3.

As I have already said, I shall not after this finding break off my examination. I would now rather like to go further into the question whether the Commission's finding that Continental, via Schmalbach, had a dominant position on a substantial part of the Common Market, is justified. I shall further examine whether the Commission has correctly evaluated the effects upon the competitive conditions in the Common Market flowing from Schmalbach's merger with Thomassen into the holding company Europemballage. In this connection it is admittedly not my object — a fact which may be understandable in the light of my conclusions so far — to be exhaustive in my examination of the questions, which are somewhat complex and of a predominantly economic kind. My intention is purely to point to some of the problems that arise and to attempt a summary appreciation thereof. (a) Firstly in relation to the question of Schmalbach's dominant position. In the course of examining this, the Commission proceeds from the assumption that a dominant position exists when there is a possibility of adopting an independent course of action, when one is able to act without particular regard for competitors, customers or suppliers. To this extent the Commission is obviously in agreement with the prevailing opinion and with tests legally laid down (such as those that can be extracted from paragraph 22 of the German ‘Gesetz gegen Wettbewerbsbeschrankungen’ (Law against restrictions on competition) and Article 66 of the ECSC Treaty). The applicants too agree with the Commission in this respect. Accordingly it is important that the Commission does not consider an appreciable influence on the market to be sufficient, as is advocated by some, precisely in regard to mergers, in the interest of a wide application of Article 86. That this basic assumption is in fact correct is demonstrated, not least by the examples of conduct amounting to abuse in Article 86. In reality they can only be imagined to exist in the case of a strong position on the market within the meaning of the definition previously given. In the contested decision, the Commission then goes on to state that there is a dominant position when on the basis of the share in the market, or on the basis of the share in the market coupled with technical knowledge, raw materials or capital, there exists the possibility of fixing prices or controlling production or distribution in respect of a significant proportion of the products. Proceeding from this, the Commission first examined the share in the market held by Schmalbach in the Federal Republic in the field of light packaging for meat and fish as well as metal caps for glass jars. It considered it possible in this way to arrive at the following conclusions: (i) That Schmalbach, in the face of a very limited competition by substitutes, held in the market for meat cans a share of German consumption amounting to 70 to 80 %. (ii) That besides, in the case of fish cans, where the share of glass jars and plastic containers was not so great, Schmalbach held a share of German consumption of 80 to 90 %. (iii) That finally, Schmalbach as the only licensee of caps of the ‘White cap’ variety for Germany, hold in the case of metal caps a share in the market of between 50 and 55 %. Furthermore, in the Commission's opinion, it must also be borne in mind that Schmalbach also produce machinery for the production and utilization of metal packings, that this undertaking had a technological advantage, secured by patents, know-how and exchange of information with other licensees of Continental and that their production programme showed a wide spread. Finally — this is also said in the decision — if one took into account the economic importance of the group as this appeared from a comparison with the biggest German competitors, as well as its possibilities of access to the capital market, then there could be no doubt that in Germany, Schmalbach held a dominant position in the markets already mentioned. However, the applicants deny this emphatically. They have objections in relation to the estimate of the share in the market, both as regards the markets in the Federal Republic of Germany and as regards the substitute competition to be taken into account, as well as to the relevant geographical basis, particularly the inclusion of imports into the Federal Republic of Germany. They further point to the importance of market demand, as well as the fact that it is open to the packing industry to arrange its own manufacture; they also point out (without this constituting a complete list of their arguments) that strong factors against holding Schmalbach to have had a dominant position emerge from their behaviour in the market and by the development of their profits. Let us therefore also consider what can be said about these arguments. If in this connection we begin with the shares which the Commission ascertained in relation to the German market, then it will soon be seen that there are no problems as regards data for the market for fish and meat cans; at the most they may exist in respect of data for metal caps. In fact, the applicants, if I understand them correctly, do not dispute the calculation of the share for fish cans. As regards the share attributable to meat cans, the applicants admittedly argue that it diminishes to 65 % if — and it is said that this was not been done by the Commission — one has regard to a number of other German producers, as well as to imports. In the course of the proceedings, however, it became clear that the other German producers mentioned by the applicants were indeed included in the Commission's computations and also that imports had not been ignored. That the latter did not in the final resort have an effect upon the computation can be explained simply by the fact, that they attain approximately the level of the exports and naturally, in ascertaining the share in the market in metal caps. In this taken into account, this time by way of deduction. Further remarks are now therefore called for only in regard to the share in the market in metal caps. In this connection it is not an amount of between 50 and 55 % but only 42 % that in the applicants' opinion can be justified, bearing in mind that due to an error in transmission on the part of one of the Schmalbach works, too low a total production figure was included in German statistics. The situation has not however as yet been fully clarified. The Commission considered that the applicants' argument was not very credible because, considered on the basis of Schmalbach's undisputed share in the market in metal caps as a whole, this resulted in Schmalbach accounting for a percentage in the market for ‘crown corks’ that seemed untenable. The applicants on the other hand, in the course of the oral proceedings adhered to their contrary contention. Having regard to the figures in dispute, some further clarification on this point seems called for unless one takes the view that in any case the values in dispute are sufficient for arriving at an assessment, because they do not in any event show an important share in the market. As regards the computation of the share in the market, the applicants claim that a further reason for the picture being inaccurate arises from the fact that the Commission only referred to the situation in the Federal Republic and did not therefore take account of foreign trade; likewise it had left out of account competition arising from substitute products. In this respect one can in my view say this: As regards foreign trade in meat cans, I have already shown why in the present context it does not carry weight, The same considerations apply — if I understand it correctly — to the market in fish cans, in which apparently there is only a modest export trade. Only in the case of metal caps could the foreign trade figures be of significance. It is a fact that in this case delivery distance does not have the same importance as in the case of meat cans and fish cans; likewise one ought not apparently to attach any importance to the fact that they are produced under licence (at any rate as regards caps of the ‘White cap’ variety) since the various licensees are not subject to territorial restrictions in regard to delivery. On the other hand, it would appear (as indeed appears from the very decision, which is the subject matter of these proceedings) that imports from French, British and other manufacturers show a considerable volume. Since, they are appreciably higher than exports from the Federal Republic, one would be justified on this point in proceeding on the basis of some geographically relevant market other than that used by the Commission and possibly in assessing the share in the market at an even lower figure than that resulting from the correction which the applicants desire. Equally, what the applicants have stated as regards competition by substitute products made of glass or plastic — particularly as regards the market in meat and fish cans — does not seem wholly irrelevant. Indeed, one cannot resist the impression that too little weight had been given in the decision to this aspect. At any rate, we are given food for thought by what the applicants have stated on the question of the investments required for a change-over from one kind of packaging to another and in relation to the fact that a number of packers in any event have at their disposal filling machinery for all kinds of packaging. Furthermore, the statement of the United States Supreme Court on the question of competition between glass and metal containers (which the applicants have quoted on page 36 of their reply to the statement of objections, without meeting any contradiction), is noteworthy. We are given further food for thought by what the applicants have submitted (with supporting data) on the increasing tendency by powerful undertakings to substitute other packaging and to develop plastic packaging. In my view, one cannot simply ignore this, even though doubtless all kinds of factors put a limit to competition by substitute products. Seen in this way, it is however possible to imagine a situation where closer market research, which is lacking in the decision, would lead to the conclusion that the data as regards market shares which were previously mentioned, need to be corrected, thus reducing still further their already limited evidential value. When examining the existence of market power one has in the applicants' view also to bear in mind that big buyers hold a considerable buyer's power and that the threat of undertaking one's own production (as has occasionally happened) will have a moderating effect upon suppliers. In this connection it must be said that the figures mentioned by the applicants, as well as the explanation given, certainly cannot be denied a certain importance. In the final resort, however, they have only a limited evidential value. In fact, these arguments fail in the case of the undoubtedly large number of small customers, who do not necessarily benefit from the buying power of the big buyers due to lack of market transparency, and who for obvious reasons cannot, without difficulties, change over to arranging their own production. I am therefore of the opinion that on the basis of the arguments just mentioned, if there should be a position of power on the market, then one cannot categorically deny the existence of a dominant position and I shall therefore refrain from dealing in detail with the applicants' objections in their details, some of which are contested. If the calculation of shares in the market undertaken by the Commission has been shown not to be entirely free from doubt, and if one bears in mind that the mere consideration of market shares will only rarely yield conclusive findings as to the existence of power on the market, it becomes clear that in the present context all the more importance must be attached to the Commission's further arguments tending to substantiate a dominant position on the part of Schmalbach. These are the arguments that a contributory factor in Schmalbach's power on the market is that they also produce machinery of interest to the packaging sector and that the group's technologically advanced position, as well as the existence of agreements restricting competition, have to be taken into account. However, once more it soon becomes apparent that the applicants can also raise objections of substance against these arguments, not the least important of these being arguments that refer to the last mentioned point, i.e., restrictions on competition that are said to have been brought about by means of licensing agreements, by a market information system and by a ‘Commercial Commission’. Indeed, according to the applicants' arguments that dispute this, it is not quite clear what effects upon the market occurred and continue to occur by reason of the factors referred to. One might also hold that they have nothing to do with the present proceedings since Article 85 of the Treaty provides the means of taking action against the acquisition of such a position of power. In relation to the problem of a technologically advanced position, the question was rightly raised whether the Commission has reasoned its opinion with sufficient clarity. In this context one ought naturally to look closely into the importance of relevant patents and licensing agreements of the group, and the detailed position as regards technical know-how, which in this industry is apparently of particular importance. Finally, as regards the manufacture and distribution of machinery for production and closure of packaging materials; before one can draw compelling conclusions from this factor in relation to the present case, one will have to be clear as to the importance to attach to leasing contracts for packing machines, containing clauses that provide for the use of particular packing materials, and also what possibility there is — here I am dealing with the applicants' arguments under this heading — of obtaining such machines from numerous other sources. Here too, in the important further field just dealt with, one might therefore get the impression that the Commission did not pursue the necessary investigations to a point that would in fact permit one to arrive at an unassailable judgment, based upon reliable data on the question of market power. Finally, we still have the fact that the Commission was unable to show in relation to Schmalbach the kind of behaviour on the market, from which one could have deduced a dominant position. This proof is admittedly not indispensable for an application of Article 86; in the case of facts such as those in the present case it would, however, have had great value as circumstantial evidence. To the extent that the Commission in this context relies upon arguing that Schmalbach's competitors had in general followed the latter's price policy, the proceedings showed — surely a point of importance — that the applicants were able without contradictions to produce instances of behaviour deviating thereform. It is also interesting to note what has emerged in relation to Schmalbach's profits and to the way they developed over a period of many years. The fact that one cannot from these data, and in particular from a comparison with profit figures of other producers of packing materials and industrial undertakings of comparable size, derive indications of market-dominating behaviour, cannot surely be unimportant in connection with a total appreciation of the facts. Furthermore, since the Commission also apparently did not undertake a market survey extending over a longer period (which in relation to Article 86 would appear indispensable) and in particular, since it apparently tried to ascertain the developing tendencies of a quickly-changing market (including new entrants to the market), it must at the end of the day be placed on record, that it seems very doubtful whether the Commission has succeeded in proving a dominant position in relation to Schmalbach. (b) As has been previously said, in the Commission's view the abuse of a dominant position can be seen in the fact that subsequent to the acquisition of Thomassen shares by Europemballage, there was in practice a cessation of all competition on the relevant markets. I would now also like to say a few words in relation to this part of the economic investigations by the Commission. Here the following picture emerges. In the applicants' view one has to proceed from the question whether, before Europemballage's acquisition of the Thomassen shares, there was in fact a competitive situation between Schmalbach and Thomassen of such a degree, that its cessation would entitle us to speak of a noticeable — that is, relevant — change in competitive conditions. On the facts that have become known, considerable doubts must however be expressed on this point. In fact, not only the figures contained in the decision itself, but also the replies to the Court's questions, show a picture of extraordinarily modest foreign trade in both directions between the Netherlands and the Federal Republic in the fields at present of interest, especially as regards the participation in this trade by the undertakings in question. It is my impression that this is so, at any rate in the case of meat and fish cans. Only in the case of metal caps, that is in a field in which Schmalbach's share in the market in any event hardly justifies us in assuming the existence of a dominant position, did the trade across borders attain any significance. Now if in the light of these facts the Commission takes the view that in reality agreements restricting competition had been the cause of the modest dimensions of the foreign trade previously mentioned, then one might well reply that the few clues supplied by the Commission (which anyhow only give rise to a suspicion) do not on this crucial point permit an adequate judgment. On the other hand, in the light of what has been submitted to this Court, one cannot without more ado reject the argument that the modest foreign trade is explained by the differing specifications (specific characteristics of the products, such as size, shape, weight as well as material used), of can manufacturers in various countries. Thus — as the applicants have argued — in the field of meat cans there is on the German market a greater emphasis on tinned sausage; whilst in the Netherlands it applies more to tinned ham, intended specially for export and having special characteristics and dimensions. It may also be of importance to note that the Dutch market in fish cans is only modest and is showing a downward trend; this being the case it is naturally not suited to induce foreign competitors to enter this market. At any rate — and this much can certainly be said — further investigations in this respect might have produced greater clarity. They would not only have established what was the effect upon current competition arising from the criticized merger — they would at the same time have presented a reliable picture about the possibility of competition between Schmalbach and Thomassen, upon which in the final resort the Commission laid the main stress. By the way, on this question of potential competition one might, on the basis of the applicants' comments, add that it does not appear to have clearly emerged whether it could have come about in the way envisaged by the Commission, that is by selling via companies in which Thomassen and Schmalbach were in each case participating and which had their place of business in the territory of the potential competitor. In this respect at any rate, we are given food for thought when we realize that the firms mentioned can hardly be regarded as dominated by Thomassen or Schmalbach. Besides, a readiness to sell on behalf of Schmalbach and Thomassen would to some extent depend upon their own production programme. Excessively strong duplication of production can in this case no doubt be just as harmful as excessive divergence. Finally — and here too one has to agree with the applicants — if one attributes a decisive importance to potential competition then there ought to have been extensive investigation in this certainly difficult field and one should have weighed up how, proceeding from the at any rate still existing competition and having regard to recognizable developing tendencies (e.g., the import trend or that of new entrants on the market) the future development might have shaped on the market which is of interest in this case. After all, it is argued in this respect that considerable quantities of metal caps from France and England had been exported to the market in question and that there had been deliveries of meat and fish cans from France and to some extent even from Denmark. It certainly should have been part of a comprehensive survey of the problems before the Commission to pay attention to this and to consider what increase of the competition on the market with third parties might reasonably be expected in the light of the increasing attainment and expansion of the Common Market, even after the Schmalbach-Thomassen merger. Likewise, in relation to the problem of change of competitive conditions, one cannot avoid the impression that the Commission's findings have not been proved beyond doubt, and accordingly on this aspect of the economic appraisal it is hardly a case of the Commission's decision being based upon a certain and unassailable foundation.