C-68/94

FRANCE AND OTHERS v COMMISSION

OPINION OF ADVOCATE GENERAL TESAURO delivered on 6 February 1997 *

Summary

The regulation: background and content I - 1383

The procedure and the decision I - 1387

The two actions: terms of the problem and level of submissions I - 1391

A — Failure to comply with the obligation to act in liaison with the national authorities (Case C-68/94) I - 1401

B — Effects of the concentration on the German market (Case C-68/94) I - 1404

C — Effects of the concentration on the Community market apart from Ger- many (Cases C-68/94 and C-30/95) I - 1410

(1) Definition of the relevant geographical market I-1410

(2) Possibility of using the regulation as the basis for action in relation to collective dominant positions I - 1417

— The wording I - 1419

— Structural links between K+S and SCPA I - 1432

* Original language: Italian.

I-1381

OPINION OF MR TESAURO — CASES C-68/94 AND C-30/95

— Characteristics of the eliminated competitor I - 1436 — Position of the competitors I - 1437 — Comparison between the position of K+S/MdK and that of SCPA ... I - 1438 — Economic power of the customers I - 1440 — Barriers to entry I - 1441 — Characteristics of the market and the product I - 1442 — Existence of parallel conduct I - 1442 D — Imposition of conditions and obligations affecting third parties not involved in the concentration (Cases C-68/94 and C-30/95) I - 1444 (1) Possibility of applying Article 8(2) to undertakings which are not par- ties to the concentration I - 1445 (2) Whether the conditions imposed in this case for the purpose of main- taining effective competition are appropriate I - 1446 — Condition concerning the withdrawal of K+S from the Kali-Export cartel I - 1447 — Condition relating to termination of the distribution contracts between K+S and SCPA I - 1448 Conclusions I - 1449

1. Is it possible to apply the provisions of brought by the French Government and the Council Regulation (EEC) N o 4064/89 of 21 other by the Société Commerciale des December 1989 on the control of concentra- Potasses et de l'Azote (hereinafter 'SCPA') tions between undertakings 1 (hereinafter and the Entreprise Minière et Chimique 'the regulation') to oligopolies? And what, in (hereinafter 'EMC')) raise the issue, although the light of the provisions of the regulation, from partially different perspectives, of are the limits to which the Commission is whether Commission Decision 94/449/EC subject in appraising the lawfulness of con- of 14 December 1993 2 (hereinafter 'the centrations? decision') is lawful.

The action brought by SCPA and EMC (Case C-30/95) specifically seeks the annul- ment of that part of the decision in which it imposes those conditions; the action brought by the French Government (Case C-68/94), on the other hand, also deals with other 4. Unlike the ECSC Treaty (Article 66), the aspects and therefore has wider implications. EC Treaty does not contain any specific pro- Nevertheless, since the objectives of the two visions on the subject of concentrations actions are only partially different and a between undertakings. That gap is the result number of the pleas and arguments put for- of a specific political determination to ward are largely identical, I consider it pos- encourage the strengthening, even through sible and indeed preferable, subject to the concentrations, of Community undertakings. necessary distinctions, to deal with them The Commission itself, in a memorandum of together. 1 December 1965, stated that it was, in prin- ciple, in favour of concentrations since it considered them expedient for strengthening European industry which was still too weak to compete on the international markets. In the same memorandum, it also made clear its intention to apply Article 86 rather than Article 85 to concentrations. That approach 3. However, before recalling the terms in was endorsed by the Court which, in its which the decision is couched and thus judgment in the 'Continental Can' case, rec- examining a dispute which, because of the ognised the existence of an abuse within the issues of principle which it raises, may rep- meaning of Article 86 when an undertaking, resent an important stage in competition already in a dominant position, reinforced case-law, I consider it appropriate to recall that position, for example through a merger, the background to the regulation, its essen- 'in such a way that the degree of dominance tial features and the procedural framework reached substantially fetters competition'. 3 within which control of concentrations is achieved. It will thus be easier to focus on certain general aspects which will then be referred to when the various issues of admis- 3 — Judgment in Case 6/72 [1973] ECR 215, paragraph 26.

However, the application of Article 86 could not conceal the at times profound disagree- not represent an entirely satisfactory solu- ments which marked its drafting stage. 6 tion, if only because that provision allows action to be taken only retrospectively, and therefore only in relation to pre-existing dominant positions, whereas a system for controlling concentrations should, above all, prevent any anticompetitive effects. The Commission, therefore, not long after the judgment in the 'Continental Can' case, sub- mitted to the Council a first proposal for a Even with the adoption of the regulation, the regulation to that effect. Moreover, its subse- favourable view of forms of merger which quent practice indicated a willingness to were designed to enable European industry reconsider the application of Article 85 to to compete effectively on the international concentrations, using the mechanism of market was not abandoned. Indeed, the pre- 'prior appraisal'. 4 That trend seemed to be amble to the regulation stresses that concen- confirmed by the judgment in the 'Philip trations, which are bound to increase as a Morris' case, 5 in which the Court accepted result of the dismantling of internal frontiers that the acquisition by an undertaking of a in order to achieve the single market, must minority holding in the capital of a competi- be welcomed as being in line with the tor undertaking might, in certain circum- requirements of dynamic competition and stances, give rise to a restriction incompatible capable of increasing the competitiveness of with Article 85. European industry, improving the conditions of growth and raising the standard of living in the Community. However, the favouring of mergers and industrial reorganisation must not result in lasting damage to compe- tition, so that Community law must be able to act against 'concentrations which may sig- nificantly impede effective competition in the common market or in a substantial part of it' (fifth recital). 5. That judgment fuelled the debate on the subject and gave renewed impetus to the Commission which submitted a further proposal in 1988. It was on the basis of that proposal that the Council adopted the regulation, the final wording of which does

7. Article 2(1) requires the Commission to take into account, with a view to establishing whether the concentration in question is compatible with the common market, 'the need to maintain and develop effective com- petition 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 Concentrations are defined in Article 3(1) by located either within or outwith the Com- recourse to a very broad concept which, in munity'; and a series of factors used to ascer- addition to mergers, also covers situations in tain the actual market power of the under- which the parties concerned may retain their takings involved. 9 The list contained in the legal, and even economic, autonomy. 7 The provision leaves a wide discretion to the primary characteristic of a concentration, Commission, partly because it does not place apart from cases of merger in the technical the various factors to be taken into consider- sense, is the acquisition of control, defined ation in any order of priority. It is also sig- by Article 3(3) as the 'possibility of exercis- nificant that the regulation raises no pre- ing decisive influence on an undertaking' by sumptions of unlawfulness connected with Ownership or the right to use all or part of the market shares held by the undertakings the assets of an undertaking' or by 'rights or contracts which confer decisive influence on the composition, voting or decisions of the 8 — This condition is fulfilled 'where ... the combined aggregate organs of an undertaking'. Operations falling worldwide turnover of all the undertakings concerned is more than ECU 5 000 million', or '... the aggregate within the scope of Article 3 are covered by Community-wide turnover of each of at least two of the the regulation only if they have a 'Commu- undertakings concerned is more than ECU 250 million', unless 'each of the undertakings concerned achieves more than two-thirds of its aggregate Community-wide turnover within one and the same Member State' (Article 1(2)). 9 — They are: 'the market position of the undertakings con- cerned and their economic and financial power, the alterna- 7 — Literally: 'where: (a) two or more previously independent tives available to suppliers and users, their access to supplies undertakings merge, or (b) — one or more persons already or markets, any legal or other barriers to entry, supply and controlling at least one undertaking, or — one or more demand trends for the relevant goods and services, the inter- undertakings acquire, whether by purchase of securities or ests of the intermediate and ultimate consumers, and the assets, by contract or by any other means, direct or indirect development of technical and economic progress provided control of the whole or parts of one or more other undertak- that it is to consumers' advantage and does not form an ings'. obstacle to competition'.

Where, on the other hand, the concentration 8. The control procedure is divided into two raises serious doubts and the Commission stages. During the first stage, which begins therefore decides to initiate formal proceed- ings (Article 6(1 )(c) of the regulation), the decision must be taken within four months, otherwise the concentration is deemed com- 10 — In the United Sutes, the 1984 Merger Guidelines intro- patible. The (final) decision may declare the duced the so-called Herfindhal-Hirschman Index (HHI) which totals the squares of the market shares of the indi- concentration compatible with the common vidual undertakings involved in the concentration.

than 100. Finally, if the HHI is above 1 800, the concentra- tion may be prohibited even if it entails an increase of less than 50. 11 — The word 'significantly' has given rise to lively debate in academic literature: among the most authoritative interpre- tations is that which makes it subject to the de minimis test, 12 — The concentration must be notified not more than one to the effect that only concentrations which have substantial week after the conclusion of the agreement, or the effects on competition, reducing it significantly and perma- announcement of the public bid, or the acquisition of a nently, can be declared incompatible. See to that effect, controlling interest. Langeheine, 'Substantive Review under the EEC Merger 13 — Appraisal of a concentration with a 'Community' dimen- Regulation', in Fordham Corporate Law Institute, 1990, sion clearly presupposes definition of the reference econ- p. 484 et seq. In that regard, see also Bellamy and Child, omic sector, whether in terms of the product or in terms of Common Market Law of Competition, 4th edition, Lon- the geographical area to be taken into account. The relevant

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FRANCE AND OTHERS v COMMISSION

may require any action that may be appro- 'MPA'), owned by the French public corpo- priate in order to restore conditions of effec- ration EMC which, moreover, holds 100% tive competition (Article 8(4)). of the capital of SCPA, the company which markets the products in question. They were followed, with outputs below one million tonnes per year, by three Spanish undertak- ings, recently grouped together in a State- owned corporation known as INI, which The procedure and the decision market their own products through the same company, Coposa; and, finally, by the British company Cleveland Potash Limited (herein- after 'CPU).

I-1387

O P I N I O N O F MR TESAURO — CASES C-68/94 A N D C-30/95

the concentration, 14 making it subject, how- products and, moreover, found that in that ever, in pursuance of Article 8(2) of the regu- sector only K+S and MdK are really active lation, to compliance with certain commit- on the Community market as a whole. 17 ments. However, while reaching the conclusion that, following the merger, those companies would enjoy a monopoly in the Community as far as magnesium sulphate and kieserite were concerned, and that the merged com- pany being formed would therefore have a dominant position on that special market, with a share of 92%, 18 the Commission did not draw any consequences from it. 11. The relevant product market, as identi- fied in the decision, mainly concerns potash products for agricultural use. 15 Those prod- ucts are mineral fertilisers which are either used on their own or applied to the soil together with other nutrients, particularly nitrogen and phosphate, in so-called com- pound fertilisers. In both uses, potash cannot be replaced by other nutrients. In the Com- 12. With regard to potash products for agri- mission's opinion, whatever their content cultural use, on the other hand, on which the (differing quantities of potash), form (stan- decision is focused almost entirely, the Com- dard or granulated) or intended use (agricul- mission drew a distinction between two rel- ture or industry for the production of com- evant geographical markets: Germany and pound fertilisers), those products are, the rest of the Community. 1 9 objectively, largely interchangeable as far as the customer is concerned, so that they can be considered together. 16

The Commission's appraisal is based, on the one hand, on the consideration that supply outside the two main producers is frag- mented and comes from operators who are not in a position to have any impact on the In those circumstances, the Commission market shares held by the duopoly; 24 and, found itself able to accept the parties' argu- on the other, on the assumption that there ments based on application of the failing will be no effective competition between company theory under which the competent K+S and SCPA because of the characteristics authorities cannot prohibit a concentration if of the relevant market, the record of the past one of the undertakings concerned is on the behaviour of the two companies and their verge of bankruptcy. In the light of the situ- close commercial links. 25 Those links consist ation which would arise in eastern Germany essentially of: (a) cooperation in the export as a consequence of the closure of MdK, that cartel Kali-Export G m b H , a company con- conclusion must, according to the Commis- stituted under Austrian law and based in sion, be regarded as consistent with the Vienna, which coordinates its members' sales requirement of strengthening the Communi- of potash products in countries outside the ty's economic and social cohesion referred to Community (the members of that cartel, in recital 13 in the preamble to the regu- each with a 2 5 % interest, are: K+S, MdK, lation. 22 SCPA and Coposa); (b) control of a joint venture in Canada, Potascan, of which K+S and EMC/SCPA each have 50% of the shares, and (c) long-established supply links by virtue of which SCPA distributes K+S products in France.

'— Kali-Export GmbH, Vienna The current cooperation with SCPA as dis- tribution partner in the French market will be terminated. It will be possible, on the one hand, for SCPA to fulfil contracts already agreed with its own customers and, on the K+S and the joint venture will withdraw other hand, for the joint venture to build up without delay from Kali-Export G m b H in its own distribution organisation. The sale to Vienna [...]. SCPA on normal market conditions is allowed.'

In the same way K+S and the joint venture will terminate the existing agency contract with Kali-Export G m b H in accordance with 15. Noting the Commission's concerns the termination arrangements provided for about the negative effects of the concentra- therein. After that date, the joint venture will tion on the conditions of competition within enter into competition with Kali-Export the Community, K+S also undertook, as G m b H via its own distribution organisation. stated in paragraph 65 of the decision, 'to adapt until 30 June 1994 the structure of Potacan in such a way as to enable each part- ner to market the potash obtained from Potacan independently of each other on the — Distribution Community market'.

K+S and the joint venture will establish in the Community their own distribution In that connection, however, it is made clear organisation — where not already in exist- in paragraph 67 that 'the Commission has ence — and will distribute their products decided not to impose a formal obligation

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FRANCE AND OTHERS v COMMISSION

16. Taking the view that the commitments in question would result in the severing of the existing links between K+S and SCPA/EMC, Those companies have put forward six pleas the Commission therefore adopted a in support of their action: by the first two, decision declaring the concentration compat- they claim that the conditions referred to in ible, which provides in Article 1 that: 'Sub- paragraph 63 have no connection with the ject to full compliance with the conditions maintenance of effective competition on the and obligations contained in the parties' Community market; by the third, they com- commitments vis-à-vis the Commission, set plain that the Commission accepted the out in paragraph 63 of this decision, the pro- commitment concerning Potacan in breach posed concentration between Kali und Salz of their rights; by the fourth and fifth, they AG, Mitteldeutsche Kah AG and Treuhan- claim that the Commission committed errors danstalt is declared compatible with the of fact and law, both in defining a geographi- common market'. cal market comprising the Member States apart from Germany and in its assessment that an alleged collective dominant position existed on that market; finally, they allege that the provisions of the regulation do not The two actions: terms of the problem and apply to a collective dominant position. level of submissions

26 — In this case, the German Government has intervened in support of the Commission's conclusions. 27 — In this case, the French Government has intervened in sup- 17. As stated earlier, the decision has been port of the applicants' conclusions, whereas K+S and MdK have been granted leave to intervene in support of the challenged both by the French Government Commission's conclusions.

19. Unlike SCPA and EMC, the French Government seeks the annulment of the whole of the decision (Case C-68/94). It asserts that the Commission failed to respect

28 — SCPA and EMC's action was brought before the Court of First Instance and referred by it to the Court of Justice 20. Clearly, with regard to the alleged errors because the French Government's action (Case C-68/94) relating to the same decision was already pending before in the appraisal of the concentration on the the latter. Indeed, since the same applicant companies had Community market apart from Germany, requested that the two cases be dealt with together by the Court of Justice, the Court of First Instance, by order of the arguments of SCPA and EMC are almost 1 February 1995, declined jurisdiction in accordance with completely coterminous with those put for- the third paragraph of Article 47 of the Statute and trans- mitted the documents to the Court of Justice. ward by the French Government. As I have 29 — Order in Case T-88/94 R Société Commerciali des Potasses already stated, that makes it possible to con- et de l'Azote and Entreprise Minière et Chimique v Com- mission [1994] ECR II-263. sider the substance of the two actions 30 — Case T-88/94 R Société Commerciale des Potasses et de together, drawing attention, where necessary, l'Azote and Entreprise Miniere et Chimique v Commission [1994] ECR II-401. to the different arguments submitted.

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32 — See, with reference to the United States, Leddy, 'The 1992 US Horizontal Merger Guidelines and Some Comparisons with EC Enforcement Policy', in ECLR, 1993, p. 15. 33 — From the point of view of formal legality, such a review means checking the aspects connected with jurisdiction, grounds, procedural regularity and observance of the right Those remarks are all the more valid with to a fair hearing; from that of substantive legality, on Die regard to concentrations, the control of other hand, it takes the form of scrutiny of the accuracy of the economic and market analysis, of the anticompetitive which, being necessarily preventive in char- effects and the correctness of the legal consequences (from the point of view of the characterisation of the facts, for acter, requires an inherently discretionary example) drawn from that analysis, without, of course, appraisal on the part of the authority whose encroaching on the scope of the discretion which the Com- mission enjoys in the application of the rules on compe- task it is to interpret and apply the regu- tition. See, in this connection, the papers by Canivet and Biancarelli in Le controle juridictionnel en matière de droit lation. Indeed, in all antitrust systems, even de la concurrence et des concentrations (proceedings of the those endowed with forms of control based seminar organised by the Court of First Instance of the European Communities on 22 and 23 November 1993), on structural data (market share held by the Luxembourg, 1994, pp. 25 to 38 and 55 to 65. undertakings concerned and presumptions 34 — Judgment in Joined Cases 100/80 to 103/80 Musique Diffu- sion Française v Commission [1983] ECR 1825. raised by it), there is a tendency to formulate 35 — In this connection, I note that the favourable view of con- judgments based also on qualitative factors centrations, to which I have referred above, is confirmed in the pragmatic approach taken by the Commission in its application of the regulation, which is characterised by a preference for the adoption of 'negotiated' solutions, which are in any case favourable to the plans in question. In the end, it has frequently resorted to the power to approve con- 31 — On the role of the Court of Justice in competition matters, centrations subject to compliance with certain conditions Trabucchi's observations are still very helpful: 'Sviluppa and obligations and, conversely, made very limited use of della giurisprudenza e suo significato nella disciplina comu- the power of prohibiuon. In that regard, sec Van Bael- nitaria suha concorrenza', in Rivista di diruto civile, 1973, I, Bellis, Il diritto della concorrenza nella CE, 1995, pp. 555 to p. 497 et seq. 556.

I shall then examine the substance of both The Court should therefore assess extremely cases. I shall deal first with the two pleas put carefully what might be described as the forward by the French Government alone, 'systematic' consequences which its decision namely, failure to observe the principle of may have, first and foremost as regards legal close and constant liaison with the authori- certainty, equal treatment and guarantees for ties of the Member States, which is required the rights of third parties, but then also as of the Commission pursuant to Article 19 of regards its implications for future practice in the regulation (A), and the justification for the control of concentrations. I consider it the Commission's appraisal of the effects of appropriate to point out that judicial review the concentration on the German market (B). is essential when laying down rules on con- Next, I shall examine the pleas put forward centrations, even in systems where, unlike in both actions with regard to the appraisal ours, there is already a predetermined assess- of the effects of the concentration on the ment criterion to guide the administrative Community market apart from Germany authorities in their task, rendering their prac- (C). In this context, I shall deal first with the tice clear and predictable. 36 aspects inherent in the definition of the rel- evant geographical market (1), then with the possibility of using the provisions of the regulation in order to take action in relation to collective dominant positions (2), and with their applicability to this case (3), also in the light of the criteria developed by the 23. In my Opinion I shall examine the Commission in its previous decisions. objections of inadmissibility raised by the Finally, I shall consider the question whether Commission with regard to the actions it is lawful to impose conditions on persons brought by the French companies (Case who are not parties to the concentration (D). C-30/95) and relating to: (A) the possibility of partially annulling the decision, as sought by those companies; (B) their right to bring proceedings; (C) the possibility of contesting that part of the decision containing the com- mitment entered into by K+S to adapt the I — Admissibility (Case C-30/95) structure of Potacan (paragraph 65); and

25. The first objection concerns the applica- tion for partial annulment of the decision. In theory, moreover, it would certainly be The Commission maintains that, by remov- possible to 'split' the decision, as the appli- ing the prerequisites for declaring the con- cants argue, also in the light of Article 10(5) centration compatible with the common of the regulation, which expressly contem- market, the annulment of one or all of the plates the possibility of partial annulment. conditions would inevitably oblige it to To that end, it should be established whether revoke the whole of the contested decision. the conditions to which Community case- law makes exercise of the power of partial annulment subject are met. As the Court stated in its judgment in the 'Flat Glass' case, 38 it is necessary 'to determine whether the scope of the operative part of the The applicants, on the contrary, assert that decision, read in the light of the grounds of the conditions at issue could be separated the decision, can be limited ratione materiae, from the rest of the decision and that their ratione personae or ratione temporis in such a annulment would have no effect other than way that its effects are restricted but its to render the decision unconditional. More- substance remains unaltered'. In the course over, since Article 8(5) of the regulation, of that examination, it should be ascertained which authorises the Commission to revoke whether, as the Court has stated, 'a partial its decision in the event of failure to comply annulment is therefore possible and is justi- with a commitment entered into by the par- fied by the fact that, taken as whole, the ties, 37 is not applicable in this case, the situ- decision is favourable to the interests of the ation feared by the Commission could in no undertakings concerned'. 39 way arise.

That confirms that the objection can only be 29. With regard to the requirement that the examined together with the substance. It decision must be of individual concern, it should, however, be emphasised at this point should be pointed out that, as the Court has that a possible partial annulment could, at consistently held, 'persons other than those most, involve the application of Article 10(5) to whom a decision is addressed may claim of the regulation, 40 that is, reopening of the to be individually concerned within the time-limits and a new examination by the meaning of the second paragraph of Article Commission. 173 only if that decision affects them by rea- son of certain attributes which are peculiar to them or by reason of circumstances in which they are differentiated from all other persons and by virtue of these factors distin- guishes them individually just as in the case of the person addressed'. 41 In this case, it is B — Right to bring proceedings obvious that the applicants' circumstances distinguish them clearly from all other per- sons.

28. The Commission further maintains that the contested decision is not of direct and First, it is significant that the applicants were individual concern to the applicants. Similar heard during the pre-litigation procedure. It arguments have been put forward by K+S is clear from the consistent case-law of both and MdK, who consider themselves to be the the Court of Justice and the Court of First sole addressees of the conditions imposed by Instance on the right of third parties to bring the decision. proceedings in the matter of competition,

First, SCPA is also directly and specifically 31. Thirdly, all the conditions imposed on concerned by the other conditions laid down the undertakings involved in the concentra- in the decision, which, however, do not affect tion in order for it to be declared compatible anyone else; and that is sufficient to differen- affect directly and almost exclusively the tiate its position from that of any other per- interests of the applicants and could seri- son, by the same token identifying it as that ously jeopardise their position on the mar- of an addressee of the measure. Secondly, it ket. 44 It is obvious that, in making the adop- would not be possible to prevent a person tion of a decision concerning one person who was indisputably (and individually) affected by a decision from bringing pro- ceedings in order to protect his interests, 42 — Judgments in C u e 26/76 Metro v Commission [1977] ECR merely because another person was in a simi- 1875, paragraph 13; Case 191/82 Fediol v Commission lar position. [1983] ECR 2913, paragraph 28 et seq.; Case 169/84 Cofaz and Others v Commission [1986] ECR 391, paragraph 23. In more recent case-law, sec the judgments in Case T-37/92 BEUC and NCC v Commission [1994] ECR II-285, para- graph 36, and Case T-114/92 BEMIM v Commission [1995] ECR II-147, paragraph 26. 43 — Judgments in Case C-354/87 Weddel v Commission [1990] ECR I-3847, paragraphs 20 to 23; and Case T-2/93 Air France v Commission [1994] ECR II-323, paragraph 45, in which the Court held that France's action against a Com- mission decision concerning a concentration between two of its competitors was admissible by reason, biter alia, of the fact that 'in assessing the competitive situation on the 33. To accept the argument criticised here two markets identified as being the markets concerned after would be to risk undermining the right to the concentration, the Commission mainly took into account the position of Air France'. judicial protection. Moreover, that argument 44 — See, albeit with reference to a different case, the judgment in does not seem to me to be supported by a Cofaz v Commission, cited in footnote 42, in particular paragraphs 28 and 29. correct interpretation of the case-law on the

fourth paragraph of Article 173 of the Treaty. the defendant institution, from the point of There is in fact no basis, except that of an view of the right to bring proceedings, the excessively restrictive reading, 45 for assum- mere fact of being a shareholder in a com- ing that the condition of being 'directly and pany involved in a concentration is not suf- individually concerned' must be peculiar to ficient to differentiate a person's circum- only one person and that it may not apply to stances in the same way as those of the several persons who can be precisely and addressee of a decision are differentiated. specifically identified as being immediately concerned by the measure. Indeed, in order for the right to bring an action to arise, that condition, namely, that the position of the person concerned must be specifically and I note first that the principles set forth in the distinctively differentiated from that of any judgment in the Zunis Holding case were other person, must be met, and in this case applicable to the applicant undertakings that differentiation cannot seriously be called which were shareholders in the companies into question. directly involved in the concentration, and therefore in a completely different position from that of EMC and SCPA in this case. Moreover, in the aforementioned judgment, the Court did not by any means state that ownership of a parcel of shares is insufficient 34. I note, moreover, that there is again a to differentiate the position of a person causal link in this case, inasmuch as the pos- within the meaning of Article 173, as the ition of the applicants was specifically taken Commission maintains, but merely pointed into account, to the extent of having had a out that, for that purpose, the possible effect decisive influence on the institution's of a measure on the relations existing decision and having constituted the funda- between a company's shareholders is not mental reason for the contested part of the sufficient, but that, on the contrary, there measure. 46 In other words, the facts of the must be specific circumstances present case show that the position of the applicant enabling the position of one of them to be companies is differentiated, and not by coin- regarded as 'directly and individually con- cidence. cerned'. And among those circumstances, even on the basis of a reading between the lines of the judgment cited above, it would not be unreasonable to include the specific size of the holding. 48 35. Finally, the Commission's reference to the judgment in the Zunis Holding case 47 does not appear to be relevant. According to

addressee of the condition relating to Kali- concerning the structure of Potacan is not Export. Indeed, despite the fact that only the proper subject of an action for annul- SCPA has an interest in the company in ment since it is not capable of producing question, the decision concerns E M C and binding legal effects of such a kind as to SCPA jointly, and they are therefore treated, affect the applicants' interests. rightly or wrongly, as a single business entity. 49 Consequently, the Commission's attempt to separate the position of E M C from that of SCPA in order to debar the former from bringing proceedings appears arbitrary at the very least, even apart from the fact that EMC has complained that it I would point out first of all that, under the suffered damage 'independently' of SCPA, Court's case-law, in order to establish particularly as a consequence of the dissolu- whether proceedings may be instituted tion of the export cartel. That dissolution against a measure under Article 173 of the deprives it of its sales network for non- Treaty, it is necessary to take account of its Community countries, thus preventing it substance and to determine whether it is from achieving 'major' exports. intended to produce binding legal effects of such a kind as to affect the applicant's inter- ests by clearly altering its legal position. 50

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OPINION OF MR TESAURO — CASES C-68/94 AND C-30/95

doubts about the correctness of such an pulp' case, 52 in which the Court held that, approach which obviously leads to a confu- for the purpose of assessing whether it could sion of procedures that, although different in be the subject of an action, an undertaking terms of their subject-matter and the parties, given by the applicants must be treated in ultimately influence each other. the same way as directions requiring an infringement to be brought to an end, as provided for by Article 3 of Regulation N o 17. Even disregarding the differences between the two cases, I note that the That said, it must nevertheless be acknow- assumption on which that solution 'was ledged that the part of the measure at issue based, namely, that the applicants merely here does not seem to meet the requirements assented to a decision which the Commis- laid down by Article 173 for a measure to sion could have adopted unilaterally, does form the subject of an action against it; more not apply in this case. specifically, it is not of such a kind as to pro- duce binding legal effects vù-à-vis the appli- cant companies.

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since they have already complied fully with the lawfulness of imposing conditions and the commitments to which the conditions in obligations which affect third parties not the decision relate. involved in the concentration (D), aspects raised in both actions and therefore to be dealt with together as regards the arguments common to both.

I note first of all that, from a procedural point of view, the objection is inadmissible since there is no reference to it in the argu- ments raised by the Commission. That objection has, in any event, been overcome by the principle laid down by the Court, A — Failure to comply with the obligation to under which, in accordance with Article 176, act in liaison with the national authorities even if it proves impossible to comply with (Case C-68/94) the obligation imposed by that provision, 'the application for annulment still consti- tutes an interest as the basis for possible pro- ceedings for damages'. 53

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OPINION OF MR TESAURO — CASES C-68/94 AND C-30/95

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and that one of the details, that relating to 46. I admit to harbouring some doubts as to SCPA's sales in Belgium and Luxembourg, the fact that the data relating to the volume was incorrect. and breakdown of sales of the various opera- tors in the sector, while admittedly impor- tant in order to obtain a complete picture of the effects of the concentration, are to be included among the most important docu- ments within the meaning of Article 19(1) of the regulation. I am of the opinion that there 45. Accordingly, it must be established is some basis for arguing, as the Commission whether, as the applicant government main- does, that the data relating to the market tains, the belated transmission of the data shares held by each operator, which were relating to the volume of potash sales, com- contained in the draft decision, were suffi- bined with the inaccuracy of one of the cient in order to appraise the proposed con- details, constitutes a breach of the Commis- centration in full knowledge of the facts. sion's obligation to act in liaison with the national authorities.

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been different'. 56 However, in this case, the has by no means shown that transmission of applicant government has not by any means the data in question within the time-limit shown that the Commission's decision and absence of error in respect of a particular would have been different had it not been for detail would have led the Advisory Commit- the alleged breach of the obligation to act in tee to adopt a different opinion, still less that constant liaison with the national authorities; the Commission's final decision would have it merely states that such a possibility could been different. 58 O n the contrary, the argu- not be ruled out. ments put forward by the Commission in this regard, and which have remained undis- puted, would seem to rule out that possibil- ' ity.

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acquisition of an undertaking which is bank- appraisal. In particular, while basing itself on rupt (or verging on bankruptcy) must, sub- that theory, it relied on the following three ject to certain conditions, be authorised since criteria: (1) MdK would have withdrawn it would not give rise to competition prob- from the market had it not been taken over lems; on the other hand, it complains that by another company; (2) K+S would in any the Commission did not make authorisation case have absorbed MdK's share after the lat- of the concentration subject to any condi- ter's withdrawal from the market; (3) no tions relating to the market in question, even alternatives were available that were less though this led to the creation of an outright anticompetitive. monopoly (98%) for the joint venture on that market.

60 — This recital provides that 'the Commission must place its appraisal within the general framework of the achievement of the fundamental objectives referred to in Article 2 of the 59 — See, on the 1992 Guidelines, Leddy, cited above in footnote Treaty, including that of strengthening the Community's 32. economic and social cohesion, referred to in Article 130a'.

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control of concentrations, which is to protect that, in short, the criteria adopted should competition. have been properly applied.

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54. With regard to the latter two criteria, however, the French Government maintains, 55. Finally, I am of the opinion that the as I have stated, that they were not correctly Commission's analysis must also be applied in this case. In particular, as far as the endorsed from the point of view of the probable withdrawal of MdK from the mar- absence of other, less anticompetitive solu- ket is concerned, it asserts that the Commis- tions. It is common ground, as the privatisa- sion has by no means shown that it would be tion procedure documents forwarded by the impossible to keep MdK alive as a public Treuhand to the Commission clearly show, undertaking by, for example, granting aid that all the undertakings which had compatible with Articles 92 and 93 of the expressed an interest in acquiring MdK had Treaty. subsequently abandoned their interest.

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Under those circumstances, it seems to me that the conclusion which the Commission reached can be endorsed. However, the fact that the Commission did not consider as a possible alternative the offer submitted by the Peine group, after the conclusion of the 57. I would point out, moreover, that, in agreement on the merger contract, to pur- two recent judgments, even though their chase the Bischofferode mine, that is to say, context and purpose were different in that one of MdK's four operational mines, they were more specifically concerned with remains to be examined. This was because the right to bring proceedings granted to the Bischofferode apparently does not constitute trade union representatives of the employees a significant part of MdK, and also for rea- of the undertakings involved in the concen- sons connected with the employment factor. tration, the Court of First Instance itself has held that, in applying the regulation, the attention given to the protection of compe- tition may certainly be reconciled, in the context of the assessment of a concentra- tion's compatibility, with appropriate con- 56. The latter aspect, which, moreover, even- sideration of its social consequences from the tually assumed considerable importance in point of view of Article 2 of the Treaty. To the application of the 'failing company that end, the Commission may, according to defence' theory in the United States as the Court, ascertain whether the concentra- well, 63 is in my view decisive, particularly in tion is hable to affect the position of the the light of the requirements of economic and social cohesion to which I have referred on a number of occasions. 64 — In this case, whereas the concentration involves activities representing 3 000 jobs in total, the Peine group's offer was limited to the purchase of an operation affecting only 536 jobs, that is, 18% of the jobs guaranteed by the concentra- tion. Although primarily a matter for the legislature, the 63 — The failing company theory arose from concerns relating to balance between the competition policy objectives and economic policy and corporate efficiency. Subsequently, other aims of the Treaty is not outside the scope of the however, in its application, political and social consider- Court's case-law either see, for example, the judgment in ations emerged, connected, inter alia, with the need to safe- the Europembaüale and Continental Can v Commission guard employment. See, in this respect, the judgment in case (cited above m footnote 3), and also the judgment in United Sates v General Dynamics Corp., 415, US 486, 507 Joined Cases 154/78, 205/78, 206/78, 226/78 to 228/78, (1974); and Areeda Turner, cited above, v o l . IV, 1980, 263/78 and 264/78, 31/79, 39/79, 83/79 and 85/79 Valsabbia p. 941. and Others v Commission [1980] ECR 907.

59. However, it is undoubtedly true that, as the French Government claims, it is not its task to propose solutions in this connection, since that is a matter for the Commission as 58. The French Government's second com- the institution responsible for applying the plaint, which is closely connected with that antitrust rules. Nevertheless, the absence of just considered, relates, as I have stated, to suggestions on its part merely indicates the the fact that the Commission did not attach difficulty of finding conditions to attach to any conditions and/or obligations to autho- the concentration on the German market, risation of the concentration as far as the which could open it u p to competition. German market is concerned, despite the fact that it gives rise to a monopoly on that mar- ket (98% of the market). In particular, the Commission should, in the French Govern- ment's opinion, have made the compatibility assessment conditional upon a specific com- mitment by the undertakings to leave the It is sufficient to observe in this connection that, even assuming that, in order to open up

65 — Judgments in C a s eT-96/92 CCE de la Société Générale des Grandes Sources and Others v Commission [1995] ECR 66 — Commission Decision 92/553/EEC of 22 July 1992 relating II-1213, paragraphs 28 and 29, and Case T-12/93 CCE de to a proceeding under Council Regulation (EEC) N o Vittel and Others v Commission [1995] ECR II-1247, para- 4064/89 (Case N o IV/M.190 — Nestíé/Perrier) (OJ 1992 graphs 38 and 39. L 356, p. 1).

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62. The applicant government and undertak- ings argue that insufficient reasons are given for identifying the Community (apart from Germany) as the second geographical market relevant for the purpose of appraising the 61. Both the French Government (Case concentration and that such identification is C-68/94) and SCPA and E M C (Case based on an incorrect and, in any case, par- C-30/95) challenge the decision's appraisal of tial analysis of the factors to be taken into the concentration in relation to the second consideration. In particular, the French Gov- relevant geographical market, namely that ernment observes that the criteria used by comprising all the Member States apart from the Commission for defining the geographi- Germany. Indeed, the applicants' complaints cal market at issue here should, if they were concern the very definition of that market, consistent with those usually employed the possibility of applying the regulation to when applying the regulation, have led it to

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deny the existence of a single market consist- and validity of the analysis made in the ing of the other Member States of the decision and on which the finding of a col- Community. That market, it maintains, is a lective dominant position on the Commu- very heterogeneous one, for several reasons. nity market apart from Germany is based. 68

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Among the factors to be taken into consider- countries. In its view, further proof of the ation, according to the requirements of form lack of homogeneity of the market in ques- C O , there is therefore no order of impor- tion derives from the examination of the tance which would allow any one of them to market shares held by the suppliers, which be regarded as predominant or at any rate vary considerably from one country to more significant than the others. Conse- another, as well as from the concentration of quently, while the Commission's claim that supply. Even the analysis of the characteris- the criteria applied in earlier decisions are to tics of demand confirms, according to the be regarded as irrelevant in this case cannot applicant government, the non-existence in be accepted, they must be regarded as consti- this case of a geographical market compris- tuting only one frame of reference, since the ing all the Member States apart from Ger- validity and consistency of the Commis- many. In its view, the Commission's assess- sion's decisions must be assessed by refer- ment concerning the interchangeability of ence to the particular context within which the products is incorrect since the choice of each specific case is set. potash products depends on the geological nature of the soil, the size of the agricultural area, consumer habits and agricultural poli- cies, as well as on the presence of potash industries within the country. 70

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still less on the basis of the different market Commission, is not at all reliable. As far as shares held in the individual countries by the transport costs are concerned, the Commis- main operators, which is not a decisive factor sion did not actually conduct an analysis but in the definition of the relevant market since merely stated apodictically that transport it may be due, for example, to pre-existing costs are not an obstacle to trade flows. trade barriers or firmly established consumer habits.

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With regard to the prices charged in the only one direction, the absence of marked Member States apart from Germany, the differences between prices and the inter- Commission points out that they are not changeability of the various potash products markedly different. In fact, the maximum could only lead to the inclusion of Spain and price difference within the Community is France in the Community market apart from 10%, whereas in Germany it is as high as Germany, all the more so as the distribution 20%. methods used in those two countries are identical to those employed in the rest of the Community (apart from Germany).

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enee of national markets. 74 This question there are no particular consumer preferences should therefore have been examined in for speciality products which are only avail- more detail by the Commission, which able from local producers. instead merely noted the presence of signifi- cant trade flows between the Member States in question.

73. With regard to the analysis of transport Likewise, the Commission's disregard of the costs, a factor commonly considered to be fact that the largest importers in the sector among the most significant in defining the had and have substantial market shares in concept of relevant market, as the Court their own countries and significantly differ- stated in the 'sugar case, 75 it is certainly true ent market shares in the other countries that the Commission has often confined seems less than wholly convincing, as does itself to general assertions. 76 However, it the minor importance it attaches to the does not seem to me that, in its objections, degree of concentration of supply. the applicant government has succeeded in showing that the differences in costs are such as to constitute 'barriers to entry': it is well known, as the Court has held, that different transport costs are not relevant for this pur- pose if they are 'not discriminatory'. 77 72. The deficiencies to which I have just drawn attention are not, however, such as to invalidate the Commission's appraisal, which seems to be founded on objective factors that are essentially undisputed.

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dence of the absence of significant differ- to entry', 79 the existence of SCPA's statu- ences in price levels between States consists tory monopoly (even though limited to the of a few statistical data provided by the F A O transit of imports from countries outside the for the period from 1987 to 1989 and of the Community), which is regarded by the reference to the 1992 prices charged by K+S Commission as a major barrier to entry to in Belgium, the Netherlands and Germany, it French territory, 80 is not taken into consid- is also true that neither the French Govern- eration in any way thereafter in order to ment nor the applicant undertakings have establish whether or not France may consti- countered the Commission's analysis with tute a distinct market. N o r can such incon- any evidence to the contrary. Indeed, they sistency be explained, as the Commission have actually affirmed that there is no sub- claims, by the distinction between barriers stantial difference between prices, while which prevent intra-Community trade and attributing this to the transparency of the those which hinder trade with non- market and not to its homogeneity. Community countries. Indeed it seems doubtful, to say the least, whether SCPA's distribution monopoly has any effect on the entry of products from non-Community countries into the market of the other Mem- ber States, since certain data supplied by the 74. If one adds to the foregoing consider- French Government, and not disputed by ations the fact that the applicants have not the Commission, show that the contrary is disputed the substantial uniformity of the the case. 81 distribution methods adopted in the different States, which is such as to preclude the exist- ence of barriers to entry similar to those existing in Germany, the Commission's analysis can only be regarded as essentially correct and sufficiently reasoned.

(2) Possibility of using the regulation as the basis for action in relation to collective domi- nant positions The Commission could, and perhaps should, have justified its assessments more fully; on closer examination they prove not to be without a few approximations. However, it does not seem to me that some degree of homogeneity in the conditions of compe- 78. It will be recalled that the conditions to tition on the market comprising all the which authorisation of the concentration in Member States apart from Germany can question was made subject were specifically plausibly be denied or, more particularly, intended, on the basis of the analysis made that the French Government's objections can by the Commission, to remove any basis for lend weight to the opposite conclusion. It creating a situation of oligopolistic domi- should be borne in mind, moreover, that, as nance by K+S and SCPA on the relevant the Court has held, 'homogeneity' of condi- market. tions of competition for the purposes of this case does not mean perfect equality of condi- tions in the different parts of the territory regarded as the relevant market. Rather, what is required is that the conditions of compe- tition should be sufficiently homogeneous to appear non-discriminatory, 82 that is, such as Both the French Government and SCPA and EMC, which in any event dispute the exist- ence of a collective dominant position in the present case, assert that the regulation does 82 — Judgment in the United Brands v Commission case, cited above in footnote 77, paragraphs 44, 52 and 53. not even apply to circumstances of this type.

— finally, further confirmation is to be found in the procedural guarantees accorded to third parties by the regu- lation; in particular, the undertakings — A decision authorising a concentration is forming part of a collective dominant binding only and exclusively on the noti- position, but not of the concentration, fying undertakings. Since the act closing would have insufficient means of protec- proceedings initiated pursuant to the tion. regulation cannot cause any harm to

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third parties, even where they form part dominant position by 'one or more under- of the collective dominant position in takings' is incompatible with the common question, it is inappropriate to speak of a market. lack or inadequacy of guarantees for third parties. In any case, the detailed procedural rules for implementing the regulation afford ample protection for the rights and interests of third parties.

Clearly, Article 2(3), which, as the Commis- sion maintains, does indeed link the domi- nant position to the concentration and not to the undertakings concerned, refers to the — The possibility of prohibiting a concen- dominant position of the concentration and tration which would strengthen the oli- not to the dominant position involving gopolistic framework of the market arises undertakings which are not parties to the from the economic theory which holds concentration. In those circumstances, it that competition is at all events affected, would be too easy to evoke the well-known provided that certain conditions are ful- adage ubi lex voluit, dixit, ubi noluit tacuit. filled, within an oligopolistic market. The use of the regulation as a basis for action in relation to a collective dominant pos- ition is therefore vital in order to ensure effective competition.

This brings me to the other arguments relied It is hardly necessary to add that it is difficult on by the applicants and relating to the legal to see any other possible basis for preventive bases, to the legislature's intention (as it action against collective dominant positions appears from the preparatory work and is created or strengthened as a result of concen- reflected in the wording of the regulation) trations, unless the view were taken, albeit and to the procedural guarantees, as well as unreasonably, that the Treaty itself precludes to the economic considerations put forward such a possibility. by the Commission, which are closely linked to the objectives of the rules on competition.

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In their view, the choice of that percentage would be 86. Furthermore, the preparatory work inappropriate if the regulation also applied to would seem rather to confirm the legisla- collective dominant positions. 85 ture's intention not to apply the regulation to collective dominant positions. Although it is well known that the Commission's inten- tion, as indicated during the process of draft- ing the act and expressed on several occa- sions, was to apply the rules in question to oligopolies, 89 it is also true, as the Commis- sion has pointed out, that the present word- ing of Article 2(3) is the result of a difficult However, it is quite true that the presump- compromise reached specifically on the tion of incompatibility of a dominant pos- question of collective dominant positions. 90 ition on the basis of a total market share in excess of 2 5 % , as contained in the recital, is not repeated in the operative part of the regulation. 86 It is also true that, in the deci- sions adopted pursuant to the regulation, market shares are only the starting point for appraising the effects of the concentration since many other factors must be taken into It is worth noting at this juncture that a consideration. 87 However, if any significance comparison between the final amended is to be attached to recital 15, it would not be unreasonable to regard it as evidence of the legislature's intention not to include cases of collective dominance within the scope of the 88 — In this connection, for example, the German Law against restrictions on competition, which is actually based on a structural approach linked to a system of presumptions by reference to the market shares held by undertakings, pro- vides for a threshold of at least 50%.

. .'. existence of a dominant position where equal to or greater than 80%, is not necessarily a decisive factor, but must be 89 — It is sufficient to refer, for this purpose, to the Sixteenth taken into consideration together with other factors: to this Report on Competition Policy, 1986, in particular section effect, see, among others, the judgment in Case 247/86 333. Alsatel v Novasam [1988] ECR 5987, paragraph 19. 90 — See p. 36 of the rejoinder.

88. In conclusion, even the preparatory work would seem to confirm that the legis- lature's intention, as reflected in the wording of the regulation, is that the latter should not 87. However, regrettable though it may be apply to collective dominant positions. That that the Council took its decision in accord- finding is not, however, decisive for the pur- ance with the wishes of some of its members poses of this case. The fact remains that the and against those of others, no-one except preparatory work can, at most, provide guid- the legislature itself can do anything about it. ance but is not conclusive since, in order to I am not swayed by the Commission's argu- establish the correct interpretation of a pro- ment that, as a result, in the absence of a vision, it is necessary to refer to its wording provision expressly precluding the applica- and purpose. bility of the regulation to collective domi- nant positions, that question has been left open. In any event, I do not believe that the Commission can take the view, as it claims, that it has the power to resolve issues delib- erately left unresolved by the Member States. — Procedural guarantees

Let me say at once that the participation of third parties in the proceedings, as provided for by the regulation, does not seem capable, I have already drawn attention, in examining in this case, of ensuring appropriate protec- the admissibility of the applicant undertak- tion for the right to a fair hearing. First, the ings' action, to the lack of justification for undertakings which are presumed to be the Commission's view that the act closing members of the oligopoly but are not parties proceedings initiated pursuant to the regu- to the concentration are not given any spe- lation is binding only on the parties to the cific information. Secondly, under Article concentration, with the result that it could 18(4), third parties are heard only in so far under no circumstances cause damage to as the Commission or the competent third parties. Without citing other examples, authorities of the Member States deem it it is precisely this case which, in an necessary also to hear other natural or legal extremely significant way, indicates the con- persons (who must obviously be taken to trary. 93 include the undertakings not parties to the concentration) or where, on their initiative, the latter show a sufficient interest. Conse- quently, as Regulation N o 2367/90 M (appli-

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cable rationetemporis to this case) confirms, involved, are treated as 'third persons', with those proceedings are non-mandatory and the negative consequences which inevitably informal, given that they are conducted flow from that as regards the right to a fair without the participation of the representa- hearing. tives of the Member States' authorities and without the formal requirements and guaran- tees laid down for the hearing of the parties. In short, they are proceedings which are capable of protecting the rights of those who really are 'third persons' (in every sense of the term), but not the rights of those who are 'parties' to the dominant position. 92. However, it is hardly necessary to point out that respect for the right to a fair hearing in administrative proceedings is an essential principle of the Community legal order. As the Court has held on numerous occasions, 'observance of the right to be heard is, in all 91. The analysis carried out by the French proceedings initiated against a person which Government, which compared the proce- are liable to culminate in a measure adversely dural arrangements laid down by Regulation affecting that person, a fundamental principle N o 2367/90 pursuant to Article 18(4) of the of Community law 'which must be guaran- regulation with the mechanism envisaged for teed even in the absence of any rules govern- proceedings initiated under Articles 85 and ing the procedure in question'. 96 86, merely confirms the inadequacy of the guarantees provided for the right to a fair hearing of undertakings which are members of an oligopoly but are not involved in the concentration. 95

'6 — Judgment in the Belgium v Commission case, cited in foot- note 56, paragraph 27. This means, as the Court has pointed out, that 'the person against whom an administrative pro- 95 — As the French Government points out (pp. 20 to 23 of the cedure has been initiated must have been afforded the application), proceedings under Article 86 are, in accord- opportunity, during that procedure, to make known his ance with Regulations N o 17 (cited in footnote 51) and N o views on the truth and relevance of the facts and circum- 99/63 (cited in the previous footnote), always inter partes stances alleged and on the documents used by the Commis- with the undertakings deemed to be in a dominant position, sion to support its claim that there has been an infringe- which are, from the very outset, informed of the proceed- ment of Community law'. See to the same effect the earner ings initiated against them and given the opportunity to judgment in Case 85/76 Hoffmann-La Roche v Commission defend themselves. [1979] ECR 461, paragraphs 9 and 11.

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persons, as well as parties, remain fully mission) in any event entitled, was certainly entitled to receive the necessary protection. not ensured. 97

— Economic considerations and objectives of the regulation

93. That is certainly an attractive argument, but one with which I am nevertheless unable to agree. While it is true that the right to a fair hearing must in any event be observed, quite apart from individual express provi- sions to that effect in relation to any circum- stances likely to arise, it is nevertheless true 94. I now turn to the economic arguments that it would be paradoxical to allow the put forward by the Commission, which are Commission to take refuge behind such a closely linked to the objective of ensuring screen when it has made no provision, effective competition. despite the adoption of specific legislation on the subject, of which Regulation N o 2367/90 is clearly an example, for the necessary guar- antees in favour of those who may be injured by the application of the rules in question.

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tive dominant positions is based, in the final profit margins, and, on the other, that con- analysis, on the need to control oligopolies centrations can foster collusion between in order to safeguard competition. 99 competitors and the adoption of parallel, even if not concerted, conduct.

It is prices by reducing production and increasing necessary to bear in mind that, although Article 85 prohibits any form of collusion which distorts competition, it does not deprive economic operators of the right to 99 — It is precisely from this perspective that certain writers have by no means ruled out the possibility of applying the adapt themselves intelligently to the existing regulation to cases of oligopolistic dominance where and anticipated conduct of their competi- effective competition is significantly impeded by several undertakings which, together, are in a position to act tors'. 102 Moreover, reliance on Article 86 is independently of their competitors and customers.

et seq. 100 — Based on the pioneering study on the subject by Cournot: Recherches sur Us principes mathématiques de la théorie des richesses, Paris 1848, the economic theory of the oli- gopoly has given rise to a large number of remarkable contributions: for a summary see Pigassou: Les oligopoles et le droit, Paris, 1983, Ch. I I I ,pp. 151 to 260. 101 — Areeda and Turner Antitrust Law, vol. III, Boston/ 96. However, the lacunae to which I have Toronto, 1978, p. 359: 'oligopoly with monopoly-like just drawn attention do not seem to me suf-

See, in that regard, Scherer and Ross: Industrial Market Structure and Economic Preference, 102 — Judgment in the 'Woodpulp' case, cited above in footnote Boston, 1990. 52, paragraph 71.

It is quite true that that provision is referred Moreover, the preceding observation high- to in general terms in recital 1 in the pre- lights very significantly the inconsistency of amble to the regulation and that, having the the position adopted by the Commission in objective of protecting effective competition, this case: as we have seen, it relies on the it can only apply to any kind of anticompeti- inappropriate nature of the legislative instru- tive situation, whether attributable to one or ments furnished by Articles 85 and 86 for to more than one undertaking. It is equally taking action against oligopolies, a fact true, however, and should be borne in mind, which, in its view, justifies a broad interpre- that that provision also states that it is to be tation of Article 2(3) of the regulation. How- implemented only 'as provided for in this ever, on closer examination, the action taken Treaty and in accordance with the timetable by the Commission against the alleged set out therein'. K+S/SCPA/EMC duopoly consisted of an 'order' to the first-named undertaking to sever its contractual links with the other two. In those circumstances, that is, faced with obvious signs of 'concertation', why not use Article 85? 104

bility of relying on the concept of collective (3) Mistaken reliance in this case on the con- dominant position in the context of the pro- cept of collective dominant position visions of the regulation on concentrations. In the final analysis, I consider that the regu- lation is not applicable to oligopolistic domi- nant positions and that this interpretation of the relevant provisions is the most consis- 99. By this plea, both the French Govern- tent, not only with their wording, but also ment and the applicant companies maintain with the rationale on which they are based that a number of errors of law and of fact and, more generally, with the overall scheme were committed in the appraisal of the con- of the system. While finding some justifica- centration on the Community market apart tion in economic terms for the opposite from Germany. solution, it would have a number of negative consequences; and above all, in view of the absence of similar reference parameters in the form of legislation and/or regulations to those existing in other antitrust systems, it would ultimately foster uncertainty. That In general, the French Government com- would, moreover, be contrary to the require- plains that the Commission failed, in assess- ment, emphasised on several occasions, that ing whether a collective dominant position Community legislation must be unequivocal existed, to follow either the criteria devel- and its application must be predictable for oped in the case-law on Article 86, or those those who are subject to it. 106 established in its previous decisions, which, moreover, are more flexible than those sug- gested by the Community judicature. In sup- port of its view, the French Government also makes a series of specific criticisms concern- ing all the factors taken into account in the decision, at the same time emphasising the importance of the criteria which the Com- mission omitted to take into consideration. Those arguments, it maintains, expose the errors by which the decision is vitiated as Of course, as I noted earlier, the Commis- regards the existence of a collective dominant sion's concerns relating to the negative con- position and, in any event, the inadequate sequences which the non-application of the reasons on 'which it is based. regulation to oligopolies could have as regards the penalisation of anticompetitive conduct cannot and must not be overlooked. Moreover, it would be more appropriate, in my opinion, to translate such concerns into action in their natural context and to make The applicant companies, which also dispute them the subject of a proposal for an amend- some of the factors taken into consideration ment aimed at completing the relevant provi- in the decision, relying on arguments similar sions. to those of the French Government, main- tain in particular that the Commission has failed to prove the existence of a causal link 106 — Judgment in Case 70/83 Kloppenburg [1984] ECR 1075, between the concentration and the alleged paragraph 11. creation of a collective dominant position.

In addition, it asserts that the present case is With regard to the criteria established in its distinguished by certain specific features decision-making practice, the Commission from other cases in which it has taken action. points out, on the one hand, that the deci- First, prior to the concentration there was sions on which the French Government already no effective competition between the bases its arguments are all, with the excep- largest two suppliers of potash products tion of the Nestlé/Perrier decision, 107 later because of the absence of K+S from the than the contested decision and, on the other, French market and because of the links exist- that it is the characteristics of each specific ing between it and SCPA. Second, as a result case which determine whether greater weight of the enhancement of their competitive or even decisive significance should be potential following from the merger with attached to certain criteria rather than to MdK, K+S and SCPA would find themselves others. It was therefore by reference to the in a dominant position in relation to other particular features of this case that it consid- potash suppliers. ered the abovementioned criteria to be of paramount importance.

101. More generally, the Commission main- tains, in replying to the French Govern- ment's objections, that the criteria developed 102. Let me begin by pointing out that the in connection with Article 86, while not concept of collective dominant position, as absent from the decision, are not decisive in developed in connection with Article 86 of regard to the control of concentrations. In the Treaty, which is to the effect that the this context, unlike that of Article 86 where hegemony from which abuse may result may it is defined primarily on the basis of market shares, the existence of a collective dominant position can only be the result of an analysis 107 — Decision 92/553, cited above in footnote 66.

103. Clearly, a new concept of collective With regard to the criteria developed in the dominance, different from that developed in decision-making practice on the subject, it is the case-law relating to Article 86, while pos- sibly justified by the specific nature of the control of concentrations, is liable to render 108 — Despite this, the Court initially seemed reluctant to recog- application of the concept in question to the nise the concept of collective dominance, partly because of system of rules governing concentrations the difficulty of identifying, where not specified in the leg- islation, the constituent elements of a firm definition of even more problematical and unpredictable. that concept. Thus, on one occasion, it seemed to restrict the application of Article 86 to cases of individual domi- Moreover, although Article 2(1) of the regu- nant positions. In the judgment in Hoffmann-La Roche lation, always assuming that the criteria (cited in footnote 96), the Court stated that 'a dominant position must also be distinguished from parallel courses listed therein for appraising concentrations of conduct which are not peculiar to oligopolies in that in an oligopoly the courses of conduct interact, while in the in respect of their compatibility with the case or an undertaking occupying a dominant position the common market are also applicable to this conduct of the undertaking which derives profits from that position is to a great extent determined unilaterally'. case, does not specify any order in which the See in this respect Korah: 'Concept of a dominant position within the meaning of Artide 86, in Common Market relevant factors are to be taken into account, Law Review, 1980, p. 395, in particular p. 398. the fact remains that the Commission cannot 109 — Judgment in the 'Flat Glass' case, cited above in footnote disregard the criteria listed and that the 38, paragraph 358. To the same effect, see the judgment in the Hoffmann-La Roche case, cited above in footnote 96, paragraphs 38 and 48. 110 — Judgment in Case C-393/92 [1994] ECR I-1477, paragraph 42. The principles set forth in that judgment were subse- quently confirmed by the Court in Joined Cases C-140/94 111 — For this view, sec Venit, cited in footnote 99, p. 527 et seq., to C-142/94 DIP and Others v Comune di Bassano del in particular pp. 530 to 531. This approach is also sup- Grappa and Comune di Chioggia [1995] ECR 1-3257, ported by the idea that the concept of 'impeded compe- paragraphs 24 to 26. See, in this respect, the Opinion in tition', as contained in Article 2(3) of tne regulation, that case of Advocate General Fennelly who pointed out, would allow the Commission to develop a new concept of among other things, that the concept of collective domi- 'dominance' based on a probability analysis with reference nance cannot be used as a substitute for the lack of any to the characteristics of the market. See Brittan: 'The Law direct evidence of the existence, and still less of any abuse, and Policy of Merger Control in the EEC, in European of a dominant position (point 64). Law Review, 1990, p. 354.

In those circumstances, moreover, the Com- mission's practice, while unquestionably In my view, it is appropriate, immediately complex and not free from contradictions, after considering the preliminary aspect — may nevertheless prove to be a useful instru- the degree of market concentration — to ment for identifying possible inconsistencies deal with the issue of the structural links and contradictions in the Commission's which, as the Commission itself has admit- decision and in its defence and thus, by the ted, were the main factor which it relied same token, show conclusively whether or upon in order to find the existence of a joint not the criteria used in this case were correct. dominant position held by K+S/MdK and If the issue is viewed in those terms, it seems SCPA. I shall then examine the other criteria to me that the Commission is not justified in used in the decision, as well as the relevance claiming that there is no need to take of criteria employed in other decisions but account of the criteria and appraisals con- not used at all in this case. tained in decisions subsequent to the one at issue in this case. The Commission's prac- tice, whether in earlier decisions — such as in the Nestlé/Perrier case often cited by the applicants 112 — or in later ones, is certainly not a parameter for determining the lawful- ness of the contested decision, but is at least — Degree of market concentration a guide to the method hitherto used by the Commission when applying the regulation to collective dominant positions.

The French Government and the applicant tion resulting from the acquisition is not par- undertakings dispute that appraisal, asserting ticularly important, being limited in terms of that the increase is not substantial since the both the number of competitors operating market shares held by K+S and SCPA rose, on the market ('which fell from ten to nine) as a result of the concentration, from 54% to and the increase in the total market share 6 1 % . The French Government also contends held by K+S and SCPA on the same market. that the Commission's analysis is arbitrary In those circumstances, the importance inasmuch as, on the one hand, it fails to take attached in the decision to the criterion in account of the fact that, following the con- question appears excessive. 113 In any event, centration, the number of potash suppliers the analysis made in this respect could, at fell from ten to nine and, on the other, it did most, show that the degree of market con- not take properly into consideration the role centration is not such as to preclude auto- of two important suppliers, CPL and matically the existence of a collective domi- Coposa. Finally, the Commission's analysis nant position. is not reliable, in its view, because it calcu- lates the market shares in two different ways, depending on the result to be achieved: on the basis of the first method, it takes into consideration only the sales volumes of the individual operators in the Community; on the basis of the second method, the sales made on the French market are instead included in SPCA's sales volume and accord- — Structural links between K+S and SCPA ingly deducted from K+S's sales volume.

108. According to the French Government, 109. With regard to the first of those argu- the Commission made a series of errors of ments, I would observe that the links assessment in its examination of the struc- between the companies concern, directly or tural links between K+S and SCPA, links indirectly, only the French market; it is which are not in fact capable of establishing therefore only in that market that they could a causal connection between the concentra- be regarded as likely to have a bearing on the tion and the creation of a K+S/SCPA competitive relationship between K+S and duopoly since they are not sufficient to SCPA. This is true, in the first place, as prove that the concentration in question cre- regards the severance of the distribution ated the conditions for collusive conduct by links between K+S and SCPA, which operate the two undertakings. In particular, (1) exclusively in the context of the French mar- although the Commission identified the ket. But it is also true, in the second place, as Community apart from Germany as consti- regards the interest in the Kali-Export cartel. tuting the relevant market, the links in ques- According to the Commission, that interest, tion affect only France; (2) the decision while not concerning sales on the Commu- should have included the Spanish undertak- nity market but only exports to non- ing Coposa in the oligopoly; 115 (3) the weak Community countries, is such as to interfere presence of K+S on the French market is not with sales in France. That assertion cannot sufficient to show the existence of dominance be verified, for lack of evidence; 1 16however, by that undertaking together with SCPA; if it were proven, it would, at the very most, and (4) it has not been proven that the acqui- demonstrate the absence of effective compe- sition of MdK by K+S could lead to the cre- tition between K+S and SCPA on the French ation of a duopolistic dominant position held market, that is to say, on a market which, in by K+S and SCPA. the opinion of the Commission itself, does not constitute the relevant market. It follows that, if the Commission's argument were well founded, even the interest in the export cartel would, in the Community context, affect only the French market which, I repeat, is not a relevant market for the pur- poses of the decision.

110. With regard, on the other hand, to the Spanish company Coposa, the French Gov- ernment asserts that the Commission wrongly excluded it from the alleged oli- gopoly consisting of K+S and SCPA. In any case, it maintains, the Commission cannot 111. N o r does it appear to me to be decisive, argue, in order to demonstrate that the iden- for the purpose of establishing the absence of tification of the Community apart from Ger- competition between K+S and SCPA, and many as the geographical market was cor- therefore the existence of a collective domi- rect, that Coposa's exports to France are nant position held by them, that, as the significant and then state, in order to demon- French Government maintains in its third strate the existence of a collective dominant argument, K+S is not present to any signifi- position, that Coposa is not present to any cant extent in France and that it uses SCPA's significant extent in France and that in any distribution organisation for a proportion of event its sales are channelled. its sales in that country. The first fact could have several explanations, such as, for example, the structure of the French market, consumer preferences or the German compa- ny's commercial strategy. Moreover, if more importance were to be attached to this aspect, it would be necessary to ask why Let me say at once that I am unconvinced by similar situations, that is, absence from the argument put forward by the Commis- important national markets, arise for all the sion in its defence that the links between major operators in the sector, and, in par- K+S and SCPA are such as to characterise ticular, why, in the contested decision, with their relations towards all the other opera- regard to the German market, the Commis- tors, and that the possible inclusion of Coposa in the oligopoly is not, in any case, a determining factor for the purposes of the decision since it would, by definition, only 117 — In this connection, I would point out, for example, that in a checklist of factors relevant to the control of concentra- result in a strengthening of the collective tions, adopted in 1990 by the Federal Cartel Office in Ger- dominant position. It is only too obvious many (published in English in Fordham Corporate Law Institute, 1991, p. 161 et seq.), the absence of competition that the exact identification of the members between the members of an oligopoly and the 'outside' competitors is treated as an essential factor for characteris- of an oligopoly is a matter of priority in ing the oligopoly as dominant.

112. That brings me to the French Govern- 113. I observe, first of all, that the Commis- ment's final argument relating to the implica- sion's aforementioned statements do not tions of the takeover of MdK by K+S: in answer the applicants' objections. Both the particular, it maintains that the Commission French Government and the undertakings has by no means proved that that acquisition maintain that there is an absence of any gave rise to a duopolistic dominant position causal link between the creation of oligopo- detrimental to competition. The applicant listic dominance and the concentration, an undertakings have also raised a similar argu- absence which stems from the fact that, ment, particularly emphasising the contradic- according to the analysis made by the Com- tion inherent in the position adopted by the mission in this regard, MdK was in any case Commission which, on the one hand, bound to withdraw from the market. In applied the failing company theory on the short, how could the takeover of MdK result basis that MdK would have withdrawn from in the creation of a collective dominant pos- the market in any case, since its plight was ition when — with or without a concentra- now irreversible, and, on the other, took the tion — MdK's market share would in any view that the takeover of MdK by K+S, and case have been taken over, following its the resulting concentration, were likely to withdrawal from the market, by the other create a duopolistic dominant position which operators in the sector? might impede competition.

O n this point, the Commission's rejoinder is Even assuming that the Commission's analy- that the creation of a joint dominant position sis, according to which it is unreasonable to

114. According to the French Government, the Commission failed to analyse, as it had in 115. In the present case, on the other hand, the Nestlé/Perrier decision, the characteris- the analysis in the decision seems, to say the tics of the competitor eliminated from the least, to contain some gaps. While not seek- market as a result of the concentration, ing to attach excessive importance to the namely, in this case, MdK. In the French share of the Community market held by Government's opinion, examination of those MdK (7%), 1 2 0 it is impossible not to have characteristics would necessarily have led to some doubts as to the actual effect of MdK's the conclusion that MdK's elimination from withdrawal on competition on the market. the market could not have any influence on Moreover, the decision makes no reference the concentration since, moreover, according to the 'impressive production capacities' to the Commission's analysis, it was an mentioned by the Commission in its undertaking which was in any case bound, albeit in the medium term, to withdraw from the market. 119 — Decision 92/553, cited above in footnote 66, paragraph 120. 120 — This share, moreover, is the same as that held by SIV, whose acquisition by Pilkington and Techint was autho- rised, without the imposition of any conditions, by 118 — See paragraph 79. Decision 94/359, cited above in footnote 87.

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defence 121 and which, moreover, appear dif- disputes the Commission's view that the ficult to reconcile with the characterisation channelling through SCPA of imports from of the undertaking as an economic entity countries outside the Community shows that that cannot be expected to survive. 122 the competitive pressure exerted by those Finally, there is nothing in the decision to countries on the duopoly is almost non- suggest that MdK plays an essential role, existent. even beyond its actual weight, in maintaining competition.

117. In the first place, the method used by the Commission, which, in order to show the absence of competitive pressure on the alleged oligopoly, puts forward as evidence 116. The French Government claims that the the channelling of imports from non- decision contains a contradictory and inad- Community countries into France through equate analysis of the position of the com- SCPA, 123 cannot be accepted. Above all, petitors operating on the relevant market. In France is not, for the purposes of this case, particular, it draws attention to the inconsis- an independent market. Consequently, the tency of the Commission's attitude in mini- analysis of the factors involved in the mising the market position of CPL and appraisal of the concentration cannot take Coposa while specifically laying emphasis, account solely of the French market, but for the purpose of identifying the relevant must rather, and in any event, take into con- geographical market, on exports from Spain sideration the territory defined by the and the United Kingdom to the other Mem- decision as the relevant market, namely, the ber States. The French Government also market comprising the Community as a whole apart from Germany.

121 — Sec p. 32 of the defence. 122 — Paragraph 76 of the decision. 123 — Sec pp. 33 and 34 of the defence and p. 54 of the rejoinder.

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118. In its criticism of the criteria applied in this case in order to establish the existence of oligopolistic dominance, the French Govern- ment also disputes both the excessive impor- tance attached by the Commission to the Furthermore, the judicial precedents cited by total market share held by K+S and SCPA the Commission are not relevant, inasmuch and the fact that it did not take account of as they refer to individual dominant posi- the imbalance between the two undertakings, tions, 127 which justifies the presumptive sig- an imbalance which, in previous decisions, nificance attached to a share of between 45% had instead constituted a significant reason and 80% of the market. Moreover, in those for denying the existence of an oligopolistic dominant position.

126 — See, for example. Decision 94/359, cited above in footnote 87. 127 — They are the judgments in the Hoffmann-La Roche case, 124 — See p. 42 of the rejoinder. cited above in footnote 96; Case 322/81 Michelin v Com- 125 — See the figures in the table on p. 43 of the French Govern- mission [1983] ECR 3461; and Case C-62/86 AKZO v ment's reply, which the Commission his not disputed. Commission [1991] ECR I-3359.

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I note first that the absence of symmetry between the undertakings concerned, which 121. All the considerations expounded so far is undisputed in this case, 128 has been con- bring to light a series of gaps and contradic- sidered decisive by the Commission in other tions in the appraisal and in the application cases in order to exclude the existence of a of the criteria developed by the Commission, duopoly, 129 whether from the point of view leading to the conclusion that the reasoning of the market shares taken as a whole and in behind the decision is not consistent. The relation to the markets of individual coun- Commission has failed to prove to a suffi- tries, or from that of 'economic power', or, cient standard, even on the basis of its own finally, from that of production capacity. It practice, the existence on the relevant market should be borne in mind in this context that of a collective dominant position for in the Nestlé/Perrier decision the Commis- K+S/MdK and SCPA which would be cre- sion made clear the implications of similarity ated as a result of the proposed concentra- in size and nature of the undertakings con- tion. cerned and the reasons for taking it into account in its appraisal of the effects of the concentration, 130 pointing out in particular that similarity in size and nature of the

That leads me to deal only briefly with the 128 — Sec the Commission's defence, pp. 37 to 58. other arguments put forward by the French 129 — For example, in the Piikington-Tcchint/SIV decision, cited above in footnote 87, paragraph 55; conversely, in the Government with regard to the other factors Mannesmann/Vallourec/Uva decision (cited above in foot- note 58), the similarity in size and nature of the undertak- taken into consideration in the decision. ings involved in the concentration, which held shares of 36 More specifically, I shall focus on the man- and 33% respectively, was regarded by the Commission as an incentive to adopt parallel conduct. ner in which the aspects concerning the 130 — Decision cited above in footnote 66, paragraph 123. economic power of the customers, the barri-

123. There is no doubt that in this case no account was taken of the influence and char- 131 — In that decision, cited in footnote 66, the power of the customers was considered, after a detailed analysis which acteristics of the various types of customer is lacking in this case, to be insufficient to constrain sig- nificantly the power of the suppliers (sec, in particular, for the products in question. That makes it paragraphs 77 to 89).

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The customers' power is not an argument relied on by the applicants at the administra- The Commission acknowledges the absence tive stage and is not included in the decision, of barriers to entry within the Community. but is an important factor to be taken into However, it adds that in this case there are account in determining whether or not an two types of barriers to entry for undertak- oligopolistic dominant position exists. As ings from countries outside the Community, such, it must necessarily be examined, failing namely, anti-dumping measures for imports which the decision may contain a lacuna from the CIS, and SCPA's statutory such as to affect its substance. Besides, pre- monopoly whereby all imports into France cisely in the judgment which I have just from non-Community countries are chan- cited, the Court found, by reference to nelled through that undertaking. Article 86, that the analysis of those aspects of the market which the applicants alleged had not been taken into consideration 'was absolutely essential for an assessment of the question of dominance', 133 thus confirming the necessity for the Commission to base its findings on investigations which are as full and exhaustive as possible. 126. Let me say at once that I very much doubt whether the aforementioned factors are capable of constituting barriers to entry. Anti-dumping duties are certainly not barri- 132 — Judgment in the 'Flat Class' case, cited above in footnote 38, paragraph 36. ers to entry since, as the Commission itself 133 — Ibid., paragraph 363. has admitted, they are intended to restore

— Characteristics of the market and the product — Existence of parallel conduct

127. Finally, with regard to the characteris- tics of the market and the product, usually regarded as significant factors to be taken 128. As the French Government has rightly into account in the analysis, I shall merely asserted, the Commission's assessments in point out, with the French Government, that this regard are by no means convincing.

136 — See, in this connection, the point I have already made with 134 — See p. 61 of the rejoinder. regard to the identification of the relevant geographical 135 — See p. 61 of the rejoinder. market.

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The factors in question were, even prima facie, considerably more significant and con- clusive as evidence than those taken into account in this case. 129. Those observations are also supported by the fact that the factors taken into account for these purposes in previous deci- sions were of a completely different nature. In the Nesdé/Perrier decision, for example, 130. In the light of all the considerations set after drawing attention to the much-reduced out above, I am of the opinion that the level of price competition, the Commission Commission has not consistently applied, in this case, the criteria which it has developed in order to ascertain the existence of a collec- 137 — OJ 1973 L 217, p. 3. See paragraph 57 of the decision. tive dominant position. That is not all; even 138 — Even without taking account systematically of the prin- ciple laid down in the judgment in the 'Fiat Glass' case, in which it is made clear that 'for the purposes of establishing an infringement of Article 86 of the Treaty, it is not suf- ficient ... to "recycle" the facts constituting an infringe- 139 — See paragraphs 59, 121 and 122 of the decision. ment of Article 85, deducing from them the finding that the parties to an agreement or to an unlawful practice 140 — See paragraph 127 of the decision. jointly hold a substantial share of the market, that by vir- 141 — Decision 94/359, cited above in footnote 87, paragraph 32. tue of that fact alone they hold a collective dominant pos- It is worth adding here that the factor in question was not ition, and that their unlawful behaviour constitutes an considered such as to lead to the imposition of conditions, abuse of that collective dominant position' (judgment cited still less to the refusal of authorisation of the concentra- above in footnote 38, paragraph 360). tion.

on the assumption that, as already suggested, clearly presupposes, on the one hand, that the concept of collective dominant position the collective dominant position is relevant can be adapted to the specific features of the for purposes of applying the regulation and, control of concentrations, as well as to the on the other, that the Commission has in fact characteristics of this particular case, it is shown that a collective dominant position none the less necessary for the Commission exists in this case. to adduce, in the context of the control of concentrations, sufficient evidence to estab- lish the existence of a causal link between the concentration and the collective dominant position. 142 On the basis of the conclusions which I have reached so far, in particular with regard to the use in this case of the concept of collec- tive dominant position, it would not seem necessary to examine the plea in question. There is no such evidence in this case. However, for the sake of completeness, I Indeed, there is substantial evidence for consider it appropriate to examine the argu- rejecting the Commission's view. In conclu- ments put forward by the applicants in this sion, I am of the opinion that the Commis- context as well. sion has by no means shown that the con- centration examined creates a position of joint dominance by K+S/MdK and SCPA which could significantly impede compe- tition. 132. The French Government maintains that, even assuming it to be applicable to col- lective dominant positions, the regulation does not allow a declaration of compatibility to be made subject to conditions and obliga- tions which, as in this case, directly affect the D — Imposition of conditions and obligations position of third parties who are not affecting third parties not involved in the involved in the concentration. To that end, it concentration (Cases C-68/94 and C-30/95) asserts that Article 8(2) of the regulation authorises the Commission only to accept, from the notifying undertakings, commit- ments concerning the concentration in the strict sense and not commitments which sub- stantially affect third parties as well. 131. Assessment of the plea alleging the unlawful imposition of obligations on per- sons who are not parties to the concentration

134. That solution does not seem to me to be capable of serious contradiction by the (1) Possibility of applying Article 8(2) to Commission's arguments that: (a) the undertakings which are not parties to the decision imposed conditions and obligations concentration only on the undertakings which were parties to the concentration, and those conditions and obligations were intended to ensure compliance with the commitments entered into by the parties which notified the plan; 133. Let me say at the outset that the French and (b) the prohibition of a concentration on Government's view must be endorsed. the basis of the fact that the conditions in Article 8(2) of the regulation authorises the question might affect the interests of third Commission to make the declaration of parties is contrary to the objectives pursued compatibility subject only to 'conditions and by the regulation and is not compatible with obligations intended to ensure that the the principle of proportionality. undertakings concerned comply with the commitments they have entered into vis- à-vis the Commission with a view to modi- fying the original concentration plan'. That wording indicates that it does not fall within the Commission's powers to take action With regard to the latter aspect, I refer to with respect to operators who are not what I stated earlier when examining the involved in the concentration, even if it con- applicability of the regulation to collective siders that they form an oligopoly together dominant positions, bearing in mind econ- with the undertakings which notified the omic considerations and the objectives of plan. that regulation. 143 As far as the former aspect is concerned, it is sufficient to observe that although, as the Commission has main- tained, it is in the very nature of the control of concentrations that the commitments entered into by the notifying parties may, In other words, Article 8(2) clearly and however indirectly, affect third parties, in expressly limits the Commission's power to this case the conditions at issue certainly do the right to obtain from the undertakings not merely affect third parties, but concern concerned commitments entered into with a them objectively and subjectively, at least to view 'to modifying the original concentra- tion plan'; it therefore precludes the adop- tion of any structural changes in the com- petitive context in which the concentration is 143 — Sec points 94 to 98 above.

136. I note as a preliminary point that the (2) Whether the conditions imposed in this effectiveness from the point of view of com- case for the purpose of maintaining effective petition of the conditions laid down appears competition are appropriate doubtful, both on account of the geographi- cal discrepancy, to which attention has already been drawn, between the subject- matter of the conditions and the relevant market, and on account of the lack of evi- dence showing that those conditions are capable of ensuring that the concentration complies with the provisions of the regu- lation. From that angle, it would seem pos- sible to endorse the applicant undertakings's 135. This point has, in particular, been raised view, namely, that, in determining the condi- by the applicant undertakings which claim tions to be imposed pursuant to Article 8(2) that the conditions in question are neither of the regulation the Commission should act necessary nor appropriate for the purpose of on the basis of serious and detailed appraisals maintaining effective competition on the

146 — The scope of those conditions shows, rather, that the 144 — The Commission refers, in particular, to the Decisions of 4 Commission could, if it had seen fit, have acted against the May 1993 in the KNP/BT and VRG case (OJ 1993 L 217, alleged participants in the duopoly (SCPA/EMC and K+S) p. 35); 19 December 1991 in the Courtaulds/SNIA case by relying on other instruments, and in particular on (OJ 1991 C 333, p. 16); and 31 July 1991 in the Varta/ Article 85, as it did, moreover, in a parallel case to this Bosch case (OJ 1991 L 320, p. 26). one, concerning the joint Canadian subsidiary Potacan, 145 — Judgment in Case C-327/91 France v Commission [1994] which is the subject of an investigation under Regulation ECR I-3641, paragraph 36. N o 17 (cited in footnote 51).

— Condition concerning the withdrawal of 138. The arguments put forward by the K+S from the Kali-Export cartel Commission, as I have just outlined them, do not seem to me to be capable of answer- ing the objections raised by the applicant undertakings. The fact remains that the Commission has failed to show that the weak presence of K+S on the French market is attributable to its membership of the Kali- Export export cartel, while that situation, as 137. The applicant undertakings argue first the applicant undertakings have pointed out, of all that the existence of Kali-Export and could well be explained by historical and the shares held by K+S, MdK and SCPA in geographical factors. Moreover, although, as the capital of that undertaking are not likely the Commission has maintained, the prin- to have the slightest effect on the conditions ciples relating to the application of Articles of competition within the Community. In 85 and 86 cannot be applied to concentra- any case, the Commission has by no means tions, the Commission can certainly not base established the anticompetitive effect of its appraisal on mere presumptions and K+S's interest in the Kali-Export cartel. probabilities. It has a duty, in any case, to show that the conditions in question are nec- essary in order to ensure the maintenance of 147 — Sec points 107 to 113 above. effective competition.

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139. In the opinion of the applicant under- takings, the Commission has in no way That factor, more than any other assessment, shown how and why termination of the dis- helps to confirm the validity of the appli- tribution contracts between K+S and SCPA cants' argument concerning the direct impact would be likely to ensure the maintenance of of the decision on their interests, and also competition on the Community market reinforces doubts as to the expediency of the apart from Germany. In their view, those conditions imposed for the purpose of elimi- links actually produce effects only on the nating the duopolistic dominant position French market. allegedly created by the concentration.

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Conclusions

141. The foregoing considerations show, in my opinion, that in this case mistakes were made in the interpretation and application of the provisions of the regulation on concentrations.

It is necessary, at this stage, to establish whether those mistakes warrant annulment of the decision as a whole or only its partial annulment, that is, only of the part containing the conditions concerning the applicant companies. For reasons which I shall explain below, I am of the opinion that the latter solution is the most appropri- ate.

put forward by the parties which I have considered well founded and which the Court sees fit to accept. Whether the Court inclines towards inapplicability, in prin- ciple, of the regulation to collective dominant positions, or whether it considers that a collective dominant position is non-existent or in any event insufficiently proven, the premiss on which the Commission based its imposition of the contested condi- tions on the applicant undertakings would be negated. Those conditions, let us remember, were laid down in order to prevent the concentration from creating a situation of oligopolistic dominance which could impede competition on the Com- munity market.

Those observations would, in my opinion, also apply should the Court come to the conclusion, once the problems connected with the application of the provisions of the regulation to oligopolies have been dealt with and the existence of a collective dominant position has been established, that Article 8(2) of the regulation does not authorise the Commission to impose conditions which directly affect the interests of third parties not involved in the concentration. Similarly, if the conditions in question were considered invalid for the purpose of ensuring the maintenance of effective competition on the relevant market, the most appropriate solution would be, once again, to annul them and thus annul the decision in part.

144. In conclusion, it would be possible, in all the various solutions which I have just outlined, to annul the conditions without emptying the decision as a whole of all substance. 150 It is hardly necessary to point out in that respect that the appraisal of the effects of the concentration on the Community market, of which the disputed conditions form part, is completely and objectively independent of that concerning the German market, a fact which could form the basis of a limitation ratione maté- riae of the operative part of the decision in such a way as to satisfy the requirements laid down in the relevant case-law.

146. In the light of the foregoing observations, I therefore conclude by proposing that the Court should:

— in Case C-68/94:

(a) annul Article 1 of Commission Decision 94/449/EC of 14 December 1993 relating to a proceeding pursuant to Council Regulation (EEC) N o 4064/89 (Case N o IV/M.308 — Kali + Salz/MdK/Treuhand), in so far as it makes the declaration of the concentration's compatibility subject to compliance with the conditions and obligations referred to in paragraph 63;

(b) dismiss the rest of the action;

(c) order the parties, and the German Government which has intervened, to bear their own costs;

— in Case C-30/95:

I -1452