Abstract
It is clear that in order to obtain comprehensive antitrust protection the term “undertaking” should be interpreted most liberally. In the legislative analysis of this term it has been questioned whether its interpretation should be determined on the basis of economic considerations. See 1–31. Most writers have supported such an interpretation as being in keeping with the purpose of Arts. 85 and 86, rather than merely stressing technical or legal concepts which relate to the separate legal personalities of the bodies involved.1 From the language of the articles there seems to be no reason why the term “undertaking” should not include almost any legal or natural person carrying on activities of an economic nature, or have a reasonable degree of economic autonomy.2 It also fellows from the articles that the legal form of an “undertaking” is not decisive; it could include corporate bodies, unincorporated associations, partnerships and individual traders.3 The definition of “undertaking”, as it may be based upon economic concepts, embodies the principle of “lifting the veil” which, as a judicial inroad into the corporate entity, is used by courts following the lead of the legislature.4 An economic unit theory, as may be applicable in competition cases, is a step in that direction and rests on the basis of corresponding justifications.
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References
See, for example, Columbia Law School Project on European Legal Institutions; The Law of the European Economic Community vol. 2, sec. 85.11, at p.3–91 (Surit and Herzog eds. 1976)(hereinafter cited as“Smit and Herzog”); R. Graupner, The Rules of Competition of the European Economic Community 11 (1965); D. McLachlan and D. Swann, Competition Policy in the European Community 130 (1967); Note, “The Substantive Rules of Antitrust in the Common Market; Analysis and Approach” 17 Stanford L. Rev. 263 (1965). The meaning of the term “undertaking” for Art. 86 need be, of course, the same as for Art. 85 (see 1–30).
Cf. Bellamy, Child and Morris, Common Market Law of Competition sec. 2–03 (2nd ed. 1978).
Cf. ibid.; Honig, Brown, Gleiss and Hirsh, Cartel Law of the European Economic Community 9 (1963).
See Gower, The Principles of Modern Company Law 213–217 (3rd ed. 1969).
OECD, Committee of Experts on Restrictive Business Practices, Restrictive Business Practices of Multinational Enterprises secs. 130–131 (1977)(hereinafter referred to as “OECD, Restrictive Business Practices of Multinational Enterprises’).
See Douglas and Shanks, “Insulation From Liability Through Subsidiary Corporations” 39 Yale L.J. 194–195 (1929). This article is mostly concerned with the liability of parent companies in contracts and torts.
Cf. Schwartz, “Applicability of National Law on Restraints of Competition to International Restraints of Competition” in Cartel and Monopoly in Modern Law vol. 2, 702–703 (1961).
See Douglas and Shanks, supra note 6, at 204–205.
The relevant judgments for our survey from the complex of the Dyestuffs Cases are the following: Case 48/49 Imperial Chemical Industries Ltd. v. Commission [1972] E.C.R. 619 (hereinafter cited as the “I.C.I. Case”); Case 52/69 Geigy AG v. Commission [1972] E.C.R. 787 (hereinafter cited as the “Geigy Case”); Case 53/69 Sandoz AG v. Commission [1972] E.C.R. 845 (issues of fact and law and the grounds of judgment in the latter case are identical to those of the Geigy Case).
Some of the economic considerations upon which the theory is based were previously mentioned in a different connection (see the intra-enterprise conspiracy doctrine in Section 3 of this chapter) and have already been entertained by the Court in the B6guelin Case (Case 22/71 [1971] E.C.R. 949; for a factual description of this case see 2061).
See the Aniline Dyes Cartel [1969] C.M.L.R. D23 (hereinafter cited as the “Dyestuffs Decision”).
Case 6/72 E!ropemballage Corporation and Continental Can Company Inc. v. Commission [1973] E.C.R. 215 (hereinafter cited as the “Continen-tal Can Case”). The court rejected some of the factual appraisals made by the Commission and thus reversed the decision.
Joined Cases 6 and 7/73, Istituto Chemioterapico Italiano SpA and Commercial Solvents Corporation v. Commission [1974] E.C.R. 223 (hereinafter cited as the “Commercial Solvents Case”). Reference to the decision of the Commission is given in note 22).
Zoja SpA v. Commercial Solvents Corporation and Istituto Chemioterapico Italiano [1973] C.M.L.R. D50 (hereinafter cited as the “Zoja Decision”Y.
In Case 85/76, Hoffmann La-Roche and Co. AG v. Commission [1979] E.C.R. 461.
See Lipton Cash Registers and Business Equipment Limited v. Hugin Kassaregister AB and Hugin Cash Registers Limited [1978] 1 C.M.L.R. D42, at para 74.
Although no specific Community enactment on the operation of the economic unit theory exists, the Commission laid down, in a Notice, some guidelines in this direction, for the specific purpose of calculating aggregate turnover of enterprises which are parties to agreements under the scope of that Notice; see Notice, Concerning Agreements, Decisions and Concerted Practices of Minor Importance Which Do Not Fall Under Article 85(1) of the Treaty Establishing The European Economic Community, J.O. 1970, C64, p.1.
See Koppensteiner, “International Enterprises Under the Antitrust Law of the European Economic Community” 9 J.W.T.L. 296 (1975).
Cf. I.C.I. Case 662, at paras. 132–135; Geigy Case 835,at para 44.
See further arguments of the applicants in the Continental Can Case 223.
In the Dyestuffs Cases the Commission inferred actual offences upon evidence of action in one similar event only (see 2–21), but this is not the case where such inferences are made with regard to a specific offence which occurs in completely different circumstances, as mentioned in the text. The Dyestuffs Cases were, nevertheless, criticized for a certain departure from the strict formula of proof as suggested here. See 2–24.
But see Bentill “Control Over the Abuse of Monopoly Power in EEC Business Law” 12 C.M.L.Rev. 65 (1975).
In the last chapter of the study we indicate that the standards of proof to establish an economic unit for a jurisdictional purpose in a specific field may come under the scrutiny of the principles of jurisdiction of international law. See 6–9.
See Mann “The Dyestuffs Case in the Court of Justice of the European Communities” 22 Int. & Comp. L.Q. 48–49 (1973); Allen, “The Development of European Community Antitrust Jurisdiction Over Alien Undertakings” 2 Legal Issues of European Integration 58–59 (1974); Steindorff “Annotation on the Decision of the European Court in the Dyestuffs Cases of July 14, 1972” 9 C.M.L. Rev. 506 (1972); Murray, “Case Note, Case 48/69, Dyestuffs Cases” 13 Va. J. Int. L. 381 (1973).
See V. Korah “Istituto Chemioterapico Italiano SpA and Commercial Solvents Corporation v. Commission of the European Communities” 11 C.M.L. Rev. 252 (1974). The writer observes that such a definition for a “subsidiary” would not be very different from the definition of “inter-connected bodies corporate” in section 159 of the English Companies Act 1948.
L. Leigh, The Criminal Liability of Corporation in English Law 75 (1969); see also R. Cross and P. Jones, An Introduction to Criminal Law 106–107 (7th ed. 1972).
For example in Smith, Stone & Knight v. Birmingham Corporation [1939] 4 All E.R. 116 (per Atkinson J.), six points were considered relevant for determining the question of implied agency; some of them are similar to the guiding principles of the economic unit theory. See also Badische Anilin und Soda Fabrik v. Basle Chemical Works, Bindschedler [1898] A.C. 200 H.L.
See Russell on Crime vol. 1, 128 (12 edition, Turner ed.,1964).
Ibid. On the concept of an “innocent agent” see also Cross and Jones, supra note 69, at 103. In their eighth edition, sec. 19.2, the authors describe an “innocent agent” as one who commits the actus reus of an offence, but is himself devoid of responsibility. See also Russell on Crime, supra note 73, at 129; an “innocent agent” is defined as a mere machine whose movements are regulated by the offender by Glanville Williams, Criminal Law sec. 120 at 350 (2nd. ed. 1961).
a. See Re Pittsburgh Corning Europe [1973] C.M.L.R. D6 at para 5.
See Cases 32 and 36–82/78, BMW Belgium SA and others v. Commission (1979) E.C.R. 2435.
See Krause “The Multi-Corporate International Business Under Section 1 of the Sherman Act - Intra-Enterprise Conspiracy Revisited” 17 The Business Lawyer 912 (1962).
Christiani & Nielsen N.V. [1969] C.M.L.R. D36 (herinafter cited as the “Christiani & Nielsen Decision”).
See Smit and Herzog, supra note 1,at secs. 85.62 et seq.
Van Oven “The Intra-Enterprise Conspiracy Paradox” in European Competition Policy 111–112 (1973).
Sperry-Rand Press Release, Bulletine of the E C, No.8, 1969, secs. 40–41.
See M. Putz v. Kawasaki Motors (U.K.) Ltd.; The Community v. Kawasaki Motoren GmbH. [1979] 1 C.M.L.R. 448.
Case 22/71, Béquelin Import Co. v. GL Import-Export SA [1971] E.C.R. 949 (hereinafter cited as the “Béquelin Case”).For the details of the case see 2–61. This case is a good example for a consideration of the intra-enterprise conspiracy in a domestic setting since both the parent company and the subsidiary were situated within the Common Market. Although the Court failed to deal with the concept in a previous case (Case 78/70, Deutsche Grammophon Gesellschaft MbH v. Metro-SB Grossmärkte CmbH & Co. KG [1971] E.C.R. 487 (hereinafter cited as the “Deutsche Grammophon Case”)), Advocate-General Romer, relying on the Commission’s position in theChristiani & Nielsen Decision and the Kodak Decision argued that Art. 85(1) was inapplicable to a mere division of functions within a single economic unit. The Court seemed only to imply that as far as parent-subsidiary arrangements are concerned, Art. 85(1) does not operate.
See Van Oven, supra note 83, at 114. The writerclaims that the ruling does not imply repudiation of the intra-enterprise conspiracy concept, but see Fourth Report on Competition Policy (at point 52) where the assertion is made that the case is in line with the Commission’s previous decisions which had repudiated the concept. See also Koppensteiner, supra note 35, at 212, where the writer argues that in the Baguelin Case the Court found the decisive criterion in the impossibility of competition between parent and subsidiary (but he regards the ruling on this point as an obiter dicta).
Case 15/74, Centrafarm BV and de Peijper v. Sterling Drug Inc. [1974] E.C.R. 1147 (hereinafter cited as the “Centrafarm Case”).
See Dietz “Enforcement of Antitrust Laws in the EEC’6 T - elnternational Lawyer 746 (1972).
See A. Deringer, The Competition Law of the European Economic Community 10, at secs. 113–114 (CCH Edition, 1968).
See Forcione “Intra-Enterprise Conspiracy Under the Antitrust Regulations of the Common Market” 25 The Business Lawyer 1434(1970)
See McQuade “Conspiracy, Multicorporate Enterprises and Section 1 of the Sherman Act” 41 Va. L. Rev. 191 (1956).
Grosfillex [1964] C.M.L.R. 237 (hereinafter cited as the “Grosfillex Decision”).
Seventh General Report on the Activities of the Community: April 1963-March 1964 (June 1964), point 67. See also Guide Practique where the Commission firstmade its approach about arrangements and enterprises external to the Comma Market known (Practical Guide to Articles 85 and 86 of the Tdraty of Rome unofficially translated in the Board of Trade Journal 9th October, 1962, and reprinted in Campbell, Common Market Law, vol.2, sec.2605 (1969))
Cf. Acevedo “The EEC Dyestuffs Case: Territorial Jurisdiction” 36 Mod. L. Rev. 320 (1973).
Commission of the EEC, Opinion Governing the Applicability of the Treaty of Rome to the Importation of Japanese Products into the Community, J.O. 1972, C111/13. See also Second Report on Competition Policy points 17 and 24.
Cf. Acevedo, supra note 141, at 320; Allen, supra note 58, at 71. But see a letter by Dr. Schlieder, Director-General of Competition, in answer to a letter by Mr. J.P. Cunningham, in Financial Times, Newsletter, October 1972, p.13 (the view expressed in the letter is that the ruling implies an effects doctrine).
The Béguelin Case 967–968. Reference for the Sirena Case which is mentioned in the opinion of the Advocate-General is: Case 40/70 Sirena v. Eda and Others [1971] E.C.R. 69. The relevant pronouncement of the Court in the latter case is the following: “ if the above mentioned agreements were concluded before the Treaty entered into force, it is both necessary and sufficient that they continue to produce their effects after that date” (p.84).
The Aide Memoire was published in (E. Lautherpacht Ed.) British Practice in International Law (1969) pp.58–60 and in the International Law Association, The Hague Conference 185–188.
See A. Hermann, Financial Times, Antitrust Policy in Europe 100 (1973).
Malawer, “International Law, European Community Law and the Rule of Reason” 7 J.W.T.L. 43 (1973).
Ellis in International Law Association, New York Conference 154.
Korah “The Control of Mergers Under Art. 86 of the Rome Treaty: Continental Can” 26 Current Legal Problems 93–94 (1973).
The Commission also suggested in its submissions that the economic unit theory is an alternative ground for jurisdiction. On this ground it based its Zoja Decision.
Mr. J. Temple-Lang, a Legal Advisor to the Commission, expressed support for the proposition that this pronouncement of the Court in the EMI/CBS Cases approves an “effects doctrine”. Mr. Temple-Lang also indicated that the Court’s judgment in the United Brands Case could be interpreted to the same effect since it stated that the Commission has power to investigate costs of production outside the Common Market (in a private communication on 2nd October, 1979).
See B. Goldman, European Commercial Law 159 (1973); Riedweg (rapporteur) in I.L.A. Tokyo Conference 478; Oberdorfer, Gleiss and Hirscl Common Market Cartel Law sec. 22 (2nd ed. 1971); Kruithof “The Application of the Common Market Anti-trust Provisions to International Restraints of Trade” 2 C.M.L.RN.74 (1974); Deringer supra note 127, at sec. 129; Hug, “The Applicability of thepri flsoftte European CommunitisTreaties Against Restraints of Competition to Restraints of Competition Caused in Non-Member States, but Affecting the Common Market” in Cartel and Monopoly in Modern Law vol.2, 653 (1960).
American Law Institute, Restatement (Second) of the Foreign Relations Law of the United States Section 18(b)(1965).
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Barack, B. (1981). Theories and Principles in the Application of Community Competition Rules to Non-Community Enterprises. In: The Application of the Competition Rules (Antitrust Law) of the European Economic Community to Enterprises and Arrangements External to the Common Market. Springer, Dordrecht. https://doi.org/10.1007/978-94-017-4482-9_2
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