CELEX: 62003CJ0012
Language: en
Date: 2005-02-15
Title: Judgment of the Court (Grand Chamber) of 15 February 2005. # Commission of the European Communities v Tetra Laval BV. # Appeal - Competition - Regulation (EEC) No 4064/89 - Decision declaring a "conglomerate-type" concentration incompatible with the common market - Leveraging - Scope of judicial review - Factors to be taken into consideration - Behavioural commitments. # Case C-12/03 P.

Case C-12/03 P
      Commission of the European Communities
      v
      Tetra Laval BV
      (Appeal – Competition – Regulation (EEC) No 4064/89 – Decision declaring a ‘conglomerate-type’ concentration incompatible with the common market – Leveraging – Scope of judicial review – Factors to be taken into consideration – Behavioural commitments)
      Opinion of Advocate General Tizzano delivered on 25 May 2004  
      Judgment of the Court (Grand Chamber), 15 Feburary 2005  
      Summary of the Judgment
      1.     Competition – Concentrations – Examination by the Commission – Assessments of an economic nature – Conglomerate-type concentration
            – Discretion as regards assessment – Review by the Court  – Limits
      (Council Regulation No 4064/89, Art. 2)
      2.     Competition – Concentrations – Assessment of compatibility with the common market – Conglomerate-type concentration – Presentation
            of a close prospective examination supported by convincing evidence 
      (Council Regulation No 4064/89, Art. 2(2) and (3))
      3.     Competition – Concentrations – Assessment of compatibility with the common market – Conglomerate-type concentration – Taking
            into account of foreseeable anti‑competitive conduct capable of resulting in leveraging – Whether permissible – No obligation
            on the Commission to assess its likelihood having regard to the risks inherent in its adoption by an undertaking 
      (Art. 82 EC; Council Regulation No 4064/89, Art. 2(2) and (3))
      4.     Competition – Concentrations – Examination by the Commission – Commitments by the undertakings concerned capable of rendering
            the notified operation compatible with the common market – Taking into account of behavioural and structural undertakings
            
      (Council Regulation No 4064/89 Arts 2(2) and (3) and 8(2))
      5.     Competition – Concentrations – Assessment of compatibility with the common market – Taking into account of the elimination
            or significant reduction of potential competition tending to reinforce a dominant position – Whether permissible – Obligation
            of the Commission to establish the alleged reinforcement – Mere finding as to the existence of a clear dominant position on
            the part of the acquiring undertaking not sufficient 
      (Council Regulation No 4064/89, Art. 2(1), (2) and (3))
      1.     The basic provisions of Regulation No 4064/89 on the control of concentrations between undertakings, in particular Article
         2, confer on the Commission a certain discretion, especially with respect to assessments of an economic nature. Consequently,
         review by the Community Courts of the exercise of that discretion, which is essential for defining the rules on concentrations,
         must take account of the margin of discretion implicit in the provisions of an economic nature which form part of the rules
         on concentrations.
      
      Whilst the Court recognises that the Commission has a margin of discretion with regard to economic matters, that does not
         mean that the Community Courts must refrain from reviewing the Commission’s interpretation of information of an economic nature.
         Not only must the Community Courts, inter alia, establish whether the evidence relied on is factually accurate, reliable and
         consistent but also whether that evidence contains all the information which must be taken into account in order to assess
         a complex situation and whether it is capable of substantiating the conclusions drawn from it. Such a review is all the more
         necessary in the case of a prospective analysis required when examining a planned merger with conglomerate effect.
      
      (see paras 38-39)
      
      2.     A prospective analysis of the kind necessary in merger control must be carried out with great care since it does not entail
         the examination of past events – for which often many items of evidence are available which make it possible to understand
         the causes – or of current events, but rather a prediction of events which are more or less likely to occur in future if a
         decision prohibiting the planned concentration or laying down the conditions for it is not adopted.
      
      Thus, the prospective analysis consists of an examination of how a concentration might alter the factors determining the state
         of competition on a given market in order to establish whether it would give rise to a serious impediment to effective competition.
         Such an analysis makes it necessary to envisage various chains of cause and effect with a view to ascertaining which of them
         are the most likely.
      
      The analysis of a conglomerate-type concentration is a prospective analysis in which, first, the consideration of a lengthy
         period of time in the future and, secondly, the leveraging necessary to give rise to a significant impediment to effective
         competition mean that the chains of cause and effect are dimly discernible, uncertain and difficult to establish. That being
         so, the quality of the evidence produced by the Commission in order to establish that it is necessary to adopt a decision
         declaring the concentration incompatible with the common market is particularly important, since that evidence must support
         the Commission’s conclusion that, if such a decision were not adopted, the economic development envisaged by it would be plausible.
      
       (see paras 42-44)
      3.     The Commission’s analysis of the effects of a conglomerate-type concentration must comprise a comprehensive examination of
         the probability of the adoption of anti-competitive conduct capable of resulting in leveraging, that is to say, it must take
         into account both the incentives to adopt such conduct and the factors liable to reduce, or even eliminate, those incentives,
         including the possibility that such conduct is unlawful.
      
      However, it would run counter to the purpose of prevention of Regulation No 4064/89 on the control of concentrations between
         undertakings to require the Commission to examine, for each proposed merger, the extent to which the incentives to adopt anti-competitive
         conduct would be reduced, or even eliminated, as a result of the unlawfulness of the conduct in question, the likelihood of
         its detection, the action taken by the competent authorities, both at Community and national level, and the financial penalties
         which could ensue.
      
      Such an assessment would make it necessary to carry out an exhaustive and detailed examination of the rules of the various
         legal orders which might be applicable and of the enforcement policy practised in them. Moreover, if it is to be relevant,
         such an assessment calls for a high probability of the occurrence of the acts envisaged as capable of giving rise to objections
         on the ground that they are part of anti-competitive conduct.
      
      It follows that, at the stage of assessing a proposed merger, an assessment intended to establish whether an infringement
         of Article 82 EC is likely and to ascertain that it will be penalised in several legal orders would be too speculative and
         would not allow the Commission to base its assessment on all of the relevant facts with a view to establishing whether they
         support an economic scenario in which a development such as leveraging will occur.
      
      
      (see paras 74-77)
      4.     As regards commitments offered by the undertakings concerned which are capable of rendering the notified concentration compatible
         with the common market, the principle is that these must enable the Commission to conclude that the concentration at issue
         will not create or strengthen a dominant position within the meaning of Article 2(2) and (3) of Regulation No 4068/89 on the
         control of concentrations between undertakings. It is to be inferred from that principle that the categorisation of a proposed
         commitment as behavioural or structural is immaterial and that the possibility cannot automatically be ruled out that commitments
         which are prima facie behavioural, for instance a commitment not to use a trade mark for a certain period or to make part
         of the production capacity of the entity arising from the concentration available to third-party competitors or, more generally,
         to grant access to essential facilities on non-discriminatory terms, may also be capable of preventing the emergence or strengthening
         of a dominant position. 
      
       (see para. 86)
      5.     It follows from Article 2(1) of Regulation No 4064/89 on the control of concentrations between undertakings that the Commission,
         when assessing the compatibility of a concentration with the common market, must take account of a number of factors, such
         as the structure of the relevant markets, actual or potential competition from undertakings, the position of the undertakings
         concerned and their economic and financial power, possible options available to suppliers and users, any barriers to entry
         and trends in supply and demand.
      
      Accordingly, the mere fact that the acquiring undertaking already holds a clear dominant position on the relevant market,
         although constituting an important factor, does not in itself suffice to justify a finding that a reduction in the potential
         competition which that undertaking must face constitutes a strengthening of its position.
      
      The potential competition represented by a producer of substitute products on a segment of the relevant market is only one
         of the set of factors which must be taken into account when assessing whether there is a risk that a concentration might strengthen
         a dominant position. It cannot be ruled out that a reduction in that potential competition might be compensated by other factors,
         with the result that the competitive position of the already dominant undertaking remains unchanged.
      
       (see paras 125-127)

      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
            
            JUDGMENT OF THE COURT (Grand Chamber)15 February 2005(1)
         
         
               (Appeal  –  Competition  –  Regulation (EEC) No 4064/89  –  Decision declaring a ‘conglomerate-type’ concentration incompatible with the common market  –  Leveraging  –  Scope of judicial review  –  Factors to be taken into consideration  –  Behavioural commitments)
               
            In Case C-12/03 P,  APPEAL under Article 49 of the EC Statute of the Court of Justice lodged on 8 January 2003,
            
            
             Commission of the European Communities,  represented by M. Petite, A. Whelan and P. Hellström, acting as Agents, with an address for service in Luxembourg,
            
            
            appellant,
            
             the other party to the proceedings being:
             Tetra Laval BV,  established in Amsterdam (Netherlands), represented by A. Vandencasteele and D. Waelbroeck of the Brussels Bar, M. Johnsson
            of the Swedish Bar, and A.Weitbrecht and S. Völcker, Rechtsanwälte,applicant at first instance,
            
            THE COURT (Grand Chamber),,
            
             composed of P. Jann, President of the First Chamber, acting for the President,  C.W.A. Timmermans and A. Rosas (Rapporteur),
            Presidents of Chambers, C. Gulmann, J.-P. Puissochet, R. Schintgen, N. Colneric, S. von Bahr and J.N. Cunha Rodrigues, Judges,
            
            
             Advocate General: A. Tizzano, Registrar: L. Hewlett, Principal Administrator,
             having regard to the written procedure and further to the hearing on 27 January 2004,
            after hearing the Opinion of the Advocate General at the sitting on 25 May 2004,
         gives the following
         
         
         Judgment
         1
            
          By its appeal, the Commission of the European Communities asks the Court to set aside the judgment of the Court of First Instance
         of the European Communities in Case T‑5/02  Tetra Laval  v  Commission  [2002] ECR II‑4381 (‘the judgment under appeal’), by which the Court of First Instance annulled Commission Decision 2004/124/EC
         of 30 October 2001 declaring a concentration to be incompatible with the common market and the EEA Agreement (Case No COMP/M.2416
         – Tetra Laval/Sidel) (OJ 2004 L 43, p. 13, ‘the contested decision’).
         
         
            
                Regulation (EEC) No 4064/89 
               
            
         
         2
            
          Article 2 of Council Regulation (EEC) No 4064/89 of 21 December 1989 on the control of concentrations between undertakings
         (OJ 1989 L 395, p. 1, corrected version in OJ 1990 L 257, p. 13), as amended by Council Regulation (EC) No 1310/97 of 30 June
         1997 (OJ 1997 L 180, p. 1), (‘the Regulation’) provides:
         ‘1.     Concentrations within the scope of this Regulation shall be appraised in accordance with the following provisions with a view
         to establishing whether or not they are compatible with the common market.
          In making this appraisal, the Commission shall take into account:
         (a)     the need to maintain and develop effective competition within the common market in view of, among other things, the structure
         of all the markets concerned and the actual or potential competition from undertakings located either within or outwith the
         Community; 
         (b)     the market position of the undertakings concerned and their economic and financial power, the alternatives available to suppliers
         and users, their access to supplies or markets, any legal or other barriers to entry, supply and demand trends for the relevant
         goods and services, the interests of the intermediate and ultimate consumers, and the development of technical and economic
         progress provided that it is to consumers’ advantage and does not form an obstacle to competition.
          2.       A concentration which does not create or strengthen a dominant position as a result of which effective competition would be
         significantly impeded in the common market or in a substantial part of it shall be declared compatible with the common market.
          3.       A concentration which creates or strengthens a dominant position as a result of which effective competition would be significantly
         impeded in the common market or in a substantial part of it shall be declared incompatible with the common market.
         ...’
         
          The contested decision 
         
         3
            
          It is apparent from the contested decision that four types of packaging are used for liquid food: carton packaging, plastic
         packaging (the material being either polyethylene terephthalate, ‘PET’, or high-density polyethylene, ‘HDPE’), cans and glass.
         The type of packaging used for a product is dependent on several factors. The most important factors are the technological
         characteristics of the product, those of the packaging material and those relating to the method of packaging.
         
         
         
         4
            
          The contested decision focuses on ‘sensitive’ products. These include milk and liquid dairy products (‘LDPs’), fruit juices
         and nectars, fruit-flavoured still drinks (FFDs) and tea and coffee drinks. In some cases, the products must be protected
         against light, as in the case of milk, or against oxygen, as in the case of fruit juices and, to a lesser extent, FFDs and
         tea and coffee drinks. Since PET is a porous resin through which oxygen and light can pass, it is less appropriate for such
         products than carton. Nevertheless, research is being carried out into methods of ‘barrier’ technology, that is to say, methods
         which ensure protection against oxygen and light.
         
         
         
         5
            
          The packaging technology is also an important factor in choosing the type of packaging. Certain acidic products, such as milk
         and fruit juices, must either be packaged in aseptic conditions or distributed in chilled form. It is apparent from the file
         that aseptic conditions can be better maintained if those types of products are packaged in carton because the packaging process
         is carried out in a single step by the producer of the liquid food in question. In the majority of cases, the producer has
         an integrated packaging line. It purchases the carton in reels and then cuts, shapes, fills and seals the packaging. 
         
         
         
         6
            
          By contrast, the packaging of a liquid product in PET is, in most cases, carried out in several stages, which makes it more
         difficult to guarantee aseptic conditions. First of all, a plastic tube made of resin called a perform must be produced, then
         an empty bottle must be formed by placing the preform in a ‘stretch blow moulding’ machine (‘SBM machine’) containing the
         appropriate mould for the desired shape and, in a final step only, the bottle must be filled and closed. These various stages
         may be carried out by different undertakings. Thus, there are ‘converters’, who manufacture empty packaging and supply it
         to liquid producers. However, integrated production lines and production techniques whereby packaging in aseptic conditions
         can be more easily guaranteed are currently being developed.
         
         
         
         7
            
          By the contested decision, the Commission declared incompatible with the common market and the functioning of the Agreement
         on the European Economic Area of 2 May 1992 (OJ 1994 L 1, p. 3) the acquisition of Sidel SA by Tetra Laval BV (‘the notified
         merger’). Tetra Laval BV (‘Tetra’) is a holding company of the Tetra group, which also includes the Tetra Pak company, which
         is the world leader in the carton-packaging sector and is regarded as holding a dominant position in aseptic packaging on
         that market, whereas Sidel SA (‘Sidel’) is a leading company in the sector of production and supply of SBM machines and is
         active in the area of ‘barrier’ technology. The decision was adopted pursuant to Article 8(3) of the Regulation.
         
         
         
         8
            
          In the contested decision, the Commission concluded that the markets for carton and PET packaging systems are distinct but
         closely related and potentially converging markets which have a growing number of common customers. It also found that there
         are, in particular, distinct markets for high and low capacity SBM machines and that those markets can, in turn, be subdivided
         into markets for sensitive and non-sensitive products. This distinction according to end use can be explained by the differences
         in the specifications for those machines, since their producers may charge different prices according to the end use, which
         can be determined at the time of purchase. Such price discrimination cannot be avoided by way of arbitrage. 
         
         
         
         9
            
          According to the Commission, the notified merger would encourage Tetra to ‘leverage’ its dominant position on the market for
         equipment and consumables for carton packaging so as to persuade its customers on that market who are switching to PET in
         order to package certain sensitive products to choose Sidel’s SBM machines, thereby excluding much smaller competitors and
         turning Sidel’s leading position on the market for SBM machines for sensitive products into a dominant position. Tetra would
         be helped in this by its close and sustained relationship with its customers, its financial strength, its know-how and its
         reputation in the aseptic and ultra-clean sector, by Sidel’s current strength, technology and reputation for quality and by
         the vertical integration from which the entity emerging from the notified merger (‘the merged entity’) will profit in relation
         to the three packaging systems (carton, PET and HDPE).
         
         
         
         10
            
          The Commission also concluded that, given the weak competition on the markets for equipment and consumables for carton packaging,
         the merger of Tetra with the leading producer on the growing market for PET equipment, a market which is closely related to
         that for carton, would eliminate an important source of potential competition. This would strengthen Tetra’s dominant position
         on the carton-packaging markets and reduce its incentive to adjust its prices and innovate to face the threat which PET poses
         to its position.
         
         
         
         11
            
          Tetra entered into a number of commitments, including a commitment to keep Tetra and Sidel separate for 10 years, not to make
         joint offers for both its carton products and SBM machines made by Sidel and to comply with its obligations under Commission
         Decision 92/163/EEC of 24 July 1991 relating to a proceeding pursuant to Article 86 of the EEC Treaty (IV/31.043 – Tetra Pak
         II) (OJ 1992 L 72, p. 1). The Commission took the view that such commitments were insufficient to resolve the structural competition
         concerns raised by the notified merger and argued that it would be virtually impossible to monitor compliance with them. Therefore,
         in Article 1 of the contested decision, the Commission declared the merger incompatible with the common market and the functioning
         of the Agreement on the European Economic Area.
         
          The judgment under appeal 
         
         12
            
          By application lodged at the Registry of the Court of First Instance on 15 January 2002, Tetra brought an action for annulment
         of the contested decision. In the judgment under appeal, the Court of First Instance held that the Commission had committed
         manifest errors of assessment in its findings as to leveraging and the strengthening of Tetra’s dominant position in the carton
         sector and therefore annulled the contested decision.
         
         
         
         13
            
          As regards the Commission’s claims that the notified merger would have anti-competitive conglomerate effects and, in particular,
         give the merged entity the capacity and incentive to engage in leveraging by exploiting its overall position in the carton
         sector with a view to attaining a dominant position on the market for SBM machines, the Court of First Instance observed that
         the Commission itself had taken the view that such a dominant position would not arise from the merger itself but rather from
         the foreseeable conduct of the merged entity. However, the Court of First Instance held that, where the Commission takes the
         view that a merger should be prohibited because it will create or strengthen a dominant position within a foreseeable period,
         it is incumbent upon it to produce convincing evidence thereof.
         
         
         
         14
            
          The Court of First Instance also stated that in order to assess the foreseeability of the merged entity’s conduct the Commission
         must examine all the circumstances which might determine that conduct. Given that, in the case of a dominant undertaking such
         as Tetra, the supposed leveraging could constitute an abuse of the pre-existing dominant position, the Court of First Instance
         held that, when examining the likelihood of the adoption of anti-competitive conduct, the Commission must have regard not
         only to the incentives to adopt such conduct but also to the factors liable to reduce, or even eliminate, those incentives,
         such as the probability of legal action against and penalties for such conduct. Since the Commission had failed to carry out
         such an examination, its findings could not be upheld. Consequently, the Court of First Instance examined whether the Commission
         could nevertheless establish the merits of its argument in the absence of those findings.
         
         
         
         15
            
          The Court of First Instance found that there was, in principle, a possibility of leveraging by the merged entity. Nevertheless,
         it also found that the Commission had overestimated the likely level of growth in the PET sector and that, for the reasons
         set out above, the leveraging methods which could be taken into consideration by the Court of First Instance were limited
         to those which do not infringe Community law. It concluded that the Commission had on the whole failed to fulfil its obligation
         to establish that the potential leveraging would lead to the creation or strengthening of a dominant position on the relevant
         markets by 2005. With regard, in particular, to SBM machines, the Court of First Instance held that the contested decision
         did not contain sufficient evidence to justify the definition by the Commission of distinct SBM-machine markets for sensitive
         and for non-sensitive products.
         
         
         
         16
            
          As regards the Commission’s claim that ‘[Tetra’s] current dominant position in carton packaging’ would be strengthened by
         the elimination of a source of constraints on competition from neighbouring markets as a result of the elimination of competition
         from Sidel on the PET-packing market, the Court of First Instance held that the Commission had to prove that strengthening,
         which cannot be inferred automatically from the fact that there is a dominant position. It found that the Commission had failed
         to provide such proof.
         
          The appeal 
         
         17
            
          The Commission relies on five grounds of appeal. The first ground alleges an error in law as to the standard of proof which
         it is required to satisfy and as to the scope of the Court of First Instance’s power of judicial review. The second ground
         alleges infringement of Articles 2 and 8 of the Regulation in so far as the Court of First Instance required the Commission,
         first, to take account of the impact which the illegality of certain conduct has on the incentives for the merged entity to
         engage in leveraging and, secondly, to assess, as a potential remedy, the commitments not to adopt any abusive conduct. The
         third ground alleges that the Court of First Instance erred in law by applying an erroneous test of judicial review and infringed
         Article 2 of the Regulation by failing to uphold the definition of distinct markets for SBM machines according to end use.
         The fourth ground alleges infringement of Article 2 of the Regulation, distortion of the facts and failure to take account
         of the Commission’s arguments in that the Court of First Instance failed to recognise the merits of the Commission’s finding
         that Tetra would strengthen its dominant position in the carton sector. The fifth ground alleges infringement of Article 2(3)
         of the Regulation in that the Court of First Instance rejected the Commission’s conclusions as to the creation of a dominant
         position on the market for SBM machines.
         
         
         
         18
            
          In its reply, Tetra requested, as a measure of inquiry, an order that a French version of the appeal be produced. The Court
         rejected that request by order of 24 July 2003.
         
          The first ground of appeal 
         
         19
            
          By its first ground of appeal, the Commission complains that the Court of First Instance, whilst claiming to apply the test
         of manifest error of assessment, in fact applied a different test requiring the production of ‘convincing evidence’. In doing
         so, the Court of First Instance infringed Article 230 EC by failing to take account of the discretion conferred on the Commission
         with regard to complex factual and economic matters. It also infringed Article 2(2) and (3) of the Regulation in that it applied
         a presumption of legality in respect of concentrations with conglomerate effect. Taking the example of the review of the Commission’s
         forecast of significant growth in the use of PET packaging for sensitive products, the Commission claims that the Court of
         First Instance distorted the facts, failed to give adequate reasons for the rejection of its arguments and failed to take
         account of factors, arguments and evidence put forward by it in the contested decision and in its defence, and even refrained
         from referring to that defence.
         
         
         
         20
            
          In paragraph 119 of the judgment under appeal, the Court of First Instance set out as follows the criteria for judicial review
         of a Commission decision on a concentration:
         ‘As a preliminary point, it must be recalled that the substantive rules of the Regulation, in particular Article 2, confer
         on the Commission a certain discretion, especially with respect to assessments of an economic nature. Consequently, review
         by the Community judicature of the exercise of that discretion, which is essential for defining the rules on concentrations,
         must take account of the discretionary margin implicit in the provisions of an economic nature which form part of the rules
         on concentrations (Joined Cases C-68/94 and C-30/95  France and Others  v  Commission (‘Kali & Salz’)  [1998] ECR I-1375, paragraphs 223 and 224; Case T-102/96  Gencor  v  Commission  [1999] ECR II-753, paragraphs 164 and 165; and Case T-342/99  Airtours  v  Commission  [2002] ECR II-2585, paragraph 64).’
         
         
         
         21
            
          In paragraph 120 of the judgment under appeal, the Court of First Instance interpreted Article 2(3) of the Regulation as follows:
         ‘It must also be recalled that under Article 2(3) of the Regulation a concentration which creates or strengthens a dominant
         position as a result of which effective competition would be significantly impeded in the common market or in a substantial
         part of it must be declared incompatible with the common market. Conversely, the Commission is bound to declare a concentration
         falling within the scope of application of the Regulation compatible with the common market where the two conditions laid
         down in that provision are not fulfilled (Case T-2/93  Air France  v  Commission  [1994] ECR II-323, paragraph 79; see also, to this effect,  Gencor  v  Commission , paragraph 170; and  Airtours  v  Commission , paragraphs 58 and 82). If, therefore, a dominant position is not created or strengthened, the transaction must be authorised
         and there is no need to examine the effects of the transaction on effective competition ( Air France  v  Commission , paragraph 79).’
         
         
         
         22
            
          The first ground of appeal relied on by the Commission relates to a number of paragraphs in the judgment under appeal. However,
         it is appropriate to reproduce the passages from that judgment which relate to the conglomerate nature of the notified merger,
         which is defined in paragraph 142 of that judgment as ‘a merger of undertakings which, essentially, do not have a pre-existing
         competitive relationship, either as direct competitors or as suppliers and customers’, a merger which does not give rise to
         true horizontal overlaps between the activities of the parties to it or to a vertical relationship between the parties in
         the strict sense of the term and in respect of which it therefore cannot be presumed, as a general rule, that it produces
         anti-competitive effects.
         
         
         
         23
            
          In paragraph 146 of the judgment under appeal, the Court of First Instance interpreted the Regulation, in so far as it applies
         to conglomerates, as follows:
         ‘It should be observed, first, that the Regulation, particularly at Article 2(2) and (3), does not draw any distinction between,
         on the one hand, merger transactions having horizontal and vertical effects and, on the other hand, those having a conglomerate
         effect. It follows that, without distinction between those types of transactions, a merger can be prohibited only if the two
         conditions laid down in Article 2(3) are met (see paragraph 120 above). Consequently, a merger having a conglomerate effect
         must, like any other merger (see paragraph 120 above), be authorised by the Commission if it is not established that it creates
         or strengthens a dominant position in the common market or in a substantial part of it and that, as a result, effective competition
         will be significantly impeded’.
         
         
         
         24
            
          With respect to the impact on competition of a conglomerate-type merger and to the Commission’s analysis in that regard, the
         Court of First Instance held as follows:
         
         ‘148
            It is necessary first to determine whether a merger transaction creating a competitive structure which does not immediately
               confer on the merged entity a dominant position may nevertheless be prohibited under Article 2(3) of the Regulation, when
               in all likelihood it will allow that entity, as a result of leveraging by the acquiring party from a market in which it is
               already dominant, to obtain in the relatively near future a dominant position on another market in which the party acquired
               currently holds a leading position, and when the acquisition in question has significant anti-competitive effects on the relevant
               markets.
            
         
         
         …
         
         
         150
            The Court observes that, in principle, a merger between undertakings which are active on distinct markets is not usually of
               such a nature as immediately to create or strengthen a dominant position due to the combination of the market shares held
               by the parties to the merger. The factors which are of significance for the relative positions of competitors within a given
               market are generally to be found within the market itself, namely in particular the market shares held by the competitors
               and the conditions of competition on the market. It does not follow, however, that the conditions of competition on a market
               can never be affected by factors external to that market.
            
         
         
         151
            Thus, by way of example, in a case where the markets in question are neighbouring markets and one of the parties to a merger
               transaction already holds a dominant position on one of the markets, the means and capacities brought together by the transaction
               may immediately create conditions allowing the merged entity to leverage its way so as to acquire, in the relatively near
               future, a dominant position on the other market. This could especially be the case where the relevant markets are tending
               to converge and where, in addition to the dominant position held by one of the parties to the transaction on a market, the
               other party, or one of the other parties, to the transaction holds a leading position on another market.
            
         
         
         152
            Any other interpretation of Article 2(3) of the Regulation could deprive the Commission of the power to exercise control over
               merger transactions which have solely or principally a conglomerate effect.
            
         
         
         153 
            Consequently, in a prospective analysis of the effects of a conglomerate-type merger transaction, if the Commission is able
               to conclude that a dominant position would, in all likelihood, be created or strengthened in the relatively near future and
               would lead to effective competition on the market being significantly impeded, it must prohibit it (see, in this regard,  Kali & Salz , paragraph 221;  Gencor  v  Commission , paragraph 162; and  Airtours  v  Commission , paragraph 63).
            
         
         
         154
            In this context, it is also appropriate to distinguish, on the one hand, between a situation where a merger having conglomerate
               effects immediately changes the conditions of competition on the second market and results in the creation or strengthening
               of a dominant position on that market due to the dominant position already held on the first market and, on the other hand,
               a situation where the creation or strengthening of a dominant position on the second market does not immediately result from
               the merger, but will occur, in those circumstances, only after a certain time and will result from conduct engaged in by the
               merged entity on the first market where it already holds a dominant position. In this latter case, it is not the structure
               resulting from the merger transaction itself which creates or strengthens a dominant position within the meaning of Article
               2(3) of the Regulation, but rather the future conduct in question.
            
         
         
         155
            The Commission’s analysis of a merger producing a conglomerate effect is conditioned by requirements similar to those defined
               by the Court with regard to the creation of a situation of collective dominance ( Kali & Salz , paragraph 222; and  Airtours  v  Commission , paragraph 63). Thus the Commission’s analysis of a merger transaction which is expected to have an anti-competitive conglomerate
               effect calls for a particularly close examination of the circumstances which are relevant for an assessment of that effect
               on the conditions of competition in the reference market. As the Court has already held, where the Commission takes the view
               that a merger should be prohibited because it will create or strengthen a dominant position within a foreseeable period, it
               is incumbent upon it to produce convincing evidence thereof ( Airtours  v  Commission , paragraph 63). Since the effects of a conglomerate-type merger are generally considered to be neutral, or even beneficial,
               for competition on the markets concerned, as is recognised in the present case by the economic writings cited in the analyses
               annexed to the parties’ written pleadings, the proof of anti-competitive conglomerate effects of such a merger calls for a
               precise examination, supported by convincing evidence, of the circumstances which allegedly produce those effects (see, by
               analogy,  Airtours  v  Commission , paragraph 63).’
            
         
         
          Arguments of the parties
         
         
         25
            
          The Commission claims that the Court of First Instance departed from principles laid down by the Court in its judgment in
          Kali & Salz  in terms of both the nature of the judicial review carried out by it and the standard of proof which it required the Commission
         to satisfy. It submits that the following paragraphs of that judgment are relevant in this regard:
         
         ‘220
            As stated above, under Article 2(3) of the Regulation, concentrations which create or strengthen a dominant position as a
               result of which effective competition would be significantly impeded in the common market or in a substantial part of it must
               be declared incompatible with the common market. 
            
         
         
         221 In the case of an alleged collective dominant position, the Commission is therefore obliged to assess, using a prospective
            analysis of the reference market, whether the concentration which has been referred to it leads to a situation in which effective
            competition in the relevant market is significantly impeded by the undertakings involved in the concentration and one or more
            other undertakings which together, in particular because of correlative factors which exist between them, are able to adopt
            a common policy on the market and act to a considerable extent independently of their competitors, their customers, and also
            of consumers. 
         
         
         
         222
            Such an approach warrants close examination in particular of the circumstances which, in each individual case, are relevant
               for assessing the effects of the concentration on competition in the reference market. 
            
         
         
         223
            In this respect, however, the basic provisions of the Regulation, in particular Article 2 thereof, confer on the Commission
               a certain discretion, especially with respect to assessments of an economic nature. 
            
         
         
         224
            Consequently, review by the Community judicature of the exercise of that discretion, which is essential for defining the rules
               on concentrations, must take account of the discretionary margin implicit in the provisions of an economic nature which form
               part of the rules on concentrations.’
            
         
         
         
         
         26
            
          The Commission concludes from the principles referred to in  Kali & Salz  and from the review carried out by the Court in that case that it is required to examine the relevant market closely, weigh
         up all the relevant factors, and base its assessment on evidence which is factually accurate, is not clearly insignificant
         and is capable of substantiating the conclusions drawn from it and that it must reach its conclusions on the basis of consistent
         reasoning.
         
         
         
         27
            
          The Commission takes the view, first of all, that the standard of ‘convincing evidence’ differs substantially, in degree and
         in nature, both from the obligation to produce ‘cogent and consistent’ evidence, established in  Kali & Salz , and from the principle that the Commission’s assessment must be accepted unless it is shown to be manifestly wrong. The
         standard is different in degree because, unlike the standard of ‘convincing evidence’, that of cogent and consistent evidence
         does not rule out the possibility that another body might reach a different conclusion if it were competent to give a decision
         on the matter. The standard required is likewise different in nature inasmuch as it transforms the role of the Community Courts
         into that of a different body which is competent to rule on the matter in all its complexity and which is entitled to substitute
         its views for those of the Commission. The Court of First Instance was inconsistent in that it referred to the test of manifest
         error of assessment yet applied a very different test.
         
         
         
         28
            
          Next, the Commission submits that a margin of discretion is inherent in any prospective analysis. The likelihood of certain
         market developments within a foreseeable time-frame must be determined on the basis of the current market situation, observable
         trends and other appropriate indicators. To require that the Commission’s assessment be, in effect, based on undisputed or
         virtually unequivocal evidence, irrespective of its merit, would deprive the Commission of its function of evaluating the
         evidence and attaching, for justifiable reasons, more weight to some sources than to others.
         
         
         
         29
            
          Finally, the Commission submits that the standard of proof required by the Court of First Instance means that it is placed
         under an obligation to authorise the transaction in cases in which the evidence does not meet the requisite standard, which
         is tantamount to a general, de facto presumption of the legality of certain concentrations or, at the very least, to the establishment
         of a bias in their favour. However, Article 2(3) and (3) imposes on the Commission a double obligation, namely either to prohibit
         a concentration if it creates or strengthens a dominant position or, as a symmetrical but opposite obligation, to approve
         it if it neither creates nor strengthens such a position. That obligation reflects the intention of the Community legislature
         to protect equally the private interests of the parties to the concentration and the public interest in maintaining effective
         competition and in consumer protection. This symmetrical double obligation calls for the application of a symmetrical test
         in relation to the standard of proof required of the Commission since it must prove the merits of its assessment equally in
         both cases.
         
         
         
         30
            
          By way of illustration of the judicial review carried out by the Court of First Instance in the judgment under appeal, the
         Commission refers, in particular, to the assessment of the growth in the use of PET packaging for sensitive products. In that
         connection, the Court of First Instance held as follows:
         
         ‘210
            At the hearing, the Commission stated that its reasoning is not based on the precise accuracy of its forecasts, inasmuch as
               it is accepted that there will be significant future growth. It also acknowledged there that, in the light of the remaining
               uncertainties surrounding the commercial applicability of the necessary barrier technologies, it could not assume significant
               PET growth for the [non-flavoured] UHT milk market, and that even the weak growth predicted in the contested decision could
               turn out to be an overestimation. It did, however, emphasise that its forecasts for probable strong growth in the use of PET
               for fresh milk, juices, FFDs and particularly tea/coffee drinks in the period up to 2005 were entirely plausible.
            
         
         
         211
            The Court finds that the use of PET will not actually increase for UHT milk and, consequently, for approximately half of the
               LDP market.
            
         
         
         212
            As regards the rest of the LDP market, it must be found that the PCI report, [entitled “The Potential for PET in the Packaging
               of Liquid Dairy Products (2001)”,] the only independent study to concentrate on the LDP market, predicts growth as a result
               of which PET use will be 9.2% of the fresh non-flavoured milk market in 2005 (PCI, p. 64). In addition there is the fact that,
               for aseptic packaging, the Warrick report [entitled “Warrick Research Report Packaging Markets – Aseptic Packaging Markets
               World and Western Europe – 2000”] predicts only minimal growth, of 1%, for flavoured milk, and a slight decline for other
               milk-based drinks, whilst the Pictet report [entitled “Analysts’ Report Pictet – European Packaging Machinery, Move into PET”]
               does not give any specific forecasts for LDPs. On the basis of that evidence, the Commission has not shown what it claims
               to have shown in its defence, namely that its forecasts for LDPs are based on a prudent analysis of the independent studies
               or on a solid, coherent body of evidence obtained by it through its market investigation. The growth estimates adopted by
               the Commission (paragraph 209 above) are not really very convincing. The PCI report, on the other hand, provides the only
               proof which might possibly support the forecast of a 25% market share for PET in other milk-based drinks (namely flavoured
               milk and drinks based on milk and yoghurt) by 2005 (PCI, pp. 63 and 64). However, if that growth were to be realised, the
               relevant volume would increase only by 62 000 tonnes for 2000, to reach 92 800 tonnes in 2005, an increase which is not very
               significant in relation to the roughly 120 million tonnes of milk produced in the Community each year (PCI, p. 9). More generally,
               the contested decision does not explain adequately how PET could displace HDPE as the main material competing with carton
               by 2005, especially in the important fresh milk packaging segment. It must be pointed out that the Commission does not dispute
               either the overall figure of 17.3% for the use of HDPE for LDPs given by [the consulting company] Canadean for 2000 (see table
               3 in recital 66) or the forecast that that figure could reach 19.5% by 2005 (see table 5 in recital 105).
            
         
         
         213
            As regards juices, the Commission’s forecast is even less convincing. Although the Commission itself acknowledged that the
               growth in question would be due mainly to a switch from glass to PET, it did not conduct any analysis of the glass market.
               In the absence of such an analysis, the Court is unable to ascertain the accuracy of the Commission’s forecasts for juices.
               An analysis of that kind would have been indispensable to enable the Court to determine the likely level of switch from glass
               to carton, PET and HDPE. It was all the more indispensable given the differences between the relevant forecasts made in the
               Canadean and Warrick studies, on the one hand, and the Pictet study, on the other, as regards levels of growth and the time
               periods used in the analyses.
            
         
         
         214
            It follows that the growth forecasts for LDPs and juices as stated by the Commission in the contested decision have not been
               proven to the requisite legal standard. Although a certain amount of growth in those segments is likely, especially for premium
               products, convincing evidence of the extent of the growth is lacking.
            
         
         
         215
            By contrast, the independent studies do show that, by 2005, there will in all likelihood be a significant increase in the
               use of PET for packaging FFDs and tea/coffee drinks, including isotonic drinks. Since the level of growth forecast in the
               contested decision was not seriously called into question by the applicant at the hearing and is not overestimated compared
               with the forecast in the studies, the Court finds that the Commission did not commit an error on this point.’
            
         
         
         
         
         31
            
          The Commission complains, in essence, that the Court of First Instance failed to demonstrate that the Commission’s estimates
         of the growth in use of PET were based, first, on factual errors, secondly, on findings of fact which were not established
         or on conclusions drawn from manifestly insignificant evidence, thirdly, on inconsistencies or errors in reasoning or, fourthly,
         on the omission of relevant factors. The Court of First Instance rejected, without explanation, the Commission’s assessment
         of the evidence, distorted the factual evidence, for example in finding, in paragraph 213 of the judgment under appeal, that
         the Commission had failed to analyse the glass market, and imposed its own findings, which were contrary to those of the Commission
         and manifestly wrong, for example in finding, in paragraph 289 of the judgment, that ‘fresh milk is not a product for which
         the marketing advantages offered by PET have any particular importance’ or, in paragraphs 288 and 328, that PET is more expensive
         than carton.
         
         
         
         32
            
          Tetra contends that the Commission’s first ground of appeal is merely a semantic discussion of the terms used in the judgment
         under appeal and does not relate to the substantive examination carried out by the Court of First Instance. The Commission’s
         argument is to no avail since there is no consistent terminology with regard to the requisite standard of proof.
         
         
         
         33
            
          Tetra also points out that the terminology used by the Court in the judgment in  Kali & Salz , to which the Commission refers in connection with the rules on evidence, did not preclude the Court, in that case, from
         examining in detail both the facts relied on by the Commission in support of its arguments and the conclusions which it had
         reached in the decision at issue. 
         
         
         
         34
            
          According to Tetra, the Court of First Instance respected the Commission’s margin of discretion and did not exceed the bounds
         of its power of judicial review by rejecting the statement of reasons for the contested decision, but merely found that the
         Commission had failed to establish leveraging.
         
         
         
         35
            
          Tetra contends that the Commission has misinterpreted paragraph 153 of the judgment under appeal in inferring from it that
         it establishes an asymmetrical standard of proof and a de facto presumption of the legality of concentrations. In that paragraph,
         the Court of First Instance merely set out the rules governing the obligation to prove the effects of concentrations.
         
         
         
         36
            
          With regard to the example put forward by the Commission in relation to the Court of First Instance’s analysis of the growth
         in the use of PET for packaging sensitive products, Tetra carries out a comparative analysis of the appeal and the judgment
         under appeal with a view to showing that the Commission has misread or distorted the judgment and has quoted certain passages
         out of context. 
         
          Findings of the Court as to the first ground of appeal
         
         
         37
            
          By its first ground of appeal, the Commission contests the judgment under appeal in so far as the Court of First Instance
         required it, when adopting a decision declaring a concentration incompatible with the common market, to satisfy a standard
         of proof and to provide a quality of evidence in support of its line of argument which are incompatible with the wide discretion
         which it enjoys in assessing economic matters. It thus complains that the Court of First Instance infringed Article 230 EC
         by exceeding the limits of its power of review established by case-law and, as a result, misapplied Article 2(2) and (3) of
         the Regulation by creating a presumption of legality in respect of certain concentrations.
         
         
         
         38
            
          It should be observed that, in paragraph 119 of the judgment under appeal, the Court of First Instance correctly set out the
         tests to be applied when carrying out judicial review of a Commission decision on a concentration as laid down in the judgment
         in  Kali & Salz . In paragraphs 223 and 224 of that judgment, the Court stated that the basic provisions of the Regulation, in particular
         Article 2, confer on the Commission a certain discretion, especially with respect to assessments of an economic nature, and
         that, consequently, review by the Community Courts of the exercise of that discretion, which is essential for defining the
         rules on concentrations, must take account of the margin of discretion implicit in the provisions of an economic nature which
         form part of the rules on concentrations.
         
         
         
         39
            
          Whilst the Court recognises that the Commission has a margin of discretion with regard to economic matters, that does not
         mean that the Community Courts must refrain from reviewing the Commission’s interpretation of information of an economic nature.
         Not only must the Community Courts, inter alia, establish whether the evidence relied on is factually accurate, reliable and
         consistent but also whether that evidence contains all the information which must be taken into account in order to assess
         a complex situation and whether it is capable of substantiating the conclusions drawn from it. Such a review is all the more
         necessary in the case of a prospective analysis required when examining a planned merger with conglomerate effect.
         
         
         
         40
            
          Thus, the Court of First Instance was right to find, in paragraph 155 of the judgment under appeal, in reliance on, in particular,
         the judgment in  Kali & Salz , that the Commission’s analysis of a merger producing a conglomerate effect is subject to requirements similar to those defined
         by the Court with regard to the creation of a situation of collective dominance and that it calls for a close examination
         of the circumstances which are relevant for an assessment of that effect on the conditions of competition on the reference
         market. 
         
         
         
         41
            
          Although the Court of First Instance stated, in paragraph 155, that proof of anti-competitive conglomerate effects of a merger
         of the kind notified calls for a precise examination, supported by convincing evidence, of the circumstances which allegedly
         produce those effects, it by no means added a condition relating to the requisite standard of proof but merely drew attention
         to the essential function of evidence, which is to establish convincingly the merits of an argument or, as in the present
         case, of a decision on a merger.
         
         
         
         42
            
          A prospective analysis of the kind necessary in merger control must be carried out with great care since it does not entail
         the examination of past events – for which often many items of evidence are available which make it possible to understand
         the causes – or of current events, but rather a prediction of events which are more or less likely to occur in future if a
         decision prohibiting the planned concentration or laying down the conditions for it is not adopted.
         
         
         
         43
            
          Thus, the prospective analysis consists of an examination of how a concentration might alter the factors determining the state
         of competition on a given market in order to establish whether it would give rise to a serious impediment to effective competition.
         Such an analysis makes it necessary to envisage various chains of cause and effect with a view to ascertaining which of them
         are the most likely.
         
         
         
         44
            
          The analysis of a ‘conglomerate-type’ concentration is a prospective analysis in which, first, the consideration of a lengthy
         period of time in the future and, secondly, the leveraging necessary to give rise to a significant impediment to effective
         competition mean that the chains of cause and effect are dimly discernible, uncertain and difficult to establish. That being
         so, the quality of the evidence produced by the Commission in order to establish that it is necessary to adopt a decision
         declaring the concentration incompatible with the common market is particularly important, since that evidence must support
         the Commission’s conclusion that, if such a decision were not adopted, the economic development envisaged by it would be plausible.
         
         
         
         45
            
          It follows from those various factors that the Court of First Instance did not err in law when it set out the tests to be
         applied in the exercise of its power of judicial review or when it specified the quality of the evidence which the Commission
         is required to produce in order to demonstrate that the requirements of Article 2(3) of the Regulation are satisfied.
         
         
         
         46
            
          With respect to the particular case of judicial review exercised by the Court of First Instance in the judgment under appeal,
         it is not apparent from the example given by the Commission, which relates to the growth in the use of PET packaging for sensitive
         products, that the Court of First Instance exceeded the limits applicable to the review of an administrative decision by the
         Community Courts. Contrary to what the Commission claims, paragraph 211 of the judgment under appeal merely restates more
         concisely, in the form of a finding by the Court of First Instance, the admission made by the Commission at the hearing, which
         is summarised in paragraph 210 of the judgment, that its forecast in the contested decision with regard to the increase in
         the use of PET for packaging UHT milk was exaggerated. In paragraph 212 of the judgment under appeal, the Court of First Instance
         gave the reasons for its finding that the evidence produced by the Commission was unfounded by stating that, of the three
         independent reports cited by the Commission, only the PCI report contained information on the use of PET for milk packaging.
         It went on, in that paragraph, to show that the evidence produced by the Commission was unconvincing by pointing out that
         the increase forecast in the PCI report was of little significance and that the Commission’s forecast was inconsistent with
         the undisputed figures on the use of HDPE contained in the other reports. In paragraph 213 of the judgment under appeal, the
         Court of First Instance merely stated that the Commission’s analysis was incomplete, which made it impossible to confirm its
         forecasts, given the differences between those forecasts and the forecasts made in the other reports.
         
         
         
         47
            
          Amongst the other examples given by it, the Commission challenges the Court of First Instance’s finding, in paragraph 289
         of the judgment under appeal, that ‘fresh milk is not a product for which the marketing advantages offered by PET have any
         particular importance’ and its conclusions as to the cost of PET in comparison to that of carton, which are set out in paragraphs
         288 and 328 of the judgment under appeal. It should be noted that these are findings of fact, which are not subject to review
         by the Court in appeal proceedings. It is therefore unnecessary to give a ruling on the merits of those findings by the Court
         of First Instance and it need be stated only that the Court of First Instance was able to base those findings on various items
         in the contested decision.
         
         
         
         48
            
          It follows from these examples that the Court of First Instance carried out its review in the manner required of it, as set
         out in paragraph 39 of this judgment. It explained and set out the reasons why the Commission’s conclusions seemed to it to
         be inaccurate in that they were based on insufficient, incomplete, insignificant and inconsistent evidence.
         
         
         
         49
            
          In doing so, the Court of First Instance observed the criteria to be applied in exercising the Community Courts’ power of
         judicial review and, accordingly, complied with Article 230 EC.
         
         
         
         50
            
          Consequently, the above analyses do not show that the Court of First Instance infringed Article 2(2) or (3) of the Regulation.
         
         
         
         51
            
          It follows from all of the above considerations that the first ground of appeal is unfounded.
         
          The second ground of appeal 
         
         52
            
          By its second ground of appeal, the Commission complains that the Court of First Instance infringed Articles 2 and 8 of the
         Regulation in that it required the Commission to take account of the impact which the illegality of certain conduct would
         have on the incentives for the merged entity to engage in leveraging and to assess, as a possible remedy, the commitment not
         to engage in abusive conduct.
         
         
         
         53
            
          The contested parts of the judgment under appeal are in the section examining the plea alleging a lack of foreseeable conglomerate
         effect, in which, more specifically, the Court of First Instance analysed the likelihood of leveraging. According to the Commission’s
         line of argument, the merged entity would have been capable of exploiting its dominant position on the market for aseptic
         carton and would have been encouraged to do so in order to leverage its leading position on the market for PET equipment,
         in particular that for high and low capacity SBM machines used for sensitive products, so as to create a dominant position.
         
         
         
         54
            
          The forms of leveraging are described as follows in recital 364 in the contested decision (reproduced in paragraph 49 of the
         judgment under appeal):
         ‘Leveraging [this position] ... in a number of ways, Tetra/Sidel … would have the ability to tie carton packaging equipment
         and consumables with PET packaging equipment and, possibly, preforms (in particular barrier-enhanced preforms). Tetra/Sidel
         would also have the ability to use pressure or incentives (such as predatory pricing or price wars and loyalty rebates) so
         that its carton customers buy PET equipment and, possibly, preforms from ... Tetra/Sidel and not from its competitors or converters.’
         
         
         
         55
            
          In response to the Commission’s criticisms, Tetra proposed to enter into various commitments. However, the Commission took
         the view that those commitments could not be regarded as eliminating the competition concerns identified by it effectively.
         With respect to the behavioural commitments, the following reasons were stated for the contested decision in recitals 429
         to 432, under the heading ‘Separation of Sidel from Tetra and Article 82 Commitments’:
         
         ‘429
            The behavioural commitment, namely the separation of Sidel from Tetra Pak, together with the confirmation of pre-existing
               Article 82 undertakings, are submitted in particular with regard to the concerns on the ability of the merged entity to leverage
               its dominant position in carton packaging to gain a dominant position in PET packaging equipment. This commitment and the
               pre-existing Article 82 commitments are, however, purely behavioural. As such, they are not suitable to restore conditions
               of effective competition on a permanent basis, since they do not address the permanent change in the market structure created
               by the notified operation that causes these concerns.
            
         
         
         430
            The “separation” of Sidel from Tetra Pak companies does not alter the fact that, as expressly acknowledged in the commitment
               itself, Sidel’s board will “be held responsible directly by the Tetra Laval Group board”. It cannot be expected that such
               separation will prevent Sidel from implementing the commercial strategy of the Tetra Laval Group. In addition Sidel’s legal
               status could be changed, i.e. Sidel might be de-listed and turned into a private company like Tetra Laval which would make
               monitoring of “firewalls” virtually impossible.
            
         
         
         431
            The commitment not to “bundle” as well as the confirmation of the pre-existing Article 82 commitments constitute pure promises
               not to act in a certain manner, indeed not to act in contravention of Community law. Such behavioural promises are in contrast
               with the Commission’s stated policy on remedies and with the purpose of the Merger Regulation itself … and are extremely difficult
               if not impossible to monitor effectively.
            
         
         
         432
            Overall, in addition to being complex in their implementation and in their monitoring, these commitments cannot be considered
               as capable of removing effectively the competition problems identified.’
            
         
         
         
         
         56
            
          The Commission’s argument challenges paragraphs 156 to 162 of the judgment under appeal, which immediately follow paragraphs
         148 to 155, which were likewise challenged by the Commission and were examined by the Court in connection with the first ground
         of appeal. In those paragraphs, the Court of First Instance held as follows:
         
         ‘156 In the present case, the leveraging from the aseptic carton market, as described in the contested decision, would manifest
            itself – in addition to the possibility of the merged entity engaging in practices such as tying sales of carton packaging
            equipment and consumables to sales of PET packaging equipment and forced sales (recitals 345 and 365) – firstly, by the probability
            of predatory pricing by the merged entity (recital 364, cited in paragraph 49 above); secondly, by price wars; and, thirdly,
            by the granting of loyalty rebates. Engaging in these practices would enable the merged entity to ensure, as far as possible,
            that its customers on the carton markets obtain from Sidel any PET equipment they may require. The contested decision finds
            that Tetra holds a dominant position on the aseptic carton markets, that is to say, the markets for aseptic carton packaging
            systems and aseptic cartons (recital 231, see paragraph 40 above), a finding which is not disputed by the applicant.
         
         
         
         157
            It should be recalled that, according to settled case-law, where an undertaking is in a dominant position it is in consequence
               obliged, where appropriate, to modify its conduct so as not to impair effective competition on the market regardless of whether
               the Commission has adopted a decision to that effect (Case 322/81  Michelin  v  Commission  [1983] ECR 3461, paragraph 57; Case T-51/89  Tetra Pak  v  Commission  [1990] ECR II-309, paragraph 23; and Joined Cases T-125/97 and T-127/97  Coca-Cola  v  Commission  [2000] ECR II-1733, paragraph 80).
            
         
         
         158
            Moreover, in response to the questions put by the Court at the hearing, the Commission did not deny that leveraging by Tetra
               through the conduct described above could constitute abuse of Tetra’s pre-existing dominant position in the aseptic carton
               markets. This could also be the case, according to the concerns expressed by the Commission in its defence, in circumstances
               where the merged entity refused to participate in the installation and any necessary conversion of Sidel SBM machines, to
               provide after-sales service or to honour the guarantees for such machines when sold by converters. However, the Commission
               went on to state that the fact that a type of conduct may constitute an independent infringement of Article 82 EC does not
               preclude that conduct from being taken into account in the Commission’s assessment of all forms of leveraging made possible
               by a merger transaction.
            
         
         
         159
            In this regard, it must be stated that, although the Regulation provides for the prohibition of a merger creating or strengthening
               a dominant position which has significant anti-competitive effects, these conditions do not require it to be demonstrated
               that the merged entity will, as a result of the merger, engage in abusive, and consequently unlawful, conduct. Although it
               cannot therefore be presumed that Community law will not be complied with by the parties to a conglomerate-type merger transaction,
               such a possibility cannot be excluded by the Commission when it carries out its control of mergers. Accordingly, when the
               Commission, in assessing the effects of such a merger, relies on foreseeable conduct which in itself is likely to constitute
               abuse of an existing dominant position, it is required to assess whether, despite the prohibition of such conduct, it is none
               the less likely that the entity resulting from the merger will act in such a manner or whether, on the contrary, the illegal
               nature of the conduct and/or the risk of detection will make such a strategy unlikely. While it is appropriate to take account,
               in its assessment, of incentives to engage in anti-competitive practices, such as those resulting in the present case for
               Tetra from the commercial advantages which may be foreseen on the PET equipment markets (recital 359), the Commission must
               also consider the extent to which those incentives would be reduced, or even eliminated, owing to the illegality of the conduct
               in question, the likelihood of its detection, action taken by the competent authorities, both at Community and national level,
               and the financial penalties which could ensue.
            
         
         
         160
            Since the Commission did not carry out such an assessment in the contested decision, it follows that, in so far as the Commission’s
               assessment is based on the possibility, or even the probability, that Tetra will engage in such conduct in the aseptic carton
               markets, its findings in this respect cannot be upheld.
            
         
         
         161
            Moreover, the fact that the applicant offered commitments regarding its future conduct is also a factor which the Commission
               should have taken into account in assessing whether it was likely that the merged entity would act in a manner which could
               result in the creation of a dominant position on one or more of the relevant PET equipment markets. There is no indication
               in the contested decision that the Commission took account of the implications of those commitments when it assessed the creation
               of such a position in future through leveraging.
            
         
         
         162 It follows from the foregoing that it is necessary to examine whether the Commission based its analysis of the likelihood
            of leveraging from the aseptic carton markets, and of the consequences of such leveraging by the merged entity, on sufficiently
            convincing evidence. In the course of that examination it is necessary, in the present case, to take account only of conduct
            which would, at least probably, not be illegal. In addition, since the anticipated dominant position would only emerge after
            a certain lapse of time, by 2005 according to the Commission, its analysis of the future position must, whilst allowing for
            a certain margin of discretion, be particularly plausible.’
         
         
         
         
         
         57
            
          Examining the forms of leveraging in detail, the Court of First Instance held as follows:
         
         ‘217 The leveraging methods referred to in recital 364 of the contested decision (cited in paragraph 49 above) are based on
            Tetra’s dominant position on the aseptic carton markets. Given, in particular, Tetra’s commitment to divest itself of its
            preforms operations, the leveraging would be carried out by two types of measures: first, through pressure leading to tied
            sales or sales which bundle equipment and consumables for carton packaging jointly with PET packaging equipment. That pressure
            could be put on Tetra customers needing to continue to use carton packaging for some of their production and especially those
            customers with long-term agreements with Tetra for their carton packaging needs (recital 365, cited in paragraph 50 above).
            Second, measures could be adopted to offer incentives, such as predatory pricing, price wars and loyalty rebates.
         
         
         
         218
            However, the use, by an undertaking with a dominant position like Tetra’s on the aseptic carton markets, of pressure in the
               form of tied sales or incentives such as predatory pricing or loyalty rebates that are not objectively justified, would usually
               constitute an abuse of that position. As this Court has already held, the possible recourse to such strategies cannot be presumed
               by the Commission, as it has done in the contested decision, in order to justify a decision prohibiting a merger transaction
               which has been notified to it in accordance with the Regulation (see paragraphs 154 to 162 above). It follows that the leveraging
               practices which may be taken into consideration by the Court are limited to those which, at least probably, do not constitute
               an abuse of a dominant position on the aseptic carton markets.
            
         
         
         219
            It is, therefore, necessary merely to consider strategies for tied or bundled sales which are not in themselves forced, for
               loyalty rebates that are objectively justified on the carton markets, and for offers of reduced prices for carton or PET packaging
               equipment that are not predatory within the meaning of well-established case-law (Case C-62/86  AKZO  v  Commission  [1991] ECR I-3359, particularly paragraphs 102, 115, 156 and 157; judgment in Case C-333/94  Tetra Pak  v  Commission  [[1996] ECR I‑5951], paragraphs 41 to 44, upholding the judgment in Case T-83/91 [ Tetra  Pak  v  Commission  [1994] ECR II‑755], and the Opinion of Advocate General Fennelly in Joined Cases C-395/96 P and C-396/96 P  Compagnie maritime belge transports and Others  v  Commission  [2000] ECR I-1365, particularly paragraphs 123 to 130). Against that background, it is necessary to examine whether the Commission
               took account of the commitment concerning separation between Sidel and Tetra Pak companies, agreed in principle for a 10-year
               period, according to which “no joint offerings of any of Tetra Pak’s carton products together with Sidel’s SBM machines are
               to be made”.
            
         
         
         220
            It is apparent from the contested decision that Tetra asked the Commission to take note of its existing obligations under
               Article 3(3) of … Decision 92/163 …, which provides:
            
         
         
         “Tetra Pak shall not practice predatory or discriminatory prices and shall not grant to any customer any form of discount
            on its products or more favourable payment terms not justified by an objective consideration. Thus, discounts on cartons should
            be granted solely according to the quantity of each order, and orders for different types of carton may not be aggregated
            for that purpose.”
         
         
         
         221
            It follows that Tetra gave a clear indication of its willingness to comply fully with the special obligations imposed on it
               by Article 82 EC as a result of the dominant position it holds on the aseptic carton markets. It also reiterated its acceptance
               of all of the relevant obligations imposed on it following the finding in Decision 92/163 of an infringement of Article 82
               EC as regards those markets. It also undertook, in the context of the present proceedings, to make no joint offers of its
               carton products together with Sidel’s SBM machines.
            
         
         
         222
            Consequently, the only methods of tied or bundled sales which would actually be feasible for the merged entity would be offers
               made by Tetra to its current customers on the carton markets which would not be compulsory or forced and which would only
               be in respect of carton packaging equipment and/or carton products, on the one hand, and PET packaging equipment other than
               SBM machines, on the other. It must also be observed that, notwithstanding the emphasis placed by the Commission in the contested
               decision (recitals 177 and 369), in its written observations and oral pleadings on the significance of the merged entity’s
               ability to offer almost all of the equipment necessary for setting up an integrated PET production line, it is clear from
               the commitments that it would not be possible for that entity to make a joint offer to a customer for carton packaging equipment
               and an integrated PET production line, at least not one containing a Sidel SBM machine.
            
         
         
         223
            Moreover, although the finding in the contested decision regarding the price discrimination allegedly practised in the past
               by Sidel is not, having regard to the parties’ written pleadings and the oral pleadings of the Commission concerning the underlying
               econometric analysis, vitiated by a manifest error of assessment, it cannot constitute sufficiently convincing evidence that
               the merged entity will continue to behave in a similar way. Unlike Sidel prior to the merger, the merged entity would be bound
               not only by the commitments but also by the various obligations limiting Tetra’s conduct.
            
         
         
         224
            It must therefore be found that the merged entity’s possible means of leveraging would be quite limited. An examination of
               the foreseeable consequences of its resorting to such conduct must take account of this.’
            
         
         
          Arguments of the parties
         
         
         58
            
          The Commission submits, first, that the approach taken by the Court of First Instance with regard to the conglomerate effects
         and the unlawful conduct of Tetra is contrary to Article 2 of the Regulation and to merger control in general.
         
         
         
         59
            
          It argues, first of all, that that approach runs counter to a meaningful interpretation of Article 2. If Article 82 EC were
         sufficient to prevent abuses, it would not have been necessary to make provision for  ex ante  control of concentrations. More specifically, the Commission challenges paragraph 218 of the judgment under appeal, in which
         the Court of First Instance held that ‘the possible recourse to such [abusive] strategies cannot be presumed by the Commission’,
         and submits that, on the contrary, the presumption that a dominant undertaking may find it rational to exclude competitors
         and/or exploit customers and thus, in some cases, actually to violate Article 82 EC is enshrined in the Regulation.
         
         
         
         60
            
          The Commission submits, moreover, that the Court of First Instance’s approach is mistaken in that it is based on unwarranted
         distinctions between different types of mergers, which are contrary to Article 2 of the Regulation. It criticises paragraph
         154 of the judgment under appeal, in which the Court of First Instance took the view that it is not the structure resulting
         from the merger transaction itself which creates or strengthens a dominant position within the meaning of Article 2(3) but
         rather the future conduct of the merged entity. The Commission argues that that finding is inconsistent with paragraph 94
         of the  Gencor  judgment, in which the Court of First Instance held that a merger would have had an immediate effect where it ‘would have
         had the direct and immediate effect of creating the conditions in which abuses were not only possible but economically rational,
         given that the concentration would have significantly impeded effective competition in the market by giving rise to a lasting
         alteration to the structure of the markets concerned’. It submits that there is no justification for drawing a distinction,
         as the Court of First Instance did in the judgment under appeal, according to whether the dominant position on the second
         market is created immediately or in the medium term. Otherwise, there would be a risk that vertical mergers or those with
         conglomerate effect might escape the scope of the Regulation because those types of merger give the merged entity the potential
         to use – and abuse – its dominant position on a market and the incentives to do so in order to exclude its competitors on
         a second market. The Commission concludes that, in the present case, it ought to have been found that the merger would immediately
         alter the structure and conditions of competition.
         
         
         
         61
            
          Finally, the Commission submits that there are insuperable legal and practical obstacles to engaging in the analysis of the
         disincentives created by the illegal nature of certain abusive commercial practices. The Commission would be required to examine,
         not the structural aspects of an undertaking, but rather its propensity to comply with the law. Such an analysis would constitute
         a breach of the principle of equality and the presumption of innocence.  It would also be impossible to apply the test because
         it could be difficult to quantify the risk, which would vary according to the strictness of the competition policy in each
         Member State. Given the standard of proof required by the Court of First Instance, the Commission concludes that it would
         be impossible for it to control vertical mergers and those with conglomerate effect properly in accordance with the Regulation.
         
         
         
         62
            
          Secondly, the Commission alleges that Court of First Instance infringed Articles 2 and 8(2) of the Regulation by finding that
         it ought to have taken account of the behavioural commitments entered into by Tetra. It compares the position adopted by the
         Court of First Instance in paragraph 161 of the judgment under appeal with that taken in paragraphs 316 and 317 of the  Gencor  judgment, in which the Court of First Instance ruled out the consideration of behavioural commitments where the merger appears
         likely to create or strengthen a dominant position. The Commission argues that, even though non-structural commitments may
         be acceptable in certain cases, commitments that amount to a mere promise to behave in a certain way, for example a commitment
         not to abuse a dominant position created or strengthened by the proposed concentration, are not as such regarded as suitable
         to render the concentration compatible with the common market. 
         
         
         
         63
            
          The Commission submits that the Court of First Instance distorted the contested decision by finding, in paragraph 161 of the
         judgment under appeal, that it was not apparent from that decision that the Commission had taken account of the implications
         of Tetra’s commitments in its assessment. The Commission asserts that it assessed those commitments but rejected them (recitals
         423 to 451 in the contested decision). The Court of First Instance cannot properly claim that the contested decision is vitiated
         by a manifest error of assessment as regards the conclusion that the concentration must be prohibited if it has not examined
         the Commission’s arguments that the commitments are unviable and, in any event, insufficient to address the competitive concerns
         raised by the notified merger.
         
         
         
         64
            
          By contrast, Tetra contends, first, that the Court of First Instance did not err in law by requiring the Commission to take
         account of the unlawfulness of the abusive conduct. The test applied by the Court of First Instance in paragraph 159 of the
         judgment under appeal is that of the rational and foreseeable conduct of an undertaking. When assessing such conduct, account
         must be taken both of the incentives to engage in unlawful conduct and the factors which might diminish, or even eliminate,
         such incentives.
         
         
         
         65
            
          Tetra contends that the comparisons drawn with the  Gencor  case are irrelevant. It submits that, in that case, the collective dominant position was created immediately by the horizontal
         merger, which is not the situation in the present case, in which a dominant position can arise only after a certain period
         of time and requires prior abusive conduct.
         
         
         
         66
            
          According to Tetra, the Commission’s interpretation of the Regulation is based on the false premiss that its purpose is to
         prevent abuses. However, it follows from the wording of Article 2(2) of that regulation that its purpose is to prohibit the
         creation of any dominant position which, by itself and without any abuse, would result in the creation of a significant impediment
         to competition.
         
         
         
         67
            
          Tetra does not see why there are insuperable legal and practical obstacles to assessing the impact of the illegal nature of
         certain conduct or how such an assessment poses difficulties different from those relating to the assessment of incentives
         to adopt abusive conduct. It observes that the Commission considers itself perfectly capable of quantifying the probability
         of detecting an infringement of Articles 81 EC and 82 EC and takes account of that assessment when fixing fines.
         
         
         
         68
            
          Secondly, with respect to consideration of its commitments, Tetra submits that paragraph 161 of the judgment under appeal
         contains no more than a finding that the Commission ought to have taken account of the commitments offered when assessing
         the foreseeable future conduct of the merged entity. It states that the Court of First Instance did not itself assess the
         commitments offered and that at no point in the judgment under appeal did it, contrary to what the Commission claims, require
         the Commission to ‘take into account behavioural commitments consisting of mere promises not to engage in abusive conduct’.
         
         
         
         69
            
          Tetra argues that the Commission has misinterpreted the judgment in  Gencor . Contrary to the Commission’s interpretation, the Court of First Instance, in paragraph 319 of that judgment, found that
         the categorisation of commitments was immaterial and that behavioural commitments may be equally capable of preventing the
         emergence or strengthening of a dominant position. 
         
         
         
         70
            
          Finally, Tetra contends that, contrary to its claims, the Commission did not carry out an assessment  in concreto  of the impact of the commitments offered by the company but merely expressed an objection in principle to the treatment of
         behavioural commitments as measures capable of constituting a valid means of remedying the creation of a dominant position
         within the meaning of the Regulation. 
         
          Findings of the Court as to the second ground of appeal
         
         
         71
            
          It should be observed, first of all, that paragraphs 148 to 162 of the judgment under appeal, which the Commission challenges
         under both its first and its second ground of appeal, form a section in which the Court of First Instance described certain
         specific aspects of conglomerate effects, in particular temporal aspects, and inferred from them certain general rules as
         to the evidence which the Commission must produce when it considers that a proposed concentration must be declared incompatible
         with the common market.
         
         
         
         72
            
          It was in the context of this reminder of the need for ‘convincing evidence’ that the Court of First Instance made reference
         to the obligation to examine all the relevant information.
         
         
         
         73
            
          Such an examination must be carried out in the light of the purpose of the Regulation, which is to prevent the creation or
         strengthening of dominant positions capable of significantly impeding effective competition in the common market or a substantial
         part thereof.
         
         
         
         74
            
          Since the view is taken in the contested decision that adoption of the conduct referred to recital 364 in that decision is
         an essential step in leveraging, the Court of First Instance was right to hold that the likelihood of its adoption must be
         examined comprehensively, that is to say, taking account, as stated in paragraph 159 of the judgment under appeal, both of
         the incentives to adopt such conduct and the factors liable to reduce, or even eliminate, those incentives, including the
         possibility that the conduct is unlawful.
         
         
         
         75
            
          However, it would run counter to the Regulation’s purpose of prevention to require the Commission, as was held in the last
         sentence in paragraph 159 of the judgment under appeal, to examine, for each proposed merger, the extent to which the incentives
         to adopt anti-competitive conduct would be reduced, or even eliminated, as a result of the unlawfulness of the conduct in
         question, the likelihood of its detection, the action taken by the competent authorities, both at Community and national level,
         and the financial penalties which could ensue.
         
         
         
         76
            
          An assessment such as that required by the Court of First Instance would make it necessary to carry out an exhaustive and
         detailed examination of the rules of the various legal orders which might be applicable and of the enforcement policy practised
         in them. Moreover, if it is to be relevant, such an assessment calls for a high probability of the occurrence of the acts
         envisaged as capable of giving rise to objections on the ground that they are part of anti-competitive conduct.
         
         
         
         77
            
          It follows that, at the stage of assessing a proposed merger, an assessment intended to establish whether an infringement
         of Article 82 EC is likely and to ascertain that it will be penalised in several legal orders would be too speculative and
         would not allow the Commission to base its assessment on all of the relevant facts with a view to establishing whether they
         support an economic scenario in which a development such as leveraging will occur.
         
         
         
         78
            
          Consequently, the Court of First Instance erred in law in rejecting the Commission’s conclusions as to the adoption by the
         merged entity of anti-competitive conduct capable of resulting in leveraging on the sole ground that the Commission had, when
         assessing the likelihood that such conduct might be adopted, failed to take account of the unlawfulness of that conduct and,
         consequently, of the likelihood of its detection, of action by the competent authorities, both at Community and national level,
         and of the financial penalties which might ensue. Nevertheless, since the judgment under appeal is also based on the failure
         to take account of the commitments offered by Tetra, it is necessary to continue the examination of the second ground of appeal.
         
         
         
         79
            
          With respect to the argument that the Court of First Instance departed from the approach taken by it in the  Gencor  judgment, it must be held that, contrary to what the Commission claims, the Court of First Instance did not depart from the
         position taken by it in paragraph 94 of that judgment, namely that there will be a significant impediment to effective competition
         if there is a lasting alteration of the structure of the relevant markets as a result of a concentration having the direct
         and immediate effect of creating conditions in which abusive conduct is possible and economically rational.
         
         
         
         80
            
          The situation in the  Gencor  case was entirely different from that addressed in the contested decision. As is clear from paragraph 91 of the judgment
         in that case, the concentration would have led to the creation of a dominant duopoly in the platinum and rhodium markets,
         as a result of which effective competition would have been significantly impeded in the common market.
         
         
         
         81
            
          It was therefore the concentration which would have given rise to a lasting alteration of the structure of the relevant markets
         in that case and thus would have made abuses possible and economically rational.
         
         
         
         82
            
          In the present case, it is true that the notified merger was capable of slightly altering the structure of the market for
         carton inasmuch as the merged entity could strengthen the dominant position which Tetra had held for some time on that market
         and which, moreover, had been the subject of a Commission decision pursuant to Article 82 EC. However, it was not effective
         competition on the carton market which the Commission intended to protect by prohibiting the merger but competition on the
         market for PET equipment, in particular that for low and high capacity SBM machines used for sensitive products.
         
         
         
         83
            
          The structure of that market would not have been immediately and directly affected by the notified merger but it could have
         been so affected only as a result of leveraging and, in particular, abusive conduct by the merged entity on the carton market.
         
         
         
         84
            
          It follows from the above considerations that the situation examined in the  Gencor  case is not sufficiently comparable to that on which the Court of First Instance ruled by the judgment under appeal for that
         court to have been able to draw any useful inferences from it. The structure of the market on which the Commission intended,
         by the contested decision, to preserve effective competition was, in the  Gencor  case, directly altered by the merger whereas, in the present case, it could be altered only by leveraging.
         
         
         
         85
            
          With respect to consideration of the behavioural commitments offered by Tetra, the Court of First Instance was right to hold,
         in paragraph 161 of the judgment under appeal, that the fact that Tetra had, in the present case, offered commitments relating
         to its future conduct was a factor which the Commission had to take into account when assessing the likelihood that the merged
         entity would act in such a way as to make it possible to create a dominant position on one or more of the relevant markets
         for PET equipment.
         
         
         
         86
            
          In that regard, the Court points to the considerations set out by the Court of First Instance in paragraphs 318 and 319 of
         the judgment in  Gencor . Contrary to what the Commission claims, it is not apparent from that judgment that the Court of First Instance ruled out
         consideration of behavioural commitments. On the contrary, in paragraph 318, the Court of First Instance laid down the principle
         that the commitments offered by the undertakings concerned must enable the Commission to conclude that the concentration at
         issue will not create or strengthen a dominant position within the meaning of Article 2(2) and (3) of the Regulation. Then,
         in paragraph 319, it inferred from that principle that the categorisation of a proposed commitment as behavioural or structural
         is immaterial and that the possibility cannot automatically be ruled out that commitments which are prima facie behavioural,
         for instance a commitment not to use a trade mark for a certain period or to make part of the production capacity of the entity
         arising from the concentration available to third-party competitors or, more generally, to grant access to essential facilities
         on non-discriminatory terms, may also be capable of preventing the emergence or strengthening of a dominant position. 
         
         
         
         87
            
          With respect to the Commission’s consideration of the behavioural commitments, the Court of First Instance merely found, in
         paragraph 161 of the judgment under appeal, that there is no indication in the contested decision that the Commission took
         account of the implications of those commitments when it assessed the possibility that a dominant position might be created
         in future through leveraging.
         
         
         
         88
            
          Nevertheless, it is not apparent that the Court of First Instance distorted the contested decision or failed to give sufficient
         reasons for the judgment under appeal in that regard. It is clear from recitals 429 to 432 in the contested decision, the
         only ones concerning the behavioural commitments submitted by Tetra, that the Commission refused to accept such commitments,
         as a matter of principle, and found, in recital 429, that ‘as such, they are not suitable to restore conditions of effective
         competition on a permanent basis …, since they do not address the permanent change in the market structure created by the
         notified operation that causes these concerns’ and, in recital 431, that ‘such behavioural promises are in contrast with the
         Commission’s stated policy on remedies and with the purpose of the Merger Regulation itself … and are extremely difficult
         if not impossible to monitor effectively’.
         
         
         
         89
            
          It follows from the examination of the second ground of appeal as a whole that, although the Court of First Instance erred
         in law by rejecting the Commission’s conclusions as to the adoption by the merged entity of conduct likely to result in leveraging,
         it was nevertheless right to hold, in paragraph 161 of the judgment under appeal, that the Commission ought to have taken
         account of the commitments submitted by Tetra with regard to that entity’s future conduct. Accordingly, whilst the ground
         of appeal is well founded in part, it cannot call into question the judgment under appeal in so far as it annulled the contested
         decision since that annulment was based, inter alia, on the Commission’s refusal to take account of those commitments.
         
          The third ground of appeal 
         
         90
            
          By its third ground of appeal, the Commission submits that the Court of First Instance erred in law by applying an erroneous
         test of judicial review and infringed Article 2 of the regulation in so far as it held, in paragraph 269 of the judgment under
         appeal, that ‘the contested decision does not provide sufficient evidence to justify the definition of distinct sub-markets
         among SBM machines with reference to their end-use’ and that, ‘consequently, the only sub-markets it is necessary to consider
         are those for low- and high-capacity machines’.
         
          Arguments of the parties
         
         
         91
            
          The Commission points out that the definition of the markets for SBM machines is a key aspect of the contested decision. It
         submits that the proportion of the relevant market represented by a common PET-carton customer base, in respect of which Tetra
         is likely to exploit its dominant position on the carton markets by leveraging, has a decisive influence on the likelihood
         of foreclosure of competitors and domination of that market by the merged entity.
         
         
         
         92
            
          The Commission states that, in recitals 176 to 183 in the contested decision, which are supplemented by recitals 347 to 358
         and 381 to 383, it defined distinct markets for SMB machines according to whether they are used to package sensitive or non-sensitive
         products and, in doing so, relied on both supply-side and demand-side factors. In regard to the latter, recital 178 in the
         contested decision is worded as follows:
         ‘In any event, a distinct group of customers for the relevant product may constitute a narrower, distinct product market when
         such a group could be subject to price discrimination. This will usually be the case when two conditions are met: (a) it is
         possible to identify clearly the group to which an individual customer belongs at the moment it purchases the relevant products
         and (b) trade among customers or arbitrage by third parties should not be feasible.’
         
         
         
         93
            
          In paragraph 259 of the judgment under appeal, the Court of First Instance summarised the Commission’s line of argument in
         the contested decision, a summary not contested by the Commission, as follows:
         ‘In the contested decision, the Commission finds, firstly, that “even for an allegedly ‘generic’ piece of equipment such as
         an SBM machine it is justified to examine the equipment market with reference to the end-use segments”, which is “even more
         relevant when comparing whole packaging systems in order to assess whether or not they may belong in the same product market”
         (recital 43). It goes on to state that each liquid product intended for packaging has “its very particular characteristics
         which dictate the availability of a given form of packaging”, before concluding that end-use segmentation constitutes a meaningful
         analytical tool for assessing the liquid food packaging equipment market (recital 44, cited in paragraph 30 above). Thus it
         distinguishes between sensitive products belonging to “common product segments” and other products, on the basis of the ability
         of the former to be packaged, at least from a technical standpoint, in either carton or PET, unlike non-sensitive products
         such as water and carbonated drinks, which cannot be packaged in carton (recital 58). Whilst accepting that “the majority
         of SBM machines are ‘generic’” (recital 177), the Commission states in the same recital that “a PET packaging line, of which
         the SBM machine is only one component, is usually tailored to the specific products filled by the customer”, which is especially
         the case for sensitive products, an argument reiterated in its assessment of the consequences of leveraging (recital 369).
         It refers by way of example to Sidel’s “SRS G Combi”, “which is designed for carbonated drinks [and] cannot be a substitute
         for a beverage producer wanting to fill juices” (recital 177), for which an aseptic “Combi SRA” machine is required. Referring
         to the Commission Notice on the definition of relevant market for the purposes of Community competition law (OJ 1997 C 372,
         p. 5, point 43), it then finds that the two conditions which normally must be met for a finding of a distinct group of customers
         and thus of a narrower product market are met in the present case: it is possible to identify clearly which group an individual
         customer belongs to at the moment it purchases an SBM machine, and the trade in the machines among customers or arbitrage
         by third parties is not feasible (recital 178).’
         
         
         
         94
            
          In paragraphs 260 to 269 of the judgment under appeal, the Court of First Instance held as follows:
         
         ‘260
            The Court finds, firstly, that the emphasis placed in the contested decision on sensitive products belonging to “common product
               segments” is based on an objective criterion, namely the fact that these products belong to the category of carton-packaged
               products and the possibility, at least from a technical standpoint, of them being packaged in PET, which, in the light of
               the growth to be expected (see paragraphs 201 to 216 above), is likely to become a fairly widespread commercial reality by
               2005, at least for FFDs and tea/coffee drinks.
            
         
         
         261 However, the contested decision fails to provide sufficiently convincing evidence to demonstrate the allegedly specific
            characteristics of SBM machines used for packaging sensitive products. Admittedly, a combined machine specifically designed
            for filling carbonated drinks cannot be used for juices. However, that far from proves that low- and high-capacity SBM machines,
            even ones tailored before sale to the specific wishes of their purchasers, do not remain generic machines, as argued in essence
            by the applicant, that is to say, capable of packaging several types of products.
         
         
         
         262
            As for the alleged specificity of packaging moulds according to the product intended for them, as argued by the Commission,
               whilst the applicant does not dispute that the number of moulds determines the capacity of the machine, this specific fact
               does not prove that SBM machines, of which moulds are merely a component, differ significantly from each other. It is clear
               from the notification that moulds last on average for three years, whilst an SBM machine lasts for up to 15 years (recital
               304). Although Sidel makes its own moulds, the contested decision does not dispute the information on the moulds market provided
               in the notification, according to which Sidel is not active in that market (that is, as a supplier of moulds to third parties)
               and the competition amongst those undertakings which are active is very strong, especially from SIG, which claims on its internet
               site that it is a world leader (recital 309).
            
         
         
         263
            Nor does the contested decision call into question the statement in the notification that, in a large facility, a customer
               can use several SBM machines in order to combine them for its various production needs. The contested decision does not contain
               any examination of whether the flexibility required by some customers for SBM machine moulds can be explained by needs relating
               to such uses.
            
         
         
         264
            In its defence, the Commission refers to a number of changes which can be made to an SBM machine to enhance its performance
               or make it more useful in an integrated PET production line, such as the addition of a special blow air filtration system
               or ultraviolet treatment to reduce the risk of contamination before the preforms enter the SBM machine. At the hearing, the
               Commission stated that these changes are evidence of the very specific characteristics of an SBM machine used in a PET packaging
               line to which the contested decision refers (recital 177). Tetra, whilst disputing the Commission’s approach of attributing
               specific characteristics of other components of a PET production line to SBM machines, none the less stated that these changes
               represented a mere 5% of the cost of an SBM machine.
            
         
         
         265
            The Court finds, first, that the contested decision makes no reference to this information. Although the decision correctly
               stresses the importance of the individual needs of customers who require an aseptic PET filling line in particular, namely
               a basic guarantee of aseptic conditions, this cannot justify the definition of a distinct sub-market for SBM machines used
               in filling lines for the sensitive products at issue here. The mere fact that each SBM machine must be installed in a PET
               line in order to be useful to its purchaser does not justify that specific characteristics of other PET equipment in that
               line should be attributed to the SBM machines themselves.
            
         
         
         266
            There is all the more reason to accept the generic nature of SBM machines, inasmuch as at the hearing the Commission was unable
               to rebut Tetra’s assertion regarding the relatively low cost, when compared to the cost of a so-called “standard” SBM machine,
               especially a high-capacity SBM machine, of making any necessary changes to render the machine more compatible for use with
               aseptic and non-aseptic PET filling machines, or possibly with aseptic filling machines capable of conversion from PET to
               HDPE.
            
         
         
         267
            The parties agree, moreover, that combined machines, which are still only rarely used for aseptic filling (see paragraphs
               248 and 249 above), do not constitute a distinct market, as is also clear from the contested decision.
            
         
         
         268
            As regards the possibility of determining exactly which group a given customer belongs to when he purchases an SBM machine
               and whether or not that customer may, at least currently within the [European Economic Area], be able to find a better price
               through arbitrage between the available suppliers, it is clear that those possibilities, if established, would apply as much
               to SBM machines used for non-sensitive products as to those used to package sensitive products. The possibility for the merged
               entity to identify the group to which a customer belongs is due to the fact that many customers in the carton markets who
               will switch to PET will be current Tetra customers. However, this possible benefit, resulting from the first-mover advantage
               which the merged entity will foreseeably have, does not preclude those customers from turning to other suppliers of SBM machines
               if they become dissatisfied with the conditions offered by the merged entity.
            
         
         
         269
            Therefore, on the basis of the evidence in the contested decision, the Commission committed an error, first, by finding that
               “the majority of SBM machines are generic” (recital 177) and, second, by distinguishing between them according to end-use.
               The contested decision does not provide sufficient evidence to justify the definition of distinct sub-markets among SBM machines
               with reference to their end-use. Consequently, the only sub-markets it is necessary to consider are those for low- and high-capacity
               machines.’
            
         
         
         
         
         95
            
          The Commission takes the view that the Court of First Instance erred in law in requiring, in paragraph 265 of the judgment
         under appeal, that it set out in the contested decision all of the technical information gathered in the course of its investigation.
         It observes that the question whether the statement of reasons for a decision meets the requirements of Article 253 EC must
         be assessed in the light not only of its wording but also its context and, in particular, the degree of prior knowledge of
         the relevant facts and the period available for adoption of that decision. 
         
         
         
         96
            
          Moreover, the Court of First Instance failed to observe the limits of its power of judicial review, distorted the contested
         decision and substituted its own assessment for that of the Commission, without even explaining the reasons for the rejection
         of the latter’s analysis, by holding, in paragraph 265, that the need for a guarantee of aseptic conditions does not justify
         the definition of a distinct sub-market for the SBM machines used in filling lines for the sensitive products at issue. Similarly,
         in paragraph 266 of the judgment under appeal, the Court of First Instance rejected the Commission’s findings as to the importance
         of the adaptation of SBM machines to use for aseptic packaging on the sole basis of the information on the cost of the necessary
         adaptation, without examining the other factors taken into account by the Commission, which include the question whether suppliers
         of SBM machines to traditional customers in the water and carbonated soft drink sectors have the necessary expertise to thus
         adapt the machines and to offer the necessary guarantees.
         
         
         
         97
            
          The Commission likewise challenges the rejection of its argument that price discrimination may constitute evidence of distinct
         sub-markets. In paragraph 223 of the judgment under appeal, the Court of First Instance took the view that such discrimination,
         allegedly practised by Sidel in the past, cannot constitute sufficiently convincing evidence that the merged entity will continue
         to behave in a similar way since that entity, unlike Sidel prior to the merger, would be bound not only by the commitments
         but also by the various obligations limiting Tetra’s conduct. The Commission submits that the Court of First Instance erred
         in law for three reasons. The first is that, according to the Commission, price discrimination is in itself evidence of the
         existence of distinct conditions of supply and demand in respect of the sale of a product to different customers and therefore
         the evidence of the existence of distinct markets. The second reason lies in the fact that the Court of First Instance required
         the Commission not to take account of unlawful conduct, even if it would be economically rational. The third reason put forward
         by the Commission is that, as follows from paragraphs 161 and 162 of the judgment under appeal, the Court of First Instance
         failed to take account of Tetra’s dominant position on the carton market and ruled on the basis that the merged entity will
         not have a dominant position on the PET market and that, therefore, any price discrimination on that market cannot constitute
         an abuse of a dominant position within the meaning of Article 82 EC.
         
         
         
         98
            
          Finally, the Commission criticises the Court of First Instance’s finding that it will be possible for customers to turn to
         suppliers other than Tetra. It submits that the Court of First Instance ignored its arguments relating to the impossibility
         of arbitrage in respect of machines of the same supplier (purchase of second-hand machines and in-house transfer of a machine
         from a ‘non-sensitive production’ to a ‘sensitive production’ division).
         
         
         
         99
            
          Tetra contends, generally, that this ground of appeal must be declared inadmissible inasmuch as it relates to findings of
         fact.
         
         
         
         100
            
          It points out that the Commission itself acknowledged, in recital 177 in the contested decision, that SBM machines are ‘generic’
         and that it is the PET packaging line which is specially adapted to the products packaged by the customer. It argues that
         it is pointless for the Commission to rely on information not contained in the contested decision because, as is clear from
         case-law, a decision must contain all the factual and legal elements on which the Commission has based its findings so as
         to allow effective judicial review of that decision. The contested decision contains no reference to the need to regard the
         SBM machine as a component of a particular type of packaging line. In any event, the Court of First Instance responded to
         all the arguments put forward by the Commission during the judicial proceedings. Thus, paragraph 226 of the judgment under
         appeal contains a response to a new argument relied on by the Commission in its defence.
         
         
         
         101
            
          Tetra submits that the Commission has taken paragraph 223 of the judgment under appeal out of context. In that paragraph,
         the Court of First Instance did not address whether it is possible to rely on price discrimination to prove that there are
         distinct markets but merely examined whether Sidel’s past conduct constituted sufficiently convincing evidence that the merged
         entity would continue to behave in the same way. Not until paragraphs 258 to 269 of that judgment did the Court of First Instance
         examine the definition of the market.
         
          Findings of the Court as to the third ground of appeal
         
         
         102
            
          First of all, the Commission’s argument based on the fact that the Court of First Instance found, in paragraph 265 of the
         judgment under appeal, that there was no reference in the contested decision to certain technical explanations of the allegedly
         highly individual features of the SBM machines used in PET packaging lines, which the Commission supplied only in its defence
         and at the hearing, must be rejected as immaterial. On reading paragraphs 266 and 267 of the judgment under appeal, it is
         clear that the Court of First Instance did not base its findings solely on the fact that there was insufficient convincing
         evidence in the contested decision of the allegedly individual features of those machines but that it took account of the
         arguments put forward by the Commission in its defence and at the hearing and responded to them.
         
         
         
         103
            
          The argument alleging that the Court of First Instance held that price discrimination was not proof of the existence of distinct
         sub-markets must likewise be rejected as irrelevant. On reading the final sentence of paragraph 259 and paragraph 268 of the
         judgment under appeal, it is clear that, in connection with the definition of distinct markets, the Court of First Instance
         did not give a ruling on the direct probative value of price discrimination but focused its analysis on the circumstances
         in which a possibility of price discrimination may be regarded as proven, those circumstances having been defined in recital
         178 in the contested decision as being (i) that it is possible to identify clearly the group to which a given customer belongs
         and (ii) that trade among customers or arbitrage by third parties is not feasible.
         
         
         
         104
            
          The other arguments raised by the Commission in support of its third ground of appeal, by which it challenges the Court of
         First Instance’s findings as to the generic nature of SBM machines, the possibility of identifying the group to which a customer
         belongs and the impossibility of trade among customers or arbitrage by third parties in relation to those machines, must be
         declared inadmissible since they call into question the Court of First Instance’s assessment of the evidence, which cannot
         be the subject of review by the Court in appeal proceedings.
         
         
         
         105
            
          It follows from those considerations that the third ground of appeal is, in part, inadmissible and, in part, unfounded.
         
          The fourth ground of appeal 
         
         106
            
          By its fourth ground of appeal, the Commission submits that the Court of First Instance infringed Article 2 of the Regulation,
         distorted the facts and failed to take account of certain of its arguments by refusing to recognise the merits of its finding
         that Tetra would strengthen its dominant position in the carton sector.
         
         
         
         107
            
          Recitals 390 to 401 in the contested decision are intended to show that the dominant position held by Tetra in the carton
         sector could be strengthened by the notified merger as a result of the elimination, on the market for sensitive-product packaging,
         of the potential competition provided by Sidel, the largest supplier on the PET market. Thus faced with weaker competition,
         Tetra would have no incentive to lower the price of its carton packaging and might be encouraged to cease innovation. 
         
         
         
         108
            
          As the Court of First Instance observed in paragraphs 311 and 317 of the judgment under appeal, the Commission relied on the
         judgment in Case T‑51/89  Tetra Pak  v  Commission , cited above, which was upheld by the Court on appeal in Case C‑333/94  Tetra Pak  v  Commission , cited above (‘ Tetra Pak II ’), in support of its argument that the weakening of potential competition would enable Tetra to feel less threatened on the
         markets for aseptic carton, which had to be regarded as a strengthening of its dominant position on those markets for the
         purposes of Article 2 of the Regulation.
         
         
         
         109
            
          In paragraph 312 of the judgment under appeal, the Court of First Instance held as follows:
         ‘… when the Commission relies on the elimination or significant reduction of potential competition, even of competition which
         will tend to grow, in order to justify the prohibition of a notified merger, the factors which it identifies to show the strengthening
         of a dominant position must be based on convincing evidence. The mere fact that the acquiring undertaking already holds a
         clear dominant position on the relevant market may constitute an important factor, as the contested decision finds, but does
         not in itself suffice to justify a finding that a reduction in the potential competition which that undertaking must face
         constitutes a strengthening of its position.’
         
         
         
         110
            
          In paragraph 322 of the judgment under appeal, the Court of First Instance found that there is, in principle, nothing to prevent
         the application in merger control of the ‘associative links’ theory, which was recognised in the context of applying Article
         82 EC in  Tetra Pak II . The case underlying  Tetra Pak II  concerned conduct on a given market which was considered to constitute an abuse of a dominant position on an associated market.
         The present case concerns neighbouring markets. However, in paragraph 323 of the judgment under appeal, the Court of First
         Instance held that the reference to  Tetra Pak II  was irrelevant since ‘the present case concerns simply the effect of the elimination, or the significant reduction, of potential
         competition which is, according to the Commission, sizeable and growing’.
         
         
         
         111
            
          In paragraph 323, the Court of First Instance also pointed out that ‘amongst the criteria laid down in Article 2(1) of the
         Regulation, which the Commission is bound to apply in assessing notified merger transactions, are ‘the structure of all the
         markets concerned and the ... potential competition from undertakings’. The Court of First Instance went on to hold as follows:
         ‘Thus the Commission did not commit any error in examining the significance for the carton markets of a reduction of potential
         competition from the PET equipment markets. It does have to show, however, that such a reduction, if it exists, would tend
         to strengthen Tetra’s dominant position in relation to its competitors on the aseptic carton markets.’
         
         
         
         112
            
          In paragraph 324 of the judgment under appeal, the Court of First Instance stated that, as its own analysis shows, the growth
         in the use of PET to package sensitive products would probably be much less marked than the Commission believes. Therefore,
         it was no longer possible, on the basis of the evidence relied on in the contested decision, to determine, with the certainty
         required to justify the prohibition of a merger, whether implementation of the notified merger would place Tetra in a situation
         in which it could be more independent in relation to its competitors on the aseptic carton markets than has been the case
         in the past.
         
         
         
         113
            
          In paragraph 325 of the judgment under appeal, the Court of First Instance examined the two pieces of factual evidence relating
         to the future conduct of Tetra on which the Commission had relied in order to prove the alleged negative effects of the notified
         merger on the markets for aseptic carton.
         
         
         
         114
            
          In paragraphs 326 to 328, the Court of First Instance examined the evidence produced by the Commission in relation to price
         competition and found, in the final sentence of paragraph 328, that the finding in the contested decision that, if it were
         authorised to acquire Sidel, Tetra would be exposed to less pressure to lower its carton prices is not based on convincing
         evidence.
         
         
         
         115
            
          In paragraphs 329 to 331, the Court of First Instance examined the evidence submitted by the Commission to substantiate its
         claim that the notified merger would reduce Tetra’s incentive to innovate. In paragraph 332, it found that the contested decision
         did not establish to the requisite legal standard that the merged entity would have less incentive than Tetra at present to
         innovate in the carton sector.
         
         
         
         116
            
          In paragraph 333, the Court of First Instance concluded as follows:
         ‘It follows that the evidence relied on in the contested decision does not establish to the requisite legal standard that
         the effects of the [notified] merger on Tetra’s position, principally on the aseptic carton markets, would, by eliminating
         Sidel as a potential competitor, be such as to fulfil the conditions of Article 2(3) of the Regulation. It follows from the
         foregoing that it has not been shown that the merged entity’s position would be strengthened vis-à-vis its competitors on
         the carton markets.’
         
          Arguments of the parties
         
         
         117
            
          By its fourth ground of appeal, which consists of several parts, the Commission contests paragraphs 312 and 323 of the judgment
         under appeal. It submits, first of all, that the way in which the Court of First Instance presented the question of the relevance
         of potential competition resulted in a distortion of the facts. According to the Commission, potential competition is unrelated
         to the competitive relationship between the undertaking regarded as dominant and other undertakings active on the relevant
         market. The relevant question is whether the structural elimination of a significant source of potential competition frees
         the dominant undertaking to an even greater extent of any constraint, in particular with regard to its customers and consumers.
         
         
         
         118
            
          The Commission goes on to argue that the two factors referred to in paragraph 312 of the judgment under appeal, namely the
         elimination or significant reduction of potential competition and the fact that the undertaking benefiting from the merger
         already occupies a dominant position on the relevant market, are sufficient to justify a finding that such a position would
         be strengthened.
         
         
         
         119
            
          The Commission takes the view, moreover, that the Court of First Instance erred in law in rejecting its assessment of the
         likely growth in the use of PET for packaging sensitive products and in relying exclusively on its own forecast that ‘this
         growth … will probably be much less marked than the Commission believes’.
         
         
         
         120
            
          Finally, the Commission claims that the Court of First Instance erred in law, in paragraphs 316 to 328 of the judgment under
         appeal, by failing to take account of its arguments regarding the effects on prices of the elimination of Sidel and, in paragraphs
         329 to 332, by rejecting its conclusion that the merged entity would have less incentive than Tetra at present to innovate
         in the carton sector.
         
         
         
         121
            
          Tetra contends that no error was made in paragraph 312 of the judgment under appeal. It observes that, according to the Regulation,
         a concentration may be prohibited if it leads to the creation or strengthening of a dominant position. Given that, by definition,
         a dominant position relates to the dominant undertaking’s position on a given market, that is to say, its position relative
         to its competitors, it is impossible to see how the Commission can take the view that the dominant undertaking’s dominant
         position can be dissociated from the position of its competitors on the same market.
         
         
         
         122
            
          In Tetra’s view, to claim that the two factors referred to in paragraph 312 of the judgment under appeal are sufficient to
         justify a finding that a dominant position is strengthened is tantamount to establishing a  per se  rule by virtue of which any reduction in potential competition will always strengthen a dominant position. Article 2(3) of
         the Regulation, however, requires that it be shown not only that a dominant position will be strengthened by the concentration,
         but also that effective competition will be significantly impeded as a result of that strengthening. Neither of those two
         requirements can be presumed to be satisfied, particularly in a case in which, like that at hand, the potential competition
         in question is that exercised by one market on a second, distinct but neighbouring, market.
         
         
         
         123
            
          In any event, the Commission relied on a number of factors in the contested decision and, therefore, it cannot complain that
         the Court of First Instance analysed those factors in the judgment under appeal. With regard to the likely growth in the use
         of PET, Tetra refers to the line of argument which it has already put forward on that point.
         
         
         
         124
            
          Finally, with respect to the arguments based on the fact that the Court of First Instance failed to uphold the Commission’s
         findings concerning the effect of the merger on Tetra’s incentives with regard to prices and innovation, Tetra submits that
         the Commission is challenging the Court of First Instance’s assessment of the facts, which is not subject to review by the
         Court in appeal proceedings.
         
          Findings of the Court as to the fourth ground of appeal
         
         
         125
            
          As is clear from Article 2(1) of the Regulation, the Commission, when assessing the compatibility of a concentration with
         the common market, must take account of a number of factors, such as the structure of the relevant markets, actual or potential
         competition from undertakings, the position of the undertakings concerned and their economic and financial power, possible
         options available to suppliers and users, any barriers to entry and trends in supply and demand.
         
         
         
         126
            
          The Court of First Instance was therefore right to point out in paragraph 312 of the judgment under appeal – and, in doing
         so, did not infringe Article 2 of the Regulation – that, although constituting an important factor, as the contested decision
         finds, the mere fact that the acquiring undertaking already holds a clear dominant position on the relevant market does not
         in itself suffice to justify a finding that a reduction in the potential competition which that undertaking must face constitutes
         a strengthening of its position.
         
         
         
         127
            
          The potential competition represented by a producer of substitute products on a segment of the relevant market (namely in
         the present case the competition, in relation to aseptic carton packaging, from Sidel, as a supplier of PET packaging, on
         the market segment for sensitive products) is only one of the set of factors which must be taken into account when assessing
         whether there is a risk that a concentration might strengthen a dominant position. It cannot be ruled out that a reduction
         in that potential competition might be compensated by other factors, with the result that the competitive position of the
         already dominant undertaking remains unchanged.
         
         
         
         128
            
          It is apparent from the Court of First Instance’s summary of the parties’ arguments in paragraphs 313 to 320 of the judgment
         under appeal that Tetra challenged the argument that the merged entity’s dominant position on the aseptic carton markets would
         be strengthened, by claiming, inter alia, that a lack of innovation in the carton sector would essentially benefit Tetra’s
         current competitors on the carton markets. The Court of First Instance was therefore right to state, in paragraph 323 of the
         judgment under appeal, in connection with the discussion and assessment of the parties’ arguments in that regard, that the
         Commission has to show that, if there is a reduction in potential competition, this will tend to strengthen Tetra’s dominant
         position in relation to its competitors on the aseptic carton markets.
         
         
         
         129
            
          Thus, the Court of First Instance relied on the potential reactions of Tetra’s competitors on the carton markets, which are
         also active on the PET market, as a basis for refuting, in paragraph 327 of the judgment under appeal, the Commission’s argument
         that Tetra might be encouraged, once the merger has been completed, to increase its prices on the aseptic carton markets and,
         in paragraph 330, the argument that the merged entity might decide to innovate less.
         
         
         
         130
            
          Accordingly, the part of the fourth ground of appeal in which the Commission claims that the potential competition is unrelated
         to the competitive relationship between the undertaking regarded as dominant and other undertakings active on the relevant
         market cannot be regarded as well founded.
         
         
         
         131
            
          It should be observed that the Commission’s line of argument with respect to the likely growth in the use of PET for packaging
         sensitive products was examined in connection with the first ground of appeal, in paragraph 46 of this judgment, with a view
         to establishing whether the Court of First Instance had infringed Article 230 EC by failing to apply the test of manifest
         error of assessment and failing to respect the margin of discretion enjoyed by the Commission in relation to complex factual
         and economic matters. In so far as the Commission, by this part of the ground of appeal, contests the Court of First Instance’s
         findings in that regard, it must be held that it calls into question the Court of First Instance’s assessment of the evidence,
         which is not subject to review by the Court in appeal proceedings.
         
         
         
         132
            
          The same applies to the part of the ground of appeal by which the Commission challenges paragraphs 316 to 328 and 329 to 332
         of the judgment under appeal, in which the Court of First Instance assessed the evidence submitted by the Commission in relation
         to the effect on prices of the elimination of Sidel and to the lesser incentive for the merged entity to innovate in the carton
         sector.
         
         
         
         133
            
          It follows from all of the above considerations that the fourth ground of appeal is, in part, inadmissible and, in part, unfounded.
         
          The fifth ground of appeal 
         
         134
            
          By its fifth ground of appeal, the Commission claims that the Court of First Instance infringed Article 2(3) of the Regulation
         by rejecting its findings as to the creation of a dominant position on the market for SBM machines.
         
          Arguments of the parties
         
         
         135
            
          The Commission submits that the Court of First Instance’s finding, in paragraph 307 of the judgment under appeal, that ‘the
         contested decision does not prove to the requisite legal standard that by 2005 the merged entity could acquire a dominant
         position on the market for low- and high-capacity machines’ is based on errors of law challenged in connection with the preceding
         grounds of appeal, namely the inclusion of SBM machines for non-sensitive products and for beer in the same market as that
         for SMB machines used for sensitive products and the finding that Tetra’s commitment not to link the sale of those machines
         to the sale of carton products was sufficient. To complete its line of argument, the Commission deems it necessary to demonstrate
         the errors made by the Court of First Instance in relation to the creation of a dominant position on the market for SBM machines.
         
         
         
         136
            
          With respect to low-capacity SBM machines, the Commission submits, first of all, that the Court of First Instance failed to
         take account of certain relevant factors set out in the contested decision, such as the growth in the market share held by
         Sidel (recital 266 in the contested decision) and the immediate strengthening of its position as a result of the combination
         of its leading position, in terms of market shares, with the financial strength, sales force, established superiority in the
         field of aseptic packaging, the first-mover advantage with customers in the carton-packaging sector and the dominant position
         already enjoyed by Tetra in that sector (recitals 376 to 387). 
         
         
         
         137
            
          Moreover, the Commission claims that the Court of First Instance based its findings on irrelevant facts. Thus, the importance
         of low-capacity SBM machines for the packaging of non-sensitive products is irrelevant if the definition of the market proposed
         by the Commission is upheld. Similarly, the Court of First Instance’s finding, in paragraph 279 of the judgment under appeal,
         that ‘a significant proportion of the SBM machines used to package sensitive products will, in all likelihood, be low-capacity
         machines’ is irrelevant in assessing whether Tetra might exploit its dominant position in the carton-packaging sector to acquire
         a dominant position in the sector of low-capacity SBM machines.
         
         
         
         138
            
          As regards high-capacity SBM machines, the Commission submits that the Court of First Instance failed to take account of the
         relevant factors, particularly, in paragraph 284 of the judgment under appeal, the growth in Sidel’s market share as a result
         of the notified merger. It also claims that the Court of First Instance was wrong to take account of the possibility that
         the growth in the use of PET for sensitive products might be lower than predicted and of the possibility that customers producing
         sensitive products might switch to HDPE rather than to PET, even though those factors are irrelevant in determining whether
         Tetra will enjoy a first-mover advantage in its dealings with customers opting for PET.
         
         
         
         139
            
          Similarly, with respect to customers switching from glass packaging, the Court of First Instance’s reasoning overlooks certain
         factors and distorts the facts. First, the Court of First Instance failed to take account of the fact that a customer using
         that type of packaging only rarely packages his products exclusively in glass. Secondly, the Court of First Instance misrepresents
         the facts in asserting that Tetra/Sidel’s competitors in the glass-packaging sector will benefit from the first-mover advantage,
         because, in so finding, it overlooks the fact that suppliers of glass and can equipment do not have close ongoing relations
         with beverage producers because virtually all glass and can manufacturing is carried out by converters.
         
         
         
         140
            
          With regard to competitors’ positions, the Commission argues that the Court of First Instance distorted the contested decision
         in holding, in paragraph 294 of the judgment under appeal, that the decision did not adequately examine the competition to
         be faced by Sidel on the market for high-capacity machines and underestimated the competition provided by its three major
         competitors. According to the Commission, the contested decision contains a detailed analysis of the relative positions of
         the merged entity and its competitors, in particular in recitals 232 to 248, 293 to 300, 303 to 310 and 369 to 387 in that
         decision. Moreover, the Court of First Instance’s findings of fact are inaccurate in that it held, first, that the competitor
         SIG has an advantage because it is active on the downstream preform market even though, according to the Commission, it is
         not active on the downstream market as a supplier of preforms to undertakings using PET bottling and, secondly, that SIG enjoys
         a first-mover advantage on account of its activities in the glass sector even though it manufactures machines and is not active
         on the downstream market for glass bottles.
         
         
         
         141
            
          Finally, the Commission takes the view that the Court of First Instance’s statement, in paragraph 305 of the judgment under
         appeal, that ‘the finding of the converters’ dependency on Sidel is not convincing’, which is based solely on the ‘current
         level of existing competition’, does not contain clear or adequate reasoning for overturning the Commission’s complex assessment
         of this point in recitals 303 to 310 in the contested decision. 
         
         
         
         142
            
          Tetra contends that the various – apparently unrelated – criticisms raised by the Commission under its fifth ground of appeal
         must be declared inadmissible for two reasons. First, the Commission relies on factors which were not referred to in the contested
         decision and, secondly, it is directly challenging the Court of First Instance’s assessment of the facts. 
         
          Findings of the Court as to the fifth ground of appeal
         
         
         143
            
          Assessment of the arguments put forward by the Commission shows that the majority of them relate to the Court of First Instance’s
         assessment of the evidence, which is not subject to review by the Court in appeal proceedings. This is true of the Commission’s
         complaint that the Court of First Instance failed to take account of certain factors which it considers to be relevant or
         took account of other factors which it considers to be irrelevant, whether that be in relation to low or high-capacity SBM
         machines or to the consideration of customers switching from glass packaging.
         
         
         
         144
            
          By other arguments advanced in support of its fifth ground of appeal, the Commission expressly challenges factual findings
         or assessments made by the Court of First Instance. This is true of the argument relating to Tetra/Sidel’s competitors in
         glass packaging and of the assessment of the position of the competitor SIG.
         
         
         
         145
            
          With respect to the alleged distortion of the contested decision in paragraph 294 of the judgment under appeal, the Commission
         fails to refer to any specific recital whose content was distorted by the Court of First Instance and, in reality, the argument
         is directed at the Court of First Instance’s assessment of the facts and evidence.
         
         
         
         146
            
          Finally, with regard to the argument alleging a failure to state reasons for the finding, in paragraph 305 of the judgment
         under appeal, that the converters’ dependency on Sidel had not been established convincingly, it need be stated only that
         the Court of First Instance gave concise but adequate reasons for that finding in the final sentence of paragraph 305.
         
         
         
         147
            
          It follows from those considerations that the fifth ground of appeal is, in part, inadmissible and, in part, unfounded.
         
          Conclusion 
         
         148
            
          Since none of the grounds of appeal raised by the Commission in support of its appeal could be upheld, the appeal must be
         dismissed.
         
         
         Costs
         149
            
          Under Article 69(2) of the Rules of Procedure, which is applicable to the procedure on appeal by virtue of Article 118, the
         unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since
         Tetra has applied for costs and the Commission has been unsuccessful in all its grounds of appeal, the latter must be ordered
         to pay the costs.
         
         
         
         
         
         
            
            
         
         
          On those grounds, the Court (Grand Chamber) hereby:
         
            
            
             
               1.
                   Dismisses the appeal; 
               
            
            
            
             
               2.
                   Orders the Commission of the European Communities to pay the costs. 
               
            
            [Signatures]
      
      
          1 –
            
            Language of the case: English.