determine in particular which products were sufficiently interchangeable with aseptic and non-aseptic machinery and cartons in the predominant milk sector. To the extent that the carton-packaging systems were used primarily for packaging milk, a dominant position in that sector was sufficient evidence, if relevant, of a dominant position on the market as a whole. Any such dominant position could not be called in question by the existence of substitutable equipment, alleged by the applicant, in the non-milk-product packaging sector, since such equipment accounted for only a very small proportion of all products packaged in cartons during the period covered by the Decision. The predominance of the milk-packaging sector is clearly demonstrated by data given in the Decision (recital 6) and not disputed by the applicant, according to which in 1987 72% of carton systems were used for packaging milk and only 7% for packaging other milk products. According to the same source, in 1983 90% of those systems were used for packaging milk and other dairy products. That pattern was even more marked in the case of the systems marketed by Tetra Pak. Tables produced by Tetra Pak in reply to a written question from the Court show that in the Community 96% of the aseptic systems manufactured by it were used for packaging milk in 1976, 81% in 1981, 70% in 1987 and 67% in 1991. Those figures indicate that, notwithstanding a decrease, the majority of Tetra Pak aseptic cartons were used for packaging milk during the period in question. As for non-aseptic cartons, 100% were used for packaging milk until 1980 and 99% thereafter, according to the same source. For all those reasons, the Commission was entitled to take the view that it was not necessary to carry out a separate analysis of the non-milk-product packaging sector.

66 In the milk-packaging sector, the Commission correctly based itself, in this case, on the test of sufficient substitutability of the different systems for packaging liquid foods, as laid down by the Court of Justice (see in particular Case 6/72 Europemballage and Continental Can v Commission [1973] ECR 215, paragraph 32, and Hoffmann-La Roche v Commission, cited above, third subparagraph of paragraph 28). It is also in accordance with case-law (see the judgment of the Court of Justice in Joined Cases 6 and 7/73 Commercial Solvents v Commission [1974] ECR 223, paragraphs 19 to 22) that the Commission applied the test of sufficient substitutability of products at the stage of the packaging systems themselves, which constitute the market in intermediate products on which Tetra Pak' s position must be assessed, and not at the stage of the finished products, in this case the packaged liquid food products.

67 In order to assess the interchangeability for packers of the packaging systems, the Commission necessarily had to take account of the repercussions of the final consumers' demand on the packers' intermediate demand. It found that the packers could influence consumer habits in the choice of types of product packaging only by promotion and publicity in a long and costly process, extending over several years, as Tetra Pak had expressly acknowledged in its reply to the statement of objections. In those circumstances, the various types of packaging could not be considered to be sufficiently interchangeable for packers, whatever their bargaining power, referred to by the applicant.

68 It is therefore exclusively to assess the effect of final demand on the packers' intermediate demand that the Commission referred to the lack of perfect substitutability, which concerned only the packaged products and not the packaging systems. In particular, the Commission correctly considered that, because of the small proportion of the retail price of milk accounted for by the cost of its packaging, "small but significant changes in the relative price of the different packages would not be sufficient to trigger off shifts between the different types of milk with which they are associated because the substitution of different milks is less than perfect" (decision in Tetra Pak I, at the end of recital 32). The applicant' s complaints that the Commission based itself on the model of perfect competition and defined the relevant markets solely by reference to consumer demand must accordingly be rejected.

69 The Court of First Instance therefore holds first that the Commission was entitled to find that during the period in question there was not sufficient interchangeability between machinery for aseptic packaging in cartons and machinery for non-aseptic packaging whatever the material used. At the level of demand, aseptic systems are distinguished by their inherent characteristics, satisfying specific consumer needs and preferences in relation to the duration and quality of conservation and to taste. Moreover, to move from packaging UHT milk to packaging fresh milk requires the setting up of a distribution system which ensures that the milk is continuously kept in a refrigerated environment. Furthermore, at the level of supply, the manufacture of machinery for the aseptic packaging of UHT milk in cartons requires complex technology, which only Tetra Pak and its competitor PKL had succeeded in developing and making operational during the period considered in the Decision. Manufacturers of non-aseptic machinery using cartons, operating on the market closest to the market in the aseptic machinery in question, were therefore not in a position to enter the latter market by modifying their machinery in certain respects for the market in aseptic machinery.

70 As for aseptic cartons, they also constituted a market distinct from that in non-aseptic packaging. At the level of the packers' intermediate demand, aseptic cartons were not sufficiently interchangeable with non-aseptic packages, including cartons, for the same reasons as those already set out in the preceding paragraph in relation to machinery. At the level of supply, the documents before the Court indicate that, notwithstanding the absence of insurmountable technical problems, manufacturers of non-aseptic cartons were not in a position in the circumstances in question to adapt to the manufacture of aseptic cartons. The fact that on that market there was only one competitor of Tetra Pak, namely PKL, with only 10% of the market in aseptic cartons during the period in question, demonstrates that the conditions of competition were such that in practice there was no possibility for manufacturers of non-aseptic cartons to enter the market in aseptic cartons, in particular given the lack of aseptic filling machines.

71 Secondly, the Court holds that, during the period in question, aseptic machinery and cartons were not sufficiently interchangeable with aseptic packaging systems using other materials. According to the data provided in the documents before the Court, which are not disputed by the applicant, no such substitutable equipment existed, with the exception of the arrival on the market towards the end of the relevant period of systems for aseptic packaging in plastic bottles, returnable glass bottles and pouches in France, Germany and Spain respectively. However, each of those new products was introduced in only one country and, what is more, accounted for only a marginal share of the UHT-milk-packaging market. According to information provided by the applicant, that share has been only 5% of the market in France since 1987. In the Community as a whole, in 1976, all UHT milk was packaged in cartons. The observations submitted by the applicant in response to the statement of objections indicate that in 1987 approximately 97.7% of UHT milk was packaged in cartons. At the end of the period in question, that is in 1991, cartons still accounted for 97% of the UHT-milk-packaging market, the remaining 3% being held by plastic containers, as the applicant indicated in answer to a written question from the Court. The marginal share of the market thus held by aseptic containers made out of other materials demonstrates that those containers cannot be considered, even during the last years of the period covered by the Decision, as products which are sufficiently interchangeable with aseptic systems using cartons (see Commercial Solvents v Commission, cited above, paragraph 15).

72 Thirdly, the Court finds that non-aseptic machinery and cartons constituted markets which were distinct from those in non-aseptic packaging systems using materials other than cartons. It has already been shown (see paragraphs 67 and 68 above) that, because of the marginal proportion of the price of milk attributable to packaging costs, packers would have been led to consider that containers ° in this case cartons, glass or plastic bottles and non-aseptic pouches ° were easily interchangeable only if there had been an almost perfect substitutability of final consumer demand. In the light of their very different physical characteristics and the system of doorstep delivery of pasteurized milk in glass bottles in the UK, that form of packaging was not interchangeable for consumers with packaging in cartons. Moreover, the fact that environmental factors led some consumers to prefer certain types of packaging, such as returnable glass bottles, did not promote the substitutability of those containers with cartons. Consumers who were aware of those factors did not consider those containers to be interchangeable with cartons. The same applies to consumers who, conversely, were attracted to a certain convenience in using products packaged in cartons. As for plastic bottles and plastic pouches, they were on the market only in countries where consumers accepted that type of packaging, in particular, according to information in the Decision which is not disputed by the applicant, Germany or France. Furthermore, according to the same source, that packaging was used only for approximately one-third of pasteurized milk in France and 20% in Germany. It follows that those products were not in practice sufficiently interchangeable with non-aseptic cartons throughout the Community during the period covered by the Decision.

73 Analysis of the markets in the milk-packaging sector thus shows that the four markets concerned, defined in the Decision, were indeed separate markets.

74 Moreover and in any event, the Court finds that an examination of the substitutability of the various packaging systems in the fruit-juice sector, fruit juices being the largest category of liquid foods other than milk, shows that in that sector also there was no sufficient interchangeability either between aseptic and non-aseptic systems or between systems using cartons and systems using other materials.

75 The market in the carton packaging of fruit juices was held mainly by aseptic systems during the period in question. In 1987, 91% of cartons used for packaging fruit juice were aseptic. That proportion remained stable until 1991, when 93% of all cartons were aseptic according to Tetra Pak' s reply to a written question from the Court. The marginal share held by non-aseptic cartons for packaging fruit juice, which continued for several years as has been shown, demonstrates that in practice they were barely interchangeable with aseptic cartons.

76 Nor were aseptic machinery and cartons sufficiently interchangeable with equipment using other materials for packaging fruit juice. The tables provided by Tetra Pak in answer to a written question from the Court show that during the period in question the two major rival types of packaging in the fruit-juice sector were glass bottles and cartons. In particular, the tables indicate that in 1976 in the Community more than 76% of fruit juice (by volume) was packaged in glass bottles, 9% in cartons and 6% in plastic bottles. The share held by cartons reached approximately 50% of the market in 1987 and 46% in 1991. The share held by glass bottles increased from 30 to 39% between those dates and the share held by plastic bottles remained negligible, decreasing from approximately 13% to 11%.

77 Taking into account their very different characteristics, concerning both price and presentation, weight and the way in which they are stored, cartons and glass bottles could not be considered to be sufficiently interchangeable. In relation particularly to comparative prices, both parties' answers to a written question from the Court show that the total cost to the packer of packaging fruit juice in non-returnable glass bottles is significantly higher by approximately 75% than that of packaging in aseptic cartons.

78 It follows from all the above considerations that the Commission has established to the requisite legal standard that the markets in aseptic machinery and cartons and those in non-aseptic machinery and cartons were insulated from the general market in systems for packaging liquid foods.

2. The machinery and carton markets cannot be separated

Summary of the arguments of the parties

79 The applicant states that the relevant market must be defined as the integrated packaging-systems market, comprising machines for packaging liquid foods and the packaging itself. It argues that there is a natural and commercial link of the type referred to in Article 86(d) of the Treaty between the machines and the cartons. In particular, segregating aseptic filling machines and aseptic cartons may involve grave risks for public health and serious consequences for Tetra Pak' s customers.

80 The applicant considers that the Commission took no account of the submissions of Tetra Pak' s competitors, which support Tetra Pak' s arguments, and adduced no evidence that the separate provision of machines and cartons reflected either the wishes of packers for independent suppliers of cartons or the wishes of the carton suppliers themselves.

81 The Commission disputes the link alleged by the applicant between machinery and cartons. It submits that Article 86 of the Treaty precludes the manufacturer of a complex product from hindering production by a third party of consumable products intended for use in its systems.

Assessment by the Court

82 First, and contrary to the arguments of the applicant, consideration of commercial usage does not support the conclusion that the machinery for packaging a product is indivisible from the cartons. For a considerable time there have been independent manufacturers who specialize in the manufacture of non-aseptic cartons designed for use in machines manufactured by other concerns and who do not manufacture machinery themselves. It is apparent in particular from the Decision (recital 16), and not disputed by the applicant, that, until 1987, Elopak, which was set up in 1957, manufactured only cartons and accessory equipment, for example handling equipment. Moreover, also according to the Decision (recital 13), and not contested by the applicant, approximately 12% of the non-aseptic carton sector was shared in 1985 between three companies manufacturing their own cartons, generally under licence and acting, for machinery, only as distributors. In those circumstances, tied sales of machinery and cartons cannot be considered to be in accordance with commercial usage, given that such sales were not the general rule in the non-aseptic sector and that there were only two manufacturers in the aseptic sector, Tetra Pak and PKL.

83 Furthermore, the applicant' s argument as to the requirements for the protection of public health and its interests and those of its customers cannot be accepted. It is not for the manufacturers of complete systems to decide that, in order to satisfy requirements in the public interest, consumable products such as cartons constitute, with the machines with which they are intended to be used, an inseparable integrated system. According to settled case-law, in the absence of general and binding standards or rules, any independent producer is quite free, as far as Community competition law is concerned, to manufacture consumables intended for use in equipment manufactured by others, unless in doing so it infringes a competitor' s intellectual property right (see the judgment of the Court of First Instance in Case T-30/89 Hilti v Commission [1991] ECR II-1439, paragraph 68, and the judgment of the Court of Justice Case C-53/92P Hilti v Commission [1994] ECR I-667, paragraphs 11 to 16).

84 In those circumstances, whatever the complexity in this case of aseptic filling processes, the protection of public health may be guaranteed by other means, in particular by notifying machine users of the technical specifications with which cartons must comply in order to be compatible with those machines, without infringing manufacturers' intellectual property rights. Moreover, even on the assumption, shared by the applicant, that machinery and cartons from various sources cannot be used together without the characteristics of the system being affected thereby, the remedy must lie in appropriate legislation or regulations, and not in rules adopted unilaterally by manufacturers, which would amount to prohibiting independent manufacturers from conducting the essential part of their business.

85 It follows that the applicant' s argument that the markets in machinery for packaging a product and those in packaging cartons are inseparable cannot be accepted.

B ° The relevant geographical market

Summary of the arguments of the parties

86 The applicant denies that the relevant geographical market covers the entire territory of the Community. It considers that the various Member States constitute separate markets for the products in question because the objective conditions of competition are not the same for all traders throughout the Community.

87 It submits that in each Member State there are local markets on which autonomous subsidiaries both of Tetra Pak and of other manufacturers operate. Moreover, consumer demand for packaged liquid foods varies from one Member State to another. In particular, the markets of north-west Europe, comprising Denmark, Ireland, the Netherlands and the United Kingdom, should have been considered separately, given that the consumption of UHT milk is marginal in those countries. In addition, the applicant argues that variations in the price of machines and cartons between the Member States show that the Community does not constitute the relevant geographical market.

88 Furthermore, the applicant asserts that the territories of Greece, Spain and Portugal must be excluded from the relevant geographical market for the period before their accession to the European Communities. After its accession, Spain should have been excluded from the relevant market because of the tariff barriers which remained in force for a transitional period.

89 The Commission considers that the geographical market encompasses the whole of the Community. It argues essentially that all the types of carton and machinery in question are to be found to a significant extent in each Member State and that the transport costs for both machines and cartons are negligible. Moreover, it considers that the price differences between the Member States, alleged by the applicant, are attributable to a monopoly situation or a partitioning of the markets.

90 The Commission states that the territory of the Member States which acceded to the European Communities during the relevant period is excluded from the geographical market and from any finding of infringement before the date of their accession. As for the tariff barriers to imports which remained in force in Spain after its accession, they do not "discriminate" between manufacturers of machines and of cartons since no such manufacturer was established in Spain.

Assessment of the Court

91 The Court notes at the outset that in the scheme of Article 86 of the Treaty the geographical market must be defined so as to determine whether the undertaking concerned is in a dominant position in the Community or a substantial part of it. The definition of the geographical market, as that of the product market, accordingly calls for an economic assessment. The geographical market can thus be defined as the territory in which all traders operate in the same conditions of competition in so far as concerns specifically the relevant products. The Commission correctly points out that it is not at all necessary for the objective conditions of competition between traders to be perfectly homogeneous. It is sufficient if they are "the same" or "sufficiently homogeneous" (judgment of the Court of Justice in Case 27/76 United Brands v Commission [1978] ECR 207, paragraph 44; see also paragraphs 11 and 53).

92 It is accordingly necessary to ascertain whether the various factors pleaded by the applicant give rise in the Community to objective conditions of competition of a heterogeneous nature. The Court considers that the establishment of major manufacturers of packaging systems in each Member State by way of national subsidiaries, and similarly the practice of dairies of obtaining supplies at local level, are not sufficient, contrary to the applicant' s contention, to establish that the conditions of competition are specific to the territory of each of those States. With regard in particular to Tetra Pak' s policy, the context of these proceedings suggests conversely that the circumstances which have just been described are attributable rather to its strategy of partitioning the markets than to the existence of local markets characterized by objectively different conditions of competition. Even if the various contracts between Tetra Pak and its customers were differentiated by the inclusion of numerous additional clauses which varied depending on the State in question, the fact remains that the commercial policy of the various group subsidiaries was part of a commercial strategy coordinated by the parent company, as is illustrated in particular by the use in all the Member States, which the applicant does not deny, of clause (ix) relating to tied sales and of a clause requiring exclusive supply by Tetra Pak' s local subsidiary in the contracts with dairies. Moreover, certain significant items of evidence, such as the letters and telexes between the Tetra Pak group and Tetra Pak Italiana, mentioned in the Decision (recitals 71 to 83) and provided to the Court, confirm that Tetra Pak' s commercial policy was determined at group level.

93 In that regard, this case is therefore distinguishable from the facts in issue in Michelin v Commission, relied on by the applicant, in which the Court of Justice held that the adoption, by the Netherlands subsidiaries of groups operating worldwide and engaged in the manufacture of new tyres, of autonomous commercial policies tailored to the specific conditions of each national market was evidence of the existence of a national market in which the conditions of competition were sufficiently alike (paragraph 26 of the judgment).

94 In this case, the Commission was entitled to define a single geographical market covering the whole Community for three main reasons. First, as the Commission emphasizes without contradiction by the applicant, demand was stable and not insignificant ° even though it varied in intensity from one Member State to another ° for all the relevant products, throughout the territory of the Community, during the period covered by the Decision. Secondly, according to the same sources, from the technical point of view customers could obtain supplies of machinery or cartons in other Member States, the presence of local distribution units being necessary solely to install, maintain and repair machines. Thirdly, the very low cost of transport for cartons and machines meant that they could be easily and rapidly traded between States; the applicant does not deny this. In particular, the absence of economic barriers to the import of machines, due to the negligible transport costs, is corroborated by the fact that machines manufactured in the United States by Nimco or Cherry Burrel and in Japan by Shikoku are, according to the Decision, marketed in the Community.

95 In the light of those factors, particular patterns of consumption cannot by themselves constitute evidence of the existence of a distinct geographical market comprising, according to the applicant, the States of north-west Europe. The alleged differences in consumer tastes concerning the type of milk or the form of packaging affected only the overall size of the markets in the relevant products in each Member State and had no effect on the conditions of competition within those markets between the manufacturers of those specific products, who were subject vis-à-vis one another to conditions of competition which were the same for all such manufacturers throughout the Community.

96 Moreover, the differences in price between the Member States, also relied on by the applicant, cannot be evidence of objective conditions of competition of a non-homogeneous nature since, in the context described in the preceding paragraphs, they are rather evidence of an artificial partitioning of the markets.

97 Furthermore, so far as concerns the States which acceded to the European Communities during the period in question, it is clear that they could form part of the relevant geographical market only as from the date of their accession, as is apparent as a matter of logic from the Decision itself and as the Commission has confirmed before the Court. In addition, the defendant was right to take the view that maintaining tariff barriers to imports during the transitional period in Spain did not create non-homogeneous conditions of competition for the various manufacturers of packaging systems in the Community since, according to information provided by the Commission and not disputed by the applicant, none of those manufacturers was established in Spain and thus by virtue of those dues put in an exceptionally advantageous position in the territory of that Member State compared to its competitors established in the other Member States.

98 It follows from the above that the relevant geographical market comprises in this case the whole of the Community. It thus extended to the nine Member States until 31 December 1980, to the ten until 31 December 1985 and to the twelve as from 1 January 1986.

99 It follows from all the preceding considerations that the definition of the relevant markets used by the Commission is not in any way vitiated by any manifest error of assessment, whether concerning the product markets or the geographical market.

C ° Tetra Pak' s position on the relevant markets and the application of Article 86 of the Treaty

Summary of the arguments of the parties

100 The applicant maintains that it is not in a dominant position. Moreover, it considers that, even if it were in such a position on the aseptic markets, Article 86 would not apply to practices carried out on the non-aseptic markets, which neighbour but are distinct from the allegedly dominated aseptic markets.

101 The applicant complains first that in assessing its position on the aseptic markets the Commission was over-reliant on market shares without taking into consideration the "countervailing power" of its major customers or competition by innovation. It refers to the judgment in United Brands v Commission (paragraphs 109 and 110), in which the Court of Justice ruled that a market share of 40% did not without more support the automatic conclusion that there was a dominant position on the relevant product market.

102 The applicant also emphasizes that it has a prominent and not a dominant position on the non-aseptic markets, as accepted furthermore by the Commission in the Decision. On that ground it disputes the applicability of Article 86 in the non-aseptic sector. It submits that the Commission' s proposition that an abuse within the meaning of that article may be committed in certain circumstances on markets which are distinct from but which neighbour those on which a dominant position has been established conflicts with the very basis of the special responsibility of an undertaking in a dominant position, which is justified by the weakened competitive structure of the dominated market. The Court of Justice moreover confirmed in Michelin v Commission, cited above, that an undertaking not in a dominant position on a given market cannot commit an abuse on that market.

103 In this case, the applicant submits that the practices complained of on the non-aseptic markets were not implemented and had no anti-competitive effects on the allegedly dominated aseptic markets, in contrast to the situation considered by the Court of Justice in Commercial Solvents v Commission, cited above, Case 311/84 CBEM v CLT and IPB [1985] ECR 3261 and Case C-62/86 AKZO v Commission [1991] ECR I-3359, relied on in the Decision. Unlike in this case, the abuses found in the abovementioned cases had always been committed on the dominated market, even though they had an anti-competitive effect on associated markets, as in Commercial Solvents v Commission and CBEM v CLT and IPB, cited above.

104 Furthermore, the applicant considers that in this case the Commission has not demonstrated that there is a causal link between the abuses allegedly committed in the non-aseptic sector and Tetra Pak' s dominant position in the aseptic sector. The applicant rejects in particular the Commission' s allegation that profits made in the aseptic sector enabled it to practice predatory or discriminatory pricing for non-aseptic machines and cartons. It also disputes the existence of any link between its dominant position in the aseptic sector and the allegedly unfair contractual terms which it is said to have imposed in the non-aseptic sector. In its view, those terms are justified by the need to ensure the proper functioning of the packaging systems and were incorporated in contracts for the supply of non-aseptic machines well before the aseptic equipment was perfected.

105 The Commission considers that the fact that the applicant holds at least 90% of the markets in aseptic machines and cartons provides irrefutable evidence of a dominant position on those markets.

106 As for the non-aseptic markets, the Decision makes no finding of a dominant position, as the Commission confirmed at the hearing. The Commission nonetheless emphasizes, in the second paragraph of recital 104, that the shares of the market held by Tetra Pak in the non-aseptic sector were sufficient to establish the existence of a dominant position on those non-aseptic markets considered separately. However, given Tetra Pak' s dominant position on the aseptic markets and the associative links between those markets and the non-aseptic markets, the Commission considers that acts committed in the non-aseptic sector also fall within the scope of Article 86 and that there is "therefore no need to demonstrate separately the existence of a dominant position held by Tetra Pak on the non-aseptic markets taken in isolation" (fourth paragraph of recital 104 of the Decision).

107 The Commission submits that neither the wording nor the purpose of Article 86 supports the view that it only catches abuses committed on the relevant market used to define the dominant position, whilst at the same time allowing the undertaking in question to commit abuses on other markets, particularly where they are closely linked to the relevant market.

108 In this case, the Commission argues that the applicant "has used the association which exists between the four markets in question to commit abuses on the non-aseptic markets, abuses which it could not have committed in the absence of its dominant position on the aseptic markets" (penultimate paragraph of recital 104 of the Decision). It is unthinkable that the applicant would have undertaken a predatory pricing campaign against Elopak, in Italy and more generally in the Community, had it not been aware that approximately 90% of its profits derived from the aseptic sector. Similarly, the applicant was able to impose unfair contractual terms on the non-aseptic markets only because 56% of its customers in that sector also operated in the aseptic sector.

Assessment of the Court

109 In relation first to the aseptic sector, the information provided by both parties shows that Tetra Pak held approximately 90% of the aseptic markets in both machines and cartons throughout the Community and throughout the period in question. It is clear that holding such market shares meant that the applicant' s position on the market made it an inevitable partner for packers and guaranteed it the freedom of conduct characteristic of a dominant position. The Commission was therefore correct in taking the view that such market shares were in themselves and in the absence of exceptional circumstances evidenc