Summary of Commission Decision of 29 March 2006 relating to a proceeding under Article 82 of the Treaty establishing the European Community and Article 54 of the EEA Agreement against Tomra Systems ASA, Tomra Europe AS, Tomra Systems BV, Tomra Systems GmbH, Tomra Butikksystemer AS, Tomra Systems AB and Tomra Leergutsysteme GmbH (Case COMP/E-1/38.113 — Prokent/Tomra) (Text with EEA relevance)
Date: 2006-03-29
Institutions: European Commission
Subjects: beverage, dominant position, economic concentration, fine, merger control, packaging product, restriction on competition, restrictive trade practice, waste recycling

28.8.2008

EN

Official Journal of the European Union

C 219/11

Summary of Commission Decision

of 29 March 2006

relating to a proceeding under Article 82 of the Treaty establishing the European Community and
Article 54 of the EEA Agreement against Tomra Systems ASA, Tomra Europe AS, Tomra Systems
BV, Tomra Systems GmbH, Tomra Butikksystemer AS, Tomra Systems AB and Tomra
Leergutsysteme GmbH

(Case COMP/E-1/38.113 — Prokent/Tomra)

(Only the English version is authentic)

(Text with EEA relevance)

(2008/C 219/12)

1. On 29 March 2006, the Commission adopted a decision
relating to a proceeding under Article 82 of the EC Treaty
and Article 54 of the EEA Agreement. In accordance with
the provisions of Article 30 of Regulation (EC) No 1/2003,
the Commission herewith publishes the names of
the
parties and the main content of the decision, including any
penalties imposed, having regard to the legitimate interest
of undertakings in the protection of their business inter-
ests. A non-confidential version of the full text of the deci-
sion can be found in the authentic languages of the case
and in the Commission's working languages at DG COMP
website at:

by

out

carried

the Commission

whether Tomra had abused its dominant position by
preventing Prokent's access to the market. The inspec-
tions were
on
26 and 27 September 2001. Following a number of
requests for
the
Commission adopted a Statement of Objections against
Tomra Systems ASA, Tomra Europe AS and Tomra group's
subsidiaries in six EEA-Contracting Parties. Tomra group
responded to the Statement of Objections on 22 November
2004. The Oral Hearing took place on 7 December 2004.

information, on 1 September 2004,

http://europa.eu.int/comm/competition/index_en.html

1.3. Article 82 of the Treaty and Article 54 of the

EEA Agreement

1. SUMMARY OF THE INFRINGEMENT

1.3.1. Dominance

1.1. Introduction

2. The Decision was addressed to Tomra Systems ASA, Tomra
Europe AS, Tomra Systems BV, Tomra Systems GmbH,
Tomra Butikksystemer AS, Tomra Systems AB and Tomra
Leergusysteme GmbH (hereafter ‘Tomra group’). Tomra
group is active in the area of collecting used beverage
containers. Its main activity within the EEA consists of the
supply of so-called reverse vending machines (RVMs) that
are used for the collection of empty drink containers.
Tomra's
approximately
turnover
EUR 273 million in 1999, EUR 342 million in 2000,
EUR 368 million in 2001 and EUR 336 million in 2002.

worldwide

was

3. Until its bankruptcy, Prokent AG (‘Prokent’), the complai-
nant, was based in Ilmenau, Germany. Like Tomra, it was a
supplier of reverse vending machines and related products
It achieved a turnover of approximately
and services.
EUR 2,3 million in 2000 and of
approximately
EUR 4,2 million in 2001. Prokent sold its products predo-
minantly in Germany, but tried to enter other national
markets as well. Following the bankruptcy of Prokent and
its assets by Wincor Nixdorf
subsequent acquisition of
Technologies GmbH, based in Paderborn, Germany,
in
September 2003, the latter has carried on the former busi-
ness of Prokent.

1.2. The proceedings

5. Tomra

and its

competitors

supply so-called reverse
vending machines (RVMs) and related products, in particu-
lar backroom equipment (1). They also provide services in
relation to the products they sell such as maintenance and
repair services. RVMs identify the incoming container
according to particular parameters such as shape and/or
bar code and calculate the deposit that is to be reimbursed
to the customer.

6. Tomra began supplying RVMs in 1972 and has remained
the market
leader ever since. Whereas all other RVM
suppliers, at the time when the investigation took place,
were very small companies with a small number of
employees and were active only in one country or a small
number of EEA Contracting Parties. RVMs are usually
installed in the retail outlets like supermarkets, therefore
the RVM customers are usually retail groups, the number
of which has shrunk recently due to the consolidation
process on the market.

1.3.1.1. R e l e v a n t p r o d u c t m a r ke t

7. Although automated and manual handling of containers
may be functionally substitutable, they are not interchange-
able from the perspective of an actual or potential
purchaser of Tomra's products, whose needs are not satis-
fied by manual handling. Customers prefer automated
RVM solutions to manual handling for reasons of labour

4. On 26 March 2001, the Commission received a complaint
from Prokent, asking the Commission to investigate

(1) A backroom space in which the drink containers are further handled or
processed, which may include conveyor systems for crates and indivi-
dual containers, stacking, sorting, compacting, accumulation units etc.

C 219/12

EN

Official Journal of the European Union

28.8.2008

costs and customer service mainly. Therefore, contrary to
what is argued by Tomra, manual handling is not part of
the same product market.

1.3.1.3. D o m i n a n t p o s i t i o n

8. Considering that the RVMs that are designed for use in
canteens or kiosks are distinct from RVMs designed for
retail outlets, and since the relevant market players, that is
the suppliers and customers of the respective products, are
different, RVMs that are designed for use in canteens or
kiosks cannot be part of
the same product market as
RVMs designed for retails outlets.

9. When looking at the product characteristics, the intended
use of the machines and their price, it appears to be appro-
priate not to consider low-end (1) stand alone machines as
substitutable with other RVMs demanded by food retailers.
There are reasons to consider that a separate market for
high-end RVMs and systems exists, and the Commission
considers
this would be the preferable market
definition. However, the question can be left open whether
high-end RVMs constitute a separate market or a part of
an overall market for RVMs including low-end machines.
The competitive assessment is the same whether there is
one overall market for RVMs or a separate market for
high-end machines.

that

10. The competitive assessment in the Decision is, therefore,
for high-end reverse vending
based on the market
machines or systems, including, in particular, all RVMs that
can be installed through a wall and can be connected to
backroom equipment, and also on an overall market
including high-end and low-end machines. The wider
market definition is taken as a working basis as it yields
more favourable figures, to Tomra's advantage.

12. Since it entered the market Tomra has been the market
leader enjoying very high market shares. According to its
annual reports and internal documents, of which at least
the Annual Reports are said to relate to high-end RVMs,
Tomra's market shares continuously exceeded 70 % in
Europe in the years before 1997. Tomra's market shares
have exceeded 95 % in Europe since 1997. In any relevant
markets Tomra's market share was a multiple of
the
market shares of its competitors. Tomra's rivals, including
those who had the potential to become strong competi-
tors, were all small or very small companies, with a very
low turnover and very few employees. Tomra's ability and
determination to acquire its most serious competitors
and/or competitors with potential to become such in the
future, further reduced the chances for the development of
credible competition. Moreover, there was no substantial
countervailing buyer power which would have been able
to challenge Tomra's dominance in any of the markets
concerned. Tomra, therefore, is a dominant undertaking in
the common market and in the territory of the EEA as
well as in substantial parts of the common market and the
territory of the EEA, which means that it is a dominant
undertaking in the sense of Article 82 of the Treaty and
Article 54 of the EEA Agreement.

1.3.2. Tomra's practices

1.3.2.1. To m r a ' s s t r a t e g y

1.3.1.2. T h e r e l e v a n t g e o g r a p h i c m a r ke t

11. The types and the volumes of drink containers on which
there is a deposit (2)
in a given EEA Contracting Party
determine the potential for reverse vending solutions and
the models of RVMs that are marketed in the country in
question. Despite examples of cross border consolidation
and cooperation in the food retail sector, customers and
their procurement process were predominantly organised
at national level. Moreover, between 1997 and 2002 RVM
suppliers other than Tomra were active only in one or in a
small number of EEA Contracting Parties. All these factors
indicate that
the conditions of competition were not
harmonious across the EEA in the period under considera-
tion and that
the relevant geographical markets were
national in scope.

(1) Low-end are the stand-alone machines that accumulate the containers
inside, whereas the high-end RVMs are connected to a backroom which
storage capacity is much higher compared to that of the low-end
machine.

(2) A deposit system is established by a state legislation under which a
mandatory deposit on a drink container is charged for the purchase of
drinks. The deposit amount is returned to the buyer when the empty
container is brought back to a specific collection point, RVMs amongst
others.

challengers. To achieve

13. Tomra's strategy was based on a policy that sought to
preserve its dominance and market share through means
such as: (i) preventing market entry; (ii) keeping competi-
tors
small by limiting their growth possibilities, and
(iii) finally weakening and eliminating competitors, by way
of acquisition or otherwise, especially those competitors
that were deemed to have the potential to become more
this objective Tomra
serious
employed various anti-competitive practices,
including
exclusivity and preferred supplier agreements, as well as
agreements containing individualised quantity commit-
ments or individualised retroactive rebate schemes. The
latter types of agreements or conditions usually relate to
quantities representing the entire requirements of
the
customer or a large proportion thereof within a given
reference period. They are often referred to as ‘high-volume
block orders’. Tomra resorted to such practices, in particu-
lar, in anticipation of expected market entry, whether due
to the planned introduction of new legislation introducing
a deposit system or otherwise, or as a reaction to the
implementation of
such legislation, being aware that
competitors needed to achieve certain sales volumes in
order to become profitable. Tomra's overall strategy is not
only confirmed by the different practices employed by the
group, but was also discussed extensively within the group
on various occasions, be it at meetings and conferences or
in correspondence, for instance, e-mail.

28.8.2008

EN

Official Journal of the European Union

C 219/13

14. Tomra was focused on preventing market entry, consid-
ering and offering cooperation with much smaller compe-
titors,
that often had just entered the market, and/or
driving them from the market, and giving priority to
long-term preferred supplier agreements and high volume
block orders. The latter is not a strategy confined to the
normal competitive process and the selection resulting
from it. Rather, it is designed to interfere with this process
and prevent it from eroding the dominant position of the
undertaking.

1.3.2.2. I m p l e m e n t a t i o n

15. Tomra's policy of blocking market access for competitors

was pursued in particular by:

— concluding exclusivity agreements with a number of its
customers for the supply of RVM solutions in five EEA
countries (Austria, Germany, the Netherlands, Norway
and Sweden) in the period of 1998-2002,

— concluding agreements with its customers

in the
period of 1998-2002 imposing upon them an indivi-
that corresponded to the
dualised quantity target,
customer's total or almost total demand for RVM solu-
tions in a specific period of time. The customers were
granted discounts subject
to
purchase the agreed target quantity,

to their commitment

— concluding agreements with the retail companies in the
period of 1998-2002 in five EEA countries establishing
individualised retroactive rebate schemes, thresholds of
which corresponded to customers' total or almost total
demand.

16. Tomra through its subsidiaries has implemented the above
(Austria,

identified practices
in five national markets
Germany, the Netherlands, Norway and Sweden).

2. ASSESSMENT OF THE PRACTICES UNDER ARTICLE 82
OF THE EC TREATY AND ARTICLE 54 OF THE
EEA AGREEMENT

17. Article 82 of the Treaty and Article 54 of the EEA Agree-
ment prohibit abuses of the dominant position that an
undertaking holds on a relevant market. The Court of
Justice has held that an undertaking that is in a dominant
position and ties purchasers, even if it does so at their
request, by an obligation or promise on their part
to
obtain all or most of their requirements exclusively from
the said undertaking, abuses its dominant position within
the meaning of Article 82 of the Treaty, whether the obli-
gation in question is stipulated without further qualifica-
tion or is undertaken in consideration of the grant of a
rebate. This applies to cases where the dominant company
is granted full exclusivity, but also where the customer
undertakes to purchase a given percentage of its require-
ments from the dominant company (1). The same is true
in cases where purchasing targets for a given period are

(1) Judgement of 13 February 1979 in Case 85/76, Hoffmann-La Roche v

Commission, [1979] ECR-461.

expressed in absolute figures, where these quantities repre-
sent all or a large portion of the customer's requirements
or its capacity for absorption in the contract period in
question (2).

18. According to the case law the same applies if the said
undertaking, without tying purchasers by a formal obliga-
tion, applies, either under
the terms of agreements
concluded with these purchasers or unilaterally, a system
of fidelity rebates, that is to say discounts or rebates condi-
its
tional on the customer's obtaining all or most of
requirements — whether the quantity of its purchases be
large or small — from the undertaking in a dominant
position (3).

19. Although the agreements, arrangements and conditions
found in this case contain different features such as explicit
or de facto exclusivity clauses, undertakings or promises to
purchase quantities corresponding to a significant propor-
tion of the customers' requirements or retroactive rebate
schemes related to the customers'
requirements, or a
combination of them, they all have to be seen in the
context of Tomra's general policy directed at preventing
market entry, market access and growth opportunities for
existing and potential competitors and eventually driving
them out of the market so as to create a situation of
virtual monopoly.

20. According to the case law of the Court of Justice, abuse in
terms of Article 82 of the Treaty is an ‘objective concept’,
which refers to the conduct of a dominant company which
through recourse to methods different
from the ones
governing normal competition ‘has the effect of hindering the
maintenance of the degree of competition still existing in the
market or the growth of that competition’ (4). The Court in
Michelin II established that ‘[t]he “effect” referred to in the
case-law cited in the preceding paragraph does not necessarily
relate to the actual effect of the abusive conduct complained of.
For the purposes of establishing an infringement of Article 82 EC,
it is sufficient to show that the abusive conduct of the under-
taking in a dominant position tends to restrict competition or, in
other words, that the conduct is capable of having that effect’ (5).
It has abundantly been shown in this decision that Tomra's
practices tended to restrict competition, that is to say, were
clearly capable of having that effect. In addition, however,
the Commission has
investigated the likely restrictive
effects of the practices.

(2) See, for instance, judgement of 9 November 1983 in Case 322/81, NV
Nederlandse Banden Industrie Michelin v Commission, [1983] ECR-3461.
(3) Judgement of 13 February 1979 in Case 85/76, Hoffman-La Roche v
Commission, paragraph 89; judgement of 3 July 1991 in Case C-62/86,
AKZO v Commission, [1991] ECR I-3359, paragraph 149; judgement of
1 April 1993 in Case T-65/89, BPB Industries plc and British Gypsum LTD
v Commission, [1993] ECR II-389, paragraph 120.

(4) Judgement of 13 February 1979 in Case 85/76, Hoffmann-La Roche v
Commission, paragraph 91; judgement of 9 November 1983 in Case
322/81, NV Nederlandse Banden Industrie Michelin v Commission
(Michelin I), paragraph 70; judgement of 3 July 1991 in Case C-62/86,
AKZO Chemie BV v Commission, paragraph 69; judgement of 7 October
1999 in Case T-228/97, Irish Sugar v Commission, paragraph 111.

(5) Judgement of 30 September 2003 in Case T-203/01, Manufacture fran-
çaise des pneumatiques Michelin v Commission (Michelin II), paragraph 239,
and judgment of 17 December 2003 in Case T-219/99, British Airways
plc v Commission (British Airways), paragraph 250.

C 219/14

EN

Official Journal of the European Union

28.8.2008

21. Exclusivity obligations, because they require the customers
to purchase all or significant parts of their demand from a
dominant supplier, have by their nature a foreclosing
capability. Given Tomra's dominant position on the market
and the fact that exclusivity obligations were applied to a
not insubstantial part of the total market demand, it was
capable of having and in fact had a market distorting fore-
closure effect. In this case there are no circumstances that
could exceptionally justify exclusivity or similar arrange-
ments. Moreover, Tomra has failed to justify its practices
by its cost savings.

large proportion thereof represented a significant incentive
for buying all or almost all the equipment needed from
Tomra and artificially raised the cost of switching to a
different supplier, even for a small number of units. In
accordance with the case law of the Court of Justice and
the Court of First Instance of the European Communities,
the rebate schemes identified have to be qualified as loyalty
building and, therefore, as fidelity rebates.

22. Discounts granted for individualised quantities that corre-
spond to the entire or almost entire demand, have the
same effect as explicit exclusivity clauses, that is to say,
they induce the customer to purchase all or almost all its
requirements from a dominant supplier. The same applies
to fidelity (loyalty) rebates, that is to say, rebates that are
conditional on customers purchasing all or most of their
requirements from a dominant supplier. It is not decisive
for the exclusionary character of agreements or conditions
whether the purchase volume commitment is expressed in
absolute terms or with reference to a certain percentage
thereof. With regard to Tomra's agreements identified in
the stipulated quantity targets constituted
this decision,
individualised commitments that were different for each
customer
its size and purchase volume.
Furthermore, they corresponded either to the customer's
entire requirements or to a large proportion of them, or
even exceeded them. Moreover, Tomra's policy to tie custo-
mers,
into agreements that
aimed at excluding competitors from the market and
denying them any chance of growth, is evident from the
its negotiations
documents relating to Tomra's strategy,
and the offers made by it to its clients. Considering the
nature of the RVM solutions market and the special char-
acteristics of the product itself, in particular the transpar-
ency and rather foreseeable demand of each customer for
machines each individual year, Tomra had the necessary
market knowledge for a realistic estimate of each individual
customer's approximate demand.

in particular key customers,

regardless of

23. The rebate schemes were individualised for each customer
and the thresholds related to the total requirements of the
customer or a large proportion thereof. They were estab-
lished on the basis of estimated customer requirements
and/or purchasing volumes achieved in the past, as is
evident from the circumstances. The incentive for buying
exclusively or almost exclusively from Tomra is particularly
strong where thresholds of
the kind described in this
section are combined with a system whereby the achieve-
ment of
the bonus or a more advantageous bonus
threshold benefits all purchases made by the customer in
the reference period and not exclusively the purchasing
volume exceeding the respective threshold. Under a retro-
active system, a customer who has started buying from
Tomra, which is a very likely scenario given Tomra's strong
market position, has a strong incentive to reach the
threshold in order to reduce the price of all its purchases
the
from Tomra. This
customer came to the threshold in question. The combina-
tion of a retroactive rebate system with a threshold or
thresholds corresponding to the entire requirements or a

incentive increased the closer

2.1. Effect on trade

24. The products supplied by Tomra and its competitors are
made and sold in different EEA Contracting Parties. Tomra,
as a dominant company, engaged in exclusionary practices
in several Member States and in Norway. Furthermore, the
abuses aimed at excluding and/or eliminating competitors
who were active in different Member States and EFTA
States. The practices in question may, therefore, have had
an effect on trade between Member States, as required by
Article 82 of the Treaty, and within the EEA territory, as
required by Article 54 of the EEA Agreement.

2.2. Repercussions of Tomra practices for competition

25. Although, as stated by the Court in Michelin II and British
Airways, to establish an abuse under Article 82 it is suffi-
cient to ‘show that the abusive conduct of the undertaking in a
in other
dominant position tends to restrict competition or,
words, that the conduct is capable of having that effect’ (1), the
Commission has completed its analysis in this case by
considering the likely effects of Tomra's practices on the
RVMs market.

26. A dominant supplier may use rebate schemes and quantity
discounts for different reasons, and these practices may
lead to different — both positive and negative — effects
on the market, depending on their characteristics. The
main possible negative effect of the rebates applied by the
dominant supplier is the foreclosure of the market for the
competitors and potential competitors. The same can be
applied with regard to the quantity commitments, aimed at
meeting the entire or almost entire demand of a customer.
Exclusivity has, by its nature, the capability to foreclose,
because it requires the customer to purchase all or almost
all
its requirements from the dominant supplier. With
regard to the assessment of the negative effects created by
the
and the quantity commitments
employed by a dominant supplier, it would be necessary to
establish whether they have the capability to hinder the
degree of competition still existing on the market or the
growth of that competition.

schemes

rebate

(1) Michelin II, paragraph 239, British Airways, paragraph 250.

28.8.2008

EN

Official Journal of the European Union

C 219/15

27. The main possible positive effect is demand expansion or
efficiencies. Given that demand for RVMs is inelastic and
that other possible efficiencies do not apply, it is difficult
to conceive of any efficiency enhancing arguments that
could be advanced in favour of Tomra.

31. With regard to the gravity of

the
Commission comes to the conclusion that it was a serious
infringement.

the infringement,

3.2. Duration

32. The Commission bases

itself on the five-year period
running from 1998 to 2002 for the purposes of estab-
the
lishing the appropriate level of
starting amount of the fine should be increased by 10 %
for each full year of the infringement.

fine. As a result,

3.3. Aggravating and mitigating factor

33. There are no aggravating or mitigating circumstances.

3.4. Amount of the fine

34. For the above reasons,

the amount of

the fine to be
imposed on Tomra Systems ASA, Tomra Europe AS,
Tomra Systems BV, Tomra Systems GmbH, Tomra
Butikksystemer AS, Tomra Systems AB and Tomra
jointly and severally, should be
Leergutsysteme GmbH,
fixed at EUR 24 million.

4. DECISION

35. Tomra Systems ASA, Tomra Europe AS, Tomra Systems
BV, Tomra Systems GmbH, Tomra Butikksystemer AS,
Tomra Systems AB and Tomra Leergutsysteme GmbH have
infringed Article 82 of the Treaty and Article 54 of the
EEA Agreement
in the period 1998-2002 by imple-
menting an exclusionary strategy in the national reverse
vending machines markets
the
Netherlands, Norway and Sweden,
involving exclusivity
agreements, individualised quantity commitments and indi-
vidualised retroactive rebate schemes,
foreclosing
competition on the markets.

in Austria, Germany,

thus

36. For

the

infringement

referred to above,

fine of
EUR 24 million is imposed on Tomra Systems ASA, Tomra
Europe AS, Tomra Systems BV, Tomra Systems GmbH,
Tomra Butikksystemer AS, Tomra Systems AB and Tomra
Leergutsysteme GmbH, jointly and severally.

a

37. Tomra Systems ASA, Tomra Europe AS, Tomra Systems
BV, Tomra Systems GmbH, Tomra Butikksystemer AS,
Tomra Systems AB and Tomra Leergutsysteme GmbH shall
immediately bring to an end the infringements referred to
in Article 1 insofar they have not already done so.

38. They shall refrain from repeating any act or conduct
referred to in Article 1 and from any act or conduct
having the same or equivalent object or effect.

its

the same time,

28. Throughout the reference period of the Decision, from
1998 till 2002, Tomra's market share in each of the five
considered remained comparatively
national markets
stable. At
rivals,
the position of
remained rather weak and unstable. One successful compe-
titor, the complainant, exited the market in 2003 after
managing to acquire an 18 % market share on the German
market in 2001. Other rival companies that demonstrated
the potential and ability to acquire bigger market shares
were eliminated by Tomra by acquisition, such as Halton
and Eleiko.
In addition to this, Tomra's exclusionary
strategy, as it was implemented throughout 1998-2002,
had an effect that is demonstrated by the changes in the
tied market (1) share and the sales of market players. More-
over, some customers started purchasing more of
the
competing products after the expiry of their exclusionary
agreements with Tomra. In addition to the absence of cost
efficiencies
there was no
benefit to consumers either. The price of RVMs offered by
Tomra did not fall after the sales volume had increased.
On the contrary, prices for Tomra's machines stagnated or
increased during the period under investigation.

justifying Tomra's practices,

3. FINES

3.1. Gravity

29. Tomra's practices consisted of a system of exclusivity,
quantity commitments and loyalty-inducing discounts.
This system aimed at eliminating or at
the very least
preventing the entry and/or the expansion of its competi-
tors. Tomra purposefully employed the practices in ques-
In addition, the
tion as part of its exclusionary policy.
assessment of
take
account of its geographic scope, encompassing five EEA
the Netherlands,
Contracting Parties: Austria, Germany,
Norway and Sweden. It is clear that Tomra's practices were
in fact implemented and were capable to deter new entry
and to prevent expansion of
if any, existing
competitors.

the gravity of Tomra's abuse must

the few,

30. In the overall assessment of gravity of

the practices
addressed in this decision, account is taken of the fact that
the infringement did not always cover the entire period in
each of the national markets considered, and that within
each national market the intensity of the infringement may
have varied over time.

(1) In this context, what is meant by the term ‘tied market’ is the quantity
of units purchased by the customers from Tomra under the anticompe-
titive agreements discussed in the Decision. The contestable part of the
volume was not covered by the exclusionary agreements, and therefore
was contestable to Tomra's competitors.