.
III
HOWEVER , ARTICLE 65 ( 2 ) EMPOWERS THE COMMISSION TO AUTHORIZE SPECIALIZATION AGREEMENTS OR JOINT-BUYING OR JOINT-SELLING AGREEMENTS , AND AGREEMENTS WHICH ARE STRICTLY ANALOGOUS IN NATURE AND EFFECT , IF IT FINDS THAT THEY SATISFY THE REQUIREMENTS SPECIFIED .
THE AGREEMENTS BETWEEN THE COMPANIES CONCERNED , RELATING TO RECIPROCAL UNDERTAKINGS NOT TO MANUFACTURE CERTAIN PRODUCTS AND PROVIDING THAT THEIR DEPOT STOCKS SHOULD REFLECT A PREFERENCE FOR EACH OTHER'S PRODUCTS , ARE SPECIALIZATION OR STRICTLY ANALOGOUS AGREEMENTS .
THESE AGREEMENTS MAY THEREFORE BE AUTHORIZED UNDER ARTICLE 65 ( 2 ) OF THE TREATY , BUT ONLY IF THEY MAKE FOR A SUBSTANTIAL IMPROVEMENT IN PRODUCTION OR DISTRIBUTION AND ARE ESSENTIAL IN ORDER TO ACHIEVE THESE RESULTS AND ARE NOT MORE RESTRICTIVE THAN IS NECESSARY FOR THAT PURPOSE ; NOR MUST THE AGREEMENTS BE LIABLE TO GIVE THE UNDERTAKINGS CONCERNED THE POWER TO DETERMINE THE PRICES , OR TO CONTROL OR RESTRICT THE PRODUCTION OR MARKETING , OF A SUBSTANTIAL PART OF THE PRODUCTS IN QUESTION WITHIN THE COMMON MARKET , OR TO SHIELD THEM AGAINST EFFECTIVE COMPETITION FROM OTHER UNDERTAKINGS WITHIN THE COMMON MARKET .
IV
ON THE QUESTION OF WHETHER THE AGREEMENTS MAKE FOR A SUBSTANTIAL IMPROVEMENT IN THE PRODUCTION OR DISTRIBUTION OF THE GOODS CONCERNED , THE FOLLOWING POINTS MAY BE MADE :
AS FAR AS UA IS CONCERNED , THE BENEFITS OF THE PROPOSED SPECIALIZATION WILL BE TWOFOLD : FIRST , THE FACT THAT FLATS AND SQUARES WILL CEASE TO BE PRODUCED IN THE FINISHING MILLS AND WILL BE REPLACED BY AN EQUIVALENT QUANTITY OF BARS WILL BRING ABOUT ECONOMIES OF SCALE ; AND SECOND , THE CONCENTRATION OF OPERATIONS IN THE WIRE MILLS ON THE LARGER DIAMETERS USED IN MANUFACTURING FINISHED PRODUCTS WILL INVOLVE A BENEFICIAL INTERNAL RATIONALIZATION BETWEEN THE ROLLING MILLS AT THE UGINE WORKS AND THE MORE MODERN MILLS AT THE FOS WORKS .
IN STEEL FINISHING AND COLD PROCESSING OPERATIONS , ECONOMIES OF SCALE WILL BE ACHIEVED AND PRODUCT RANGES WILL BE RATIONALIZED .
UA HAS ESTIMATED THAT THESE IMPROVEMENTS IN MANUFACTURING AND FINISHING _ ELIMINATING THE WORK OF SETTING UP ROLLS IN ITS MILLS , EXTENDING PRODUCTION RUNS AND RATIONALIZING MANUFACTURING RANGES _ WILL RESULT IN A SAVING TO THE COMPANY OF APPROXIMATELY FIVE MILLION FRENCH FRANCS .
CL'S PRODUCTIVITY SAVINGS HAVE BEEN ESTIMATED AT FOUR MILLION FRENCH FRANCS . THIS FIGURE RELATES SOLELY TO THE EFFECTS OF THE AGREEMENTS ON THE DIRECT COST OF MANUFACTURING THE PRODUCTS . NO ALLOWANCE HAS BEEN MADE FOR SAVINGS ON THE DIRECT COST OF STEEL-MAKING OR ON OVERHEADS , OR FOR SAVINGS RESULTING FROM AN INCREASE IN PROFIT MARGINS DUE TO AN EXPANSION OF TONNAGE . THE SAVINGS WHICH HAVE BEEN ESTIMATED RELATE PRIMARILY TO SETTING-UP OPERATIONS AND VOLUME INCREASE BOTH IN THE ROLLING MILLS AND IN THE FINISHING MILLS .
EACH COMPANY HAS THE EXCLUSIVE RIGHT TO SELL ITS PRODUCTS DIRECT EX-WORKS ; IN THE CASE OF EX-STOCK SALES , WHICH ACCOUNT FOR APPROXIMATELY HALF THE OUTPUT , EACH CONTRACTING PARTY