Source: EURLEX
Language: en
Format: md

No C 285/8 Official Journal of the European Communities 1. 11. 91

Notice pursuant to Article 19 (3) of Regulation No 17 concerning a request for a negative
clearance or an exemption pursuant to Article 85 (3) of the EEC Treaty (Case No IV/33.576

— Eleco-MiTek)

(91/C 285/04)

1. On 20 February 1990, Eleco Holdings pic ('Eleco')
notified the agreement dated 14 February 1989 between
itself and MiTek Holdings Inc. ('MiTek') for the
transfer to Eleco of a MiTek subsidiary in the United
Kingdom called Gang Nail Systems Ltd ('GNS').

2. The ultimate holding company of MiTek is MiTek
Industries Inc., a corporation governed under the laws of
Florida (USA). In 1987, this corporation acquired Gang
Nail Systems Inc., a US corporation which owned, _inter_
_alia,_ GNS and other companies in Europe engaged in
similar activities to GNS ('the GN companies').

3. MiTek and Gang Nail Systems Inc. had been
competitors in the United Kingdom and in other parts of
the Community in the supply of punched metal
connector plates and related services and machinery.
Punched metal plates are used as fasteners in the
production of prefabricated roof trusses for the building
industry.

4. Following a recommendation of the Monopolies
and Mergers Commission in the United Kingdom,
MiTek was required by the United Kingdom authorities
to divest itself of GNS. It subsequently entered into the
notified agreements on 14 February 1989 under which it
disposes of GNS to Eleco. MiTek continues to be, a
competitor in the United Kingdom through its
pre-existing subsidiary, Hydro-Air International (UK)
Limited, which supplies products and services under the
Hydro-Air and Beuplate names.

5. The principle underlying the recommendation of
the Monopolies and Mergers Commission was that GNS
should be placed as far as possible in the position in
which it was prior to the merger, as a competitor of
MiTek in the United Kingdom market. This implied, in
particular, that MiTek should provide GNS with certain
goods and technology previously available to GNS from
other GN companies outside the United Kingdom,
which have now become part of MiTek, and restore to
GNS the right to use the Gang Nail trade marks in the
United Kingdom. The parties agreed that in fact the activities of GNS in both the United Kingdom and Ireland
should be transferred to Eleco since GNS had previously

operated in those territories and it would have been
impractical to separate them.

6. The products are made from strips of metal which
are cut to size and punched through so as to create rows
of integral nails, as if a piece of a fakir's bed.
Prefabricated roof trusses are made by cutting timber to
size and shape and assembling it by embedding
connector plates on each side at the joints, generally
using hydraulic presses. The design of prefabricated roof
trusses and specification of the required timber pieces
and connector plates is carried out by 'computer-aided
design' software developed by or for the producer,
taking into account the characteristics of that particular
producer's connector plates.

7. Under the agreements MiTek granted to Eleco an
irrevocable royalty-free non-exclusive intellectual
property right licence to make certain products, principally those which GNS manufactured itself prior to the

merger.

8. MiTek also agreed to supply for resale in the
United Kingdom and Ireland various goods previously
supplied to GNS by other GN companies in Europe, for
a period of at least five years. In relation to the goods
supplied, GNS undertook not to actively solicit orders
for those goods or hold stocks of them outside the
United Kingdom and Ireland, though passive exports are
expressly permitted. GNS agreed not to sell certain types
of connector plates outside the United Kingdom and
Ireland for two years. The types of plates concerned are
little used by GNS but are the principal plates previously
sold by GN companies in the rest of Europe.

9. MiTek further agreed to supply various dies for the
manufacture of connector plates, which were previously
owned by other GN companies.

10. The agreements do not contain a general
restriction on competition by the vendor, since the aim
of the divestiture is that MiTek and GNS should

compete. MiTek agrees not to use, in the United
Kingdom and Ireland, intellectual property rights
formerly used by GNS in that territory and, for five
years, intellectual property rights which were formerly

1. 11. 91 Official Journal of the European Communities No C 285/9

used outside that territory by other GNS group
companies. It further agrees, for five years, not to sell in
the United Kingdom or Ireland connector plates which
have the structural values of those sold by GNS. It is
free, however, to sell there, as in the past, plates which
compete with those of GNS.

In addition, MiTek agreed not to solicit GNS customers
for four months, and both MiTek and Eleco agreed not
to solicit each others' employees for nine months.

11. GNS owns the rights to the United Kingdom and
Irish registered trade mark 'Gang Nail', and rights in
unregistered trade marks described as 'logo' and 'stripes'.
MiTek agreed, for five years, not to use these trade
marks (the 'GN trade marks') in the United Kingdom
and Ireland. Eleco agrees not to use these trade marks
outside the United Kingdom and Ireland for two years,
but is free to sell anywhere under trade marks other than
the GN trade marks.

12. At the end of two years, GNS became entitled to
use the GN trade marks anywhere in the Community
outside the United Kingdom and Ireland, provided that
they are differentiated (in principle by new colour(s) or
by other appropriate indications) to avoid confusion in
the minds of customers with the Gang Nail trade marks
now owned by MiTek in the Community outside the
United Kingdom and Ireland. MiTek agreed after two
years to use GN trade marks only in such a way as to
avoid confusion with the 'differentiated' trade marks of

GNS (in principle by maintaining the existing colour and
style).

13. At the end of five years, MiTek will become free
to use the GN trade marks in the United Kingdom and
Ireland and GNS will adopt the differentiated trade
marks for use throughout the Community. Parallel
imports will not be affected by the agreements except
that at the end of the five-year period risks of confusion

in the minds of users arising out of any parallel imports
will be substantially eliminated as a result of the
agreement between the parties to differentiate their trade
marks.

14. The parties have reciprocal pre-emptive rights in
the event of either abandoning or disposing of the GN
trade marks. In case of disposal, whether separately or
together with other assets, the rights are to be exercisable
on the same terms as the proposed disposal. The parties
are to ensure that any third party acquiring GN trade
mark rights shall be bound by the trade mark provisions
of the agreements.

15. The parties have confirmed that, without prejudice
to the contractual arrangements between them, they will
respect the rules of Community law on the free
movement of goods and competition in so far as they
apply to the present proceedings. They have therefore
confirmed that they do not intend to bring any action
for trademark infringement in relation to the use of the
Gang Nail trade marks to oppose the marketing of
products lawfully put on the market by other in the
Community.

16. On the basis of the facts summarized above, the
Commission proposes to take a favourable view of the
agreements. This procedure may be closed with the
sending of an administrative letter by the Commission's
Directorate-General for Competition. The Commission
invites interested third parties to send their observations,
within one month from the date of publication of this
notice, to the following address quoting the reference
TV733.576 Eleco-MiTek':

Commission of the European Communities,
Directorate-General for Competition, IV/C/1,
200 rue de la Loi,

B-1049 Brussels.