Manufacture française des pneumatiques Michelin v Commission of the European Communities.

• Jurisdiction: European Union
• Court: General Court (European Union)
• Date: 30 September 2003

Case T-203/01


Manufacture française des pneumatiques Michelin
v
Commission of the European Communities

«(Article 82 EC – Rebate system – Abuse)»

Judgment of the Court of First Instance (Third Chamber), 30 September 2003

Summary of the Judgment

1..

Competition – Dominant position – Abuse – Meaning – Objective concept referring to conduct likely to influence the structure of the market and with the effect of hindering the maintenance or development of competition – Obligations on dominant undertakings – Exercise of competition only on the merits

(Art. 82 EC)

2..

Competition – Dominant position – Abuse – Discounts with a foreclosure effect on the market – Loyalty rebate – Abusive practice

(Art. 82 EC)

3..

Competition – Dominant position – Abuse – Quantity rebates – Whether permissible – Conditions – Abusive nature of the rebate system – Criteria for assessment

(Art. 82 EC)

4..

Competition – Administrative procedure – Statement of objections – Matters to be stated

5..

Competition – Dominant position – Abuse – Quantity rebates with a loyalty-inducing effect – Rebate, granted annually, representing a percentage of the overall turnover achieved with the customer over the preceding year and rising progressively and significantly with that figure

(Art. 82 EC)

6..

Competition – Administrative procedure – Observance of the rights of the defence – Access to the file – Limits – Obligation to communicate to the dominant undertaking the identity of its customers which collaborated in the investigation – None

7..

Competition – Administrative procedure – Commission decision finding an infringement – Exclusion of evidence in documents not disclosed to the parties – Consequences – Relevant objection may not be proved by reference to those documents

8..

Competition – Dominant position – Abuse – System of rebates leaving the dominant undertaking with a broad scope for subjective assessment – Rebates devoid of objective economic justification

(Art. 82 EC)

9..

Competition – Dominant position – Abuse – Tyre manufacturer – Contracts granting a rebate to retailers undertaking systematically to have carcasses retreaded by that manufacturer – Condition with a tied sales effect – Permissible under national law – Irrelevant – Primacy of Community law

(Art. 82 EC)

10..

Competition – Dominant position – Abuse – Obligations imposed on retailers of the dominant undertaking's products in return for financial advantages – Obligations aimed at eliminating competition from other manufacturers

(Art. 82 EC)

11..

Competition – Dominant position – Abuse – Obligations to provide information and submit to supervision without objective justification imposed on retailers of the dominant undertaking's products in return for financial advantages – Application of Regulation No 4087/88 allowing obligations to provide information in the context of franchise agreements – Excluded

(Art. 82 EC; Commission Regulation No 4087/88, Art. 3(2))

12..

Competition – Dominant position – Abuse – Meaning – Conduct having either the effect or the object of hindering the maintenance or development of competition

(Art. 82 EC)

13..

Competition – Fines – Amount – Determination thereof – Raising of the general level of fines – Whether permissible – Condition – Duty to state reasons – None

(Council Regulation No 17, Art. 15(2); Commission Communication 98/C 9/03)

14..

Competition – Fines – Amount – Determination – Criteria – Fine for abuse of a dominant position – Assessment of the seriousness of the infringement – Account to be taken of the nature and object of the abusive practices and not their specific effects

(Council Regulation No 17, Art. 15(2)

15..

Competition – Fines – More than one infringement – Imposition of a single fine – Permissible – Duty of the Commission to state specifically each individual abusive component – None

(Council Regulation No 17, Art. 15(2))

16..

Competition – Fines – Amount – Determination thereof – Criteria – Duration of infringement – Duration, taken into account as such, irrespective of its consequences on the harm caused – Permissible

(Council Regulation No 17, Art. 15(2))

17..

Competition – Fines – Amount – Determination thereof – Criteria – Seriousness of the infringements – Aggravating circumstances – Recidivism – Concept

(Commission Communication 98/C 9/03)

18..

Competition – Fines – Amount – Determination thereof – Criteria – Seriousness of the infringements – Aggravating circumstances – Recidivism – Similar infringements successively committed by two subsidiaries of the same parent company

19..

Competition – Fines – Amount – Determination thereof – Criteria – Seriousness of the infringements – Aggravating circumstances – Increase in the uplifts previously applied for recidivism – Diminution of the reductions previously applied for certain mitigating circumstances – Permissible

(Council Regulation No 17, Art. 15(2); Commission Communication 98/C 9/03)

1.

An

abuse is an objective concept referring to the behaviour of an undertaking in a dominant position which is such as to influence the structure of a market where, as a result of the very presence of the undertaking in question, the degree of competition is already weakened and which, through recourse to methods different from those governing normal competition in products or services on the basis of the transactions of commercial operators, has the effect of hindering the maintenance of the degree of competition still existing in the market or the growth of that competition. It follows that not all competition on price can be regarded as legitimate and that an undertaking in a dominant position cannot have recourse to means other than those within the scope of competition on the merits. Therefore, whilst the finding that a dominant position exists does not in itself imply any reproach to the undertaking concerned, it has a special responsibility, irrespective of the causes of that position, not to allow its conduct to impair genuine undistorted competition on the common market. Similarly, whilst the fact that an undertaking is in a dominant position cannot deprive it of its entitlement to protect its own commercial interests when they are attacked, and whilst such an undertaking must be allowed the right to take such reasonable steps as it deems appropriate to protect those interests, such behaviour cannot be allowed if its purpose is to strengthen that dominant position and thereby abuse it. see paras 54-55, 97

2.

A rebate system which has a foreclosure effect on the market will be regarded as contrary to Article 82 EC if it is applied by an undertaking in a dominant position. That is the case with a loyalty rebate, which is granted by an undertaking in a dominant position to its customers in return for an undertaking to obtain their stock exclusively or almost exclusively from that undertaking. Even in cases where it is not discriminatory, such a rebate is designed, through the grant of financial advantages, to prevent customers from obtaining their supplies from the dominant undertaking's competitors. see paras 56-57, 65

3.

Quantity rebate systems applied by an undertaking in a dominant position, linked solely to the volume of purchases made from that undertaking, do not generally have a foreclosure effect on the market prohibited by Article 82 EC. If increasing the quantity supplied by that undertaking results in it incurring lower costs, it is entitled to pass on that reduction to its customer s in the form of a more favourable tariff. It follows that a quantity rebate system in which the rate of the discount increases according to the volume purchased from the dominant undertaking will not infringe Article 82 EC unless the criteria and rules for granting the rebate reveal that the system is not based on an economically justified countervailing advantage but tends, following the example of a loyalty and target rebate, to prevent customers from obtaining their supplies from competitors. In determining whether a quantity rebate system is abusive, it is therefore necessary to consider all the circumstances, particularly the criteria and rules governing the grant of the rebate, and to investigate whether, in providing an advantage not based on any economic service justifying it, the rebates tend to remove or restrict the buyer's freedom to choose his sources of supply, to bar competitors from access to the market, to apply dissimilar conditions to equivalent transactions with other trading parties or to strengthen the dominant position by distorting competition. see paras 58-60, 62

4.

The statement of objections must be couched in terms that, albeit succinct, are sufficiently clear to enable the parties concerned properly to identify the conduct to which the Commission objects. It is only on that basis that the statement of objections can fulfil its function under the Community regulations of giving undertakings and associations of undertakings all the information necessary to enable them properly to defend themselves, before the Commission adopts a final decision. see para. 77

5.

A quantity rebate system applied by a supplier to its customers, in which there is a significant variation in the discount rates between the lower and higher steps, which has a reference period of one year and in which the discount is fixed on the basis of total turnover achieved during the reference period, has the characteristics of a loyalty-inducing discount system in that it constitutes a strong incentive to obtain supplies from that supplier. see para. 95

6.

In the context of proceedings seeking to establish that a dominant position has been abused, the Commission must take account of the risk that the undertaking concerned might adopt retaliatory measures against...