CELEX: 31975D0494
Language: en
Date: 1975-07-18 00:00:00
Title: 75/494/EEC: Commission Decision of 18 July 1975 relating to a proceeding under Article 85 of the EEC Treaty (IV/21.353 - Kabelmetal-Luchaire)

No L 222/ 34                          Official Journal of the European Communities                               22. 8 . 75
                                                             II
                                         (Acts whose publication is not obligatory)
                                                  COMMISSION
                                                COMMISSION DECISION
                                                      of 18 July 1975
              relating to a proceeding under Article 85 of the EEC Treaty (IV/21.353 — Kabel
                                                      metal-Luchaire)
                                     (Only the French and German texts are authentic)
                                                        (75/494/ EEC)
THE COMMISSION OF THE EUROPEAN                                                                 I.
COMMUNITIES,
                                                                  1.     Kabelmetal has developed from the cold-extru­
Having regard to the Treaty establishing the European             sion process a whole range of special techniques for
Economic Community, and in particular Article 85                  the machining of steel parts.
thereof ;
                                                                  At present the manufacturing techniques used by
                                                                  Kabelmetal are based on secret processes and practical
Having regard to Regulation No 17 ( J ) of 6 February             experience (know-how) and on a large number of
 1 962, and in particular Articles 4, 6 and 8 thereof ;           patents in all EEC countries other than Ireland,
                                                                  Denmark and Luxembourg. These patents, of varying
 Having regard to the notification made on 2 February             importance, do not directly affect the basic extrusion
 1963 of the patent and know-how licensing agree­                 process, which in itself may be freely used by any
 ment which Kabel - und Metallwerke Neumeyer AG, a                firm , but relate specifically to the manufacture and
 company with its registered office at Nuremberg,                 fitting together of the tools for the shaping of the
 Germany, which later became Kabel - und Metall­                  parts, the phosphatization and lubrication of the parts,
werke Gutehoffnungshütte AG, with its registered                  and in general to improved methods, in particular
 office at Hanover (hereinafter called 'Kabelmetal'),             those used to obtain parts with special shapes.
 concluded on 19 June 1958 with Ets Luchaire SA,
 Paris, France (hereinafter called ' Luchaire') ;                 The various parts manufactured on the basis of tech­
                                                                   niques used by Kabelmetal include pistons, shock
                                                                  absorbers, hollow axles, spindles, extinguishers, brake
 Having regard to the summary of the notification                  parts, parts of furniture, cog wheels, etc . Among the
 published, as required by Article 19 (3) of Regulation            major users of the products thus obtained are the
 No 17, in Official Journal of the European Commu­                 motor industry, the electrical industry, the extingui­
  nities No C 157 of 14 December 1974 ;                            sher-manufacturing industry and the mechanical-engi­
                                                                   neering industry in general .
  Having regard to the Opinion delivered on 24 April
  1975 by the Advisory Committee on Restrictive Prac­              2.    By the terms of the licensing and technical assis­
  tices and Dominant Positions pursuant to Article 10              tance agreement concluded on 19 June 1958 , as
 of Regulation No 17 ;                                             amended on 4 March 1960 , 10 November 1960 , 16
                                                                   January 1962, 31 December 1965 and 13 March 1974,
 (') OJ No 13 , 21 . 2. 1962, p. 204/62.                           Kabelmetal granted Luchaire an exclusive licence for
 ---pagebreak--- 22 . 8 . 75                        Official Journal of the European Communities                         No L 222/ 35
the manufacture in France of the abovementioned              agreement must be settled in accordance with the
products using its secret and patented manufacturing         conciliation and arbitration rules of the Paris Interna­
techniques (current or future), the exclusive right to       tional Chamber of Commerce .
sell these products in certain non-member countries
(Spain and Portugal) and a non-exclusive licence to
sell these products in all the countries of the common
market.                                                      As originally drafted, the agreement contained an obli­
                                                             gation on the licensee to transfer to Kabelmetal owner­
                                                             ship of such improvements, whether patentable or
                                                             not, as the licensee might make in conjunction with
The parties agreed to exchange all relevant informa­         Kabelmetal ; a further obligation not to sell the
tion concerning the application of the licensed tech­        products in question within the EEC, except in the
niques. Kabelmetal specifically undertook to give the        territory of specified Member States, and an obligation
licensee all necessary technical assistance for the dura­    not to contest the validity of the licensor's patented
tion of the agreement, in particular to help train tech­     processes. At the Commission 's request, however, the
nicians, work out production planning, design tooling        parties deleted these obligations from the agreement
and determine the types of steels to be used. The            with effect from 13 March 1974.
licensee undertook to grant Kabelmetal a non-exclu­
sive licence in respect of any patent relating to such
improvements of processes as should be discovered by
the licensee, so that Kabelmetal might not only use          The agreement expires on 31 December 1977.
them for its own production but also authorize any
other licensee who should give the same undertaking
to use them . Luchaire also undertook to keep secret
Kabelmetal 's know-how : it would communicate such           3 . The following factors also emerged during inves­
know-how only to its authorized representatives and          tigation of the case : essentially, the cold-extrusion
employees and take all reasonable steps to ensure that       process involves the plastic deformation in a press,
they too should keep it secret.                              without pre-heating either of the part or of the tooling
                                                             (punches and die), of a rough blank, usually of metal,
                                                             into a solid or hollow part. The essential distin­
                                                             guishing characteristic of the cold-extrusion process is
In consideration of the licence, Luchaire undertook to
                                                             that it makes it possible to work with metals at
pay Kabelmetal royalties, originally calculated by refer­    ambient temperature . This normally has certain advan­
ence to the purchase price of the materials used, and        tages over the 'traditional' deep-drawing processes in
subsequently changed to a lump sum , paid in instal­         that it improves the mechanical properties of the parts
ments. Once the agreement has expired, Luchaire may          (strength , fibre structure, etc .) — as a result of cold
continue to make use without payment of royalties of         hardening — as well as saving material and additional
techniques received prior to 31 December 1972, while         machining. In general, it can be said that it is better
the use of techniques received after this date will be       to use cold-extrusion techniques to manufacture parts
subject to the payment of royalties the amount of            which require the removal of a large quantity of ma­
which is still to be fixed .
                                                             terial in successive operations, provided that the
                                                             number of parts to be produced justifies the use of
                                                             expensive equipment. It should be noted that the
The parties undertake for the duration of the agree­         investment costs for the installation of one production
ment not to sell, either directly or indirectly, products    unit per extrusion, with a sufficient number of presses
manufactured using Kabelmetal 's techniques in               and tools, total several million units of account.
certain countries outside the EEC, that is to say for
Kabelmetal in Spain and Portugal , and for Luchaire
outside the EEC and these two countries . However,
this undertaking does not apply to imports into these        The extrusion process has been used since the end of
countries of machines or assemblies which incor­             the last century on soft metals and in the manufacture
porate parts manufactured under the agreement.               of armaments such as brass cartridge cases. From 1934
                                                             onwards it was extended to steel as a result of inven­
                                                             tions made by Kabel - und Metallwerke Neumeyer AG
                                                             and protected by secret patents . After the Second
Kabelmetal undertakes not to grant any licence in            World War the process was confiscated by the Allies
respect of its techniques on terms which are more            and thus came to be used widely in Europe and in the
favourable than those applying to Luchaire to any            USA for the manufacture of many different parts and
other person , company or firm anywhere in the world .       was put to many different uses . Although the cold
                                                             extrusion process in general has thus been in use for
                                                             more than thirty years, there exists a whole range of
The agreement is to be performed in accordance with          possible techniques now used by various firms in the
French law ; any dispute between the parties over the        mechanical-engineering industry.
 ---pagebreak--- No L 222/ 36                       Official Journal of the European Communities                                22 . 8 . 75
Kabelmetal , with all its know-how and its patents,          tional techniques of forging and sintering, machining
holds the key to the use of cold-extrusion techniques        by metal removal and casting.
specially developed for manufacturing steel parts with
particularly awkward dimensions and shapes. Luchaire
profits directly from Kabelmetal's development work
by turning to Kabelmetal whenever it has any special
problems concerning the manufacture of new parts
and new tools and equipment requiring fresh invest­
                                                              It should also be pointed out that at present Luchaire
ment .
                                                              is the only licensee within the EEC for the products
                                                              manufactured on the basis of Kabelmetal techniques.
The products covered by the agreement are generally           4.     No observations were received by the Commis­
manufactured on the basis of technical specifications         sion from third parties following the publication of
and part designs submitted by customers before an             the summary of the notification .
order is placed . Detailed technical research is often
required in order, principally, to reduce the number of
non-standardized shapes, such as large variations of
section , grooves and necks. There is no wholesale or
retail trade in most of these products, because they are                                    II .
generally delivered direct by Kabelmetal itself or its
licensee to manufacturers who incorporate them into
their own products .
                                                               5 . Article 85 ( 1 ) of the Treaty prohibits as incompa­
                                                              tible with the common market all agreement;
                                                              between undertakings which may affect trade between
                                                              Member States and which have as their object or effect
Apart from some deliveries made in Belgium, where              the prevention , restriction or distortion of competition
under the original version of the agreement of 19             within the common market.
June 1958 Luchaire had a non-exclusive sales licence,
Luchaire has not as yet been supplying firms within            6. By the terms of its agreement with Luchaire,
the EEC, other than those established in France .              Kabelmetal undertook to grant Luchaire an exclusive
 Undertakings in other Community countries (i.e. Italy,        licence for the manufacture, in a specified part of the
the United Kingdom , Belgium and the Netherlands)              territory of the common market, of parts obtained by
have been supplied direct by Kabelmetal .                      cold-extrusion using its patented inventions and
                                                               know-how .
 It is impossible to determine exactly the licensee s
                                                               A patent confers on the holder the exclusive right to
 share of the market, since the products in question are       use the protected invention ; know-how, as long as it
 put to many different uses and may be manufactured
                                                               is kept secret, makes it possible for the person
 both by producers using different cold-extrusion tech­
                                                               possessing it to make sole use of the invention , or of
 niques, including six undertakings established in             the technical and economic information which is its
 France, and by those using rival deep-drawing tech­
                                                               subject. The holder of a patent or know-how may, by
 niques . Nevertheless, the information available to the
                                                               licensing agreements, authorize the use of the
 Commission suggests that Luchaire must account for
                                                               patented invention in a specific part of the common
 about 20 % of the production of such parts in France
                                                               market covered by the patent, or pass on the inven­
 in 1 974. The other 80 % was manufactured by                  tion or secret information to any firm interested in
 competitors and by users themselves (mainly the large         using it.
 car manufacturers or their subcontractors).
                                                                If the patent-holder, however, undertakes to restrict
 Rival techniques for obtaining the same parts as those         the use of his inventions to one single firm in a speci­
 manufactured by cold-extrusion include the tradi               fied territory, he is no longer able to make agreements
 ---pagebreak--- 22 . 8 . 75                        Official Journal of the European Communities                           No L 222/ 37
with other applicants for licences ; such an under­          8 . The other provisions of the agreement between
taking on the part of the holder is not of the essence       Kabelmetal and Luchaire are not caught by Article
of the patent ; such an exclusive licence covering           85 ( 1 ), because they do not have as their object or
industrial property rights and know-how may be a             effect a substantial restriction of competition within
restriction of competition and therefore prohibited by       the common market. This is true in particular of the
Article 85(1 ).                                              following :
                                                                (i) Kabelmetal s undertaking not to grant any licence
In the case in point, as has been shown above, the                  in respect of its techniques to any firm in any
techniques in respect of which Kabelmetal has                       part of the world on terms more favourable than
granted licences are important techniques for the                   those applying to Luchaire (most-favoured
manufacture of rough parts and the number of strictly               licensee clause). The licensor's undertaking to
competing and comparable processes, like the number                 extend to the original licensee any more favou­
of manufacturers using them, is relatively small .                  rable terms subsequently granted to other licen­
Luchaire holds a substantial share of the market for                sees would not in general dissuade the licensor
these articles in the EEC, and this share is all the                from granting further licences to third parties. In
greater as the remainder is not exclusively produced                specific cases, however, particularly where the
by competitors but also by the users themselves.                    market situation was such that the only way to
Kabelmetal for its part has a considerable turnover in              find other licensees was to grant them more favou­
Germany. This being so, the exclusive manufacturing                 rable terms than those granted to the first
licence granted by Kabelmetal, apart from restricting               licensee, this obligation could be an obstacle to
Kabelmetal 's freedom, seriously affects the position of            the granting of further licences and therefore
others — notably many metallurgical undertakings                    constitute an appreciable restriction of competi­
with their registered offices in France — who might                 tion . In this specific case, however, none of the
wish to apply the techniques in question, since they                facts point to such a restriction .
are prevented from using these techniques within the
common market.
                                                               (ii) the prohibition on exports by the parties to coun­
                                                                    tries outside the common market, since in the
                                                                    case in point this would not substantially affect
                                                                    either competition within the common market or
The exclusive licence granted to Luchaire, therefore,               trade    between   Member     States,  because  the
appreciably restricts competition within the common                 products in question are not suitable for
market.
                                                                    marketing through intermediaries and are there­
                                                                    fore unlikely to be reimported into the EEC and
                                                                    subsequently sold from one Member State to
                                                                    another.
7. The exclusive manufacturing licence for France
granted by Kabelmetal to the licensee prevents Kabel­
metal from granting further licences to other firms
which would enable them to use its patented inven­
tions and know-how on French territory and,
consequently, put them in a position to export from           (iii) Luchaire s obligation to grant Kabelmetal, and
 France to other parts of the common market.                         through Kabelmetal other possible licensees, non­
                                                                    exclusive licences in respect of such improve­
                                                                     ments as Luchaire itself may have made to the
                                                                    techniques in question . This restricts Luchaire's
                                                                     freedom to make contractual dispositions in
This restriction must therefore be regarded as liable to             respect of such improvements, for although
affect trade between Member States since it is likely to             Luchaire remains free in theory to grant licences
 endanger, directly or indirectly, freedom of trade                  for improvements to other ' firms, which would
between Member States in such a way as to hamper                     not normally have access to Kabelmetal 's basic
 attainment of the objectives of a single international              processes, it cannot now refuse to grant such
 market .                                                            licences to competing firms using the same
                                                                     processes, which are therefore directly interested
                                                                     in any improvement. Luchaire's obligation to
                                                                     permit the granting of licences to its competitors,
                                                                     thus losing any competitive advantage which
 The agreement in question therefore falls within the                might result from the said improvements, would
 scope of Article 85 (1 ) of the Treaty.                             tend to discourage any effort which the company
 ---pagebreak--- No L 222/ 38                          Official Journal of the European Communities                              22. 8 . 75
       might normally make to obtain such an advan­             torial advantages it derives from the exclusion of any
       tage. Such an effect may restrict competition,           other firm which might be interested in manufac­
       particularly in an oligopolistic market structure .      turing on the basis of the licensor's techniques within
       In the market in question, as Luchaire is at             the territory for which the licence is valid . This provi­
       present the only licensee in the common market           sion    has   therefore enabled    another  manufacturer
       and as it is unlikely that further licensees who         within the EEC to use improved techniques for
       could effectively compete with Luchaire will be          machining steel parts — techniques which , compared
       appointed before the contract' expires, the obliga­      with the traditional deep-drawing processes, make
       tion in question cannot be regarded as having an          possible considerable savings in raw material and the
       appreciable effect on conditions in the EEC               production of high-quality finished products.
       market .
(iv) Luchaire's     undertaking     to   keep    secret the
       know-how made available to it by Kabelmetal,
       since the very essence of technical know-how,            The obligation also contributes to promoting tech­
       which is a collection of industrial processes unpro­      nical progress and to improving the production of
       tected by the law on industrial property, is              parts manufactured according to the licensor's tech­
       secrecy. This element of secrecy is an essential          niques in that the agreement made possible by the
       precondition so that the owner of the technical           obligation permits the licensee to ask for Kabelmetafs
       know-how can pass it on to other firms and is             technical assistance in designing new parts and new
       therefore also an essential prerequisite for              tools and equipment, and thus encourages joint
       exploiting the know-how until such time as it             improvement of the licensed techniques.
       becomes public knowledge .
  (v) Luchaire's undertaking to pay royalties if it uses
       — once the contract has expired — the secret
       techniques received after a specified date during
       the lifetime of the contract, since this obligation       11 .    Users, notably electrical-equipment and motor­
       does not prevent the licensee from using the              vehicle manufacturers and their customers, obtain a
                                                                 fair share of the benefits of the economic and tech­
        know-how after the contract has expired even if it
        has to pay royalties to do so.                           nical progress mentioned above, for as a result of this
                                                                 agreement they have at their disposal in the common
                                                                 market goods tailored to their needs, in unusual
                                                                 shapes and dimensions. Most users in France can ,
                                                                 thanks to the close proximity of Kabelmetal's
                                                                 licensee, be sure of obtaining efficient technical infor­
                              III .
                                                                 mation and assistance in finding which of the parts
                                                                 they require can be made to higher technical specifica­
                                                                 tions or at lower prices, as well as regular supplies.
 9 . Under Article 85 (3), the provisions of Article             Competition between rival products is sufficient to
 85(1 ) may be declared inapplicable in the case of any          guarantee users a share in the benefits in question .
 agreement between undertakings which contributes to
 improving the production or distribution of goods or
 to promoting technical or economic progress, while
 allowing consumers a fair share of the resulting
 benefit , and which does not :                                   12. Luchaire s exclusive licence for a specific terri­
                                                                  tory may, in respect of the use of Kabelmetal 's secret
                                                                 and protected techniques, be considered indispensable
 (a) impose on the undertakings concerned restrictions            to attainment of the desirable objectives set out in the
       which are not indispensable to the attainment of           foregoing paragraphs . Given the investments required
       these objectives ;                                         to apply Kabelmetal 's techniques and to promote
                                                                  sales of products manufactured by extrusion processes,
 (b) afford such undertakings the possibility of elimi­          which when the agreement came into force were not
       nating competition in respect of a substantial part        as yet widely used and had to compete with many
       of the products in question .                              other processes to which users were already accus­
                                                                  tomed, Kabelmetal would have been unable to get any
                                                                  interested firm in the EEC to apply the techniques it
  10 .     Kabelmetal s undertaking to grant Luchaire             possessed at that time, or indeed any new develop­
 exclusive rights contributes to promoting economic               ment involving fresh investment, had it not given an
 progress, since it made possible the licensing agree­            undertaking that other firms would be unable to
 ment in question by guaranteeing Luchaire a suffi­               compete with it directly by manufacturing the
 cient return on its investments by virtue of the terri­          products in question using the same protected or
 ---pagebreak--- 22 . 8 . 75                           Official Journal of the European Communities                             No L 222/39
secret techniques in the territory coverd by the                between Member States of the EEC. Since the agree­
licensing agreement. The protection which this terri­           ment in question is to lapse very soon, before the
torial advantage gives against the risk of insufficient         expiry of the Kabelmetal patents to which it relates, it
use of production capacity that has had to be created           would be advisable to provide that the decision under
could not be attained by measures which would                   Article 85 (3) will lapse on the same date as the agree­
restrict competition to a lesser degree.                        ment .
                                                                 17.     In order that it may be          verified that the
 13 .    Although Luchaire occupies an important posi­
                                                                amended agreement as applied in           practice does not
tion in the EEC, the agreement in question does not
                                                                exceed the bounds of the decision         declaring inappli­
give it power to eliminate competition in a large part
                                                                cable the prohibition in Article          85 ( 1 ), measures
of the relevant product market. It should be noted              should be taken to ensure that the Commission is
here that other cold-extrusion techniques and other
                                                                informed of judgments given under the arbitration
deep-drawing processes are used by several firms
within the common market. Added to this is the fact             clause , since these might contain interpretations of
that Kabelmetafs licensee is free to sell the relevant          the agreement which do not take account of the scope
products within the common market outside the terri­            of this decision, which might in consequence have to
                                                                be amended .
tory for which it holds an exclusive manufacturing
licence and is especially responsible .
                                                                                              V.
 14.     As matters now stand, the licensing agreement
between Kabelmetal and Luchaire satisfies all the tests
for a decision granting exemption under Article 85 (3).          18 . The agreement in question does not satisfy the
                                                                tests of Article 7 ( 1 ) and (2) of Regulation No 17. The
                                                                agreement was already in existence at the date of entry
                                                                into force of Regulation No 17 but was not notified
                                                                by the date specified in Article 5 ( 1 ) of the said Regula­
                              IV .                              tion and did not fall within subparagraph (2) (b) of
                                                                Article 4 (2) of the Regulation since its effect is not
                                                                simply to impose restrictions on the exercise of the
 15. As originally drafted, the licensing agreement             rights of the user of industrial property rights.
between Kabelmetal and Luchaire did not satisfy the
tests of Article 85 (3), because it contained a general
obligation on the licensee not to export to other EEC           Consequently, the prohibition in Article 85 ( 1 ) applies
countries the articles manufactured using Kabelme­              to the whole period between 13 March 1962, the date
tal's techniques, the obligation to transfer to Kabel­          of entry into force of Regulation No 17, and the date
metal ownership of jointly developed improvements               of entry into force of the decision declaring Article 85
and the obligation not to contest the validity of the           ( 1 ) inapplicable to the agreement in question ,
licensor's    patents . These      obligations   constituted
substantial restrictions of competition and could not
be regarded as being of the essence of the licensed
patent rights or as contributing to the improvement of          HAS ADOPTED THIS DECISION :
production or distribution of goods or to promoting
technical or economic progress.
                                                                                           Article 1
At the Commission 's request, these obligations
preventing application of Article 85 (3) were on 13
March 1974 deleted from the agreement.                          The provisions of Article 85 ( 1 ) of the Treaty esta­
                                                                blishing the European Economic Community are,
                                                                pursuant to Article 85 (3) thereof, declared inappli­
Pursuant to Article 6 ( 1 ) of Regulation No 17, the deci­      cable to the patent and know-how licensing agree­
sion granting exemption under Article 85 (3) may                ment concluded on 19 June 1958 by Kabelmetal and
therefore have effect from the date on which the agree­         Luchaire , as amended on 13 March 1974.
ment was amended, namely 13 March 1974.
                                                                                           Article 2
16 .     For purposes of determining pursuant to Article
8 ( 1 ) of Regulation No 17 the duration of the validity
of the decision , account should be taken of the fact           The abovementioned undertakings shall communicate
that the restrictions of competition found do not               to the Commission without delay any judgment given
prevent the free movement of the goods in question              under the arbitration clause .
 ---pagebreak--- No L 222/40                     Official Journal of the European Communities                          22 . 8 . 75
                      Article 3                           — Ets Luchaire SA, Paris, France .
This Decision shall have effect from 13 March 1974
to 31 December 1977 .
                                                           Done at Brussels, 18 July 1975 .
                      Article 4
This Decision is addressed to the following undertak­                              For the Commission
ings :
                                                                                       The President
— Kabel - und Metallwerke Gutehoffnungshütte AG,
    Hanover, Germany, and                                                         François-Xavier ORTOLI