T-322/94

Commission of the European Communities, represented by Richard Lyal, of its Legal Service, acting as Agent, with an address for service in Luxembourg at the office of Georgios Kremlis, of its Legal Service, Wagner Centre, Kirchberg,

defendant,

A P P L I C A T I O N for suspension of the operation of the Commission decision of 8 June 1994 relating to a proceeding under Council Regulation (EEC)

* Language of the case: English.

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2 By separate document lodged at the Registry of the Court of First Instance on the same day, the applicant also made an application under Articles 185 and 186 of the EC Treaty requesting the Court to:

— suspend the operation of the contested decision;

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— order the notifying parties not to carry out the transaction;

— order Shell Petroleum NV, Shell Oil Company (hereinafter 'Shell Oil') and any other company in the Royal Dutch/Shell group (hereinafter 'Shell') to refrain from taking any further action that may prejudice the interests and competi- tiveness of the UCC/Shell Oil joint venture.

7 On 4 January 1994 Shell Petroleum NV, a holding company in the Shell group, and Montedison Nederland N V notified to the Commission under Council Regulation (EEC) N o 4064/89 of 21 December 1989 on the control of concentrations between undertakings (revised version published in OJ 1990 L 257, p. 13) the proposed for- mation of a joint venture to be called 'Sophia' which was to include the interests and assets of the two parties in the polyolefins sector. That operation involved, inter alia, the merger of almost all their businesses relating to the production and sale of polypropylene resin and the transfer to the joint venture of a large part of their intellectual property rights and technological research facilities. The assets of Shell Oil were expressly excluded from the notified agreements.

s By letter of 21 January 1994 U C C replied to the notice published by the Commis- sion on 12 January 1994 inviting interested third parties to submit observations o n the notified operation (OJ 1994 C 8, p. 4). The applicant drew the Commission's attention to the current structure of the polypropylene technology market and to the potential negative impact on competition of an association between Shell and Montedison, which each control one of the two basic sources of technology. U C C also adduced various arguments regarding the effects of the notified operation o n the polypropylene resin market and on the relationship between that market and the upstream technology market.

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9 After having carried out a preliminary examination in accordance with Article 6 of Regulation N o 4064/89, the Commission found that there existed serious doubts as to the compatibility of the notified operation with the common market. Con- sequently, on 8 February 1994 it initiated the proceedings envisaged in Article 6(l)(c) of that regulation.

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Law

1 3 Under Articles 185 and 186 of the Treaty and Article 4 of Council Decision 88/591/ECSC, EEC, Euratom of 24 October 1988 establishing a Court of First Instance of the European Communities (OJ 1988 L 319, p. 1), as amended by Council Decision 93/350/Euratom, ECSC, EEC of 8 June 1993 (OJ 1993 L 144, p. 21), the Court of First Instance may, if it considers that circumstances so require, order that application of the contested act be suspended or prescribe any necessary interim measures.

u Article 104(2) of the Rules of Procedure of the Court of First Instance provides that applications for interim measures referred to in Articles 185 and 186 of the Treaty are to state the circumstances giving rise to urgency and the pleas of fact and of law establishing a prima facie case for the interim measures applied for. Such measures must be of a provisional nature in the sense that they must not prejudge the decision on the substance of the case (see the order of the President of the Court of First Instance of 10 May 1994 in Case T-88/94 R Société Commerciale des Potasses et de l'Azote et Entreprise Minière et Chimique v Commission [1994] ECR 11-263).

Arguments of the parties

accordingly subject to Regulation N o 4064/89, whereas, in the applicant's view, the condition for the application of the regulation laid down in the second subpara- graph of Article 3(2) is not satisfied. I n view of the interests which the parent undertakings retain on the markets where the joint venture would actually or potentially compete, the operation is clearly cooperative in nature, which ought to have led the Commission to consider it under Article 85 of the EC Treaty. The risk of the parties coordinating competitive behaviour between themselves, and also between themselves and their joint venture, is not eliminated by the commitments to keep Shell and Montedison as independent competitors on the technology licensing market. The applicant stresses the possibility of Sophia's subsequent entry into the polypropylene technology market by reason of the development of the new Catalloy technology which is to be transferred to it by Montedison, and also refers to the terms of the Commission's notice regarding concentrative and coop- erative operations under Regulation No 4064/89 (OJ 1990 C 203, p. 10), according to which, where a joint venture is operating in a market downstream of its parent companies, coordination of their sales policy is likely.

i7 Secondly, U C C claims that the Commission has made numerous errors in law and in its assessment of the facts by taking the view that the commitments offered by the parties were such as to remove the risk of a dominant position being created on the polypropylene resin market and, especially, on the polypropylene technology market. The polypropylene resin production businesses combined within Sophia are of an economic importance going far beyond that of the businesses of granting technology licences to third parties. According to U C C , such a large disproportion will be a strong economic incentive for the parent companies to coordinate and restrict their businesses on the technology market, even at the cost of profitability, in order to reinforce the position of the Sophia joint venture on the downstream market.

19 With regard to the risk of serious and irreparable damage, the applicant claims that the Commission's authorization for the creation of a joint enterprise between Shell and Montedison will make it impossible for UCC/Shell Oil to participate effec- tively in the present round of licence negotiations for polypropylene technology, which is taking place during the 1994-1998 period. Certain potential licensees, which consider that the economic interests of Shell will henceforth lie mainly in the resin production market, have already expressed their doubts regarding Shell's willingness to sustain the Unipol technology in the long term. That perception of economic operators has a decisive influence on the choices of technology made by the licensees because, owing to the intensity of competition on the resin produc- tion market and the substantial investment required for the construction of a polypropylene plant, they must make sure that the licensor will pursue a contin- uous and long-term research and development policy which will ensure their access to the latest technological improvements. The damage which would therefore result from the failure to conclude several licensing agreements is not only serious but also irreparable, because even if the Commission's decision were to be annulled by the Court at the end of the main proceedings, the applicant would no longer be in a position to re-establish its competitive position on the polypropylene technology market after the end of the present negotiating round, since most of the 25 new technology licences necessary to increase world-wide polypropylene production capacity have already been granted, principally to the advantage of the Spheripol technology.

23 The Commission considers that the applicant's arguments as to the alleged illegal- ity of the contested decision are inconsistent and are based solely on suppositions as to the future conduct of the parent companies, the Sophia joint venture and third

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parties. Moreover, it contests the applicant's legal interest in bringing proceedings. O n the one hand, if, as the applicant claims, Shell and Montedison were led to restrict their activities on the polypropylene technology market in order to rein- force Sophia's position on the market for the production of polypropylene resin, U C C would then benefit from the general increase in the level of royalties flowing from that practice; on the other, in so far as concerns the effects of the operation on the western European polypropylene resin market, the Commission argues that U C C , which is not a producer, has not explained how changes in the structure of the market could affect it. Furthermore, the Commission points to the contradic- tions which it claims exist in the applicant's arguments to the effect that Shell's objectives are, at the same time, to exercise a dominant position with Montedison on the polypropylene technology market and to prepare its withdrawal from that market in order to concentrate on the resin production market. Finally, the Com- mission points outs that it has powers, if necessary, to initiate proceedings under Article 85 of the Treaty against any concerted practices which might be imple- mented on the technology market.

25 As regards the balance of interests, the Commission contends that the damage alleged by the applicant could not in any event threaten its existence, whereas sus- pension of the operation of the decision, which could call into question the viabil- ity of its proposed joint venture with Shell, would have serious consequences for Montedison, whose financial difficulties are well known. In the Commission's opinion, interim measures which have such a serious effect on the interests of third parties which are not parties to the proceedings and have not been able to express their views cannot be justified in the present case. Furthermore, the public interest requires particular caution to be exercised with respect to suspension of the oper- ation of decisions adopted under Regulation N o 4064/89, having regard to the restrictions which that regulation already imposes on the commercial freedom of undertakings to which it applies.

Findings of the judge hearing the application for interim measures

26 With regard to the claim for interim measures in the form of orders addressed to the parties to the joint venture and to the companies in the Shell group, it must first be stated that that claim seeks to obtain from the judge hearing the application interim measures which do not come within his jurisdiction and that, consequently, that claim must be rejected as inadmissible.

27 Under the system which the E C Treaty establishes for the division of powers, it is for the Commission, if it considers it necessary in the context of the powers of control accorded to it in competition matters in particular by Article 85 of the Treaty in conjunction with Article 3(1) of Regulation N o 17 of the Council of 6 February 1962, First regulation implementing Articles 85 and 86 of the Treaty (OJ, English Special Edition 1959-1962, p. 87) to adopt interim measures addressed to the notifying parties. The role of the Court of First Instance is to carry out a legal review of the Commission's action in those matters and not to take the place of the Commission in the exercise of the powers conferred on it by the abovemen- tioned provisions (see the order of the Court of Justice in Case 792/79 R Camera Care v Commission [1980] E C R 119). The same considerations apply to the request

3i It should be pointed out that, according to the applicant, the alleged weakening of its competitive position during the negotiating round would be merely the conse-

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quence of possible reactions from potential licensees as a result of their perception of Shell's future conduct on the polypropylene technology market. That conduct cannot be regarded as a necessary consequence of the operation of the contested decision and the damage which it might cause to the applicant is entirely hypothet- ical and based on the unpredictable probability of future and uncertain events (see the order of the President of the Court of First Instance of 15 July 1994 in Case T-239/94 R EISA v Commission [1994] ECR 11-0000). Accordingly, it must be found that, prima facie, the causal link between the decision and the damage alleged by the applicant has not been established.

32 It is, moreover, apparent from the documents before the Court and from the replies given by the parties to the Court's questions at the hearing on 14 November 1994 that, while the applicant has claimed that certain potential licensees intimated to it their concerns regarding Shell's long-term support for the Unipol technology, it has still not established that those doubts would be decisive with regard to their ultimate decision to obtain a licence and that UCC/Shell Oil would not be able to offer licensees guarantees or inducements of such a nature as to retain their inter- est. Furthermore, as the Commission has pointed out, it is possible that certain potential customers may express doubts regarding the viability of a technology which is of interest to them in order t o obtain better conditions from licensors, especially during the current negotiating round.

36 In any event, the applicant's interest in having the operation of the contested deci- sion suspended must be weighed against the public interest in implementation of decisions adopted under Regulation N o 4064/89 and the interests of third parties directly affected by suspension of the operation of the decision. It must first of all be observed that that regulation was adopted primarily in order to ensure effec- tiveness of control and legal certainty for the undertakings to which it applies (see the order of the President of the Court of First Instance in Case T-96/92 R CCE de L· Société Générale des Grandes Sources and Others v Commission [1992] E C R 11-2579). Furthermore, in the present circumstances, it must be recognized that sus- pension of the operation of the contested decision could have serious consequences for the parent companies of Sophia, in particular for Montedison.

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37 Accordingly, it must be held that the conditions in law for ordering suspension of the operation of the contested decision are not fulfilled and the application must be dismissed.

On those grounds,

THE PRESIDENT OF THE COURT OF FIRST INSTANCE

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