United Brands Company and United Brands Continentaal BV v Commission of the European Communities: ECJ 14 Feb 1978

Europa The opportunities for competition under article 86 of the treaty must be considered having regard to the particular features of the product in question and with reference to a clearly defined geographic area in which it is marketed and where the conditions of competition are sufficiently homogeneous for the effect of the economic power of the undertaking concerned to be able to be evaluated. For the product 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 to a limited extent interchangeable with them and is only exposed to their competition in a way that is hardly perceptible. The dominant position referred to in article 86 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 giving it the power to behave to an appreciable extent independently of its competitors, customers and ultimately of its consumers. In general a dominant position derives from a combination of several factors which, taken separately, are not necessarily determinative. A trader can only be in a dominant position on the market for a product if he has succeeded in winning a large part of this market. However an undertaking does not have to have eliminated all opportunity for competition in order to be in a dominant position. An undertaking’s economic strength is not measured by its profitability ; a reduced profit margin or even losses for a time are not incompatible with a dominant position, just as large profits may be compatible with a situation where there is effective competition. The fact that an undertaking’s profitability is for a time moderate or non-existent must be considered in the light of the whole of that undertaking’s operations. The fact that an undertaking forbids its duly appointed distributors to resell the product in question in certain circumstances is an abuse of the dominant position since it limits markets to the prejudice of consumers and affects trade between member states, in particular by partitioning national markets.
Europa An undertaking in a dominant position for the purpose of marketing a product – which cashes in on the reputation of a brand name known to and valued by the consumers – cannot stop supplying a long- standing customer who abides by regular commercial practice, if the orders placed by that customer are in no way out of the ordinary. Such conduct is inconsistent with the objectives laid down in article 3 (f) of the treaty, which are set out in detail in article 86, especially in paragraphs (b) and (c), since the refusal to sell would limit markets to the prejudice of consumers and would amount to discrimination which might in the end eliminate a trading party from the relevant market. If the occupier of a dominant position, established in the common market, aims at eliminating a competitor who is also established in the common market, it is immaterial whether this behaviour relates to trade between member states once it has been shown that such elimination will have repercussions on the patterns of competition in the common market. The policy of differing prices enabling UBC to apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage is an abuse of a dominant position. Charging a price which is excessive because it has no reasonable relation to the economic value of the product supplied may be an abuse of a dominant position within the meaning of subparagraph (a) of article 86 ; this excess could, inter alia, be determined objectively if it were possible for it to be calculated by making a comparison between the selling price of the product in question and its cost of production, which would disclose the amount of the profit margin.
Europa ‘ . . the charging a price which is excessive because it has no reasonable relation to the economic value of the product supplied would be an abuse.
This excess could, inter alia, be determined objectively if it were possible for it to be calculated by making a comparison between the selling price of the product in question and its cost of production, which would disclose the amount of the profit margin; . .
The questions therefore to be determined are whether the difference between the costs actually incurred and the price actually charged is excessive, and, if the answer to this question is in the affirmative, whether a price has been imposed which is either unfair in itself or when compared to competing products.’
C-27/76, [1978] EUECJ C-27/76, [1978] ECR 207
Bailii
Citing:
See AlsoUnited Brands v Commission ECJ 5-Apr-1976
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C-27/76, [1976] EUECJ C-27/76R

Cited by:
CitedBHB Enterprises Plc v Victor Chandler (International) Ltd ChD 27-May-2005
The claimant created a very substantial computerised database about horses and the racing industry. It licensed the database to users, including some who were able to grant sub-licenses. It sought to rely on the Database Directive to support its . .
[2005] EWHC 1074 (Ch), [2005] EuLR 924
CitedAttheraces Ltd and Another v British Horse Racing Board and Another ChD 21-Dec-2005
The claimants relayed horse racing events to bookmakers. The respondents collected data about the races and horses. The claimants sought the freedom to use that data, and the defendants asserted a database right to control such use.
Held: BHB . .
[2005] EWHC 3015 (Ch)
CitedAttheraces Ltd and Another v The British Horseracing Board Ltd and Another CA 2-Feb-2007
The defendant appealed a finding that it had abused its dominant market position in refusing to supply to the claimant a copyright licence for its information on horse racing at a proper or acceptable price. The defendant was said to have a monopoly . .
[2007] EWCA Civ 38, [2007] UKCLR 309, [2007] BusLR D77

These lists may be incomplete.
Updated: 20 December 2020; Ref: scu.132436