British-American Tobacco Company Ltd and R J Reynolds Industries Inc v Commission of the European Communities: ECJ 17 Nov 1987

Europa An investigation carried out by the commission in fulfilment of its duty to ensure that the rules on competition are observed does not constitute adversary proceedings between companies which have submitted an application under article 3 of regulation no 17/62, having shown that they have a legitimate interest in seeking an end to the alleged infringement, and companies which are the object of the investigation. Although complainants must be given the opportunity to defend their legitimate interests during the administrative proceedings and the commission must consider all the matters of fact and of law which they bring to its attention, their procedural rights are not as far-reaching as the right to a fair hearing of the companies which are the object of the commission’ s investigation, and the limits of such rights are reached where they begin to interfere with those companies’ rights to a fair hearing. The obligation of professional secrecy laid down in article 214 of the treaty and article 20*(2) of regulation no 17/62 is mitigated in regard to complainants, but they may not in any circumstances be provided with documents containing business secrets. The legitimate interests of complainants are fully protected where they are informed of the outcome of the confidential negotiations between the commission and the companies which are the object of its investigation with a view to bringing the agreements or practices complained of into conformity with the rules laid down in the treaty; the right of the commission and those companies to enter into confidential negotiations would be imperilled if the complainants were given the right to attend such negotiations or be kept informed of the progress made in order to submit their observations on the proposals put forward by one party or the other.
2. Where the acquisition of shares in a competing company is the subject-matter of agreements entered into by companies which remain independent after the entry into force of the agreements, the issue must first be examined from the point of view of article 85 of the treaty. Although the acquisition by one company of an equity interest in a competitor does not in itself constitute conduct restricting competition, such an acquisition may nevertheless serve as an instrument for influencing the commercial conduct of the companies in question so as to restrict or distort competition on the market on which they carry on business. That would be true in particular where, by the acquisition of a shareholding or through subsidiary clauses in the agreement, the investing company obtains legal or de facto control of the commercial conduct of the other company or where the agreement provides for commercial cooperation between the companies or creates a structure likely to be used for such cooperation, or where the agreement gives the investing company the possibility of reinforcing its position at a later stage and taking effective control of the other company. Every agreement must be assessed in its economic context and in particular in the light of the situation on the relevant market. Where the companies concerned are multinational corporations which carry on business on a worldwide scale, their relationships outside the community cannot be ignored, and it is necessary in particular to consider the possibility that the agreement in question may be part of a policy of global cooperation between them. The commission must exercise particular vigilance in the case of a stagnant and oligopolistic market, such as that for cigarettes.
3. Although as a general rule the court undertakes a comprehensive review of the question whether or not the conditions for the application of article 85*(1) of the treaty are met, its review of the commission’ s appraisals of complex economic matters is necessarily limited to verifying whether the relevant rules on procedure and on the statement of reasons have been complied with, whether the facts have been accurately stated and whether there has been any manifest error of appraisal or a misuse of powers.
4. The acquisition by one company of a shareholding in a competing company can constitute an abuse of a dominant position within the meaning of article 86 of the treaty only where that shareholding results in effective control of the other company or at least in some influence on its commercial policy.
5. Where the commission rejects an application pursuant to article 3 of regulation no 17/62, it need only state the reasons for which it did not consider it possible to hold that an infringement of the rules on competition had occurred, and it is not obliged to explain any differences in relation to the statement of objections, since that is a preparatory document containing assessments which are purely provisional in nature and are intended to define the scope of the administrative proceedings with regard to the companies against which they are brought, or to discuss all the matters of fact and of law which may have been dealt with during the administrative proceedings.


Joined Cases 142 and 156/84, C-142/84



Company, Judicial Review, Commercial

Updated: 19 May 2022; Ref: scu.133897