CELEX: 31985D0560
Language: en
Date: 1985-12-02 00:00:00
Title: 85/560/EEC: Commission Decision of 2 December 1985 relating to a proceeding under Article 85 of the EEC Treaty (IV/30.971 - BP/Kellogg)

No L 369 / 6                                       Official Journal of the European Communities                                       31 . 12 . 85
                                                              COMMISSION DECISION
                                                                  of 2 December 1985
                                           relating to a proceeding under Article 85 of the EEC Treaty
                                                              (IV / 30.971 - BP / Kellogg)
                                                            (Only the English text is authentic)
                                                                     ( 85 / 560 / EEC )
THE COMMISSION OF THE EUROPEAN COMMUNITIES ,                                             business ,    BP    has   undertaken     research     and
                                                                                         development into catalysts . BP is also a minor
Having regard to the Treaty establishing the European                                    producer of ammonia . The MW Kellogg Company
Economic Community ,                                                                     (MWK ) is a substantial American process plant
                                                                                         designer and contractor .
Having regard to Council Regulation No 17 of 6 February
1962 , First Regulation implementing Articles 85 and 86 of
the Treaty (') as last amended by the Act of Accession of
Greece , and in particular Articles 6 and 8 thereof,                                                The product and the market
Having regard to the notification submitted on 1 June 1983                         4.    The goods or services affected by the arrangements are
by BP International Limited and the MW Kellogg Company                                   plant for the production of ammonia , designs for the
concerning the joint development of a design for the                                     construction of such plant know-how useful for the
construction of ammonia-making plant ,                                                   operation , construction , design and development of
                                                                                         such plant , and catalyst for use in such plant .
Having regard to the summary of the notification
published ( 2 ) pursuant to Article 19 ( 3 ) of Regulation                         5.    Ammonia plant design is constantly evolving . There
No 17 ,                                                                                  are a large number of designers of and contractors for
                                                                                         such plant ( at least 10 well-known names , among
                                                                                         them MWK). MWK was responsible for the design of
After consulting the Advisory Committee on Restrictive                                   about 20 % of present capacity in western Europe .
Practices and Dominant Positions ,
Whereas :
                                                                                      The parties' interests in ammonia plant development
                               I. FACTS                                            6.    In the course of their R & D on catalysts for refining,
                                                                                          BP discovered a catalyst possibly effective for the
                                                                                         production of ammonia and have done a number of
                           The notification
                                                                                         years further research on this . BP wish to exploit this
                                                                                          both in plant operated by themselves and in plant to be
1.       On 1 June 1983 the Commission was requested by BP                                sold to other ammonia producers . The catalyst cannot
         International Limited and the MW Kellogg Company                                 be used commercially until a process that will make
         to exempt under Article 85 (3 ) certain of their                                 use of it has been developed with the cooperation of
         arrangements .                                                                   BP's research and development staff. BP have no
                                                                                          experience in the design , construction or commercial
2.       These arrangements concern the joint development of                             exploitation of designs for such a process . BP has ,
         a design for the construction of ammonia-making                                  therefore , sought a partner. MWK has a small process
         plant .                                                                          plant development department which does not
                                                                                          undertake research into catalysts , but which is willing
                                                                                          to cooperate with BP's research and development staff
                                                                                          in the development of such a process . They have ,
                                                                                          therefore , entered into the following arrangements .
                              The parties
3.       BP International Limited ( BP ) is a company within the
         BP group . The principal business of BP is oil
         production , refining and trading . In the context of this                                      The arrangements
(») OJ No 13 , 21 . 2 . 1962 , p . 204 / 62 .                                      7.     BP and MWK will cooperate in the development of
( 2 ) OJ No C 224 , 4 . 9 . 1985 , p . 2 .                                                designs for the construction of ammonia plant using
 ---pagebreak--- 31 . 12 . 85                               Official Journal of the European Communities                                   No L 369 / 7
       BP s catalyst . A joint development agreement provides         10 .  The joint development agreement contains the
       that each party shall remain the owner of their prior                principles of a licensing agreement whereby MWK
       know-how , shall own severally ( taking out patents as               will exploit the process by licensing the right to use it
       applicable ) know-how developed by each                              to the owners or operators of plant, and pay BP a
       individually , and shall own jointly any jointly                     percentage of the fee it receives in respect of such
       developed know-how . Each has an irrevocable                         licences. The joint development agreement contains
       world-wide non-exclusive right to use and sub-license                provisions for MWK's fee to be fixed as a function of
       joint patents.                                                       the cost saving that use of BP's catalyst is expected to
                                                                            make possible over existing designs of plant .
8.     In pursuance ot this agreement BP accepts the                  11 .  The duration foreseen for the joint development
       following restrictions :                                             agreement is about six years - that is to say about a
                                                                            year after the first commercial plant using the catalyst
                                                                            becomes operational (the duration is defined as a fixed
       8.1 .     not to disclose information about the catalyst             number of years following alternative stages in the
       for other development projects in the field of ammonia               development). There are provisions for earlier
       production ;                                                         termination in a wide variety of circumstances,
                                                                            including project failure or if MWK develop a more
                                                                            attractive process . The licensing agreement is to last
       8.2 .     not to supply the catalyst during the life of the          for 15 years, renewable .
       joint development agreement ( other than to MWK's
       customers for the new process , to companies in the BP
       group or to companies that might manufacture the
       catalyst ) without MWK's consent (this restriction is
       the means by which BP gives MWK a limited exclusive
       right to exploit any new design );                                               The parties' submissions
       8.3 .     to use its best endeavours , but not amounting
       to an absolute obligation to ensure that, if the first         12 .  The parties believe that the successful development of
       commercial plant using the new process for the                       the process will represent a considerable technical
       production of ammonia is built for the BP Group , then               advance making possible substantial energy savings
       the BP Group will use MWK as the design                              which , in their turn , should be reflected in lower
       contractor .                                                         ammonia prices.
                                                                      13 .  The parties submit that BP and MWK are not
                                                                            competitors and would be unlikely to become
9.     MWK accepts the following restrictions :                             competitors .
       9.1 .    not to carry out independently , or in
       cooperation with third parties , other research and            14 .  They further submit that the development requires the
       development in the field of graphite-based ammonia                   commitment of substantial resources by both of them ,
       synthesis catalysts ;                                                and requires BP to divulge to MWK the fruits of many
                                                                            years of costly research effort . Restrictions, that
                                                                            otherwise would fall under the prohibition of Article
       9.2 .    not to spend more on developing other                       85 ( 1 ) of the Treaty , are necessary to bring these
       ammonia processes ( with the exception of those using                about . Without accepting the restriction at 9.1 above,
       the traditional iron-based catalyst ) without informing              MWK could not devote sufficient resources to the
       BP (this together with the next two restrictions                     joint development nor ensure that any other firm with
       constitutes the means by which BP is put on notice that              which it might cooperate did not benefit from the
       it might wish to exercise its right to find another                  fruits of BP's earlier research . The restrictions at 9.2 to
       partner should MWK not promote the new process                       9.4 above are the minimum necessary to allow BP to
       actively);                                                           exercise its option to exploit the process without
                                                                            MWK should MWK not develop or market the new
                                                                            process actively . The restrictions at 8 above are the
       9.3 .    not to, commercialize any new ammonia                       minimum necessary to allow MWK an adequate
       process using iron-based catalysts likely to be more                 return from a successful development and follow
       commercially attractive than the process using BP's                  earlier Commission precedents of what may be
       catalyst without informing BP ;                                      exempted in such cooperations .
       9.4 .     not to bid for ammonia plants other than by                Following the publication of a notice pursuant to
       way of offering the jointly-developed process without                Article 19 ( 3 ) of Regulation No 17 , the Commission
       informing BP .                                                       received no comments from interested third parties .
 ---pagebreak--- No L 369 / 8                                     Official Journal of the European Communities                                   31 . 12 . 85
                          II . LEGAL ASSESSMENT                                       arrangements were notified to the Commission on
                                                                                      1 June 1983 . It appears appropriate, therefore ,
                                                                                      pursuant to Articles 6(1 ) and 8 ( 1 ) of Regulation
15 .     ( a ) The restrictions listed at 8 and 9 above , and more                    No 17 , to adopt such a decision for a period of
               particularly the restriction on the supply of the                      7 years with effect from that date,
                catalyst by BP and the restrictions on the
                development or sale of other processes by MWK
                fall under the prohibition of Article 85 ( 1 ) since
                their freedom of commercial decision is thus                HAS ADOPTED THIS DECISION :
                restricted ; if the product is succesfully developed ,
                the restrictions could have an appreciable effect                                       Article 1
                upon trade between Member States because
                ammonia is produced in the majority of those
                                                                            Pursuant to Article 85 ( 3 ) of the EEC Treaty , the provisions
                States ;
                                                                            of Article 85 ( 1 ) are hereby declared inapplicable for the
                                                                            period from 1 June 1983 to 31 May 1990 to the joint
         (b)The agreement is not exempted by virtue of                      development and related agreements for the construction of
                Commission Regulation ( EEC ) No 418 / 85 of                ammonia-making plant notified to the Commission on
                19 December 1984 on the application of Article 85           1 June 1983 by the parties named in Article 2 .
                ( 3 ) of the Treaty to categories of research and
                development agreements ('), since several of its
                clauses ( see paragraphs 8.2 , 9.3 and 9.4 above ) go
                beyond the scope of the Regulation in so far as they                                    Article 2
                give rise to restrictions on the exploitation of
                products and processes which have not been jointly          This Decision is addressed to :
                developed by the parties to the agreement and
                which are not covered by Articles 4 and 5 of the            1 . BP International Limited ,
                Regulation .                                                    Britannic House ,
                                                                                Moor Lane ,
                                                                                UK-London EC2Y 9BU .
         (c) The successful development of the process will
                promote technical and economic progress ,                   2 . The MW Kellogg Company ,
                particularly energy saving , from which consumers               3 Greenway Plaza East ,
                will benefit ; the restrictions listed appear                   Houston ,
                                                                                USA-Texas 77046 .
                reasonable and necessary for this purpose for the
                reasons given in paragraph 14 above and the
                undertakings will still be faced with substantial
                competitors ( see paragraph 5 ). A decision                 Done at Brussels , 2 December 1985 .
                pursuant to Article 85 ( 3 ) may , therefore , be
                taken .
                                                                                                                For the Commission
                                                                                                                 Peter SUTHERLAND
          ( d ) The foreseen duration of the joint development is
                about six years ( see paragraph 11 above ). The                                              Member of the Commission
( 1 ) OJ No L 53 , 22 . 2 . 1985 , p. 5 .