SHARE ALL OR PART OF THEIR PRODUCTION FACILITIES AND OTHERWISE TO VARY THEIR PRODUCTION PROGRAMMES ARE SPECIALIZATION AGREEMENTS OR STRICTLY ANALOGOUS THERETO .
17 . THE AGREEMENTS SPECIFIED IN PARAGRAPH 16 MAY THEREFORE BE AUTHORIZED UNDER ARTICLE 65 ( 2 ) OF THE TREATY IN SO FAR AS THEY MAKE FOR A SUBSTANTIAL IMPROVEMENT IN PRODUCTION OR DISTRIBUTION AND ARE ESSENTIAL IN ORDER TO ACHIEVE THIS RESULT , WITHOUT BEING MORE RESTRICTIVE THAN IS NECESSARY FOR THAT PURPOSE ; NOR MUST THE AGREEMENT 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
18 . ON THE QUESTION WHETHER THE CONTRACT MAKES FOR A SUBSTANTIAL IMPROVEMENT IN THE PRODUCTION OR DISTRIBUTION OF THE RELEVANT GOODS , THE FOLLOWING POINTS CAN BE MADE .
THE PRODUCTION PROGRAMMES WORKED BY FKH , SSW , MH , KW AND P + S OVERLAP TO A LARGE EXTENT . BUT THERE ARE MAJOR DIFFERENCES IN THE AGE , CAPACITY , AND PRODUCTIVITY OF THEIR PRODUCTION FACILITIES .
PRODUCTION SPECIALIZATION BETWEEN THESE COMPANIES , THROUGH THE ALLOCATION OF PRODUCTS UNDER THE AGREEMENT TO THE BEST-EQUIPPED PLANT WHICH CAN PRODUCE AT THE LOWEST COST , WILL ENABLE THEIR ROLLING MILLS TO WORK AT A HIGHER PROPORTION OF CAPACITY , THEREBY IMPROVING PRODUCTIVITY .
THE OBJECT OF THE AGREEMENT BY CERTAIN COMPANIES NOT TO UNDERTAKE CERTAIN FORMS OF PRODUCTION , AND OF THE POOLING OF ALL OR PART OF THEIR PRODUCTION FACILITIES , IS TO CONSOLIDATE EXISTING SPECIALIZATION AND TO ENSURE THAT UNPROFITABLE DUPLICATION OF INVESTMENT WILL NOT TAKE PLACE .
ROETZEL , SAG AND TW EACH ROLL A SINGLE PRODUCT , EITHER NARROW STRIP OR COATED SHEETS .
BY AGREEING NOT TO PRODUCE THE PRELIMINARY PRODUCTS THEY REQUIRE BUT TO HAVE THEM SUPPLIED BY INTEGRATED WORKS , THEY OBVIATE THE NEED FOR HEAVY INVESTMENT WHICH , IN VIEW OF THE SCALE OF THEIR OWN REQUIREMENTS , WOULD NOT BE USED TO OPTIMAL CAPACITY ; SECONDLY , THEIR SUPPLIERS CAN INCREASE USE OF THEIR OWN FACILITIES AND THEREBY REDUCE COSTS .
THE ALLOCATION OF ORDERS AND THE COORDINATION OF SALES BETWEEN THE COMPANIES CONCERNED , WHEN IN A PERIOD OF REDUCED ECONOMIC ACTIVITY THE COMMISSION INDICATES TO THEM AN OVERALL DELIVERY OBJECTIVE , IS DESIGNED TO ALLOW THEM TO SHARE OUT AMONG THEMSELVES THIS OVERALL FIGURE IN A WAY WHICH WILL SECURE THE SPECIALIZATION OBJECTIVES OF THE PRESENT AGREEMENTS AND , IN THE CASE OF THE SINGLE-PRODUCT COMPANIES , TO SAFEGUARD THEIR POSITION IN THE MARKET WITHOUT HAVING TO FOREGO THE PURSUIT OF THEIR SPECIALIZATION . THIS ALLOCATION OF ORDERS AND COORDINATION OF SALES IN SUCH CIRCUMSTANCES CONSTITUTES AN ESSENTIAL ELEMENT IN THE SPECIALIZATION AGREEMENT .
19 . HOWEVER , THE COMMISSION MUST BE ABLE TO VERIFY WHETHER THE AGREEMENTS WIL ACTUALLY HAVE THESE EFFECTS .