Packaging company likely to lose appeal

Date: 04/07/1996

By Tim Jones

ONE of the EU's longest running legal sagas is crawling to an end.

Thirteen years after a complaint was filed with the European Commission against Swedish packaging company Tetra Pak International SA for allegedly abusing a dominant position, the case will finally be laid to rest by the end of the year.

Tetra Pak's appeal against the decision of the Court of First Instance (CFI) in October 1994 to uphold the 75-million-ecu fine imposed on the firm by the Commission was rejected by Advocate-General Ruiz-Jarabo Colomer last week.

In his opinion, Colomer called on the full Court of Justice to refuse the appeal when it comes before its judges in the autumn.

Tetra Pak makes machinery for manufacturing cartons for liquid foods. The market for cartons can be divided into two sectors: 'aseptic', comprising cartons and filling machines used for storing foods for several months, and 'non-aseptic', for foods sold for immediate consumption.

On the basis of a complaint in 1983, a Commission investigation found elements in the contracts the company had signed with its customers in some member states to be contrary to EU law. These included the absolute right of the company to prevent customers from adding accessories to the machines, using cartons other than those made by Tetra Pak on the machines and exclusive rights of maintenance.

The firm modified aspects of the contracts after talks with the Commission, but did not go far enough to satisfy investigators. In July 1991, the Commission fined the company for abuse of a dominant position contrary to Article 86 of the Treaty of Rome.

Tetra Pak brought an action for annulment of the decision before the CFI in 1991, but this was rejected. It then launched an appeal against this decision, claiming that the Court's definition of the relevant product market was incorrect and the fine disproportionate.

Above all, the firm continues to contest the landmark decision in the case - that Tetra Pak could abuse a dominant position with actions in a market where it was not dominant and where the effects occurred in the non-dominant market.

While the Commission could only establish that Tetra Pak had a dominant position in the aseptic market, it also found abuses in the non-aseptic market. The Court supported its contention that abuses of a dominant position can be found in a market where a company is not dominant, provided there are close links between the two markets.

The Court found that both the aseptic and non-aseptic machines and cartons were used for packaging the same liquid products - mostly dairy products and fruit juice - and a large number of Tetra Pak's customers operated in the two markets.

The firm hopes the Court of Justice will at least find that the CFI erred in this new legal departure.