2005/305/EC: Commission Decision of 7 July 2004 imposing fines on an undertaking for supplying incorrect or misleading information in a notification in a merger control proceeding (Case No COMP/M.3255 — Tetra Laval/Sidel) (notified under document number C(2004) 2500) (Text with EEA relevance)
Date: 2004-07-07
Institutions: European Commission
Subjects: beverage industry, economic concentration, fine, food industry, infringement of EU law, merger control, packaging, packaging product

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Official Journal of the European Union

L 98/27

II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 7 July 2004

imposing fines on an undertaking for supplying incorrect or misleading information in a
notification in a merger control proceeding
(Case No COMP/M.3255 — Tetra Laval/Sidel)

(notified under document number C(2004) 2500)

(Only the English version is authentic)

(Text with EEA relevance)

(2005/305/EC)

On 7 July 2004 the Commission adopted a Decision under Council Regulation (EEC) No 4064/89 of
21 December 1989 on the control of concentrations between undertakings (1), and in particular Articles
14(1)(b) and 14(1)(c) of that Regulation. A non confidential version of the full Decision can be found
in the authentic language of the case and in the working languages of the Commission on the website of
the Directorate General for Competition, at the following address:
http://europa.eu.int/comm/competition/index_en.html

I. THE PARTIES

control of Sidel by public bid announced on 27 March
2001.

(1)

Tetra Laval B.V. (Tetra) of the Netherlands, is a privately
held group of companies, which is active in the design
and manufacture of equipment, consumables and ancillary
services for the processing, packaging and distribution of
liquid food. Sidel S.A.,
is a French company
(Sidel)
involved in the design and production of packaging
stretch blow
equipment
moulding machinery, barrier
and filling
machines for polyethylene terephthalate plastic bottles
(PET bottles).

in particular,

and systems,

technology

II. THE TRANSACTION

(2) On 18 May 2001, the Commission received a notification
(the Original Notification) pursuant to Article 4 of Council
Regulation (EEC) No 4064/89 (the Merger Regulation) of
acquired within the
a
the Merger Regulation,
meaning of Article 3(1)(b) of

concentration whereby Tetra

(1) OJ L 395, 30.12.1989, p. 1. Regulation as last amended by Regu-

lation (EC) No 1310/97 (OJ L 180, 9.7.1997, p. 1).

III. PROCEDURE

(3) After

the Original Notification,

examination of
the
the notified operation fell
Commission concluded that
within the scope of the Merger Regulation and that it
raised serious doubts as to its compatibility with the
common market and the EEA Agreement. On 5 July
the Commission decided in accordance with
2001,
Article 6(1)(c) of
the Merger Regulation to initiate
proceedings in this case.

(4) On 30 October 2001,

an

in-depth

investigation

the Commission declared the
common market,
operation incompatible with the
following
I). By
judgment (the Judgment) delivered on 25 October 2002,
the Court of First Instance of the European Communities
(CFI) annulled the Commission’s Decision in its entirety.
Following the judgment, the Commission re-commenced
its examination of the notified concentration pursuant to
Article 10(1) and 10(5) Merger Regulation. On 13 January
2003, the Commission decided not to oppose the notified

(Tetra

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operation and to declare it compatible with the common
market and with the EEA Agreement, pursuant to Article
6(1)(b) and 6(2) of the Merger Regulation subject to full
compliance with a commitment and obligations (Tetra II).

(10) The infringements on which the Commission bases the

fines decision are:

(5) During the examination of the proposed concentration
following the judgment of the CFI
it became apparent
information
that Tetra had failed to disclose pertinent
regarding the development of Tetra Fast which was
being actively pursued, including its potential impact on
the conditions of competition in the SBM market. Tetra
had failed to disclose such information

(a)

infringement of Article 14(1)(b) Merger Regulation
due to Tetra’s failure to disclose the Tetra Fast tech-
nology in Section 8.10 of Form CO requiring the
disclosure of R&D in affected markets;

(b)

infringement of Article 14(1)(c) Merger Regulation
due to Tetra’s failure to disclose the Tetra Fast tech-
nology in replying to the Commission’s Article 11
request of 13 July 2001 in which:

(i) in the Original Notification of 18 May 2001; and

(ii) in a reply to a request for information made pursuant
to Article 11 of the Merger Regulation on 13 July
2001 (the Article 11 Reply).

(i)

question 4 requested Tetra to describe deve-
lopments regarding PET packaging for juice and
liquid dairy products (LDP)
(Tetra knew about
the aseptic quality of Tetra Fast which is of
particular
and
LDP); and

to packaging juice

relevance

(6)

It allows

The Tetra Fast technology is a technology developed and
stretch blow moulding
patented by Tetra.
machines (SBM machines)
to blow plastic PET bottles
through a new method using explosive materials. The
commercial advantages of this new method are significant
as found by the Commission in Tetra II, which explained
(at point 63) that: ‘… the technology appears to offer a range
of economic, operational and environmental advantages over
conventional stretch blow moulding’.

(7) During the Tetra I proceedings, Tetra failed to disclose the
existence of the Tetra Fast technology in the Form CO
itself as well as in replies to at least one Article 11 letter
seeking information on PET packaging markets. The
Commission was completely unaware of the technology's
existence and hence of its importance.

(ii) question 5 asked for ongoing development in
(Tetra had filed a
tech-

PET barrier
technologies
coating patent based on the Tetra Fast
nology).

(11) Tetra’s infringements are particularly serious as the infor-
mation was important for the Commission’s assessment
and Tetra ought to have known of this importance. Had
information been disclosed during the
the Tetra Fast
Commission’s Tetra I proceedings,
it would have been
an important element to the Commission’s assessment.
The Commission was thus seriously misinformed in its
first analysis.

(8)

(9)

The Commission discovered the existence of Tetra Fast for
the first time several months after the adoption of Tetra I.
The matter came to the Commission's attention through
the monitoring work of the Commission’s Trustee. Tetra
subsequently disclosed information on Tetra Fast during
the Tetra II proceedings.

Tetra's failure to disclose the relevant information falls
within Article 14(1)(b) and (c) of the Merger Regulation
which provides that the Commission may impose fines of
EUR 1 000 to 50 000 on undertakings where intentionally
or negligently they supply incorrect or misleading infor-
mation in a notification or where they supply incorrect
information in response to a request made pursuant to
Article 11.

IV. INFRINGEMENT OF ARTICLE 14(1)(b) IN THE
ORIGINAL NOTIFICATION

(12) Tetra started developing Tetra Fast as early as in 1996.
Tetra had obtained a Swiss patent (1996) and a European
patent (1997) for the new technology and by the time of
the Original Notification in Tetra I (18 May 2001) had
filed at least four other patent applications. More than
EUR [0-10] million had been spent in developing Tetra
Fast by the end of 2000 and a further investment of EUR
[0-10] million was foreseen for the year of the Original
Notification. Tetra’s had carried out or commissioned
studies in respect of the technology in 2000. Tests had
also been carried out at or by university centres and
institutes
in 2000 and 2001. Tetra obtained safety
approval requirements for the technology in 2000 and
started field tests a few months before the Form CO
was submitted to the Commission.

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(13) The Form CO, in its section 8.10, requests the notifying
party(ies) to supply information about R&D in the affected
markets, in particular as carried out by the parties them-
selves. It requests:

‘Explain the nature of the research and development in affected
markets carried out by parties to the concentration.’

Legal assessment

the Merger Regulation the
(18) Under Article 14(1)(b) of
Commission may by
from
EUR 1 000 to 50 000 where, intentionally or negligently,
an undertaking supplies incorrect or misleading infor-
mation in a notification pursuant to Article 4.

decision impose

fines

In doing so the parties are to take account of: ‘(b) the course
of technological development for these markets over an appro-
priate time period (including developments in products and/or
services, production processes, distribution systems, etc.)’ and ‘(c)
the major innovations that have been made in these markets and
the undertakings responsible for these innovations;’

(19)

It is evident that in not disclosing the information on
Tetra Fast in Section 8.10 of Form CO Tetra submitted
incorrect
information. While the Commission has no
proof of Tetra acting intentionally Tetra’s infringement
must be considered grossly negligent.

(14) The notification does not contain any reference to the

Tetra Fast technology.

that

(15) Tetra’s principal argument is that Tetra Fast does not form
part of any market affected by the operation and does not
closely relate to the affected market for SBM machines
and that it was therefore not necessary for Tetra Fast to
be mentioned in Section 8.10 of Form CO. Tetra
technology replaces an
considers
external piece of
supplying the pressure
for blowing the bottle within the SBM
necessary
machine. The
this
a
pressure
compressor (most often supplied by a party other than
the SBM machine suppliers), whilst the Tetra Fast tech-
nology relies on the pressure generated by explosive
combustion of a hydrogen/oxygen mixture.

relies on compressed air produced by

the Tetra Fast
equipment

traditional means of

achieving

It

is evident

(16) The Commission considers that this argument is mani-
that a technology which
festly wrong.
brings about a major change in the performance of
SBM machines belongs to the affected market for SBM
machines as
the technology is not actually
marketed separately (in which case Tetra would have
had to submit
the information on the basis of a
separate technology market). Tetra’s R&D overview for
2000, disclosed only during the Tetra II procedure,
shows that Tetra itself saw Tetra Fast as part of
the
SBM machine market.

long as

(17) The Commission also rejects Tetra’s argument that the
technology was irrelevant as it would not bring about a
significant
to the way SBM machines
operate. Tetra’s internal documents clearly show that it
saw a significant potential
inter alia, reductions in
power consumption.

improvement

for,

(20) During the Commission’s Tetra I investigation, field tests
were being carried out and several management meetings
were held. By the time of the adoption of the Commis-
sion's prohibition decision, millions of bottles were
produced using the Tetra Fast technology. Even if Tetra
had not been aware of the importance of the technology
at the time of the notification, it had plenty of occasions
during the administrative procedure of Tetra I to realise
the incorrectness of the information it had provided in
Form CO. It should be noted in this context that Article
4(3) of the Implementing Regulation contains an obli-
any ‘material
gation to inform the Commission of
facts’ arising during the administrative
changes
procedure.

in the

V. INFRINGEMENT OF ARTICLE 14(1)(c) IN REPLY TO
THE ARTICLE 11 REQUEST OF 13 JULY 2001

(21)

In an Article 11 request of 13 July 2001, the Commission
required the parties to:

‘Q4. Please provide all available information on the future
potential use of PET in the LDPs and juice segments. Provide
all studies and internal documents discussing this possibility.
Explain in detail what technologies would be needed to enable
PET to be used successfully for the packaging of LDPs and juice.
Discuss your activities and others’ activities in this area.

Q5. Please provide all documents in your possession relating to
the development of a barrier technology.
In particular, please
provide all studies,
internal documents, technical and economic
analyses and scientific documents relating to PET barrier.’

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(22) The parties submitted six annexes in response to the
previous questions including many technical documents.
However,
in its answer of 26 July 2002 Tetra did not
provide any document that contained any reference to
Tetra Fast itself or to the barrier or coating technology
(PCT/EP02/02160) that Tetra Laval had developed for use
with its Tetra Fast technology.

(23) Tetra Fast is not only a method of blowing a PET bottle in
a novel way (through explosion) but has two extra
(i) the explosion has a sterilising effect on
advantages:
the bottle and (ii) by introducing special gases into the
explosive process, the inside of the bottle may be coated
by substances acting as a barrier.

(24) Tetra was fully aware of both. It had submitted a patent
application for a new barrier technology related to Tetra
Fast on 23 March 2001, which underlined both the
aseptic quality of
the Tetra Fast blown bottle and
sought to patent the gas barrier enhancing properties of
the new technology. Also, a Tetra internal analysis
underlined these aseptic qualities.

(25) Tetra relies on what

it considers to be the different
character between Form CO and a Request
for Infor-
mation. In Tetra’s opinion, Form CO sets out a series of
pre-defined factual questions to allow for an assessment of
the completeness of the notification, whereas the contents
of Requests for Information, are drawn up depending on
the Commission’s information requirements at a given
moment
in its decision-making process and must be
construed taking into account this context and typically
requires the addressees to express subjective views as to
the issues raised. In addition, Tetra considers that Requests
for Information are of a less formal character and provide
a means of discussion and exchange of views, for the
Commission and the parties. According to Tetra, this is
recognised in Article 14(1)(c) which sanctions
the
provision of incorrect information but not of misleading
information whereas Article 14(1)(b)
the
incorrect or misleading information. On
provision of
this basis, Tetra considers that the scope for imposing
sanctions under Article 14(1)(c)
significantly more
limited than under Article 14(1)(b).

sanctions

is

(26) The Commission considers that Tetra’s arguments must be
rejected on the basis that the standard required by Form
CO and by an Article 11 request is no different at least in
respect to the provision of correct information. For the
same reason Tetra’s claim that the scope for imposing
sanctions under Article 14 (1)(c)
is more limited is
unfounded.

for the packaging of

(27) Regarding question 4, Tetra holds that the technology
‘would not be needed’
juice and
LDP and therefore it was not required to disclose its
existence in response to this question. However,
the
Commission notes the question requested all studies and
internal documents discussing the potential use of PET in
the LDPs and juice segments and asked what was needed
to package LDPs
to compete
successfully on the market.
It also requested Tetra to
discuss its, and its competitors’ activities in this area.
This necessitated a discussion of the technologies that
the parties and their competitors possessed or were
developing in order to compete effectively in future.

and juice

in order

juice

(28) As outlined above, Tetra had submitted a patent appli-
cation for a new barrier technology related to Tetra Fast
which, mentioning juice explicitly, underlined the gas
barrier enhancing properties of the new technology and
stressed its aseptic qualities,
the latter being of high
importance for commercially successful packaging of
both
that
improvements in gas barrier technologies are of high
relevance for future packaging of juice and that aseptic
filling is of high potential relevance for packaging juice
it should have discussed Tetra
and LDP. Consequently,
Fast in its reply to Question 4 which asked for tech-
nologies which would be needed to enable PET to be
used successfully for the packaging of LDPs and juice
and requested Tetra to discuss its own activities.

outlines

LDPs.

Tetra

itself

and

(29) Regarding question 5, Tetra argues that Tetra Fast is not a
barrier technology as such and therefore,
it was not
required to mention its existence in response to the
question. The Commission notes that Tetra’s coating tech-
nology patent application of 23 March 2001, unam-
biguously links Tetra Fast
to barrier technologies. The
patent application describes a method of blowing bottles
using a precursor gas mixture to coat the inner side of the
bottle at the same time as blowing the bottle which while
also relating to the blowing of the bottle is still a tech-
nology for applying a barrier to the inner surface of the
bottle. The fact that it is not sprayed or applied on to the
surface of the bottle in the same way as other barrier
technologies does not make it any less related to PET
barrier technologies.

Legal assessment

the Merger Regulation the
(30) Under Article 14(1)(c) of
Commission may by
from
EUR 1 000 to 50 000 where, intentionally or negligently,
an undertaking supplies incorrect information in response
to a request made pursuant to Article 11.

decision impose

fines

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(31) Regarding Question 4, it is clear that a full discussion of
the future potential competitive environment should have
included a detailed explanation of Tetra Fast for both its
potential for the application of barrier coatings through
the Tetra Fast technology and for their enhanced aseptic
quality. Gas barrier technology, as acknowledged by Tetra
is of relevance for packaging of juices and aseptic filling is
of importance for both the packaging of juices and LDP.
Tetra’s response was incorrect in that it did not give the
for
Commission a full picture of
development of competition on the market.

the future potential

(32) Regarding Question 5, Tetra was aware at this time of the
potential of Tetra Fast to be used as a means of applying a
coating to the inner side of the PET bottle. Tetra’s failure
to mention Tetra Fast renders its reply incorrect.

VI. GRAVITY OF THE INFRINGEMENT AND
AMOUNT OF THE FINE

(33) While there are no indications that Tetra acted inten-
tionally, Tetra’s infringement must be considered grossly
negligent. In its response to the Statement of Objections
Tetra did not make comments as to the gravity of the
infringement. Neither did Tetra identify any mitigating
factors.

(34)

In the Commission’s view, the infringements in this case
are very serious. A notification is the basis and the starting
point for the Commission’s investigation of a concen-
tration. It determines to a large extent the approach of
the Commission towards the case and the areas and focal
points of its investigation. Incorrect information creates
the risk that important aspects relevant for the compe-
titive assessment of the transaction are neither investigated
nor analysed by the Commission resulting in its final
decision being flawed since it is based on incorrect or
incomplete information. The same may be said of the
failure to provide correct information in the Article 11
Reply which prevented the Commission from making a
full and proper assessment of the merger.

(35) The development of Tetra Fast was important

for the
Commission’s analysis of the conditions of competition
on PET packaging markets. The undisclosed information
was highly significant for the assessment of Tetra’s acqui-
sition of Sidel in Tetra I. The potential of the technology
would have had a significant impact on the Commission’s
assessment of: (a) PET packaging markets and in particular
the
on SBM markets; and (b)
merged entity on PET packaging markets,
in particular
on the relevant SBM markets.

the future position of

(36) Another factor to be taken into account in concluding
that the infringement of Article 14(1)(c) is very serious
is that Tetra gave incorrect replies to two questions in the
Commission’s Article 11 request having a different scope,
whereas in response to each of these two questions infor-
mation on Tetra Fast, should have been disclosed for
different reasons.

(37) For infringements of Article 14(1)(b) and Article 14(1)(c)
the Commission may impose fines from EUR 1 000 to
50 000.

(38)

In light of the foregoing, the Commission considers that a
fine of EUR 45 000 for each of Tetra’s two infringements,
i.e. of Article 14(1)(b) and of Article 14(1)(c),
is appro-
priate.

VII. CONCLUSION

(39) The Commission imposes two fines each of EUR 45 000
(totalling EUR 90 000) on Tetra for its infringement of
Article 14(1)(b) and of Article 14(1)(c).