“First, each member of the dominant oligopoly must have the ability to know how the other members are behaving in order to monitor whether or not they are adopting the common policy. As the Commission specifically acknowledges, it is not enough for each member of the dominant oligopoly to be aware that interdependent market conduct is profitable for all of them but each member must also have a means of knowing whether the other operators are adopting the same strategy and whether they are maintaining it. There must, therefore, be sufficient market transparency for all members of the dominant oligopoly to be aware, sufficiently precisely and quickly, of the way in which the other members’ market conduct is evolving; Second, the situation of tacit coordination must be sustainable over time, that is to say, there must be an incentive not to depart from the common policy on the market. As the Commission observes, it is only if all the members of the dominant oligopoly maintain the parallel conduct that all can benefit. The notion of retaliation in respect of conduct deviating from the common policy is thus inherent in this condition. In this instance, the parties concur that, for a situation of collective dominance to be viable, there must be adequate deterrents to ensure that there is a long-term incentive in not departing from the common policy, which means that each member of the dominant oligopoly must be aware that highly competitive action on its part designed to increase its market share would provoke identical action by the others, so that it would derive no benefit from its initiative (see, to that effect, Gencor v. Commission, paragraph 276); Third, to prove the existence of a collective dominant position to the requisite legal standard, the Commission must also establish that the foreseeable reaction of current and future competitors, as well as of consumers, would not jeopardize the results expected from the common policy.”
“If a product could be used for different purposes and if these different uses are in accordance with economic needs, which are themselves also different, there are good grounds for accepting that this product may, according to the circumstances, belong to separate markets which may present specific features which differ from the standpoint both of the structure and of the conditions of competition. However this finding does not justify the conclusion that such a product together with all the other products which can replace it as far as concerns the various uses to which it may be put and with which it may compete, forms one single market. The concept of the relevant market in fact implies that there can be effective competition between the products which form part of the same market in so far as a specific use of such products is concerned.”
“for the banana to be regarded as forming a market which is sufficiently differentiated from other fruit markets it must be possible for it to be singled out by such special features distinguishing it from other fruits that it is only exposed to their competition in a way that is hardly perceptible.”
“Consequently Article 86 prohibits any abuse by an undertaking of a dominant position on the common market or a substantial part thereof in so far as it may affect trade between Member States, that is to say in so far as it prohibits any abuse of a position of economic strength enjoyed by an undertaking which enables it to hinder the maintenance of effective competition on the relevant market by allowing it to behave to an appreciable extent independently of its competitors and customers and ultimately of consumers.”
“…….. a position of economic strength enjoyed by an undertaking which enables it to prevent effective competition being maintained on the relevant market by affording it the power to behave to an appreciable extent independently of its competitors, customers and ultimately of consumers.”
“1. MSC was a well established efficient operator; 2. MSC was offering a regular fixed day of the week service; 3. MSC had access to other routes – so they operated on this trade giving shippers the opportunity to trans-ship on to others, and its operations on other trades would be benefited through the extra business generated from this trade; 4. Boaz and Na’ama Arkin had all the contacts giving MSC the benefit of a highly competent and well-connected Israeli agency; 5. MSC used older ships and so had lower costs; 6. MSC was an established shipping line with its own vessels – it had the fleet ready to switch into this trade; 7. MSC had substantial capital – it sustained substantial losses and continued to trade.”
“1. Market shares are an important factor but do not on their own determine whether an undertaking is dominant; 2. It is also necessary to consider the position of other undertakings operating in the same market and how market shares have changed over time; 3. An undertaking is more likely to be dominant if its competitors enjoy relatively weak positions or if it enjoys both a high and stable market share; 4. The Director General will usually look at the history of the market shares of all the undertakings in the market. This is more informative than considering market shares at a particular point in time, partly because such a snapshot might hide the dynamic nature of the market; 5. Volatile market shares for the largest undertakings, or successful entry and expanding market shares for many small undertakings, for example, may indicate that a market is relatively competitive; 6. Market shares are not always a reliable guide to market power. An undertaking with a persistently high market share may not necessarily hold market power for two reasons: first, if entry into the market is easy, the incumbent undertaking is likely to be constrained to act competitively so as to avoid attracting entry over time by potential competitors. Secondly, in a market where undertakings regularly improve the quality of their products, a persistently high market share may indicate no more than a persistently successful innovation. While consideration of market shares over time is important when assessing market power, an analysis of entry conditions and other factors are equally important; 7. Entry barriers and exit conditions are important in assessing whether an undertaking possesses market power. While an incumbent with apparent market power may claim that potential competition is waiting in the wings, a more objective judgment can be made by the Director if hard evidence of successful entry in the recent history of the market is provided; 8. Growth or prospective growth in a market will usually have bearing on the likelihood of entry: entry will usually be more likely in a growing market than in a static or declining one because it will be easier for an entrant to be accommodated without any precipitous collapse in prices and profits; 9. The main potential constraint on the market power of a seller is the strength of buyers and the structure of the buyer’s market. The potential market power of a seller is offset by the buying power of a buyer, but for which prices would have been higher. 10. An undertaking’s conduct in a market or its financial performance may in itself, provide evidence that it possesses market power; 11. Persistently significant high returns, relative to those which would prevail in a competitive market of similar risk and rate of innovation, may suggest that market power does exist. This would be especially so if they did not stimulate new entry or innovation.”
“On the other hand the relationship between the market shares of the undertaking concerned and of its competitors, especially those of the next largest, the technological lead of an undertaking over its competitors, the existence of a highly developed sales network and the absence of potential competition are relevant factors, the first because it enables the competitive strength of the undertaking in question to be assessed, the second and third because they represent in themselves technical and commercial advantages and the fourth because it is the consequence of the existence of obstacles preventing new competitors from having access to the market.”
“38. The dominant position thus referred to relates to a position of economic strength enjoyed by an undertaking which enables it to prevent effective competition being maintained on the relevant market by affording it the power to behave to an appreciable extent independently of its competitors, its customers and ultimately of the consumers. 39. Such a position does not preclude some competition, which it does where there is a monopoly or a quasi-monopoly, but enables the undertaking which profits by it, if not to determine, at least to have an appreciable influence on the conditions under which that competition will develop, and in any case to act largely in disregard of it so long as such conduct does not operate to its detriment. A dominant position must also be distinguished from parallel courses of conduct which are peculiar to oligopolies in that in an oligopoly the courses of conduct interact, while in the case of an undertaking occupying a dominant position the conduct of the undertaking which derives profits from that position is to a great extent determined unilaterally. The existence of a dominant position may derive from several factors which, taken separately, are not necessarily determinative but among these factors a highly important one is the existence of very large market shares. 40. A substantial market share as evidence of the existence of a dominant position is not a constant factor and its importance varies from market to market according to the structure of these markets, especially as far as production, supply and demand are concerned. Even though each group of vitamins constitutes a separate market, these different markets, as has emerged from the examination of their structure, nevertheless have a sufficient number of features in common to make it possible for the same criteria to be applied to them as far as concerns the importance of the market shares for the purpose of determining whether there is a dominant position or not. 41. Furthermore although the importance of the market shares may vary from one market to another the view may legitimately be taken that very large shares are in themselves, and save in exceptional circumstances, evidence of the existence of a dominant position. An undertaking which has a very large market share and holds it for some time, by means of the volume of production and the scale of the supply which it stands for – without those having much smaller market shares being able to meet rapidly the demand from those who would like to break away from the undertaking which has the largest market share – is by virtue of that share in a position of strength which makes it an unavoidable trading partner and which, already because of this secures for it, at the very least during relatively long periods, that freedom of action which is the special feature of a dominant position.”
“51. Since the relevant market thus has the particular features of a narrow oligopolistic market in which the degree of competition by its very nature has already been weakened, Roche’s share, which is equal to the aggregate of the shares of its two next largest competitors, proves that it is entirely free to decide what attitude to adopt when confronted by competition. Roche’s technical lead over its competitors due to the fact that it is the proprietor of several patents relating to vitamin A, even after the expiration of these patents, is a further indication that it occupies a dominant position. As has been indicated above, the same applies to the absence of potential competition from new manufacturers, whereas the competition derived from the surplus manufacturing capacity of existing undertakings rather favours Roche as is apparent from an extract from management information of the middle of August 1971 which reads ‘although BASF will continue to intensify its activities, we expect to achieve a further steady increase of our turnover. However, the present overcapacity of production is such that a fixing of prices cannot be expected for the next few years. Such a development would, of course, be accelerated if one of our smaller competitors ceased production.’”
“58 Market shares of this size either in value or in quantity, complemented by the statement in the document jointly prepared by the parties that the figures for 1971 were 6% lower still than those for 1972 do not in themselves constitute a factor sufficient to establish the existence of a dominant position for most of the period considered by the Commission. On the contrary it has become apparent that the rectification which the latter had to carry out was due to its omission to take account of the imports of a Japanese competitor which in 1973 accounted for 30% of the market. On the other hand the Commission, in the case of this particular market, has not indicated what the additional factors would be, which together with the market share as corrected, nevertheless would be of such a kind as to admit of the existence of a dominant position. The findings lead to the conclusions that, as far as concerns vitamin B3, there is insufficient evidence of the existence of a dominant position held by Roche for the period under consideration.”
“The size of these shares, which is in itself significant, is made the more so by the fact that the shares of Roche’s competitors must be estimated, after the before-mentioned rectification, for 1974, according to value, at 16%, 6% and 1% in the case of the other producers and at 19% for one or more importers who were in general firms operating from non-Member States. Such a position as the one which has been established conforms even more typically than the one established in the case of vitamin A to the pattern of a narrow oligopolistic market in which Roche’s share is much larger than the combined shares of the two next largest competitors. Therefore the Commission was right to find that there was a dominant position on this market.”
“(i) AKZO’s market share is not only large in itself but is equivalent to all the remaining producers put together; (ii) apart from Interox and Luperox the remaining producers have a limited product range and/or are of local significance only; (iii) AKZO’s market share (as well as that of the second and third placed producers Interox and Luperox) has remained steady over the period under consideration and AKZO has always successfully repulsed any attacks on its position by smaller producers; (iv) AKZO was able even during periods of economic downturn to maintain its overall margin by regular price increases and/or increases in sales volume; (v) AKZO offers a far broader range of products than any rival, has the most highly developed commercial and technical marketing organization, and possesses the leading knowledge in safety and toxicology; (vi) AKZO has on its own account been able effectively to eliminate ‘troublesome’ competitors (besides ECS) from the market or weaken them substantially: the example of SCADO for one shows that AKZO is in a position, if it so wishes, to exclude a less powerful producer; (vii) once such small but potentially dangerous competitors are neutralized, AKZO has been able to raise the price for the particular product in respect of which their competition was felt.”
“60 With regard to market shares the Court has held that very large shares are in themselves, and save in exceptional circumstances, evidence of the existence of a dominant position: Case 85/76, Hoffmann-La Roche v. EC Commission. That is the situation where there is a market share of 50 per cent such as that found to exist in this case. 61. Moreover, the Commission rightly pointed out that other factors confirmed AKZO’s predominance in the market. In addition to the fact that AKZO regards itself as the world leader in the peroxides market, it should be observed that, as AKZO itself admits, it has the most highly developed marketing organisation, both commercially and technically, and wider knowledge than that of its competitors with regard to safety and toxicology ..….”
“whilst retention of market share may show that a dominant position has been retained (Hoffman – La Roche), a decline in market shares which are still very large cannot in itself constitute proof of the absence of a dominant position”
“significant difference between Cewal’s market share and that of its principal competitor, the benefits derived from the contract with Ogefrem giving Cewal exclusivity, the large size of its network, its capacities and the frequency of its services and, lastly, the experience acquired by Cewal over several decades on the market concerned.”
“The target of the freight policy was defined to retain as much cargo as possible, some lines were mentioning at least 80% and others 100%.”
“Mr Polito pointed out that it should be a helpful factor to Mr Kreis to learn about the changed situation in the market with BCL, MSC and MCL arriving at a market share of 33% by the end of the year against previously 18%. The speed with which the trade moved away from the Conferences to outsiders clearly indicates that there is no major barrier for a shipping company to get into the market. Mr Polito was advised that the conferences presently followed a mixed freight policy comprising: - special rate lists open to all clients - volume related quantity rebates with specific clients - special rate agreements with clients with quantities linked to such agreements Mr Polito confirmed that “once the dual rate system has been abandoned and considering that with a trade share of 65% the Conferences do no longer maintain a dominant position the freedom of action for the Conferences has greatly widened. Within reason the Conferences may opt for rate flexibility. It will also be very difficult for the commission to criticize the Conferences for undercutting competition rates. So yes, the Conferences may take fighting actions though there is some legal uncertainty to it.”
“Activities of MSC and MCL are as much perturbing as BCL if not more in the UK trade and fighting should be equally directed against all three lines.”
“- Based on opposition figures available the FMC proper to pick and to recommend to the Executive Committee another 3 main commodities southbound (next to tyres, paper and vehicle spare parts) which to be especially attacked on basis of competition rates plus a certain percentage having in mind the regular and reliable services of the Conference lines. Case need, however, opposition rates to be matched. - the existing Special Rate List southbound to be extended by the list of commodities submitted by CIS (as per enclosure) at rates 20% below tariff. Furthermore existing positions of the Special Rate List still above 20% below tariff to be adjusted accordingly.”
“70 Article 82 prohibits a dominant undertaking from eliminating a competitor and thereby strengthening its position by using methods other than those which come within the scope of competition on the basis of quality. From that point of view, however, not all competition by means of price can be regarded as legitimate. 71. Prices below average variable costs (that is to say, those which vary depending on the quantities produced) by means of which a dominant undertaking seeks to eliminate a competitor must be regarded as abusive. A dominant undertaking has no interest in applying such prices except that of eliminating competitors so as to enable it subsequently to raise its prices by taking advantage of its monopolistic position, since each sale generates a loss, namely the total amount of the fixed costs (that is to say, those which remain constant regardless of the quantities produced) and, at least, part of the variable costs relating to the unit produced. 72. Moreover, prices below average total costs, that is to say, fixed costs plus variable costs, but above average variable costs, must be regarded as abusive if they are determined as part of a plan for eliminating a competitor. Such prices can derive from the market undertakings which are perhaps as efficient as the dominant undertaking but which, because of their smaller financial resources, are incapable of withstanding the competition waged against them.”
“41. In AKZO this Court did indeed sanction the existence of two different method of analysis for determining whether an undertaking has practised predatory pricing. First, prices below average variable costs must always be considered abusive. In such a case, there is no conceivable economic purpose other than the elimination of a competitor, since each item produced and sold entails a loss for the undertaking. Secondly, prices below average total costs but above average variable costs are only to be considered abusive if an intention to eliminate can be shown.”
“Furthermore, it would not be appropriate, in the circumstances of the present case, to require in addition proof that Tetra Pak had a realistic chance of recouping its losses. It must be possible to penalise predatory pricing whenever there is a risk that competitors will be eliminated. The Court of First Instance found, at paragraphs 151 and 191 of its judgment, that there was such a risk in this case. The aim pursued, which is to maintain undistorted competition, rules out waiting until such a strategy leads to the actual elimination of competitors.”
“[113] It is, moreover, established that, in certain circumstances, abuse may occur if an undertaking in a dominant position strengthens that position in such a way that the degree of dominance reached substantially fetters competition. [114] Furthermore, the actual scope of the special responsibility imposed on a dominant undertaking must be considered in the light of the specific circumstances of each case which show that competition has been weakened (Case C-333/94 P, Tetra Pak v. EC Commission). [115] The maritime transport market is a very specialized sector. It is because of the specificity of that market that the Council established, in Regulation 4056/86, a set of competition rules different from that which applies to other economic sectors. The authorisation granted for an unlimited period to liner conferences to co-operate in fixing rates for maritime transport is exceptional in light of the relevant regulations and competition policy. [116] It is clear from the eighth recital in the preamble to Regulation 4056/86 that the authorization to fix rates was granted to liner conferences because of their stabilising effect and their contribution to providing adequate efficient scheduled maritime transport services. The result may be that, where a single liner conference has a dominant position on a particular market, the user of those services would have little interest in resorting to an independent competitor, unless the competitor were able to offer prices lower than those of the liner conference. [117] It follows that, where a liner conference in a dominant position selectively cuts its prices in order deliberately to match those of a competitor, it derives a dual benefit. First, it eliminates the principal, and possibly the only, means of competition open to the competing undertaking. Secondly, it can continue to require its users to pay higher prices for the services which are not threatened by that competition.”
“We accept the Director’s submission that to establish an intention to eliminate competition it is sufficient to show that the undertaking concerned must have been aware or, at least, could not have been unaware, that its conduct was of such a nature as to eliminate competition: see the cases cited at paragraphs 450 and 456 below.”
“As to the meaning of ‘intentionally’ in section 36(3), in our judgment an infringement is committed intentionally for the purposes of the Act if the undertaking must have been aware that its conduct was of such a nature as to encourage a restriction or distortion of competition: see Musique Diffusion Francais and Park Pen cited above. It is sufficient that the undertaking could not have been unaware that its conduct had the object or would have the effect of restricting competition without it being necessary to show that the undertaking also knew that it was infringing the Chapter I or Chapter II prohibition: see BPB Industries and British Gypsum cited above, at paragraph 165 of the judgment, andCase T-29/92 SPO and Others v. Commission[1995] ECR II-289 , at paragraph 356. While in some cases the undertaking’s intention will be confirmed by internal documents, in our judgment, and in the absence of any evidence to the contrary, the fact that certain consequences are plainly foreseeable is an element from which the requisite intention may be inferred. If, therefore, a dominant undertaking pursues a certain policy which in fact has, or would foreseeably have, an anti-competitive effect, it may be legitimate to infer that it is acting ‘intentionally’ for the purposes of section 36(3).”
“Since it is the hope and intention that with the extended fighting measures increasing quantities of cargo will be regained from competition it must be ensured that at all times sufficient tonnage is being made available by members in order to cope with such increased quantities without failure.” (iii) The Claimant relies on the following conduct after the start of the relevant period. (a) On 6May 1991 it was noted by Mr Levy of Zim, secretary of the FMC, that the Conferences’ recent freight adjustments were “acting hard and painfully on MSC reps’ ….. relationship with their clients.”
“Members of a conference shall not use fighting ships in the conference trade for the purpose of excluding, preventing or reducing competition by driving a shipping line, not a member of the conference, out of the said trade.”
“(1) The dissemination of information to conference members by a conference secretariat of the dates of forthcoming departures scheduled by the independent company, of the type of cargoes to be loaded and, as far as information was available, of the identity of the shippers; (2) The convening of a Special Fighting Committee which had as its task the taking of decisions as to which conference ships would offer reduced rates different from the conferences’ normal rates at which vessels were to sail either on or close to (before or after) the date on which the independent vessel was scheduled to sail; (3) The adoption of fighting rates derogating from the conference’s scale of charges, fixed by common agreement but which depended upon the charges applied by the independent line; and (4) A sharing of the losses from the application of rates which differed from the conferences’ normal rate.”
“I would like to draw your attention to the endless stories from our various competitors and “friends” claiming that we shall not last more than a few months, that we shall not have vessels to carry your cargoes, that we shall not be able to supply trucks from Eilat to Tel Aviv etc etc etc.”
“The reason for restraining dominant undertakings from seeking to hinder the maintenance of competition by, in particular, eliminating a competitor is that they would thus be enabled to charge abusively high prices. Thus, an inefficient monopoly would be reinstated and consumers would benefit only in the short run. If that result is not part of the dominant undertaking’s strategy it is probably engaged in normal competition.”
“Yes, the purpose of the conduct must be such that it is not conduct that a competitor would enter into in normal competitive circumstances, where what is meant by normal competitive circumstances are circumstances where you cannot conceive of eliminating someone and making the market less competitive and therefore more remunerative for you in the future.”
“Thus, to the extent that it is necessary, I believe that the present case passes the test of recoupment. At the same time, I would say that some such requirement should be part of the test for abusively low pricing by dominant undertakings. It is implied in the first paragraph of the quotation from AKZO (see paragraph 126 above). It is inherent in the Hoffmann La Roche test (see paragraph 24 above).”
“Therefore, sales below average (or short-run marginal; AKZO, paragraph 70) costs are in effect presumed to be abusive. While it is usually rational to sell above average variable costs, because that permits some return on capital, where the market will not bear a higher price, it is not usually rational to sell below average variable costs. Marginal costs need not be incurred and business has no interest in incurring them so as to make a loss. A dominant firm would be permitted, however, to rebut this presumption by showing that such pricing was not part of a plan to eliminate its competitor.”
“2. Non-conference shipping lines competing with a conference should adhere to the principle of fair competition on a commercial basis; 3. In the interest of sound development of liner shipping service, non-conference shipping lines should not be prevented from operating as long as they comply with the requirements of paragraph 2 above.”
“Before variable costs can be discussed in detail, the relevant time frame must be clarified as the variability of a cost and hence the magnitude of variable costs will depend crucially on the time frame under consideration – given enough time, for instance, a machine can be replaced by a smaller or larger machine. In AKZO the Court did not discuss explicitly the timescale appropriate for analyzing predation.”
“189. Although it is true, as the applicant points out, that the fact that an undertaking is in a dominant position cannot disentitle it from protecting its own commercial interests if they are attacked, and that such an undertaking must be conceded the right to take such reasonable steps as it deems appropriate to protect its said interests, such behaviour cannot be countenanced if its actual purpose is to strengthen this dominant position and abuse it. 190. Even if the possibility of a counter-attack is acceptable that attack must still be proportionate to the threat taking into account the economic strength of the undertakings confronting each other.”
“It was an ordinary freight war as a result of too much capacity for the available cargo and all players (without discrimination or hindrances) were scrambling for customers and market shares by using the price mechanism. There are always casualties in such processes and it depends on who wants to hang in there against who cannot afford to lose more money.”
“Noted regretfully that no agreement was reached regarding reducing rates n/b, which means that the lines are compelled to continue with the existing mechanism of the FMC on an individual basis. Have expressed already our opinion at last FMC meeting, London 26.11.90, that this system is working against the Conference Lines. The idea that by keeping the current rates at a high level, lines will indeed succeed to maintain their earnings, is in our opinion an illusion, very soon. Losses which we shall suffer due to losing shipments will be much higher than the eventual earnings. At present we are losing more and more customers who switch to competition without leaving a trace. They just disappear from our manifests and reappear in the lists of competition. Those lists are becoming longer and longer from one sailing to the other. If we want to regain those customers we shall very soon have no choice but to match competition rates or even quote lower, which will decrease our income further. Such a deterioration could have been stopped only by a reduced tariff or by introducing special commodity rates at a level preventing customers from switching to competition. The opinion that lines will be able to keep different clients by granting each one of them special rates/commitment, is also dangerous, because such agreements with so many customers cannot remain secret for a long period. Sooner or later this will be known by other customer shipping same commodities or similar at higher rates, and the results will not be to the benefit of the conference lines. Wish to emphasise that we experienced already the system of negotiating with individual clients and the conclusions were very disappointing. The moment that a name of a customer is mentioned in one of the telexes or faxes same client is being “attacked” by salesmen of all the lines who try to obtain his shipments. Furthermore, the salesmen who are anxious to obtain new bookings, contribute to the deterioration of rates by offering lower rates to clients who even didn’t ask for it. (This happened already time and again …) All these will create Chaos in the market, leading to a situation in which the Conference Lines will compete between themselves and fight each other (recently experienced). The only conclusion to prevent such a deterioration is by implementing a new list of special rates at a realistic level, as already suggested at last FMC meeting in London.”
“The parties are committed to do their utmost in order to compete with any third party Line commencing any service within the scope of this Agreement and, to that effect, they shall abide by the Executive Committee’s decisions in all matters pertaining thereto.”
“… according to Article 85(3)(b) of the Treaty, an exemption cannot be granted to an agreement which eliminates competition. In that regard, the Court of Justice has stated that ‘if Article [3(g)] provides for the institution of a system ensuring that competition in the common market is not distorted, then it requires a fortiori that competition must not be eliminated. This requirement is so essential that without it numerous provisions of the Treaty would be pointless (Case 6/72 Europemballage Corporation and Continental Can v. Commission [1973] ECR 215, paragraph 24). Similarly, it is clear from the case law that ‘price competition is so important that it can never be eliminated’ (Case 26/76 Metro v. Commission [1977] ECR 1875, paragraph 21). In Regulation No 4056/86, the Council did not intend to derogate, and indeed could not have derogated, from Article 85(3) of the Treaty. On the contrary, the Council refers on several occasions, in particular in the 13th recital in the preamble to Regulation No. 4056/86 and in Article 7 thereof, to the need to ensure that the block exemption does not cover practices, which are incompatible with Article 85(3) of the Treaty. As regards the exemption of a horizontal price-fixing agreement which has as its object to effect the elimination, at least to a large extent, of internal competition between conference members, the existence of external competition from the independent shipping companies, that is those which operate outside the conference, constitutes the principal guarantee of maintaining effective competition where there is a block exemption. The introduction, or the practice, of differentiated prices makes it possible to attract into a group independent shipping companies which, otherwise, would continue to compete with the members of the conference. Admittedly, any agreement between shippers fixing two, or more, levels of prices does not automatically lead to the elimination of external competition. Thus, an agreement fixing several levels of prices, of the type contained in the TAA, might bring together only carriers representing, collectively, a relatively small part of the market and thus, not lead not the elimination of external competition. By contrast, a conference whose members charge uniform freight rates might represent almost the entire market and eliminate external competition. However, those situations are largely theoretical and, in general, it cannot be disputed that the possibility of fixing different levels of prices makes it possible to attract into the group companies which, without that flexibility, would remain independent and that this situation is likely to lead to the elimination of external competition; by contrast, the obligation to fix uniform freight rates for all conference members is not such as to encourage all operators to join the conference, which guarantees the existence of external competition.”
“12. In arriving at a decision on questions of tariff policy in all cases mentioned in this Code, the following points shall, unless otherwise provided, be taken into account. (a) Freight rates shall be fixed at as low a level as is feasible from the commercial point of view and shall permit a reasonable profit for shipowners; (b) The cost of operations of conferences shall, as a rule, be evaluated for the round voyage of ships, with the outward and inward directions considered as a single whole. Where applicable, the outward and inward voyage should be considered separately. The freight rates should take into account, among other factors, the nature of cargoes, the interrelation between weight and cargo measurement, as well as the value of cargoes; (c) In fixing promotional freight rates and/or special freight rates for specific goods, the conditions of trade for these goods of the countries served by the conference, particularly of developing and land-locked countries shall be taken into account. (a) Freight rates shall be fixed at as low a level as is feasible from the commercial point of view and shall permit a reasonable profit for shipowners; (b) The cost of operations of conferences shall, as a rule, be evaluated for the round voyage of ships, with the outward and inward directions considered as a single whole. Where applicable, the outward and inward voyage should be considered separately. The freight rates should take into account, among other factors, the nature of cargoes, the interrelation between weight and cargo measurement, as well as the value of cargoes; (c) In fixing promotional freight rates and/or special freight rates for specific goods, the conditions of trade for these goods of the countries served by the conference, particularly of developing and land-locked countries shall be taken into account. 18. Fighting Ships Members of a conference shall not use fighting ships in the conference trade for the purpose of excluding, preventing or reducing competition by driving a shipping line not a member of the conference out of the said trade.”
“it should be pointed out that for the purposes of establishing an infringement of Article 86 of the Treaty, it is not sufficient, as the Commission’s agent claimed at the hearing, to ‘recycle’ the facts constituting an infringement of Article 85, deducing from them the finding that the parties to the agreement or to an unlawful practice jointly hold a substantial share of the market, that by virtue of that fact alone they hold a collective dominant position, and that their unlawful behaviour constitutes an abuse of a dominant position.”
“3. Whereas this situation necessitates the adoption of a Regulation applying the rules of competition to maritime transport; whereas Council Regulation (EEC) No. 954/79 of15 May 1979 concerning the ratification by Member States of, or their accession to, the United Nations Convention on a Code of Conduct for Liner Conferences will result in the application of the Code of Conduct to a considerable number of conferences serving the Community; whereas the Regulation applying the rules of competition to a maritime transport foreseen in the last recital of Regulation (EEC) No. 954/79 should take account of the adoption of the Code; whereas, as far as conferences subject to the Code of Conduct are concerned, the Regulation should supplement the Code or make it more precise; 5. Whereas this Regulation should take account of the necessity, on the one hand to provide for implementing rules that enable the Commission to ensure that competition is not unduly distorted within the common market, and on the other hand to avoid excessive regulation of the sector; 6. Whereas this Regulation should define the scope of the provisions of Articles 85 and 86 of the Treaty, taking into account the distinctive characteristics of maritime transport; whereas trade between Member States may be affected where restrictive practices or abuses concern international maritime transport, including intra-Community transport, from or to Community ports; whereas such restrictive practices or abuses may influence competition, firstly, between ports in different Member States by altering their respective catchment areas, and disturb trade patterns within the common market; 14. Whereas the automatic nullity provided for in Article 85(3) in respect of agreements or decisions which have not been granted exemption pursuant to Article 85(3) owing to their discriminatory or other features applies only to the elements of the agreement covered by the prohibition of Article 85(1) and applies to the agreement in its entirety only if those elements do not appear to be severable from the whole of the agreement whereas the Commission should therefore, if it finds an infringement of the block exemption, either specify what elements of the agreement are by the prohibition and consequently automatically void, or indicate the reasons why the agreement is therefore void in its entirety;”
“Liner conferences” means a group of two or more vessel-operating carriers which provides international liner services for the carriage of cargo on a particular route or routes within specified geographical limits and which has an agreement or arrangement, whatever its nature, within the framework of which they operate under uniform or common freight rates and any other agreed conditions with respect to the provisions of liner services.”
“Contrary to the applicant’s submissions, that interpretation of the concept of a liner conference is not inconsistent with the possibility, acknowledged by the Commission, for a conference member to take independent action. That action is fundamentally different from the system of differentiated prices. The taking of independent action, which enables a conference member, subject usually to 10 days’ notice, to offer, for a specific product, a lower freight rate than that in the conference tariff, does not create another level of prices which may be generally charged, since that action concerns only a single ad hoc transaction. The stabilizing effect of the existence of uniform or common freight rates for all conference members therefore continues in the event of independent action, whereas it is undermined where the conference tariff, which lists all the freight rates applicable, is replaced by a system of rates which vary according to the members. In addition, independent action is, by definition, decided on and taken by a carrier in accordance with the principle of competition law that each operator determines, completely independently, the policy which he intends to follow on the market; by contrast, a system of differentiated prices implies an anti-competitive arrangement additional to that of the liner conference, since it is in practice akin to the agreement between a conference and independent companies.”
“Whereas there can be no exemption if the conditions set out in Article 85(3) are not satisfied; whereas the Commission must therefore have power to take the appropriate measures where an agreement or concerted practice owing to special circumstances proves to have certain effects incompatible with Article 85(3); whereas, in view of the specific role fulfilled by the conferences in the sector of the liner services, the reaction of the Commission should be progressive and proportionate; whereas the Commission should consequently have the power first to address recommendations, then to take decisions.”
“Tariffs, related to conditions, regulations and any amendments thereto shall be made available on request to transport users at reasonable cost, or they shall be available for examination at offices of shipping lines and their agents. They shall set out all the conditions concerning loading and discharge, the exact extent of the services covered by the freight charge in proportion to the sea transport and the land transport or by any other charge levied by the shipping line and customary practice in such matters.”
“Where the persons concerned are in breach of an obligation which, pursuant to Article 5, attaches to the exemption provided for in Article 3, the Commission may, in order to put an end to such breach and under the conditions laid down in Section II: - address recommendations to the persons concerned; - in the event of failure by such persons to observe those recommendations and depending upon the gravity of the breach concerned, adopt a decision that either prohibits them from carrying out or requires them to perform specific acts or, while withdrawing the benefit of the block exemption which they enjoyed, grants them an individual exemption according to Article 11(4) or withdraws the benefit of the block exemption which they enjoyed.”
“The hearing took place on30 April 1992 . After the hearing the lines have communicated evidence which demonstrate that they have formally terminated their rate differential system in January 1991 and abandoned their loyalty arrangements in February 1991. Since February 1991, the lines have thus discontinued those aspects of their Agreements to which the Commission objected in the Statement of Objections. There seems to be no longer any necessity to require them to terminate their arrangements as was envisaged in the Statement of Objections. On the basis of the information available and after a preliminary examination, the Agreements which were amended early in 1991 appear to be Conference agreements which can benefit now from the block exemption granted by Article 3 of Regulation no. 4056/86. In view of the termination of the infringements and also of the fact that the trades concerned seem open now to competition as demonstrated by the successful entry of MSC, I think that this case does not display any more a sufficiently strong community interest to make a formal decision necessary. Please let me know if you wish to make further comments, and do so within two months of the date of receipt of this letter. We, of course, reserve the right to re-examine this case should substantial new information be made available, whether it be through your observations or a later date.”
“When the conduct of the claimant exacerbates, or adds to the injuries, of which he complains, that conduct will generally result in a reduction of his damages on grounds of contributory negligence, or failure in his duty to mitigate damage. However, it may be that the conduct of the claimant is so wholly unreasonable and/or of such overwhelming impact that that conduct eclipses the defendant’s wrongdoing and constitutes a novus actus. It is submitted that for the claimant’s subsequent conduct to be regarded as a novus actus interveniens it should be such as can be characterized as reckless. Unreasonable conduct can be dealt with by a finding of contributory negligence. Once the court has determined that the defendant was in breach of a duty to exercise reasonable care for the claimant’s safety, the claimant’s negligent conduct should not lead to a finding of novus actus.”
“Despite the detailed explanation in your letter of the Commission’s decision not to pursue this case further, I find it most unsatisfactory that shipping lines which, according to the Commission’s own Statement of Objections as I understand it, were operating under a cargo sharing agreement designed to eliminate competition, should be allowed to do so with impunity, and in fact to benefit from their actions. Although these shipping lines formally terminated their rate differential system in January 1991 and abandoned their loyalty agreements in February 1991, by then the damage to my business had been done. I was forced to suspend BCL’s operations as a direct result of their cartel practices. I also question your assumption that the trades concerned are now open to competition, as demonstrated by the successful entry of MSC. I believe I have proof that prices are now co-ordinated between MSC and the Conference and that cartel practices are still being used to exclude competition, although the tactics have changed. I am now trying to accumulate new evidence of these practices, which I hope to be able to present shortly.”
“Everyone closely connected to the matter knew this borders on economic suicide”
“The decision to cut rates was entirely Mr Arkin’s while myself and other members of staff told him on more than one occasion that we felt it was not a correct move to make. All that Mr Arkin was creating was a freight war that I did not believe he could win …..”
“I believe that Mr Arkin made most of his money out of speculation in tonnage. He was not, by choice, a liner operator and in my view did not fully understand the trade. Running liner operations provided a use for his various company ships and the chance to make money on ships being chartered in. When Boaz and Na’ama Arkin joined MSC, it set off a considerable amount of emotions in Mr Arkin. He was determined they should not succeed. There had previously been bad blood between Mr Arkin and Boaz and Na’ama’s father.”
“71. There is another respect in which I do not agree with the way in Mr Franses has viewed the matter. He seems to me to proceed on the basis that, if the company was insolvent in balance sheet terms – that is if its balance sheet liabilities exceeded its balance sheet assets – but the directors allowed it to continue to trade, that would in itself constitute wrongful trading of a sort which justified the directors being disqualified. I do not agree with that approach, at least not without substantial qualifications. It is common for a company to trade when its shareholders’ funds as shown in the balance sheet are in deficit. In some cases the directors may be culpably wrong in allowing the company to carry on, but in other cases they are not, particularly in a company’s early months when it is seeking to get itself established and may have anticipated an initial period of losses before turning the corner and moving into profit. 7.2 What makes trading wrongful is not the bare fact of balance sheet insolvency, but the continuation of trading at a time when the directors either knew or on any realistic view ought to have known that there was no reasonable prospect that the company’s creditors would ever get paid ……The law has to leave room for cases where it was unacceptable for directors to take the view that their company, though insolvent in balance sheet terms for the present, was going to trade its way into profit so that all the creditors would be paid. Further, there has to be room for cases like that even if in the event the directors turn out to be wrong, so that the company does not succeed in trading out of its difficulties, and as it turns out the creditors, or some of them are not paid. Indeed, as will appear later, I believe that this case is of that nature.”