United Brands Company and United Brands Continentaal BV v Commission of the European Communities.
Date: 1978-02-14
10IN ORDER TO DETERMINE WHETHER UBC HAS A DOMINANT POSITION ON THE BANANA MARKET IT IS NECESSARY TO DEFINE THIS MARKET BOTH FROM THE STANDPOINT OF THE PRODUCT AND FROM THE GEOGRAPHIC POINT OF VIEW .
11THE OPPORTUNITIES FOR COMPETITION UNDER ARTICLE 86 OF THE TREATY MUST BE CONSIDERED HAVING REGARD TO THE PARTICULAR FEATURES OF THE PRODUCT IN QUESTION AND WITH REFERENCE TO A CLEARLY DEFINED GEOGRAPHIC AREA IN WHICH IT IS MARKETED AND WHERE THE CONDITIONS OF COMPETITION ARE SUFFICIENTLY HOMOGENEOUS FOR THE EFFECT OF THE ECONOMIC POWER OF THE UNDERTAKING CONCERNED TO BE ABLE TO BE EVALUATED .

PARAGRAPH 1 . THE PRODUCT MARKET
12AS FAR AS THE PRODUCT MARKET IS CONCERNED IT IS FIRST OF ALL NECESSARY TO ASCERTAIN WHETHER , AS THE APPLICANT MAINTAINS , BANANAS ARE AN INTEGRAL PART OF THE FRESH FRUIT MARKET , BECAUSE THEY ARE REASONABLY INTERCHANGEABLE BY CONSUMERS WITH OTHER KINDS OF FRESH FRUIT SUCH AS APPLES , ORANGES , GRAPES , PEACHES , STRAWBERRIES , ETC . OR WHETHER THE RELEVANT MARKET CONSISTS SOLELY OF THE BANANA MARKET WHICH INCLUDES BOTH BRANDED BANANAS AND UNLABELLED BANANAS AND IS A MARKET SUFFICIENTLY HOMOGENEOUS AND DISTINCT FROM THE MARKET OF OTHER FRESH FRUIT .
44THE CONDITIONS FOR THE APPLICATION OF ARTICLE 86 TO AN UNDERTAKING IN A DOMINANT POSITION PRESUPPOSE THE CLEAR DELIMITATION OF THE SUBSTANTIAL PART OF THE COMMON MARKET IN WHICH IT MAY BE ABLE TO ENGAGE IN ABUSES WHICH HINDER EFFECTIVE COMPETITION AND THIS IS AN AREA WHERE THE OBJECTIVE CONDITIONS OF COMPETITION APPLYING TO THE PRODUCT IN QUESTION MUST BE THE SAME FOR ALL TRADERS .
53FROM THE STANDPOINT OF BEING ABLE TO ENGAGE IN FREE COMPETITION THESE SIX STATES FORM AN AREA WHICH IS SUFFICIENTLY HOMOGENEOUS TO BE CONSIDERED IN ITS ENTIRETY .
65THE DOMINANT POSITION REFERRED TO IN THIS ARTICLE 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 GIVING IT THE POWER TO BEHAVE TO AN APPRECIABLE EXTENT INDEPENDENTLY OF ITS COMPETITORS , CUSTOMERS AND ULTIMATELY OF ITS CONSUMERS .
66IN GENERAL A DOMINANT POSITION DERIVES FROM A COMBINATION OF SEVERAL FACTORS WHICH , TAKEN SEPARATELY , ARE NOT NECESSARILY DETERMINATIVE .
182IN VIEW OF THESE CONFLICTING ARGUMENTS IT IS ADVISABLE TO ASSERT POSITIVELY FROM THE OUTSET THAT AN UNDERTAKING IN A DOMINANT POSITION FOR THE PURPOSE OF MARKETING A PRODUCT - WHICH CASHES IN ON THE REPUTATION OF A BRAND NAME KNOWN TO AND VALUED BY THE CONSUMERS - CANNOT STOP SUPPLYING A LONG STANDING CUSTOMER WHO ABIDES BY REGULAR COMMERCIAL PRACTICE , IF THE ORDERS PLACED BY THAT CUSTOMER ARE IN NO WAY OUT OF THE ORDINARY .
183SUCH CONDUCT IS INCONSISTENT WITH THE OBJECTIVES LAID DOWN IN ARTICLE 3 ( F ) OF THE TREATY , WHICH ARE SET OUT IN DETAIL IN ARTICLE 86 , ESPECIALLY IN PARAGRAPHS ( B ) AND ( C ), SINCE THE REFUSAL TO SELL WOULD LIMIT MARKETS TO THE PREJUDICE OF CONSUMERS AND WOULD AMOUNT TO DISCRIMINATION WHICH MIGHT IN THE END ELIMINATE A TRADING PARTY FROM THE RELEVANT MARKET .
184IT IS THEREFORE NECESSARY TO ASCERTAIN WHETHER THE DISCONTINUANCE OF SUPPLIES BY UBC IN OCTOBER 1973 WAS JUSTIFIED .
189ALTHOUGH IT IS TRUE , AS THE APPLICANT POINTS OUT , THAT THE FACT THAT AN UNDERTAKING IS IN A DOMINANT POSITION CANNOT DISENTITLE IT FROM PROTECTING ITS OWN COMMERCIAL INTERESTS IF THEY ARE ATTACKED , AND THAT SUCH AN UNDERTAKING MUST BE CONCEDED THE RIGHT TO TAKE SUCH REASONABLE STEPS AS IT DEEMS APPROPRIATE TO PROTECT ITS SAID INTERESTS , SUCH BEHAVIOUR CANNOT BE COUNTENANCED IF ITS ACTUAL PURPOSE IS TO STRENGTHEN THIS DOMINANT POSITION AND ABUSE IT .
229THE INTERPLAY OF SUPPLY AND DEMAND SHOULD , OWING TO ITS NATURE , ONLY BE APPLIED TO EACH STAGE WHERE IT IS REALLY MANIFEST .
230THE MECHANISMS OF THE MARKET ARE ADVERSELY AFFECTED IF THE PRICE IS CALCULATED BY LEAVING OUT ONE STAGE OF THE MARKET AND TAKING INTO ACCOUNT THE LAW OF SUPPLY AND DEMAND AS BETWEEN THE VENDOR AND THE ULTIMATE CONSUMER AND NOT AS BETWEEN THE VENDOR ( UBC ) AND THE PURCHASER ( THE RIPENER/DISTRIBUTORS ).
249IT IS ADVISABLE THEREFORE TO ASCERTAIN WHETHER THE DOMINANT UNDERTAKING HAS MADE USE OF THE OPPORTUNITIES ARISING OUT OF ITS DOMINANT POSITION IN SUCH A WAY AS TO REAP TRADING BENEFITS WHICH IT WOULD NOT HAVE REAPED IF THERE HAD BEEN NORMAL AND SUFFICIENTLY EFFECTIVE COMPETITION .
250IN THIS CASE CHARGING A PRICE WHICH IS EXCESSIVE BECAUSE IT HAS NO REASONABLE RELATION TO THE ECONOMIC VALUE OF THE PRODUCT SUPPLIED WOULD BE SUCH AN ABUSE .
252THE QUESTIONS THEREFORE TO BE DETERMINED ARE WHETHER THE DIFFERENCE BETWEEN THE COSTS ACTUALLY INCURRED AND THE PRICE ACTUALLY CHARGED IS EXCESSIVE , AND , IT THE ANSWER TO THIS QUESTION IS IN THE AFFIRMATIVE , WHETHER A PRICE HAS BEEN IMPOSED WHICH IS EITHER UNFAIR IN ITSELF OR WHEN COMPARED TO COMPETING PRODUCTS .
253OTHER WAYS MAY BE DEVISED - AND ECONOMIC THEORISTS HAVE NOT FAILED TO THINK UP SEVERAL - OF SELECTING THE RULES FOR DETERMINING WHETHER THE PRICE OF A PRODUCT IS UNFAIR .
265UBC ' S RETRACTATION , WHICH THE COMMISSION HAS NOT EFFECTIVELY REFUTED , ESTABLISHES BEYOND DOUBT THAT THE BASIS FOR THE CALCULATION ADOPTED BY THE LATTER TO PROVE THAT UBC ' S PRICES ARE EXCESSIVE IS OPEN TO CRITICISM AND ON THIS PARTICULAR POINT THERE IS DOUBT WHICH MUST BENEFIT THE APPLICANT , ESPECIALLY AS FOR NEARLY 20 YEARS BANANA PRICES , IN REAL TERMS , HAVE NOT RISEN ON THE RELEVANT MARKET .