Hoffmann-La Roche & Co. AG v Commission of the European Communities.
Date: 1979-02-13
9OBSERVANCE OF THE RIGHT TO BE HEARD IS IN ALL PROCEEDINGS IN WHICH SANCTIONS , IN PARTICULAR FINES OR PENALTY PAYMENTS , MAY BE IMPOSED A FUNDAMENTAL PRINCIPLE OF COMMUNITY LAW WHICH MUST BE RESPECTED EVEN IF THE PROCEEDINGS IN QUESTION ARE ADMINISTRATIVE PROCEEDINGS .

ARTICLE 19 ( 1 ) OF COUNCIL REGULATION NO 17 OBLIGES THE COMMISSION , BEFORE TAKING A DECISION IN CONNEXION WITH FINES , TO GIVE THE PERSONS CONCERNED THE OPPORTUNITY OF PUTTING FORWARD THEIR POINT OF VIEW WITH REGARD TO THE COMPLAINTS MADE AGAINST THEM .

SIMILARLY ARTICLE 4 OF REGULATION NO 99/63 OF THE COMMISSION OF 25 JULY 1963 ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1963 , P . 47 ) ON THE HEARING PROVIDED FOR ARTICLE 19 OF REGULATION NO 17 PROVIDES THAT THE COMMISSION SHALL IN ITS DECISIONS DEAL ONLY WITH THOSE OBJECTIONS RAISED AGAINST UNDERTAKINGS AND ASSOCIATIONS OF UNDERTAKINGS IN RESPECT OF WHICH THEY HAVE BEEN AFFORDED THE OPPORTUNITY OF MAKING KNOWN THEIR VIEWS .
11THUS IT EMERGES FROM THE PROVISIONS QUOTED ABOVE AND ALSO FROM THE GENERAL PRINCIPLE TO WHICH THEY GIVE EFFECT THAT IN ORDER TO RESPECT THE PRINCIPLE OF THE RIGHT TO BE HEARD THE UNDERTAKINGS CONCERNED MUST HAVE BEEN AFFORDED THE OPPORTUNITY DURING THE ADMINISTRATIVE PROCEDURE TO MAKE KNOWN THEIR VIEWS ON THE TRUTH AND RELEVANCE OF THE FACTS AND CIRCUMSTANCES ALLEGED AND ON THE DOCUMENTS USED BY THE COMMISSION TO SUPPORT ITS CLAIM THAT THERE HAS BEEN AN INFRINGEMENT OF ARTICLE 86 OF THE TREATY .
21IN ORDER TO DETERMINE WHETHER ROCHE HAS THE DOMINANT POSITION AS ALLEGED , IT IS NECESSARY TO DELIMIT THE RELEVANT MARKETS BOTH FROM THE GEOGRAPHICAL STANDPOINT AND FROM THE STANDPOINT OF THE PRODUCT .
28IF A PRODUCT COULD BE USED FOR DIFFERENT PURPOSES AND IF THESE DIFFERENT USES ARE IN ACCORDANCE WITH ECONOMIC NEEDS , WHICH ARE THEMSELVES ALSO DIFFERENT , THERE ARE GOOD GROUNDS FOR ACCEPTING THAT THIS PRODUCT MAY , ACCORDING TO THE CIRCUMSTANCES , BELONG TO SEPARATE MARKETS WHICH MAY PRESENT SPECIFIC FEATURES WHICH DIFFER FROM THE STANDPOINT BOTH OF THE STRUCTURE AND OF THE CONDITIONS OF COMPETITION .

HOWEVER THIS FINDING DOES NOT JUSTIFY THE CONCLUSION THAT SUCH A PRODUCT TOGETHER WITH ALL THE OTHER PRODUCTS WHICH CAN REPLACE IT AS FAR AS CONCERNS THE VARIOUS USES TO WHICH IT MAY BE PUT AND WITH WHICH IT MAY COMPETE , FORMS ONE SINGLE MARKET .

THE CONCEPT OF THE RELEVANT MARKET IN FACT IMPLIES THAT THERE CAN BE EFFECTIVE COMPETITION BETWEEN THE PRODUCTS WHICH FORM PART OF IT AND THIS PRESUPPOSES THAT THERE IS A SUFFICIENT DEGREE OF INTERCHANGEABILITY BETWEEN ALL THE PRODUCTS FORMING PART OF THE SAME MARKET IN SO FAR AS A SPECIFIC USE OF SUCH PRODUCTS IS CONCERNED .

THERE WAS NO SUCH INTERCHANGEABILITY , AT ANY RATE DURING THE PERIOD UNDER CONSIDERATION , BETWEEN ALL THE VITAMINS OF EACH OF THE GROUPS C AND E AND ALL THE PRODUCTS WHICH , ACCORDING TO THE CIRCUMSTANCES , MAY BE SUBSTITUTED FOR ONE OR OTHER OF THESE GROUPS OF VITAMINS FOR TECHNOLOGICAL USES WHICH ARE THEMSELVES EXTREMELY VARIED .
29ON THE OTHER HAND THERE MAY BE SOME DOUBT WHETHER , FOR THE PURPOSE OF DELIMITING THE RESPECTIVE MARKETS OF THE C AND E GROUPS OF VITAMINS , IT IS NECESSARY TO INCLUDE ALL THE VITAMINS OF EACH OF THESE GROUPS IN A MARKET CORRESPONDING TO THAT GROUP , OR WHETHER , ON THE CONTRARY , EACH OF THESE GROUPS MUST BE PLACED IN A SEPARATE MARKET , ONE COMPRISING VITAMINS FOR BIO-NUTRITIVE USE AND THE OTHER VITAMINS FOR TECHNOLOGICAL PURPOSES .
38ARTICLE 86 IS AN APPLICATION OF THE GENERAL OBJECTIVE OF THE ACTIVITIES OF THE COMMUNITY LAID DOWN BY ARTICLE 3 ( F ) OF THE TREATY NAMELY , THE INSTITUTION OF A SYSTEM ENSURING THAT COMPETITION IN THE COMMON MARKET IS NOT DISTORTED .

ARTICLE 86 PROHIBITS ANY ABUSE BY AN UNDERTAKING OF A DOMINANT POSITION IN A SUBSTANTIAL PART OF THE COMMON MARKET IN SO FAR AS IT MAY AFFECT TRADE BETWEEN MEMBER STATES .

THE DOMINANT POSITION THUS REFERRED TO RELATES TO A POSITION OF ECONOMIC STRENGTH ENJOYED BY AN UNDERTAKING WHICH ENABLES IT TO PREVENT EFFECTIVE COMPETITION BEING MAINTAINED ON THE RELEVANT MARKET BY AFFORDING IT THE POWER TO BEHAVE TO AN APPRECIABLE EXTENT INDEPENDENTLY OF ITS COMPETITORS , ITS CUSTOMERS AND ULTIMATELY OF THE CONSUMERS .
39SUCH A POSITION DOES NOT PRECLUDE SOME COMPETITION , WHICH IT DOES WHERE THERE IS A MONOPOLY OR A QUASI-MONOPOLY , BUT ENABLES THE UNDERTAKING WHICH PROFITS BY IT , IF NOT TO DETERMINE , AT LEAST TO HAVE AN APPRECIABLE INFLUENCE ON THE CONDITIONS UNDER WHICH THAT COMPETITION WILL DEVELOP , AND IN ANY CASE TO ACT LARGELY IN DISREGARD OF IT SO LONG AS SUCH CONDUCT DOES NOT OPERATE TO ITS DETRIMENT .

A DOMINANT POSITION MUST ALSO BE DISTINGUISHED FROM PARALLEL COURSES OF CONDUCT WHICH ARE PECULIAR TO OLIGOPOLIES IN THAT IN AN OLIGOPOLY THE COURSES OF CONDUCT INTERACT , WHILE IN THE CASE OF AN UNDERTAKING OCCUPYING A DOMINANT POSITION THE CONDUCT OF THE UNDERTAKING WHICH DERIVES PROFITS FROM THAT POSITION IS TO A GREAT EXTENT DETERMINED UNILATERALLY .

THE EXISTENCE OF A DOMINANT POSITION MAY DERIVE FROM SEVERAL FACTORS WHICH , TAKEN SEPARATELY , ARE NOT NECESSARILY DETERMINATIVE BUT AMONG THESE FACTORS A HIGHLY IMPORTANT ONE IS THE EXISTENCE OF VERY LARGE MARKET SHARES .
41FURTHERMORE ALTHOUGH THE IMPORTANCE OF THE MARKET SHARES MAY VARY FROM ONE MARKET TO ANOTHER THE VIEW MAY LEGITIMATELY BE TAKEN THAT VERY LARGE SHARES ARE IN THEMSELVES , AND SAVE IN EXCEPTIONAL CIRCUMSTANCES , EVIDENCE OF THE EXISTENCE OF A DOMINANT POSITION .

AN UNDERTAKING WHICH HAS A VERY LARGE MARKET SHARE AND HOLDS IT FOR SOME TIME , BY MEANS OF THE VOLUME OF PRODUCTION AND THE SCALE OF THE SUPPLY WHICH IT STANDS FOR - WITHOUT THOSE HAVING MUCH SMALLER MARKET SHARES BEING ABLE TO MEET RAPIDLY THE DEMAND FROM THOSE WHO WOULD LIKE TO BREAK AWAY FROM THE UNDERTAKING WHICH HAS THE LARGEST MARKET SHARE - IS BY VIRTUE OF THAT SHARE IN A POSITION OF STRENGTH WHICH MAKES IT AN UNAVOIDABLE TRADING PARTNER AND WHICH , ALREADY BECAUSE OF THIS SECURES FOR IT , AT THE VERY LEAST DURING RELATIVELY LONG PERIODS , THAT FREEDOM OF ACTION WHICH IS THE SPECIAL FEATURE OF A DOMINANT POSITION .
89AN UNDERTAKING WHICH IS IN A DOMINANT POSITION ON A MARKET AND TIES PURCHASERS - EVEN IF IT DOES SO AT THEIR REQUEST - BY AN OBLIGATION OR PROMISE  ON THEIR PART TO OBTAIN ALL OR MOST OF THEIR REQUIREMENTS EXCLUSIVELY FROM THE SAID UNDERTAKING ABUSES ITS DOMINANT POSITION WITHIN THE MEANING OF ARTICLE 86 OF THE TREATY , WHETHER THE OBLIGATION IN QUESTION IS STIPULATED WITHOUT FURTHER QUALIFICATION OR WHETHER IT IS UNDERTAKEN IN CONSIDERATION OF THE GRANT OF A REBATE .

THE SAME APPLIES IF THE SAID UNDERTAKING , WITHOUT TYING THE PURCHASERS BY A FORMAL OBLIGATION , APPLIES , EITHER UNDER THE TERMS OF AGREEMENTS CONCLUDED WITH THESE PURCHASERS OR UNILATERALLY , A SYSTEM OF FIDELITY REBATES , THAT IS TO SAY DISCOUNTS CONDITIONAL ON THE CUSTOMER ' S OBTAINING ALL OR MOST OF ITS REQUIREMENTS - WHETHER THE QUANTITY OF ITS PURCHASES BE LARGE OR SMALL - FROM THE UNDERTAKING IN A DOMINANT POSITION .
90OBLIGATIONS OF THIS KIND TO OBTAIN SUPPLIES EXCLUSIVELY FROM A PARTICULAR UNDERTAKING , WHETHER OR NOT THEY ARE IN CONSIDERATION OF REBATES OR OF THE GRANTING OF FIDELITY REBATES INTENDED TO GIVE THE PURCHASER AN INCENTIVE TO OBTAIN HIS SUPPLIES EXCLUSIVELY FROM THE UNDERTAKING IN A DOMINANT POSITION , ARE INCOMPATIBLE WITH THE OBJECTIVE OF UNDISTORTED COMPETITION WITHIN THE COMMON MARKET , BECAUSE - UNLESS THERE ARE EXCEPTIONAL CIRCUMSTANCES WHICH MAY MAKE AN AGREEMENT BETWEEN UNDERTAKINGS IN THE CONTEXT OF ARTICLE 85 AND IN PARTICULAR OF PARAGRAPH ( 3 ) OF THAT ARTICLE , PERMISSIBLE - THEY ARE NOT BASED ON AN ECONOMIC TRANSACTION WHICH JUSTIFIES THIS BURDEN OR BENEFIT BUT ARE DESIGNED TO DEPRIVE THE PURCHASER OF OR RESTRICT HIS POSSIBLE CHOICES OF SOURCES OF SUPPLY AND TO DENY OTHER PRODUCERS ACCESS TO THE MARKET .

THE FIDELITY REBATE , UNLIKE QUANTITY REBATES EXCLUSIVELY LINKED WITH THE VOLUME OF PURCHASES FROM THE PRODUCER CONCERNED , IS DESIGNED THROUGH THE GRANT OF A FINANCIAL ADVANTAGE TO PREVENT CUSTOMERS FROM OBTAINING THEIR SUPPLIES FROM COMPETING PRODUCERS .

FURTHERMORE THE EFFECT OF FIDELITY REBATES IS TO APPLY DISSIMILAR CONDITIONS TO EQUIVALENT TRANSACTIONS WITH OTHER TRADING PARTIES IN THAT TWO PURCHASERS PAY A DIFFERENT PRICE FOR THE SAME QUANTITY OF THE SAME PRODUCT DEPENDING ON WHETHER THEY OBTAIN THEIR SUPPLIES EXCLUSIVELY FROM THE UNDERTAKING IN A DOMINANT POSITION OR HAVE SEVERAL SOURCES OF SUPPLY .

FINALLY THESE PRACTICES BY AN UNDERTAKING IN A DOMINANT POSITION AND ESPECIALLY ON AN EXPANDING MARKET TEND TO CONSOLIDATE THIS POSITION BY MEANS OF A FORM OF COMPETITION WHICH IS NOT BASED ON THE TRANSACTIONS EFFECTED AND IS THEREFORE DISTORTED .
91FOR THE PURPOSE OF REJECTING THE FINDING THAT THERE HAS BEEN AN ABUSE OF A DOMINANT POSITION THE INTERPRETATION SUGGESTED BY THE APPLICANT THAT AN ABUSE IMPLIES THAT THE USE OF THE ECONOMIC POWER BESTOWED BY A DOMINANT POSITION IS THE MEANS WHEREBY THE ABUSE HAS BEEN BROUGHT ABOUT CANNOT BE ACCEPTED .

THE CONCEPT OF ABUSE IS AN OBJECTIVE CONCEPT RELATING TO THE BEHAVIOUR OF AN UNDERTAKING IN A DOMINANT POSITION WHICH IS SUCH AS TO INFLUENCE THE STRUCTURE OF A MARKET WHERE , AS A RESULT OF THE VERY PRESENCE OF THE UNDERTAKING IN QUESTION , THE DEGREE OF COMPETITION IS WEAKENED AND WHICH , THROUGH RECOURSE TO METHODS DIFFERENT FROM THOSE WHICH CONDITION NORMAL COMPETITION IN PRODUCTS OR SERVICES ON THE BASIS OF THE TRANSACTIONS OF COMMERCIAL OPERATORS , HAS THE EFFECT OF HINDERING THE MAINTENANCE OF THE DEGREE OF COMPETITION STILL EXISTING IN THE MARKET OR THE GROWTH OF THAT COMPETITION .

SECTION 4 : THE NATURE OF THE REBATES AT ISSUE
123AS FAR AS THE FIRST POINT IS CONCERNED THE TERMS OF THE CONTRACTS AT ISSUE AS WELL AS THE CONSIDERATIONS SET OUT IN MANAGEMENT INFORMATION AND IN THE MINUTES OF THE MEETING BETWEEN UNILEVER AND ROCHE IN LONDON ON 11 DECEMBER 1972 SHOW CLEARLY THE IMPORTANCE WHICH ROCHE ITSELF ATTACHES TO THE REBATES WHICH IT GRANTS .

IN THESE CIRCUMSTANCES IT CANNOT BE ACCEPTED THAT THESE REBATES ARE NOT OF IMPORTANCE TO THE CUSTOMERS .

MOREOVER SINCE THE COURSE OF CONDUCT UNDER CONSIDERATION IS THAT OF AN UNDERTAKING OCCUPYING A DOMINANT POSITION ON A MARKET WHERE FOR THIS REASON THE STRUCTURE OF COMPETITION HAS ALREADY BEEN WEAKENED , WITHIN THE FIELD OF APPLICATION OF ARTICLE 86 ANY FURTHER WEAKENING OF THE STRUCTURE OF COMPETITION MAY CONSTITUTE AN ABUSE OF A DOMINANT POSITION .