The Gazette 1973

Member States. (2) Recent declarations of the Commission give the impression that it at present desires international con- centrations only in a few sectors, particularly with regard to highly technological products. For all re- maining sections, the Commission considers concentra- tion control to be necessary with the possibility of pro- hibiting concentrations. (3) In a Study on "The Problem of Concentration of Enterprises in the Common Market" of 1966, the Com- mission—for the first time—showed the way to control and to influence the concentration of enterprises by means of Article 86 of the EEC-Treaty on the basis of the law as it is. In the Study the Commission takes the view that the acquisition of an enterprise by another one which is in a "market dominant position" may be an abusive exploitation of this position. The exploitation is termed abusive, if, objectively, the be- haviour of the enterprise is a misbehaviour in view of the aims stipulated in the EEC-Treaty. (4) In its decision of 9 December 1971 against Continental Can, the Commission has—for the first time—converted this theory into practice. The Con- tinental Can Company of New York, the largest packag- ing manufacturer in the world, since 1969 holds a majority in the largest German packaging manufactur- ing company. In 1970, it furthermore acquired a majority in the largest packaging manufacturing com- pany of the Benelux-countries, Thomassen and Drijver, Deventer/Holland. (5) In this decision, the Commission asserted that Continental Can through its German subsidiary held a dominant position on certain markets. The acquisition of the largest Benelux manufacturer was termed an abusive exploitation of that dominant position : If, by the merger of a dominant enterprise with another one the dominance is strengthened to such an extent that competition—which would have re- mained in existence, actually or potentially, despite the initial dominant position—is practically elim- inated for the goods concerned in an essential part of the Common Market, then this is a behaviour incompatible with Article 86 of the Treaty. (6) Continental Can filed a complaint against this decision with the European Court of Justice, among other things on the following grounds : (a) Abusive exploitation" of a dominant position requires a casual nexus between this position and Decision of professional inter© Local authority liable for erroneous report given by Inspector as to foundations of house. The decision in this case involves the liability of a local authority in the exercise of its statutory powers and the liability of local authorities for the negligence of their inspectors and employees, etc. The case is fully reported in the High Court at (1971) 2. All E.R. 1003 and in the Court of Appeal at (1972) I. All E.R. pages 462-490. In this particular case a Building Inspector of a local authority inspected foundations which required Bye- Law approval by the local authority concerned in October 1958. It was subsequently ascertained that the foundations had been badly laid so as to create a hidden defect and the defective foundations caused damage to the house after the premises had been purchased by a subsequent owner. The subsequent owner Mrs. Dutton, brought an action against the Defendant local authority for damages for the negligence of their Build- ing Inspector in approving for the purpose of the

the act which is qualified as an abuse. There is no connection between Continental's allegedly dominant position in Germany and the acquisi- tion of the shares in the Dutch Company. (b) The authors of the EEC-Treaty have consciously disregarded the idea of including regulations against mergers. This is apparent if one compares this Treaty with the Treaty of the European Coal and Steel Community (MUV). In view of this it is inadmissible by means of interpreta- tion to insert such provisions into Article 86. (c) It is undisputed that market dominance as such is permitted. Article 86 starts from this fact, only prohibiting the abuse, not the position; conse- quently, a mere increase of market power cannot be prohibited. (d) The application of Article 86 cannot be sub- stantiated with the help of general merely pro- gramatic provisions of the EEC-Treaty. Those have no higher rank than Article 86. (e) Article 86 unlike Article 85 does not empower the Commission to grant an exemption. There- fore, the Commission's theory means a general rigid rule, resulting in legal uncertainty. (f) If the Commission thinks provisions against mergers necessary, they have to be introduced by changing or amending the Treaty, or, perhaps by a Regulation to be based on Article 235 EEC-Treaty. Article 86 is the wrong way. (7) In his lecture, Dr. Gleiss could not yet consider the European Court's judgment of 21 February 1973 by which the decision of the Commission was reversed. The Court in essence confirmed the theory of the Com- mission. According to this judgment, a behaviour is abusive within the meaning of Article 86, "if an enterprise in a dominant position increases it in such a manner that the degree of dominance achieved hinders competition essentially, so that only enterprises remain on the market, which in their behaviour depend on the dominant enterprise". This means, that not only mergers but also other forms of increase of market power can be an abuse within the sense of Article 86. But the Court reversed the Commission's decision because it failed sufficiently to prove the market dominance of Continental Can in Germany and the restraint on competition effected by the merger. Building Bye-Laws the foundations of the house which had been built by the first-named Defendants, Bognor Regis United Building Co. Ltd., insofar as the walls cracked, the staircase slipped, and the doors and win- dows would not close. Mr. Justice Cusack held that Bognor Regis U.D.C. were liable for their Inspector's negligence in not en- suring that the foundations had been properly con- structed and laid in conformity with the Statutory Bye- Laws. The Trial Judge awarded the Plaintiff £2,115 damages against the second Defendants, Bognor Regis U.D.C., with interest at 6% from the date of service of the writ. The Court of Appeal (Lord Denning, Sachs and Stamp LJJ.), upheld the decision of the High Court and dismissed the appeal. Leave to appeal to the House of Lords was granted but the appeal was subsequently withdrawn. [Dutton v. Bognor Regis Building Co. and Bognor Regis Urban District Council—C. A.—(1972) I. All E. R. 462.]