Source: EURLEX
Language: en
Format: md

13. 8. 87 Official Journal of the European Communities No C 215/3

Notice pursuant to Article 19(3) of Council Regulation No 17/62 (')

Elopak/Metal Box — ODIN

(87/C 215/03)

— Case IV/32.009 —

A. Introduction

1. On 1 August 1986 Elopak A/S (Norway) and
Elopak Ltd (UK) on the one hand, and Metal Box pic
(UK) on the other hand notified a series of agreements
to the Commission.

2. The object of the agreements is to establish ODIN
Developments Ltd (UK), jointly owned by Elopak and
Metal Box, which is to carry out the research and
development of a container with a carton base and
separate closure that can be filled by an aseptic process
with UHT processed foods. ODIN will also develop the
machinery and technology for filling these new
containers and if successful undertake production and
distribution of the new containers and their filling
machines.

3. The object of the notification was to benefit from
the opposition procedure provided for in Article 7 of
Commission Regulation (EEC) 418/85 ( [2] ). Failing
benefit of such opposition procedure the parties sought,
pursuant to Articles 2 and 4 of Regulation 17/62,
negative clearance or alternative exemption under Article
85 (3) of the EEC Treaty.

B. The parties

4. _Elopak._ The Elopak Group of companies is
Norwegian in origin and is engaged primarily in Europe
but also in Africa and the Middle East in the manu
facture and sale of cartons for use in packaging and
distribution in the dairy and food industries. It also
supplies and installs integrated systems equipment for
filling, packaging and handling these cartons. Previously
Elopak did not manufacture the filling machines
themselves but acted as a distributor for certain filling
machine manufacturers. However it recently acquired a
company having as its principal interest the production
of these filling machines. Elopak supplies primarily
cartons for milk and to a lesser extent juice, wine and
water. Its milk cartons are almost exclusively for
pasturised (fresh) milk with a shelf life of only several

O OJ No 13, 21.2. 1962, p. 204/62. OJ Special Edition 19591962 November 1972, p. 87.
( [2] ) Regulation of 19 December 1984 on the application of
Article 85 (3) of the Treaty to categories of research and
development agreements, OJ L 53, 22. 2. 1985, p. 5.

days. The consolidated turnover of the Elopak Group
(including Elopak Ltd) was ± NOK 2 000 million in
1985.

5. _Metal Box._ The Metal Box Group of companies,
British in origin, is active in several industrial activities
(packaging, central heating and security printing) on a
worldwide basis. Its core business of packaging includes
not only traditional cans for foods and liquids but also
PET and polythene bottles, general plastic packaging,
aerosols, metal and plastic paint cans, plastic packaging
for toiletries and cosmetics as well as a variety of other
packaging and closures and seals. Most food products in
cans are filled by a sterilization process but Metal Box
has an aseptically filled 'Milk Can' (polypropylene
container with aluminium top) for long shelf life liquids,
including milk. Metal Box has its own active R & D
centre covering a variety of packing materials and
processes. Metal Box and Carnaud SA formerly had
certain shareholdings in each other which have now been
liquidated. The consolidated turnover of the Metal Box
Group was £1 114 million in 1985/86.

C. The Agreements

The essential elements of the notified agreements which
were made on 23 April 1986 are summarized below.

6. Elopak and Metal Box create a 50/50 jointly
owned company ODIN to research, develop and if successful ultimately exploit (i.e. manufacture and distribute)
a new form of paperboard-based package with separate
closure and the filling and sealing machinery and
technology associated with this new package. The new
package will be for shelf stable UHT treated particulate
foods (i.e. not liquids) filled aseptically. This new
product and the new associated filling, sealing and
handling machinery and technology constitutes the field
of the agreement. ODIN will be controlled by a board
composed of equal numbers of Elopak and Metal Box
representatives.

7. Metal Box and Elopak grant ODIN a nonexclusive licence to exploit anywhere in the world all
their respective intellectual property rights (patents and
know-how) relevant for the field of the Agreement. Both
parents will grant a similar licence to ODIN for any new
intellectual property rights they may obtain. ODIN will
not use these intellectual property rights for any purpose

No C 215/4 Official Journal of the European Communities 13. 8. 87

other than in the field of the agreement and will keep
such intellectual property rights confidential. ODIN will
be the owner of any improvements made by it to the
intellectual property rights.

8. Within the field of the agreements ODIN shall
have the exclusive right to exploit the intellectual
property rights licensed from the parents and any
improvements it may make. If ODIN decides not to
exploit the new technology in any particular country, the
parents shall have the right to exploit the technology in
that country when such opportunity is offered by ODIN
to third parties.

9. The parents can obtain from ODIN a nonexclusive licence (without the right to sub-license) for
any improvement made by ODIN provided that

9.1. the use or exploitation of such improvements is
unlikely to conflict with ODIN (i.e. all uses outside
the field of the agreement are permissible), or

9.2. ODIN decides not to exploit this technology for the
purposes of ODIN.

10. Elopak and Metal Box are free to carry out
R & D or exploitation either independently or with a
third party in the field of packaging systems for shelf
stable particulate foods provided they do not use either
the know-how of the other partner in ODIN or any
improvements made by ODIN except as specified in the
agreements.

11. In the event of deadlock, breach or disagreement
as to how ODIN should continue or exploit the new
product, and where these disputes cannot be settled,
arrangements are made for one of the parties to buy out
the other's shares. In such events it is agreed that one of
the parties (the choice determined both by the type of
breach or disagreement) will make an offer of its shares
to the other party. If this offer is not accepted, the
offeror will be obliged to purchase the shares of the
other party at the price contained in its original offer.

12. At such a break-up or sale of shares the following
non-exclusive royalty free licences shall be made:

12.1. ODIN shall license the seller of the shares to use

all of its improvements.

12.2. The purchaser shall license its own intellectual
property rights to the seller for use only in the field
of the agreement.

Similar cross licences will be granted to both parents on
liquidation of ODIN.

13. At such break-up, sale or liquidation, for a period
of five years neither Elopak nor Metal Box shall use the
proprietary know-how of the other party or any
improvements made by ODIN with a competitor of that
other party.

14. Except as laid down in the agreement neither
party can sell or dispose of its shares in ODIN without
the consent of the other party. Even after break-up and
sale described in point 11 above, the purchaser of the
shares shall not for five years transfer any shares in
ODIN to any third party without first offering them to
the original seller on the same terms.

15. All information received by ODIN or by one
party from the other under these agreements will be
treated confidentially. Elopak and Metal Box will also
carry out for a fee on a contract basis research and
development work requested by ODIN. ODIN will be
the owner of any intellectual property arising during
such contract work. Elopak and Metal Box will keep
confidential all information disclosed or developed under
such contracts.

D. The products and the market

16. The new product does not yet exist, but it is
intended that it will be based on Elopak's gable-top
carton, made from paper boards coated with
polyethylene or aluminium, and will have a separate
closure. It will be capable of being aseptically filled and
sealed so that it can be used to package UHT processed
food products containing particles. Also to be developed
along with the new product are the associated sterilizing,
filling, sealing and handling equipment which must be all
adapted to suit the new product and the filling and
sealing process yet to be developed. Foods packed in the
new product will have a shelf life of several months. It is
excepted that the UHT process will affect the quality of
the packaged foods less than the sterilization used in
canning.

17. The market for the product has yet been
developed nor has consumer acceptance been tested,
however uses for it might include soups, sauces, piefillings, fruit, vegetables, baby foods, pasta products and
pet foods. That being so the new product if successfully
developed will compete with metal cans principally, but
also glass jars and certain 'brick' type cartons capable of
being filled with UHT treated liquids or semi-solids by
an aseptic process.

13.8.87 Official Journal of the European Communities No C 215/5

18. The markets for the packages with which the new
product is likely to compete are oligopolistic in structure:
for metal cans — Nacanco, Continental Can, American
Can, PLM (Swedish origin), Carnaud and Metal Box
itself; for glass jears — Owens Illinois, St. Gobain and
PLM; for 'brick' type cartons — Tetrapak and PKL
(Germany). The cost of transport of metal cans and glass
jars but not of 'brick' type cartons limits the geographical
existent of the relevant market. The new product, like
Elopak's current gable-top carton, will probably be
transported as flattened blanks separately from the
closures. The distance over which it can be economically
— transported will therefore probably be greater than is
currently possible with metal cans and glass jars. The
existence of these other competitors even within the
oligopolistic structure of the market and the fact that the
transport costs of the new product will probably not limit
severely the geographical extent of the relevant market,
means that the creation of ODIN will not create any
significant foreclosure effects.

19. The new product will not compete with Elopak's
current gable-top containers used for fresh milk. On this
market in any case there are several competitors
including Tetrapak which possesses its own technology.

E. Parties' submissions

20. The parties have submitted the following
arguments.

20.1. Elopak's board container cannot be packed with
particulate foods (i.e. they are only used for
liquids) and Elopak does not possess an acceptable
aseptic filling process at present. As a result of the
acquisition mentioned in paragraph 4 above,
Elopak has acquired a prototype aseptic filling
machine, which has a different kind of technology
from that which Metal Box is contributing to the
joint venture. Furthermore Elopak does not have
the know-how to seal cartons with a separate
closure nor does it know-how to manufacture such

closures. Elopak's containers are currently principally used for fresh milk packages and must
furthermore be adapted to accommodate separate
closures.

20.2. Metal Box makes a variety of paperboard
containers for non-liquid foods (e.g. frozen foods),
it makes various closures and seals and has UHT

and aseptic packaging technology. It has no
experience of the type of carton to be used as the
basis of the new product.

20.3. The parties are not actual or potential competitors
as the production process and technology for the
parties' products are radically different as is their
respective forming, filling and sealing machinery.
Only to a very small extent is there an overlap in
the uses to which their respective products are put.
Neither party could reasonably be expected to
research and develop the new product on its own
because both their respective know-how and
experiences are necessary.

F. Procedure

21. The Commission does not consider that the

benefit of the opposition procedure requested can be
provided because the agreements fall outside the scope of
such procedure and do not fulfil the conditions necessary
for an exemption to be granted in this way. However the
Commission does propose to adopt a favourable attitude
for the notified agreements, the key provisions of which
are outlined above. Before doing so it invites interested
third parties to send their comments on the case within
one month from the date of publication of this notice to
the following address, quoting reference TV/32009 —
Elopak/Metal Box — ODIN'.

Commission of the European Communities,
Directorate-General for Competition,

Directorate for Restrictive Practices, Abuse of Dominant

Positions and other distortions of competition — I,

200, rue de la Loi, B-1049 Brussels.