CELEX: 31976D0185
Language: en
Date: 1975-10-29 00:00:00
Title: 76/185/ECSC: Commission Decision of 29 October 1975 adopting interim measures concerning the National Coal Board, National Smokeless Fuels Limited and the National Carbonizing Company Limited

No L 35/6                       Official Journal of the European Communities                               10. 2. 76
                                                         II
                                    (Acts whose publication is not obligatory)
                                            COMMISSION
                                          COMMISSION DECISION
                                               of 29 October 1975
             adopting interim measures concerning the National Coalf ) Board, National
                Smokeless Fuels Limited and the National Carbonizing Company Limited
                                        (Only the English text is authentic)
                                                  (76/ 185/ECSC)
THE COMMISSION OF THE EUROPEAN                               inter alia industrial and domestic hard coke at 13
COMMUNITIES,                                                 plants. NSF has approximately 84 % of the market for
                                                             industrial and domestic hard coke and 88 % of the
                                                             market for domestic hard coke in the United
Having regard to the Treaty establishing the European
Coal and Steel Community, and in particular Article          Kingdom .
66 (7) thereof,
Having regard to the application of the National             NCC buys all the coal it requires for coke production
Carbonizing Company Limited to the European Court            from NCB. As NSF is price-leader for industrial and
of Justice and the order of the President of the Court       domestic hard coke in the United Kingdom, NCC is
of Justice of 22 October 1975,                               unable to sell its identical products above NSF's
                                                             prices.
                           I
                                                             In July 1973 NCB increased its prices for coking coal
                                                             but NSF did not increase the price charged for
Whereas :                                                    domestic coke. If unaccompanied by other measures
                                                             this change in the price structure would have reduced
                                                             the margin within which independent coke producers
National Carbonizing Company Limited ('NCC') of              have to operate in the United Kingdom . This diffi­
Nottingham, United Kingdom, is a public limited              culty was avoided by NCB introducing a rebate equiva­
company producing inter alia industrial and                  lent to 100 % of the increase in the price of coal . This
domestic hard coke at two plants at Barnsley and             rebate was given only on coal used to produce
Rotherham .
                                                             domestic coke for sale in the United Kingdom .
NCC has approximately 7 % of the total hard coke
market in the United Kingdom . This includes 9 % of          There were further price increases for coking coal on
the market for domestic hard coke.
                                                              1 May 1974, 1 November 1974 and 1 April 1975
                                                             accompanied by increases in the prices of industrial
The National Coal Board ('NCB') is a publicly owned          and domestic coke . On each occasion the rebate on
enterprise having a virtual monopoly of coal produc­         coal for the production of domestic coke for sale in
tion in the United Kingdom and about 95 % of the             the United Kingdom was altered but the full amount
market for coal there. Its wholly owned subsidiary,          of these later coal price increases was not rebated.
National Smokeless Fuels Limited ('NSF') produces            Other costs of coke production were also increasing.
 ---pagebreak--- 10. 2. 76                          Official Journal of the European Communities                           No L 35/7
As a result, in the period from July 1973 to April           as regards the production of a raw material (in this
1975 the price of coking coal increased by £ 4-40 per        case coking coal) and therefore able to control its
ton. The price of coal to make one ton of coke               price to independent manufacturers of derivatives (in
increased therefore by £ 6-29. At the same time the          this case, coke) and which is itself producing the same
costs of production for NCC increased by £ 41 0 per          derivatives in competition with these manufacturers,
ton of coke. The total increase of the costs for one ton     may abuse its dominant position if it acts in such a
of coke was therefore £ 10-39. The price of coke was         way as to eliminate the competition from these manu­
increased by £ 6*70 within the same period.                  facturers in the market for the derivatives. From this
                                                             general principle the services of the Commission
By letter dated 21 July 1975 to the Commission,              deduced that the enterprise in a dominant position
NCC made inter alia the following complaints :               may have an obligation to arrange its prices so as to
                                                             allow a reasonably efficient manufacturer of the deriva­
                                                             tives a margin sufficient to enable it to survive in the
1 . that the fact that NCB charged different prices for      long term.
    coal for domestic coke production depending on
    whether the coke was to be sold in the United
    Kingdom or not was a violation of the ECSC               However, on the basis of the facts available to them
    Treaty and in particular Article 60,                     the    services  of the  Commission     concluded   that
2. that the prices charged by NCB and NSF respec­            NCB/NSF, while subject to this obligation, appeared
                                                             not to have acted contrary to it. It is against this
    tively for coal for domestic coke production and         conclusion that NCC has sought relief from the Court
    for domestic coke constituted in the circumstances
                                                             of Justice of the European Communities.
    a violation of Articles 60 and 66 (7) ECSC Treaty,
    in substance on the grounds that the margin
    between these two prices had become insufficient         On 16 October 1975 NCC applied to the Court of
    to allow domestic coke producers to operate              Justice under Article 35 of the ECSC Treaty claiming
    economically.                                            that the Commission had acted improperly in failing
                                                             to adopt measures putting an end to violations of the
In its letter NCC stated that if no solution could be        Treaty by inter alia NCB. NCC simultaneously
arrived at, NCC's two plants would have to be closed.        applied to the Court of interim measures enabling
NCC also stated that the UK Government had not                NCC to produce domestic coke 'on an economic
                                                             basis'.
given any assistance.
The services of the Commission first contacted NCB           On 22 October the President of the Court of Justice
on 23 July 1975. On 12 September 1975 the services           made an order ruling that :
of the Commission wrote to NCC saying that the
grant of the rebate only in respect of domestic coke             'it is for the Commission to take the measures of
sold in the United Kingdom was contrary to the                   conservation which it considers strictly necessary,
ECSC Treaty and that, following the intervention of              and subject to all appropriate guarantees, for the
the Commission, NCB had undertaken to give the                   purpose of keeping in operation the two NCC
rebate immediately in respect of all domestic coke               plants threatened with closure and only for the
destined for sale in the Community.                              shortest time which it considers to be necessary
                                                                 for the completion of the proceedings in the main
On 15 October 1975 the services of the Commission                action'.
informed NCC orally of the provisional conclusions
they had reached in respect of their complaint on the        This order makes it clear that the Commission has
basis of the information then available.
                                                             power under the ECSC Treaty to adopt interim
                                                             measures even if the services of the Commission do
The conclusions were that, though NCB/NSF had a              not consider that, on the basis of the facts known to
dominant position in the UK for both coal and coke,          them, a violation of the Treaty has been committed.
there had been no violation of the ECSC Treaty by
NCB or NSF.
                                                             The order makes it clear that the prerequisites for
                                                             interim measures in the matter are fulfilled. What
By letter and telex dated 16 October 1975 the services       remains to be laid down are the nature and the scope
of the Commission informed NCC in writing of the             of these measures, including an adequate guarantee.
outcome of the consideration they had given to the
issues.
                                                             For this purpose a hearing was held on 24 October, at
                                                             which NCC and NCB/NSF were represented. Interim
In this letter the services of the Commission accepted       measures and the question of the guarantee were
that an undertaking which is in a dominant position          discussed.
 ---pagebreak--- No L 35/8                           Official Journal of the European Communities                              10 . 2. 76
                             II                               It could, for example, be by bank guarantee, by the
                                                              deposit of cash in a blocked bank account, a recog­
                                                              nized debt owed by NCB to NCC, or a guarantee by a
The purpose of interim measures in the present                third party of unquestionable solvency and liquidity.
instance is to ensure the survival of NCC as an inde­         The guarantee must be secure and adequate in
pendent coke producer pending the outcome of the              amount, should be simple and ensure reasonably
case before the Court.                                        convenient and prompt repayment in a reasonably
                                                              liquid form. The Commission would not however
                                                              oppose any form of guarantee acceptable to NCB.
In view of the losses being incurred by NCC this
survival can only be ensured by ordering NCB to
forego temporarily such part of the price of coking           The price reduction applies only to coal sold to NCC
coal supplied to NCC as will allow the latter to break        for the production of domestic coke. Since the benefit
even for the likely duration of the case, which in view       to NCC is subject to repayment and since the
of the urgency of the matter can be estimated at 12           guarantee will apply only to it, the reduction need not
weeks.                                                        be given to other enterprises buying coal from NCB
                                                              for domestic hard coke production. Any legal rights
                                                              which these enterprises may have can be considered
According to statements made by NCC to the                    on an appropriate occasion .
Commission, a reduction of the price of coking coal
supplied by NCB to NCC by £ 2*79 per ton on the
quantities needed for the period mentioned would              The price reduction does not apply to coal for making
achieve this result. The total sum which NCB would            products other than domestic hard coke. As the price
thus forgo temporarily would amount to approxi­               reduction is subject to repayment and is to be given
mately £ 280 000, excluding interest.                         only for a relatively short period, no significant distor­
                                                              tion of competition is expected.
In view of the temporary nature of the interim
measures and the correlation between the price reduc­          Either party may reapply to the Commission if any
tion ordered and the amount to be guaranteed, no              serious doubt or difficulty arises in the application of
detailed examination of the amount of the price reduc­
                                                              any part of this Decision.
tion requested by NCC need at present be under­
taken .
                                                                                          Ill
As to the guarantee to be given by NCC, the Commis­
sion has to consider the possibility that the disappear­
ance of one of the few remaining competitors of an            The order of the Court insists that interim measures
enterprise in a dominant position is the result of finan­     be adopted 'only for the shortest time which it
cial, industrial or commercial factors peculiar to that       considers to be necessary for the completion of the
competitor, e.g. its industrial and commercial competi­       proceedings in the main action'. As the interim
tiveness and its financial strength. For this reason the      measures involve substantial cost which must ulti­
enterprise in a dominant position must be given a             mately be borne either by NCC or by NCB, it is
guarantee of such nature and scope as to ensure that          necessary to ensure that everything is done to
the ultimate cost of the interim measures will not be
                                                              minimize the time required to complete the proceed­
borne by it if it has committed no violation of the           ings in the main action . To this effect any supplemen­
Treaty.                                                       tary information needed to identify and clarify the
                                                              issues before the Court should be made available as
                                                              quickly as possible.
The most appropriate way to achieve this is to require
the claimant firm to guarantee fully and effectively
the immediate payment of any sums which the enter­            It is therefore appropriate that all the information
prise in a dominant position has had to forego as a           which the independent professional advisers of NCC
result of the interim measures but which the final            and NSF may reasonably require to consider these
outcome of the case before the Court shows to be due          issues should be made available to them . All informa­
to it.                                                        tion so made available must also be made available to
                                                              the Commission, as the defendant before the Court,
                                                              without prejudice to the Commission's rights to ask
An adequate and appropriate guarantee of repayment            for the production of further information if the case
could take various forms, as does the security given in       so requires and subject to the powers of the Court
similar circumstances in cases before national courts .       under the rules of procedure.
 ---pagebreak--- 10. 2. 76                         Official Journal of the European Communities                          No L 35/9
The professional advisers are obliged not to disclose to    amount in question. Any other form of guarantee
any employee or officer of their respective clients, any    shall require the approval of the National Coal Board.
business secrets of the other company or companies,
in accordance with normal practice when information                                Article 3
is exchanged in such circumstances on a 'professional
advisers only' basis which is familiar in the United        If the National Carbonizing Company Limited shall
Kingdom.                                                    give a guarantee for the repayment of less than
                                                            £ 280 000 plus interest, the obligations of the
The Commission therefore, in order to limit the cost         National Coal Board shall be proportionately reduced.
of the interim measures and to ensure that they are
not rendered useless by delay, and to avoid further                                Article 4
difficulties due to th£ delays in obtaining information
which have already occurred, orders the parties to          The amount, if any, to be repaid by the National
exchange the information in question as a necessary         Carbonizing Company Limited to the National Coal
part of the interim measures of protection. This solu­       Board shall be governed by the final decision by the
tion also avoids the risk of delay due to the Commis­       institutions of the Community on the question
sion having to avoid disclosing to one party what           whether, and if so to what extent, the pricing policy of
another party might regard as its business secrets, in      the National Coal     Board and National Smokeless
the course of the procedure before the Court,                Fuels Limited constitutes a violation of the Treaty.
HAS ADOPTED THIS DECISION :
                                                                                   Article 5
                                                            The National Carbonizing Company Limited, the
                        Article 1                            National Coal Board and National Smokeless Fuels
The National Coal Board shall reduce the effective           Limited shall immediately make available to the inde­
                                                            pendent professional advisers of the others, and to the
price of coal supplied to the National Carbonizing           Commission, all financial and other information
Company Limited and used for the production of
domestic hard coke to be sold for use within the             reasonably required for the purpose of the case before
                                                            the Court.
Community, by £ 2-79 per ton with effect from 22
October 1975. This obligation shall end on 15
                                                                                   Article 6
January 1976 and shall be limited to £ 280 000, on
which interest shall run at 1 2 % compounded.               This Decision is addressed to the National Coal
                                                             Board, London, National Smokeless Fuels Limited,
                        Article 2                            Harrow, Middlesex a..d the National Carbonizing
The obligations of the National Coal Board under             Company Limited, Mansfield, Notts.
Article 1 shall be conditional upon the National
Carbonizing Company Limited having provided a                Done at Brussels, 29 October 1975.
guarantee for the immediate repayment to the
National Coal Board of the amount corresponding to
                                                                                      For the Commission
the total price reductions under Article 1 plus interest.
The guarantee shall take the form of an unconditional                                     The President
undertaking by a third party of unquestionable
solvency and liquidity for the repayment of the                                      Francois-Xavier ORTOLI