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COMPETITION LAW OR ANTITRUST LAW:THE BANANA JUDGEMENT AND SOME CONSIDERATIONS TO

PARTICULAR JUDGEMENTS

STUDENT NAME: JUANA GUILLEN


STUDENT NUMBER: 9675817
FACULTY OF LAW OF THE UNIVERSITY OF AMSTERDAM
DEPARTMENT OF INTERNATIONAL LAW
SUPERVISOR: DANIELE OBRADOVISH
STUDENT CAMPUS BOX 100
YEAR 1989
THE NETHERLANDS
Table of Contents:
foreword
preface
I-The recent banana judgement
-Article 86: relevance to countries
-identification of consequences for 3rd countries
2- What is about the banana judgement?
-overview of the banana judgement
-quoting relevant passages or stipulations
-considerations in particular judgements
3-Consequences of Judgement
-clarification of points A,B,C etc.
4-Conclusions:
5-Summary of the text
Abbreviations:

CFI: Court of First Instance


CMLR: Common Law Report
CMLRev: Common Law Review
ECJ: European Court of Justice
ECLR: European Competition Law Review
ECR: European Court Reports
EEA: European Economic Area
EFTA: European Free Trade Association
FAO: Food and Agriculture Organisation
GATS: General Agreement on Trade and Services
GATT: General Agreement on Tariffs and Trade
ICJRep- reports
JCMS- of common market studies
MMC: Monopolies and Merger Commission
OECD: Organisation for economic co-operation and development
OEEC: Organisation for European economic co-operation
OJ: Official Journal (of the EC)
PCIJ: Permanent Court of International Justice
PCA: Partnership and co-operation agreement
SEA: Single European Act
WTO: World Trade Organisation n
In the producing countries of Central America, the collec-tion of bananas
generally carried out by the firms that themselves distribute the bananas in the
consumer country or are closely connected with the wholesalers. These firms that
own their own plantations or have entered into supply con-tracts with planters
therefore often have links with the production sector. Although as a general rule
these firms are not responsible for the risks to which the goods are ex-posed
until they leave port they already control the organi-sation of the collection,
packaging, forwarding to the port and loading. The importance of efficient
harvesting and loading for the purpose of ensuring that a region remains
competitive is grasped when it is pointed out that in almost all the countries
under consideration these operations rep-resent more than hone half of export
earnings. f.o.b.
Opinion of Mayras A.G. in UBC v. The Commission (Case 27/76).

INTRODUCTION: This Thesis I write about particular policy matters concerning


European community law in the context of competition law, following some structure
of some articles as for example of Jean Monet papers author is Mattias Kumm his
paper about the German problem concerning the banana judgement. My outline and
structure is about the link be-tween competition rules consequences in
international rules and country consent, the relation to abuse describe in UBC
case to banana market, link between competition rules and country approve of and
compare the negative consequences to 3rd countries in this case Latin American
countries, the Following is a definite of what is to be my thesis that I will to
submit to my supervisor Ms. Daniele Obradovic.
The European problems concerning the market order for ba-nanas: United fruit
company was founded in 1889 and trans-formed Central America into an export fruit
destined for the rich market of Europe and North America. Before even the European
Community was established bananas have been a sen-sitive agricultural product.
Since 1 January 1948 GATT’s status in the European Commu-nity has been applied
and a few years after its entry into force. The Treaty of Rome was signed and at
that time, the separate Member States (not the Community as a whole) were Members
of GATT and bound to comply with its rules. Quarrels over bananas led to problems
even at the very beginnings of the EEC. At the end of the negotiations in 1956,
one of the open questions was the conflict between States that intended to
maintain their import of bananas from third countries, and those which demanded
protection from the banana produc-tion in some regions and dependent territories.
In 1957 the German chancellor Adenauer delayed the signing of the Treaty of Rome
for three days in order to negotiate a derogation for Germany into the import of
bananas with no tariffs and not abinding the principle of community preference.
The import from bananas from third countries has always been the subject of
discussion within the European Community. When signing the Treaty of Rome in 1957,
the heads of government were already concerned with the “banana's problem”.In 1962
De Gaulle President of France, took part in the community discussion demanding a
supply for his country that would privilege land production. Till now is obvious
that the ba-nana issue is not only an internal matter within the Euro-pean Union.
The intensity of this discussions within the Community and with third countries
has been taking on an in-cresingly heated tone due to the Banana Common Market Or-
ganisation (CMO). Before the signing of the Marrakesh Agree-ment, France and
Germany were entangled in a strong discus-sion on the matter of the European
market for bananas.0 In the fight against the Community’s import regime of
bananas, three major sources of law have been used; Community law, national law
and international law. Legal actions have been taken and some proceedings are
still pending before the Court of Justice, the Court of First Instance and the
German Federal Constitutional Court, as well as various national court. The Banana
Regulation’s extra territorial effects have been expressed in actions before
GAAT/WTO Panels, un-dertaken by countries which are not members of the European
Union since Latin Americas economies revenues were in danger of collapsing. EC
Regulation 404/93 establishing a market or common organisation or order for the
banana market in the European Union establish a common organisation of the market
in bananas. It fixed a system of assistance to ACP Produc-ers: closely attached to
French, Spanish, Portuguese import-ers

Form quotas and tariffs for third country bananas, most of who are established in
Central America and owned by US grow-ers. Three years before the entering of the
Regulation into force under Article 19(2) Article 16 of the Regulation 404/93 A
special mechanism was provided to adapt quotas to exceptional circumstances and to
overcome difficulties of a sensitive nature monitored by a Management Committee
com-posed of EC and MS representatives (Article 16 in connection with Article 30
of Regulation 404/93) The Regulation did not contain explicit transitory
provisions to allow importers to adapt their business to the new market
organisation. The measures were aimed at restricting the importation of third
country bananas and market share in the Community under this regime of this EC
Regulation 404/93, quotas of bananas from third countries entitled the
preferential treatment under the regulation were designate to importers based on
prior sales. Imports outside these quotas are subject to prohibi-tive tariffs. The
banana market and conflicts fall inside what is call the purpose of competition
law /antitrust law as the control in the public interest of the actual or po-
tential market power of business firms. Article 113 of the EC Treaty give the EC
solely authority to enact the foreign trade law of the community and excludes
thereby any concur-rent competence on the part of Member States (MS). This in-
cludes the cross border services as well in goods. The EC is further responsible
under Article 113 and 228 for commercial agreements with third countries; and
under Article 238 for more far-reaching associations agreements with other coun-
tries. The EC also exercises foreign trade powers under the catching authority of
Article or Art 235 of the EC Treaty. Member States preserve the right to deal with
trade develop-ment and matters, and they have concurrent jurisdiction with the
Community over the provisions of services that attach a temporary or permanent
establishment in the Community. These areas are under EC jurisdiction an example:
is the Common Agricultural Policy (CAP); European Community also enjoys exclusive
authority with respect to the Regulation of Inter-national Trade in areas for
which it has internal compe-tence, another example is the ECSC Treaty by contrast
it is limited to the establishing Maximum and minimum rates of duty and enacting
measures of contingent protection. Most of the rules on foreign trade under the
European Community ap-ply to all imports into the European Union. There are bilat-
eral agreements between the European Union and United States of America under
Common Customs Tariff (CCT) consist of all the tariff measures affecting imports
into the European Un-ion at any particular time. The measures are published annu-
ally in the Integrated Tariff (Taric).
Many agricultural products are subject to special charges that apply instead of or
in addition to the regular duty. If the product is subject to a World Trade
Organisation (WTO) binding this operates at the maximum permissible custom charge.
Preferential quotas may apply to a single country or to a group of countries,
example the US’s tariff quota for oranges and orange juice that share with Cuba,
Argentina and Colombia. In the banana case, the Court(ECJ) repeated the main
reasons for which it excluded direct effect of GATT rules (in fact quoting form
International Fruit Company v. Produktschap voor Groenten Cases 21-24/72 [1972]
ECR 1219). And under Regulation 404/93 it defies all theoretical dis-cussion on
‘deregulation’ and ‘competition between legal or-ders’ there is a long story of
special interest lobbying be-hind the Regulation which established an EC Common
organisa-tion of banana markets for ACP growers closely attached to French,
Spanish and Portuguese importers. This was the dam-age of third country mostly US
owned growers stablished in Central America from where German importers had
enjoyed a regime of tariff-free imports, german banana importers who lost
considerable business after the enactment of the Regu-lation of 1 July 1993,
defying by FRG the regulation on the common organisation of the market on bananas
in favor of acp growers as french, spanish and portugueses importers this
regulation defies all theoretical discussion and competition between legal orders.
EC intervention in the banana market was the detriment of ‘third country’ mostly
US owner in Cen-tral America the Question raise is then What are constitu-tional
rights in the sense of sovereign powers? Since ba-nanas were so cheap and popular
to german consumers, it is the economic approach that define the market as
interna-tional and the Question raise Why wasn’t the Court judgement approach in
the banana judgement as UBC? Or was the Court so aware and experience in banana
economies since UBC that noone try to insolent this bridge of uncertainty through
the years? May be there is a problem of construction? Problem is that remedies
depend on another legal system (rights and du-ties) their nature context extent,
that the function of a national system is to take national remedies as in Italian
law, and national markets to prevent abuse of monopoly using fines and injuctions.
To understand competion law we need Article 86 which creates the rules and an
action of defense under such article is needed of expert economic advice, none
see a judgement of the court year’s later as a black out of the law of competition
and a miracolous judgment in 5 Octo-ber 1994 Case C-280/93 Germany v Council as a
dismisal by surprise, as the German government and distributer of ba-nanas claim,
so as well another demostration is that there is a long conflict and as well the
importers complain was inadmissible against the banana regulation where both the
german government and importers both lodged complains against the EC banana
Regulation with a view to obtaining interim relief under Article 185/186 and
looking for a void declaration to the regulation since according to importers was
inadmissible, but they lack standing to sue because they were not directly and
individualy concern by the regulation and they had no clue of EC law. It will only
allow recourse unde Article 215(2) of the EC Treaty to recover damages in case of
ilegality of community action. But Germany failed in many ways if the litigation
had ended with the Court judge-ment of 5 October 1994 this would have been
regarded till today as was there aim a claim under a Human Rights Treaty, Germany
not in front of the European Court of Justice but in front of the European Court
of Human Rights this would have been regarded by doctrine as a recognition of
fundamental rights theory in EC law since how rights are confered on in-dividuals
by the Treaty are to be enforced in each different national system and therefore
if the litigation had ended perhaps would only have provoked a debate on whether
the ECJ takes rights theory seriously or uses it just for the sake of rethoric.
But the German importers continue the litiga-tion and went to german courts, they
were successful in ger-many despite the clear wording of the banana judgement of
the ECJ. No UNCITRAL but a Regulation that did establish the European market order
for bananas as a common organisation for the market of bananas setting up a system
of assistance to ACP between banana producers closely attach to French, Spanish,
Portuguese importers establishing quotas, tariffs for 3rd country bananas from
Central America owned by US Growers, the measures and aiming to restrict the
importation of bananas from 3rd country bananas and market share in the Community
became the other wall in the german economy.

The problem here is the lack of description and the bridge that nobody seems to
link between the time of the Commis-sion decision and the Courts judgement in the
United Brands Case Aff.27/76 of 14 February 1978 and the Banana Judgement of 5
October 1994, in the second judgment any of the de-fences or complains of German
sovereignty over rights of traders and trade, since United Fruit now United Brands
op-erating under the well known chiquita label was soon joined in the quest by the
predecessor of Del Monte and Dole, within a decade, the big three had holding in
much of tropi-cal latin America, the Caribbean, Africa and Southern Asia. Where
this oligopoly didn’t set up plantations, it dominated shipping and marketing: no
one mention the illegal transpor-tation of bananas to Germany and coffee and from
Latin American ports under Latin American flags and all the enrich business small
men now a days billionaires with the products that so far, never gave a cent to
the poor starving nations of Central American workers, but yes to the rotation of
cor-rupted underground transactions of the Latin American cor-rupted business
institutions, and governments and the Euro-pean market was consuming
bananas,where vast areas of land continuously were appropriated from subsistence
farmers by governments keen on extending railways lines and sovereig-nity areas to
all areas of their territory and during the final judgement and all articles from
different authors that claim the sovereignty and exploitation of German rights no
one read to write this thesis or remember what created the European market in
competition law how article 86 is apply to foreign multinational, what was then
the multinational approach to the German market or the other way around, how this
is related to their national system when community law is a separate system of
national law since the first refer-ences are to be found in the Report to the
European Assembly prior to the Enactment of Regulation 17/62 where it was rec-
ommended that before further legislation was enacted, more knowledge of the
national law of the member states was needed. Over one hundred years later the
process of oligop-oly continue, in the year 1997 Costa Rica became for the first
time a net importer of bananas while its banana ex-ports were second to Ecuador in
the world market. Banana cash continues to pay off international debts incurred
bying American inputs and technical support in the 1970s. Liberal-ized trade and
structural adjudgement plans mantained the pressure to export bananas which are
prescribed by the IMF which demand increased exports and cuts to government social
spending in exchange for new loans and rescheduling of pay-ments on old loans. And
in the first case of Chiquita ba-nanas prices depended on the country buyer one
can assume that the producers of bananas sold the distributor (Ger-many)
different prices, as with UBC which did not create different prices but a clause,
so discrimination presupposes the division of customers into groups Court some how
for got the total analysis that bananas Is as well animal food for birds, monkeys
etc. you can produce vitamins( as in join dominance), shampoos, be use as a model
as Josephine baker rise her image with bananas to conquest her public in Paris
(single market) which could be according to this factor a differential product
inside the product market. UBC doesn’t bear the risk of consumers market the Court
considers verti-cal integration as an element of dominance as the seller UBC
Germany wanted to discriminate in order to raise profits in-stead of helping
German importers adapt changing market situations in the elasticity of dominance
which is high and low, ubc superior efficiency is a predator as Germany or
standard oil, UBC got power over time, Germany is behind with short term factors
as weather, strikes, countries cur-rencies and third world country debt there is
no risk for German nor for ubc so call vertical relations. So this the-sis is
about that a demonstration of that problem in verti-cal market integration and the
consequences in time.

WHAT BANANAS ARE ABOUT: Bananas market is covered by prefer-ential markets or


access under quota, licensing arrangements to France, UK, and other associated
states of EEC countries export mainly to France, Italy and to all the EEC
Countries, when quotas can’t be filled (as has occurred with the sup-pliers of
Italian and UK Market) the shortfall is met from open market supplies. The largest
flow of trade (7%) is do-mestic trade to Spain and Portugal another 7% is
accounted for by minor local trade to nearby markets to the Canary Is-lands and
Madeira such as from Ecuador to Chile, Brazil to Argentina. Sixth new markets of
Eastern Europe -Yugoslavia and the Soviet Union- and the oil exporting countries
of the Near East, North Africa, accounting for only 6% of banana imports. Where
that relation to the European Market is the US multinational companies own and
controlled 65% of total world banana exports form eight countries and has
degenerate an internal and external conflict in and outside Europe since as a
tradition the first part of the century when United Fruit colonise and therefore
occupy making so call diabolic documents resulting into a banana gate, since the
deforestation of the beginning of the banana fever burning multiple acres of land
US became owner of vast tracks of prime land in those countries, as for example
in 1949 United Fruit (or Rosario Mining Co.) Owned or leased ap-proximately 3.5
million acres in Cuba, Jamaica, Honduras, Guatemala, Nicaragua, Costa Rica and
Panama and Colombia; where large scale plantation units became traditionally a
dominant pattern of the industry. In Central America, Carib-bean and other third
countries today these multinationals continue direct production operating
plantations as large as 5,000 hectares. Chiquita is truly a global company, with
headquaters in 6 continents, own approximately 90,00 acres (36,400 hectares) and
lease about 50,000 acres (20,000 hec-tares of land in Panama, Costa Rica,
Colombia, with 40,000 employees and operations and in 1990 bananas were a single
exception in the European Community in terms of the rule ap-plied for the free
circulation of goods among its members.
Out of the total 45 million of bananas produced worldwide close to 10 million are
exported. Aproximately 3.5 million exports go the US and 3.9 million tons to the
European Mar-ket. Details salws in the EU result in the invoicing of about US$6
billion.
Banana imports increased 5% in 1994 to 3.7 million MTs, al-though import value
increased only slightly. The position and import market shares of the top five
suppliers to the US remained relatively unchanged between 1993 and 1994: Costa
Rica (steadly 26%), Ecuador (falling from 22% to 21%), Co-lombia (steadly at 17%),
Honduras (rising from 12% to 13%) and Guatemala (rising from 11% to 12%), Mexico
share of the US market decreased from 9% to 5% over the period, while Pa-nama
exports more than doubled giving it an import market share of 4%, up from only 2%
a year earlier. The organisa-tional structure shared by the companies is known as
verti-cal integration, controlling several phases of banana prod-ucts as
production and marketing which under free market conditions would be controlled by
a number of different com-panies. Under the system of vertical integration banana
com-panies continue to posses power over governments in the countries they
operate. In the banana case, the European Court took into account many facts:
bananas got no seeds, they are easy to handle, the level of production enables the
fruit to satisfy the weak the sick and the kids you don’t need teeth to eat them,
it can be easily digested and tasted by the old and is very good for baby’s, so it
satisfy the population and the constant needs because of the colour, taste,
softness and is a year fruit nor there in any season without restrictions for the
product neither it represented a discreet market In Europe the traditional
competition mar-ket is under this framework distribute in the European sys-tem
under certain conditions: As Article 3 (g) (formerly 3(f)) of the EC Treaty
requiring ‘a system ensuring that competition in the Common Market is not
distorted” Competi-tion articles are derived from and supplemental to Article 2’s
fundamental, twin Aim to ‘approximate’ economical po-lices of the Member States
and to promote actively the de-velopment and expansion of the Community’s
economical ac-tivities, these function accounts for the EEC’s ordering OT its
competition goals. The EEC has established that the pri-mary goal of the
competition articles is the elimination of economic barriers among Common Market
states and the promo-tion of free flow of goods in a single unified market the
EEC approach has an comic consideration and the influence of into multinationals
in particular revelling the conflict of competition Law and demonstrating the
effect of supremacy of the EEC’s basic purposes in the application of antitrust
laws and Articles 85-94 . Article 86 is the equivalent of Section Two of the
Sherman Act has the character of being the greatest potential for enforcement
activity directed against those US based firms which the Commission perceives as
unduly influencing or dominating European markets. In this case there is a
definition of the product: bananas since when determining whether a firm has
achieved a monop-oly (or dominant position) in the European market, the focus of
efficiency model would be upon the existence of the mar-ket power of UBC and the
presence of the market power The product market and the geographic market has been
defined according to Article 86 applied by the Commission and the Court in
interpreting and applying to the product, geo-graphical and temporal market.
After agriculture, competi-tion policy is perhaps the most highly developed of the
Com-munity’s common policies and Treaty provisions are applica-ble as soon as a
restrictive agreement is pending and some Member States try to protect their
markets from the abuse of a dominant position which modifies the market in the
case of UBC was Denmark and other European countries. As the appli-cation with
foreign elements Article 86 weighty whether an enterprise has a dominant position
in the common market the Commission has often taken into account the entire
economic power as in United Brands Decision D 49, at par 83 thus be-come a
indirect discrimination towards foreign customers. With the greatest impact on
undertakings situated in-side/outside the common market. It is an essential
compli-ment to the fundamental provisions of the Treaty designated to create a
Common Market. If most of the price discrimina-tion theory is assumed by the
economic theory: as the analy-sis of price discrimination where economic analysis
and ef-fects of cost distinction are define. Once that is clarify the theoretical
analysis of price discrimination it will al-low to analyse the antitrust policy
adopted by the EEC, the European Court of Justice (ECJ) and the effects of
discrimi-nation in competition. Perfect price discrimination OR Sys-tematic
discrimination predatory pricing In this context Bananas in the European
Community were supplied from three parts of the world:
-EC producers were subsidies: Portugal, Spain and Greece; but also region's part
of the EC; the Canary Islands, the French Overseas Department (DOM), above all the
Martinique and Guadeloupe and the Azores.
These bananas correspond to about 20% of the total Community of supplies.
-ACP Countries have 0 duty: African, Caribbean and Pacify. Many of these countries
are former colonies to several Mem-ber States. In a Protocol to the Lome
Convention, the Euro-pean Community has ensured ACP countries preferential treat-
ment and the IV Lome Convention guaranteed a duty free ba-nana import. These
bananas correspond to about 20% of the total community supplies.
-Third-country producers (“Dollar bananas, 20%”): Ecuador, Costa Rica, Honduras,
Guatemala, Nicaragua and Colombia were the main suppliers.
Till now a days the EC Countries, except Germany, used a GAAT-bound customs
tariff of 20% on bananas. These bananas correspond to about 60% of the total
Community supplies. In 1991, Germany accounted for about 35% of the total EC im-
port.
Non traditional ACP bananas that are controversial on non traditional zero
duties' bananas.
The inadequacy of a blanket judgement on price discrimina-tion is evident, there
is no general case against it, an analysis of the UB case should help to
understand:
A) Which answer has been given to the Question by the EEC Competition
authorities
B) Whether the solution reached is completely acceptable.
I will try to explain that into the next point:

I- Or the recent BANANA JUDGMENT: The intra-enterprise con-spiracy, has relevance


to extraterritorial application of competition rules where the economic unit
theory:
1- allows not only the Question of the responsibility of the foreign enterprise
to be settled;
2- but also the solution to be found to problems of investi-gation, service of
process and enforcement with regard to enterprises.
The examination of the relevant facts is in line with the guiding principles of
the Commission decisions and Court Judgements ON THE BANANA CASE explains why the
Community case law constitutes an economic unit concentrate in the no-tion of
“control”. The European Court of Justice (ECJ) or the Court has described such
definition as follows: There is no definition in Article 86 of what constitutes an
“abuse”. The types of abuse listed in paragraphs (a) to (d) of Article 86 are only
examples of the matters that are prohibited. An abuse may consist of conduct or
behaviour for which the holding of a monopoly power is not a perquisite and which,
if it is involved a non-dominant firm, would be unobjectionable. The ECJ has given
a wide interpretation of the meaning in the light of Article 3(g)of the EC Treaty
, in which it is said that among the activities of the Commu-nity shall be the
‘institution of a system ensuring that competition in the Common Market is not
distorted’, and of Article 2, which says that “one of the tasks of the Commu-nity
to promote throughout the Community a harmonious devel-opment of economical
activities”. This has enable the Court and the Commission to apply Article 86 to a
wide range of conduct including what alters the structure of competition on the
market as well as that which directly exploits cus-tomers. If an undertaking holds
a dominant position on one market it is possible for its conduct on another
neighbour-ing market to constitute the abuse, for the dominant posi-tion and the
abuse do not have to be in the same market. For example: After UBC case 40 years
later banana market re-flected a conflict of the past and now a days since Germany
imported duty free bananas, called dollar bananas there was a banana protocol
annex to Article 15 and Article 4(3), and Italian tax under Article 95(2) of the
EC Treaty and Greece (6) protested under Article 30 EC Treaty and Lome Convention,
Germany custom duty on bananas, were no quanti-tative restrictions were impose and
since Germany was a prominent customers of these banana growers were importers and
distributors, who had enjoyed a regime of free import prior to the Regulation
404/93, many German Importers were hit hard by EC Regulations, with some facing
bankruptcy, be-cause banana prices in Germany were up. Since Germany im-ported
bananas more than any European country and the ba-nanas were duty free, almost
without exceptions from Latin America, and they were referred as the dollar
bananas, Ger-many obviously wishes to continue up to date with its banana policy
and even before the common market organisation for bananas was introduced This
fruit has been the subject of several disputes before the European Court of
Justice. In 1976 the Court determined that bananas are a separate prod-uct market,
because of specific features. The Court referred to the characteristics such as a
appearance, taste, soft-ness, seedlessnes, a constant level of production and to
the fact that bananas only to a limited extent are affected by the prices of other
fruit market. The criterion of what can affect trade between Member States
implies the definition of trade which includes the production of good and the
provi-sion of services such as banking and insurance’s and the supply of public
utilities Whether the provisions of the Treaty are applicable as soon as the
restrictive agreement some Member States try To protect their own domestic markets
from abuse of dominant position modifies trading conditions between Member States
or whether they are only applica-ble .
The Court found that Italian consumption tax imposed on ba-nanas, which were in
free circulation in the Member States, protective and thus prohibited under
Article 95(2) of the EC Treaty . If there is a dominant position inside the EC
mar-ket and the community is affected and this has impact in the community
substantial part where the territories are sub-stantial part as the Court defined
dominat position or abuse and there are some factual evaluations of the
peculiarities of the structure of the relevant market. Italy produced large
quantities of fruit, such as oranges, apples, peaches and plums, but almost no
bananas. To protect the domestic fruit market. Italy imposed a consumption tax on
bananas, but not on other fruit. In Greece the national organisa-tion for bananas
was found incompatible with Article 30 of the EC Treaty and the country’s
obligations under the Lome Convention. To import bananas to Greece originating
from other Member States or in free circulation, in the European Community,
importers need a licence. The authorities system-atically refused to issue such
licences. The present ap-proach in community law considers: Whether the agreement
is likely to produce alteration in the trade between Member State or in the Court
words: How should you decide the scope of the product market? The general
approach of the Court and the Commission has been to focus upon interchangeabil-
ity. Competition within the Common Market or abuse of dominant position is
affected, for the idea of application of Article 86 designed to promote a regime
of actual com-petition within the Common Market. For example: Concerted practices
are not normally regulated by written terms, so that their purpose can be shown
only by other, including circumstantial evidence , it seems immaterial that the
pro-hibited practice also seeks to achieve other ends as long as it seeks the
anticompetitive restraint .

I-A: ARTICLE 86: RELEVANCE TO COUNTRIEs of this article is that this article aloud
direct applicablility and it can be litigated in national courts, and since
bananas are relevant product market separate from the general product market, case
law in article 86 is clear. Since UB had a highly or-ganised integrated system,
for the production and distribu-tion of bananas as owned plantations and had
connections with independent products once this product landed in the eec the
bananas were put into the hands of distributors, competitors could use the same
method of production and dis-tribution according to the ECJ and the Commission, a
cumula-tive effect of dominant position. Germany is the explanation why in UB the
ECJ and the Commission had to wait till the banana judgment and then didn’t
explain why the competitors would come up against such obstacles if they try to
use the similar methods. In UBC the ECJ didn’t consider the possi-bility of a
competition entering the market at just one level, the degree of competition which
is consistent with a finding of dominance with interchangeable products may be
compatible con dominance and competitive pressure from out-side the relevant
market: bananas are products with multiple applications juices, ice cream etc. The
absence of potential competition constitutes an indicator of dominance it needs
potential of large capital investments and great operations of those undertakings
already in the market and by the prac-tical difficulties of building a comparable
system. As demostrated in UB where ECJ considers cumulative effect of the
obstacles facing a new competitor were almost insupa-rable, the article control
possible oligopolies for it pur-poses Article 86(1) phrase: one or more
undertakings is equal to the possibility of controling one or more undertak-ings
or control or oligopolies suitable for the use or con-trol of oligopolies, UBC
can’t fit into exploitative or anticompetitive behavour, UBC geographical price
descrimina-tion was condemned by the Commission and the ECJ since UBC landed
bananas in two communites ports and charged different prices depending on the MS,
so distributors will sell de-pending on country high/low prices to the consumer
subject to “green banana clause” which forbade resale of the ba-nanas when green
and UB created a rigid partitioning of na-tional markets at price levels which are
artificially dif-ferent.
In so far as the terminology of the Article 86 impact of the prohibited practices
on competition within the Common Market requires additional attention: The
requisite measure of market control in the definition of Dominant Position: “it is
necessary to observe that the definition of Dominant Position relates to the power
of the enterprise unilaterally doing what Article 85(1)”; calls: prevention,
restriction or distortion of competition. Another example is in UB case the Court
defined Dominant Position as : “A position of economic strength enjoyed by an
undertaking which enables it to prevent effective competition being maintained on
the relevant market by giving the power to behave to an appre-ciable extent
independently of its competitors, clients and ultimately of its customers”
. A mechanical standard for finding a Dominant Position in the context of Article
86 seems inadequate, for control can be determined only by a factual evaluation of
the peculiari-ties of the structure of the relevant market. The require-ment that
the Dominant Position be within the Common Market or in a substantial part of it:
would appear to set only minimum territorial limits rather than define the
relevant market. Article 96 makes clear that it is necessary that the Community
wide range of competition be effected, as long as the effect be felt in
substantial part of the Common Market. Where various territories or countries are
the relevant mar-ket to constitute substantial parts of the Common market, in
decisions of the commission on Article 86 it is not clear: Whether countries that
constitutes nation of the substantial part of the Common Market, the Commission
was comparing their respective territorial areas or: Whereas it was making some
forms of economic comparison ? The definition of the relevant market in which the
Dominant Position is held: “Any use that is incompatible with the Common Market is
abuse and is irrelevant if the perpetrator of the abuse was conscious of the
prohibited nature of such activity.
The Court declared that GATT must have direct effect before an applicant can
invoke GATT rules so the Court dismiss the application of Germanay for lack of
validity.
Since Germany was affected by the new import regime for ba-nanas and its
government filed an application to the Court of Justice under Article 173 of the
EC Treaty for a declara-tion that title IV and Article 21(a) of the banana Regula-
tion to be void. It requested interim relief, but this was rejected by Order of 29
June 1993 . Both declarations the banana judgement and the ECJ created a
foundation for prior proceedings. The German argument submitted that the Regula-
tion infringed essential procedural requirements, substan-tive rules of Community
law, inter alia the principle of proportionality, the right to property and the
freedom to pursue trade or business, and community international obli-gations
under GATT these were grounds invoked by the German government for an annulment of
the banana Regulation.
The Court dismissed the application and maintained the Ba-nana Regulation’s
validity. The Court has always required that GATT should have direct effect before
its provisions can be invoked by an applicant in court proceedings, the court in
the case established that direct effect of commu-nity law a prerequisite for a
private party to be able to invoke it in a national court and acquire rights. The
Court has declared that GATT must have direct effect before an ap-plicant can
invoke GATT as ground for annulment, when the applicant claims that secondary EC
law is in conflict with GATT rules. This was clearly store, even when the
applicant is a Member State, GATT can only be invoked if it is given direct
effect. On 25 July 1994, the German Government re-quested the Court to give an
opinion regarding the framework agreement on bananas and on 29 March 1994, the
framework agreement on bananas was reached between the European Union, Colombia,
Costa Rica, Nicaragua and Venezuela.
In a new attempt to scape the unfavourable effects of the agreement Germany
applied to the Court for a declaration that decision 94/800/EC was invalid . The
argument stands as that the basic rights, such as the right to property, the right
to pursue trade and the principle of equal treatment of category A and C operators
were infringed by the Frame-work Agreement on Bananas. The case is still pending
before the Court. There are also other litigation’s before German Courts.

I-B:IDENTIFICATION OF CONSEQUENCES FOR 3RD COUNTRIES:


The Court has made some references to attitudes and intrest of third countries and
in the ERTA Judgment the Court base an argument on the circumstance that it might
be harmful for the outcome of the venture to impose on third countries a change in
the distribution of powers within the Community which would afftec a posteriori
the conditions under which negotiations had been started a considerable time ago.
In fact it may be added that negotiations may not be imposed once started under
different conditions ; in Kramer judg-ment the Court recognizes that the Community
can play a role in NESFC, the appropriate adjustments to the decision making
machinery instituted by the Convention are...a matter for negotiations with the
other contracting parties
The relationship between the Community and Member States has never been completely
cleared in the field of GATT, where the Member States retain their capacity as
“contracting parties” whereas the Community has taken over the bulk of commercial
negotiations.
The 1993 and 1994 GATT dispute settlement reports on the in-consistency of the
EC’s import restrictions on banans with GATT Articles I and III and the continuing
disregard by the EC of these dispute settlement findings, show that also the EC
Institutions assert a Community power to tax and restrict EC citizens in manifest
violations of their international GATT obligations. The EC ‘banana protectionism’
which ac-cording to the recent estimate by the World Bank cost con-sumers $2.3
billion a year and distorts EC competition (leading to numerous bankruptcies e.g;
in Germany and Latin America) for the benefit of the handful of multinational ba-
nanas firms based in the United States reflects the politi-cal weakness of the EC
“Foreign policy consitutions” gov-ernments are not effectively constrained to
pursuing their legitimate task of protecting the legitimate intrest of their
citizens. Neither separation of powers through Parlia-mentary Legislation and
Judicial review nor the principle of primacy of international law over secondary
EC Law which un-derlies articles 228 to 234 of the EC Treaty and requires both the
EC and its Member States to act in conformity with self-imposed international
treaty obligations are effec-tively guaranteed in the EC’s external relations.
Even GATT obligations are binding on the institutions of the Community and on MS
(Art 228:7 and 234 EC Treaty) and were ratified also by national parliaments in EC
Countries, the GATT case law of the EC Court of Justice remains characterize by a
long tradition of ignoring even precise and undconditional GATT rules and GATT
dispute setlement findings against the EC. The most recent example of this
“judicial protection-ism’ is the court judgment of 5 Oct 94 on Germany complaint
that the EC Council’s banana regulation was inconsistent with GATT articles I and
III as previosly determined in two independent gatt disputes settlement reports.
The court con-cluded that the existence of gatt safeguard clause art xix and gatt
dispute settlement sustem art xxiii that the gatt rules are not unconditional and
preclude the court from tak-ing provisions of gatt into their foreign policy.

2-B: RELEVANT PASSAGES OR STIPULATION TO THE The relation of the following CASES
to the banana judgement: The law of sup-ply and demand is a prescriptive rule to
be applied rather than a description of certain economic phenomena the Commis-sion
reports to the judgment is crucial for the interpreta-tion of Article 86 in UBC
case plus application plus clarify the concept of abuse where the court enlarged
greatly on its earlier decisions regarding the notion of dominant position and
abuse since UBC resisted new competitors attempting to stablish themselves on the
whole of the relevant market. Was able to keep up it figures on all the relevant
national mar-kets and that new customers continue to buy more bananas from UBC
even at the highest prices:

-LITIGATIONS BEFORE GERMAN COURTS:


Atlanta Fruchthandessgesellschaft (Atlanta) one such im-porter is the plaintiff in
the case before the administra-tive court in Frankfurt. Atlanta initiated an
action under Article 173 par. 2 ECT before the ECJ for a declaration that certain
provisions of the regulation were void, but failed for lack of standing.
T. Port GmbH- another German importer of Latin American ba-nanas to of third
country bananas to Sweden, Finland, Austria was in danger of bankruptcy was no
longer possi-ble after the accession of these countries to the Commu-nity due to
the contract breach by one of its supplier in Colombia, T Port could not Import
its normal quantity in the years 1989 to 1991. The result was an issued import
licence from the authorities to which correspond to a fraction of T. Port’s normal
import. And applied to an administrative court (VGH) Kassel for an annulment of
the authority decision, in a decision of 23 December 1994, the national court
neither annulled the decision nor granted the applicant interim relief.
The standard the Danish Supreme Court judgement of 6th April 1998 established for
the review of the questions relating to legislative jurisdiction, can be a general
guiding value in this context.

The consequences of the judgement on the banana import re-gime for the enforcement
of the Uruguay agreement : two judgements (ECJ) Germany v Council (banana
judgement) C-280/93 judgement of 5th October 1994 and International Fruit Co. and
others v Commission Cases 41-44/70 ECR[1971] 421.
: they argued that in the context of the enforcement of GATT in EC law, the same
conditions should apply to chal-lenges brought by individuals in the context of
the action under article 173 of the EC Treaty.
Preliminary ruling:
Two further judgements: Fediol III and Nakajima (ECR [1991] I-2029)
Regulation 2641/84 “new instruments of trade policy”
Article XXIII of GATT case 104/81 Kup (1982)
Fediol and banana judgement where imports where divided in three categories, like
in third category third country ba-nanas (reduced duty 2 million tones for import
of non tra-ditional ACP and 3rd country bananas), 100 ECU per tonne for 3rd
country bananas, 850 ECU per tonne for 3rd country bananas 850 ECU, 66,5% for
operators who mark 3rd country bananas)

An abuse of dominant position where the Commission con-cluded in their statement


of objections that an agreement infringed Article 86 EEC by abusively enhancing
the domi-nant positions held, as in Continental such cases are rare . Competition
law adopts a pragmatic view of joint ventures. Some are beneficial, others are
detrimental to the market. Article 86 may apply were a joint venture rein-forces
the dominance of the parties on the market where it artificially creates a
dominant undertaking. The ECJ has on a number of occasions stressed the relevance
of protecting market structure: “The concept of abuse is an objective concept
relating to the behaviour of an undertaking in a dominant” Therefore ECJ has
rationalise: “... Article 86 covers practices which are likely to affect the
structure of a market where, as a direct result of the presence of the undertaking
in question where competition has already been weakened and which, through
recourse to methods dif-ferent from those governing normal competition in products
or services based on Trader's performance, have the effect of hindering the
maintenance or development of the Level of competition still existing on the
market. So, the Commis-sion to date, has not actively used this structural ap-
proach to joint ventures The ECJ (or the Court) in re-spect of mergers, has
stated that it is an abuse if the merger leads to an “...alteration to the supply
structure which seriously endangers the consumer’s freedom of action on the
market...” In response to a 1993 complaint under GATT Article XXIII by Colombia,
Costa Rica, Guatemala, Nicaragua and Venezuela against import restrictions on
fresh bananas by individual MS, a GATT panel report of 3 June 1993 found, inter
alia, “that the quantitative re-strictions maintained by France, Italy, Portugal,
Spain and the UK on import of bananas were inconsistent with Article XI:1” and
“that the tariff preference accorded by the EEC to imports of bananas originating
ACP countries was incon-sistent with Article 1”. According to the Panel Report “a
legal justification for the preference could not emerge from an application of
Article XXIV to the type of agree-ment described by the EEC in the Panel
Proceeding’s but only from an action on the contracting parties under Arti-cle XXV
(GATT document DS 32/R of 3 June 1993, at 83.) Fol-lowing the adoption of the EEC
Council Regulation No. 404/93 on the common organisation of the market in bananas,
the 5 complainants requested the establishment of another GATT panel under Article
XXIII. In United Brands the Court took into account the fact that “The banana has
certain characteristics, appearance, taste, softness, heedlessness, easy handling,
a constant level of production which enable it to satisfy the constant needs of an
important section of the population consisting of the very young, the old and the
sick. As a result of these characteristics and coupled to other factors the ECJ
concluded that bananas could rep-resent a discreet market. An analysis of product
marked based solely upon characteristics is inadequate. Details of the competitive
conditions and the structure of supply and demand must also be taken into account
.There is also Con-sumer demand and price. In the concept of abuse as noted with
UBC case the existence of dominance in an undertaking attracts no legal
consequences, it is abuse of that domi-nance which results in application of
Article 86, the ques-tion that the Commission will ask according to the ECJ is
whether the dominant undertaking “... has made use of the opportunities arising
out of the dominant position in such a way as to reap trading benefits which it
would not have harvest if there had been normal and sufficiently effec-tive
competition In Hoofman La Roche the Court held that an abuse of dominance “...has
the effect of hindering the maintenance of the degree of competition still
existing in the market or the growth of that competition”. An abuse is only within
Article 86 if it affects trade between Member States .
Discount schemes and non justifiable ones under dominant undertakings and article
86 EEC where the discount is found to be unrelated to scale economics or other
commercial jus-tifications then a dominant supplier might be liable to a charge of
discriminatory or exclusionary practices where there are fidelity and loyal
discounts where the supplier Holds a Dominant position the discount almost
certainly in-fringes Article 86 .In Michelin the supplier instituted a system of
discount's conditional upon the attainment of sales targets. As a buyer exceeded
the threshold for each target his discount increased. The ECJ commented that the
system was designed to impose pressure on Michelin purchas-ers to remain loyal to
Michelin . Nor may a dominant sup-plier refuse supplies because the customer
promotes a rival brand as in UBC. It’s probably always abusive for a domi-nant
supplier to refuse supplies unless the customer ac-cepts restrictions on the
territory in which the goods may be resold as in Hugin/Liptons overturned on
appeal to the ECJ for lack of appreciable effect upon inter-state trade or the
usage to which the goods may be put . Any collat-eral condition imposed upon an
unwilling customer is likely to be an abuse as in UBC. The Commission rejected
this as a valid justification for a tie but, as part of the undertak-ing given by
oranges allowed oranges to include a legal disclaimer in respect of the safety in
the use of its prod-ucts. Tying is prohibit by Article 86(d) it appears to be the
case that restraining by a dominant concern will be al-most habitually an abuse of
dominance as in Hoffman La Roche. For example in Continental and Hoffman the Court
held that other forms of anti competitive behaviours by dominant firms were
unlawful:
1-mergers; 2-refusal to supply raw materials to competitors and 3-and rebates
given only to buyers dealing exclusively with the dominant firm.
In Hoffman the Court basing it reasoning on Article 3(f) of the Treaty, gave a
definition of abuse covering all forms of anticompetitive behaviour. In
Continental the Court held that Article 86: “prohibits a corporation al-ready
dominant from merging with or acquiring a competi-tor”.
Article 86 does not contain a similar necessity to that of “object or effect” to
control competition, but the general concept of abuse is set forth without further
indication. Article 86 states the decisive criterion for finding abuse: any
prosecution that is incompatible with the Common Market is abuse and it is
irrelevant whether the perpetrator of the abuse was conscious of the prohibited
nature of his ac-tivities. Any use of Dominant Position that objectively can be
qualified as abuse is enough. As remark on the applica-tion of Article 86 in
situations with foreign elements and when in determining Whether an enterprise has
a Dominant Position in the Common Market, the Commission has often taken into
account not merely the enterprise’s market share in the Common Market, but of its
entire economic power as in [UB decision D49, at par. 83.]: “An abuse occurring
within the Common market, but vis-à-vis third countries, can be deemed to have an
indirect effect on trade and com-petition within the Common Market. The
interpretation may go too far, however, except where a third party is only a tool
and the measures are actually aimed at a competitor or customer within the Common
Market, e.g. Indirect discrimi-nation by differential treatment of foreign
customer for the purpose of affecting a competitor located within the common
Market?.- The Draft Regulation of the EEC Council concerning control of mergers
between undertakings it has noted that the draft means that Mergers of
Enterprises es-tablished in third countries (Foreign Mergers) are excluded
regardless whether such Mergers have effects on interstate-trade, e.g. where the
only two competing exporters of a product not Manufactured in the Common Market
merge. Al-though this is not in line with the practices regarding Ar-ticle 86
Market where is consider that the exclusion of Foreign Mergers in the draft is
acceptable for practicable reasons. Community law should however remain applicable
where a foreign merger involves enterprises established in the Common Market for
example: If two foreign enterprises merge and one or both has subsidiaries in the
Common Mar-ket.

3-CONSEQUENCES OF THE JUDGMENT :


CLArification of POINTs A,b.c: This is point A:
It has been argued that the competition policy must be such as to enable community
enterprises to combine for the pur-pose of competition on foreign markets or to
compete with foreign giants in their own market. Such a defensive aspect of the
competition policy exists and can be observed, in de-cisions enabling co-operation
between medium sized enter-prises for effective competition on the World market.
In the three judgements of united brands, bananas (UBC); Hoffman La Roche-vitamins
(Roche) and Hugin the European Court ruled: “a company held a dominant position
in the EEC for the pur-poses of Article 86”.
General non-recognition of enforceability to GATT: interna-tional fruit case
concluded that: The Court ruling imply first according to Castillo de la Torre in
his article in the journal of world trade volume 29, of the year 1995 that the
case law also applies to direct actions by individuals before the ECJ, the
question is definitely settled, no con-ceptual distinction is made between direct
effect of na-tional courts, a well develop concept of EC law and whether is
possible to invoke provisions of the international agree-ments in this case with
GATT, in direct action before the ECJ.
The Court rulings have important consequences, because it makes clear that the
applicability of GATT in EEC Law is a single concept that does not depend on the
Court that deals with the Question. Seems some how that Germany ignores Court
statements overruling what the Court states in UBC, Conti-nental, Hoffman, and an
abuse of dominant position or price discrimination, not just that it seems they
don’t even re-call UBC case but it is vanish out of any statement concern-ing
banana trade, don’t even concede in the proceedings to the link to the actual
judgement, when there is a definition in international law of sovereignty
jurisdiction and we all know the UN can treat countries as individuals, but here
there is a subestimation of what ILO (International labour organisation) as
organisation does for people, there is sim-ple no link or whatsoever to ILO and
third country bananas and people, when there is an international tribunal in den
Hague and in Europe a court for human rights which gives ac-cess to individuals to
file petitions, so it seems there is a total lack or disregard to such approach
and all or many of the German argument goes back to what Mattias Kumm call general
practical arguments, in p 22 in his Jean Monet paper in page 24 where it states
that when the German Constitution was adopted Germany was not then a sovereign
state, follow-ing the unconditional surrender to, and occupation by allied forces
the Ultimate public power in Germany was exercised by those forces. In the context
of German ratification it re-gained its sovereignty in the technical strong sense.
Another issue is the ethnic characteristics distinguishing the people in the
emphatic sense of Staatvolk on the na-tional level from the people in the other
levels, underlying one demos thesis. Then when implying the basic rights of a
sovereign nation state and in front of the ECJ which is mak-ing use of a
formalistic and positivist conception of the rule of law, the German principle is
incompatible with the ECJ’s European monist conception according to which the
European legal order frames the task of constitutional judging at the Member
State level. And Second it expands the the formal ideal of the rule of law on the
uniform applica-tion of supranational laws providing for the predictability and
regularity associated with the Rule of Law and extending to it to the
supranational level, third principle is a de-mocratic principle, or legitimacy
which adapts protection of the Individual rights and democratic self
determination. All these principles together are the heart of the matter of the
assessments of the ECJ and most be for the Courts of the Member States.
EC Treaty or EC Secondary Legislation and settlement proce-dures of GATT have
been the most successful in international Treaties, the two exceptions provided by
the ECJ in Fediol III and Nakajima give wide enforceability to GATT provisions in
the case law of paragraph 111 of the later judgement. A measure which is intended
to implement a particular GATT ob-ligation as in a Uruguay round Agreement, Fediol
III as in the banana judgement EC Regulation explicitly mentions a specific
provision to GATT also Article 2(1) of the “new instrument” referred to,
‘international trade practices’ attributable to 3rd countries which are
incompatible with international law with the generally accepted rules as exam-ple
are the Argentinean authorities with Article 9 of the Second Banking Directive par
6 “relations with third coun-tries” and international Treaties. And Second Council
Di-rective 89/646/EEC of 15 December 1989; Directive 77/780/EEC, OJ 1989 L386/1
and Council Directive 93/38/EEC of 14 June 1993 OJ 1993 L 199/84 Article 34 par 5
and Coun-cil Regulation N-2641/84 Art 10(2)(3) par 3 Reg. N-522/94 (OJ 1994
L66/10).
Having rule this way one may wonder to the extent to which the judgement is
consistent with ECJ Provisions case law and methodology e.g. Demiriel Case 12/86
ECR [1987] 36 719, par 14 , GATT and EC institutions and Panel Report. In policy
considerations as common trade policy e.i SPI Case, or com-mercial policy
according to Article 113 of the Treaty; i.e. Kupferberg case (ECR [1982]3641) par
18 with all political consequences to the banana case: i.e. General Gulmann opin-
ion of 8 June 1994 par 131 the future consequences and the enforcement of the
direct effect of the Uruguay Round Agree-ments, WTO, GATS. So USA rule out such
direct effect and therefore the Commission clause is important 1- because of GATT
par 111 of the two exceptions: banana judgement and Uruguay Round incompatibility
with Marrakech in April 1994; Second the banana case supports that Member States
are to be treated like individuals in the context as The Interna-tional Court or
international law Treaties or so calls indi-vidual states and Third i.e. Kupferber
and FTA.
New Agreements on Safeguards GATT Article XXV/XXVIII of 1994 under two exceptions
of par 11 of the banana judgement can’t become the rule and that certain limits
are to be imposed by the ECJ to its enforcement.
The decision may not be totally consistent with the ration-ale in other cases
where the ECJ has dealt with the Question of the judicial enforcement of the
International Agreement from a policy view it is very much in accordance with the
perception that GATT is a matter for policy making institu-tions and that the ECJ
Will only intervene when a policy de-cision is made by the institutions in
Secondary Legislation to the effect that some weight be given to the enforcement
of international obligations.

3-A: CLASIFY POINT B:


Some of the existing EEC Agreements with less developed countries for the
establishment of the free trade area contain the same provisions of those which
are applied with the developed countries of EFTA. Examples of those countries are
Portugal, Israel.
The banana judgements briefly and categorically reject all arguments based on the
respect for international obligations and for vested rights of traders. Member
States applied dif-ferent system in relation to bananas, separating their mar-ket
from those of the other Member States, the situation wasn’t compatible with the
SEA article 7A European Community and import of bananas, mostly from Latin America
were sub-ject only to the custom duty of 20% ad valorem, consolidated with the
framework of GATT into:
Benelux States,
Denmark
and Ireland.
Most originatings from Latin America were subject only to a custom duty of 20% ad
valorem, consolidated with the frame-work from GATT.
And import form 3rd countries at the following national markets covered by
bananas from Southern or overseas regions of the Community or ACP States to avoid
deflections of trade imported by other ECST were excluded under Article 115 EC.
No imports from third countries were admitted into their na-tional markets:
France
United Kingdom
Italy
Spain
Portugal and
Greece
The consumption in these countries was covered either by ba-nanas produced in some
southern or overseas regions of the Community or imported from ACP States. ACP
volume of bananas is fixed by quota and divided among the traditional ACP sup-
pliers (Annexed to the Regulation).
These bananas were not compatible with bananas from Central American bananas
Republics either in quality or price.
To avoid deflections of trade, imports by other EC States were excluded by
decisions under Article 115 EC.
According to Article 18 of the Regulation a tariff quota of 2.1 million an with an
additional quota on behalf of the new MS, is subject to a specific duty of now 75
ECU per tonne on third country bananas (also here as with ACP are controver-sial
rules) exceeding this quote are Subject to prohibitive duties of 850 or 750 ECU
per tonne respectfully. An adjust-ment of the annual quota is provided on the
basis of a fore-cast supply balance. The rules are subject to disputes. 66.5% of
the quota are open to operators who traditionally marketed third-country and non
traditional ACP bananas. 30% for operators who marketed Community and traditional
ACP ba-nanas and 3.5% for operators who started marketing other than community and
traditional ACP bananas from 1992 (Arti-cle 19). Details in implementing
regulations by the Commis-sion of how imports take place on the basis of licences
that are subject to the provision of a security and are transfer-able to other
operators.

CLASSIFY POINT C:
[United Brands Company and United Brands Continental BV vs. Commission [1978] ECR
207, [1978] 1 CMLR 429 (Case 27/76)] where dominant position is explain because
UBC produced ba-nanas and was accused of a variety Of abusive Practices that were
said to infringe Article 86. On many issues:
a- of law
b- of policy
And in this framework: -of control dominance: UBC wasn’t the only active direction
-The Court declared that: “An under-taking does not have to have eliminated all
opportunity for competition in order to be a dominant position.” and ob-served:
“That UBC’s market share, fixed by the Court 40-45% was several times greater than
its nearest rival”. Con-cluded that limited war price had not altered market
shares. Then out of the above question the following Con-clusion: the bigger the
market share, the more likely that dominance is established. Since UB highlight:-
that each mar-ket requires special attention and must be judge according to its
own peculiarities, then:- Defining a market involves a calculation of the barriers
that surround that market. Those particular barriers to competitors entering:
a) the market are the exceptionally large capital invest-ments required for the
creation and running of banana plantations
b) the need to include sources to supply in order to avoid the effects of fruit
diseases and bad weather (hurricane, floods etc.)
c) the introduction of an essential system of logistics which the distributor
of a very perishable product makes necessary
d) economics of scale from which new comers to the market can’t derive any
immediate benefit and
e) the actual cost of entry make up inter alia of all the general expenses
incurred penetrating the market such as:
i- the setting up of an adequate commercial network
ii- the mounting of a very large-scale advertising cam-paigns
iii- all financial risks -the cost (of which are irrecov-erable if the attempts
fails)
n 100% occupation of market isn’t a cause for concern where another firm is
able freely to enter that market
n potential competition control the liberty of the firm in occupation
n Definition of the market requires an appreciation of its economic context as
in: [Continental Can (Case 6/72) [1973] ECR 215.]
n Over estimation of entry barriers leads to unnecessary intervention in
markets which would correct themselves: [Hugin Kassaregister AB v Commission (Case
22/78) [1979] ECR 1969; [1979] 3 CMLR 345 ECJ]

CLARIFICATION TO POINTS A B C :
The consequences to the judgement on the banana import re-gime and the abuse of a
dominant position where the courts
ABUSE in United Brands Case provides continues with a list of the types of conduct
subject to control CONDEMNED BY THE COMMISSION:
a) the abuses under Article 1(a), (b), (c) and (d) of the decision where:
1- UBC forbade its distributors from reselling bananas when still green
2- UBC routinely under supplied in response to orders as to the force
distributors to sell locally rather than seek to penetrate new market:
b) Article 1 of the Decision listed four heads of abuse.
3- cut off supply of chiquita banana to Olsen, a Danish dis-tributor
c) UBC selling prices dependent on the customer’s Member State.
4-imposed at the banana port of entry into the Commission
before any supplement based on transport cost within the commission may have cause
such discrepancy and
5- UBC charged unfair prices in relation to the economic value of the product
supply.

Which aspects of UBC policy were likely to exploit consumer directly? And Which
were more indirect in that they served to reduced or suppress competition?
The Court accepts that the dominant firm is precluded from arbitrary conduct: -the
precise nature of the control exer-cised in this area depends on the nature of the
market in issue.- One of the several matters considered in UB was the conduct of a
dominant firm towards the supply of its custom-ers. Therefore in THE CASE: UBC was
found by the Commission to have abused its dominant position in the banana market,
where the firm sought annulment of the decision before the Court. UBC is the
largest World seller of bananas in the Commission opinion:
1- Enjoys a Dominant Position on the banana market and is a substantial part of
the Common Market
a- Owing not only the
Markets share about 40/45%
of the trade in bananas within the Six States of the EEC (several
Times larger, than the market share of its competitors ,but smaller than the
market share which was considered to be relevant in earlier cases of dominance)
2-, but also to various factors that applied only to it and which, in the Court
Opinion gave it advantages to competi-tors:(the vertical integration of its banana
business).
The Commission had adopted a narrower market definition than that advocated by UB.
The narrower the definition the more likely that dominance will be established.
Disagreement be-tween Commission and Undertaking in this fashion is a common
feature of Article 86 Cases. Markets may also be defined by reference to their
territorial scope, even if consumers will not switch from for example: of green
mango’s to other types of mango’s, the single national green mango producer is not
dominant if producers of green mango in other States can im-port their product of
competition.

Facts: -UB owns a)numerous plantations and a fleet refrig-erated boats; -b)it
controls banana ripening in some coun-tries; -c) and it takes direct charge of
advertising; -d)sales promotion activities; -e) and conglomerate charac-ters: Nor
just its economical power put UBC in a position to place major obstacles in a way
of affective competition by its business rivals; for example: -while potential
competi-tors found themselves with major barriers to entry of the market: UBC
rejected the charge of discrimination and con-front its own opinion: It had been
active in plant research and developed a more prolific and Disease resistant
variety of bananas that gave its advantage in regularity of supply when natural
disasters hit a particular part of the growing area.
-Competitors could also buy or established plantation in di-verse areas and some
planters had surplus banana for sale.
-UBC owned enough refrigerated vessels to ship over half the bananas sent to
European ports, there is a charter market for such ships and ownership can be a
disadvantage when freighted rates slump.
-It had also arranged for very careful quality control and extensive promotion of
the bananas it had packed in the tropics bearing chiquita mark.(In Central America
especially in Honduras, were UB owns as well Rosario Mining Co. and UB).
-Chiquita bananas were found by the Commission to fetch some
30/40% more than unblended one’s

And by the Court:


7% more than the rival one’s
41/45% supplied by UBC (Chiquita banana or UB)
50% chiquita brand
30/40% chiquita brand, plus
7% chiquita brand

-the dominant position according to the Court stabilised by the Court by a number
of factors none which is decisive, but critical
-time dimension is out of the picture
-European ports
-short term monopoly
-the mechanism of the market are adversely affected
-reap monopoly profits whether they occur
-the Court doesn’t give extensive explanations of its think-ing, but simply
indicates the result which it haSometimes
-Sometimes the analysis of the Court judgements could point more than one
direction and then:
-One simply has to consider those factors that appear to be relevant and could
have been taken into consideration.
In 1994, the multinational shares of the EU were distributed as:
Chiquita (USA) 18.5%
Dole(USA) 15.0%
Del Monte(USA) 8.0%
Fyffes (Irland)
and Geest(UK) 16.5%
In its Chiquita Decision of December 17, 1975 a fine of one million units of
account was imposed (Article 2) and UBC was required to bring the infringement to
an end (Article 3 (a) (b) a periodic penalty payment of 1000 units of account per
day was fixed by Article 4 in respect of the obligations under Article 3(b).
In its decision, of December 17, 1975, the Commission found UBC guilty of having
infringed Article 86 EEC by its conduct as a dominant supplier of bananas to a
market comprising Belgium, Denmark, Germany, Ireland, Luxembourg and The Neth-
erlands, the Commission was concerned about the need of The young, the old and the
infirm who may have difficulty eating other fruit.
-the interests of the toothless, are sufficiently protected by the inability of
the dominant firm to discriminate against them
-it would lose so much market share from the rest of the population that it would
not be worth raising prices to ex-ploit the weak
-when considering under Article 95 of the EC Treaty Whether a tax imposed on
bananas by Italy protected Italian soft fruit, the Court held that bananas must be
regarded as being in partial competition with such fruit [(Commission vs. It-aly
[184/85] E.C.R.2013 par. 12)].
Article 1 of the Commission decision over UBC specified four heads of abuse:
A-) that UBC had required its ripener/distributor in the relevant Member State to
refrain from reselling green ba-nanas that it had supplied to them (“the green
banana clause).
B-) that for it's “Chiquita” brand of bananas UBC had charged other trading
parties dissimilar prices in respect of equivalent transactions.
c-) that for “Chiquita” bananas UBC had charged unfair prices;
D-) that from October 10, 1973, to February 11, 1975, UBC had withheld supplies of
bananas from its former customer, the Danish ripener/ distributor, Olessen.
THER RELATION TO THE CLASIFICATION OF POINTS A,B,C:
In point A there seems to be a complete disregard to compe-tition law, and
according to german defense in the case to human rights, since the conception of
european law according to which the european conception of judging on a member
state level, since some of these principles are basic for the courts and member
states some of the existing eec agree-ments with less developing countries.
Members apply differ-ent systems in relation to bananas the ones originating from
latin america are subject to custom duty of 20% ad valorem consolidated with the
framework of gatt, and as in united brands where dominant position is explain and
explain that each market requires special attention and must be judge ac-cording
to its characteristics.

GERMANY AS MAIN BANANA CONSUMER IN THE EUROPEAN MARKET:


Chiquita offers more than 30 products in a wide variety of packaging types and
sizes, and chiquita brand is a leading international marketers and distributor of
many other fresh and processed food products, since 1903 UFC revolutionized ocean
transportation of perishable food products using re-frigerated vessels and since
1903 the company is listed on NY stock exchange.
Since December 17, 1975; the quarrels on bananas at very be-ginning of the EEC and
the open questions between states to import from third countries the question was
solved at the level of heads of Governments, who accepted the Protocol on Bananas
who safeguard the former commercial relations of Germany and retained separate
markets for this product with the Common Market .
After 40 years of UB and nearly forty years later, the bat-tle is reviving, and
German Courts rebel against unjust and discriminatory rules of the Common Market
Organisation on bananas and against the judgement of the ECJ confirming its
legality of the banana judgement Case C-280/93 Germany vs. Council [1994] ECR I-
4973: Since Germany enjoyed a duty free import quota pursuant to the banana
protocol that was at-tached to the implementing Convention based on Article 136
EC. Under these rules the quota was adapted annually to the demand. It its
paragraph 4 applicable as soon as the common tariff applies in its entirety. The
protocol determined (sub paragraph 3) “any decision to abolish or amend this quota
shall be taken by the Council, acting by a qualify majority on a proposal of the
Commission”. The view of German law-yers to the Banana Regulation and its
confirmation by the Court of Justice seems to justify all the insinuations and the
distrust underlying the Maastricht Judgement of the Ger-man
Bundesverfaassungsgericht with regard to the rule of law and fundamental rights of
the Community 31 CMLR Rev 251. The banana Judgement of the ECJ briefly and
categorically re-jected all arguments based on the respect of international
obligations and for vested rights for traders. The German Constitutional Court
claimed the competence to supervise whether the Community law as applied by the
Court of Justice generally protect the essentials of the fundamental rights to a
degree which is comparable with the German Constitution and whether it respects
the limits of the competence trans-ferred by the MS as approved by the Act of
ratification of the German Parliament. Some German traders and Courts re-ferring
to the principles established by the Bundesverfas-sungsgericht called the
application of the Bananas Regula-tion in the territory of Germany in question so
under this so call professional criticism in the Court is the only con-trol of
high courts of last instance, and in particular those lawyers who are deeply
convinced that the Court is one of the most important pillars of the Community and
specially when they believe and are reporting dangerous developments. Obviously
this isn’t a valid argument since the Court ruling in UB and Hoffman is completely
conscious of the abuse in Europe and sometimes outside to start with that the
origins of the quarrels doesn’t have its roots in the judgement of the Court, but
in the Market Organisation of the Babas which was confirmed by the Court, it is
necessary to understand the Banana Regulation and the new rules since Member
States applied different systems in relation to the product, sepa-rating the
markets from those of other MS, for example in UB it was UB whom divided the MS
market. It is obvious that ei-ther situations are not compatible with the Single
Market as outlined in Article 7A EC. German importers disposed of about 840,000
tonnes in comparison with imports of 1,371,000 tonnes in 1992, which means a
reduction of nearly 40%. The EC Court’s judgement of 5 October 1994 on Germany’s
com-plaint against Council Regulation (EEC) No. 404/93 of 13 February 1993 on the
common organisation of the market of bananas implies that the majority decisions
by the EC Coun-cil according to Petermann is a clear violation of GATT rules, in
determining two independent GATT dispute settle-ment proceedings, may not be
according to him challenged by the EC Court, even if EC Member States and
individual EC citizens request the Court to protect them against such il-legal
discrimination trade restriction. I wonder whether he is also thinking in the
terms of third world country workers in the plantation of bananas?. Petermann
also writes that the continuing threat by the USA to impose retaliatory trade
sanctions in response to these violations of GATT rules, the renewed recourse by
Germany to the EC Court against the EC import restrictions on bananas, and the
decisions of the German constitutional court of 25 January 1995 to protect German
importers against the discriminatory and expropriat-ing effects of these import
restrictions, all according to petersmann illustrate the interrelationships
between the rule of law at the level of international, European and na-tional law.

SUMMARY: At the time the WTO opened the discussion on the banana issue, three
distinct import regimes were operating in Europe. One being applied in Germany
allowed for the im-portation of a substantial amount of bananas without payment of
customs duties. The protected market program was being used by
France (aimed at favouring imports from its Overseas De-partments and
Territories, Cameroon and Ivory Coast.
Portugal (which imported from Madeira and former African colonies)
UK (which imported from Jamaica, Surinam and Belize)
Spain (Canary Islands)
Italy (Somalia)
Northern European Countries (Holland, Ireland,Denmark, Be-ligum and Luxembourg)
were importing the dollar banana (from Latin America) with no quatitative
restrictions, prior pay-ment of a 20% customs affair.

In 1990 bananas were a single exception in the Community in terms of the rule
applied for the free circulation of goods among its members. The five year debate
on the establishment of CMO (banana common market organisation) centered around
several contradictory requisites: guarantee of the community preference principle,
maintain community farmers incomes, ensure preferential relations with ACP
countries as formally agreed in the Lome Agreements; keep shares of different ori-
gins and avoid significant differences in production costs which could double
depending on the origin of the produce. Most of the activities of large
multinationals such as Chi-quita, Dole and Del Monte were precisely in Germany
(the German market, unlike others, was almost exclusively a ‘ba-nana dollar’
market). The most polemic aspect of the CMO whose negative effects particularly
attain multinationals such as Dole, Chiquita and Del Monte is the establishment of
a distribution of the import quota aimed to give way to “associations” among
Community growers and “dollar ba-nana” importers. This mechanism aims to guarantee
a market for 30% of the community’s production, share that it attrib-uted to
operators that work with bananas from traditional ACP countries while only 66.5%
percent is destined to im-porters from third countries and non traditional ACP
coun-tries, that is, imports operating in Germany and Northern European countries.
The remaining 3.5% is reserved for new operators. Import licences are divided up,
in turn among the various stages of the chain: int he case of community ba-nanas
57% is allocated to the production export sector, 15% to importers and 28% to
those in charge of ripening them. On July 1993 the CMO authorized the free
circulation of prod-ucts of any origin in the European Market and provided in the
same year a 2.5 million ton quota be established for im-ports from third countries
and non-traditional ACP coun-tries. Imports in excess of this quota were subject
to high tariff. Compensatory aid was considered for community pro-ducers based on
reductions in the market price, as well as structural assistance to improve
competitiveness levels for production. EEC Regulation 403/93 finally ended thirty
years of domestic barriers which had made the European market a complex puzzle
between 12 different markets. The setting up of a Single Market in 1992
eliminating all internal barriers for intra-community trade was contradictory to
the concept of national markets. As a result of the CMO, the European market
experienced a revolution which had a strong impact on the structure and operation
of the international market. New alliances were forged and external growth was
evidenced in many European and US multinationals. Enterprises which had
traditionally operated in the “dollar banana” zone moved on to make investments in
Africa setting up ties with opera-tors of the European production zone. The
European market distribution mob a notable alteration. Changes continue to be
evidenced, and the biggest battles are being fought be-tween the large enterprises
and the war in between large en-terprises and the role played by the authorities
in Brus-sels. The CMO is in fact one of the sectors in which the european union
intervenes most actively. The banana CMO is strongly challanged by several Latin
American countries. In 1992 Costa Rica, Colombia, Guatemala, Nicaragua and Vene-
zuela requested that GATT form a first panel of experts. These countries were
oppossed to the markets protected by France, Greece, UK, Italy, Spain and
Portugal. In May 1993 based on articles XI and I of the GATT, the panel ruled that
the quotas and other preferential tariffs applied by several European countries
were illegal. The EU blocked approval of this Resolution for an entire year in the
GATT Council of Representatives. In 1993 when the EU launched its CMO for the
banana, the GATT panel ruling was ignored. The creation of the CMO spurred the
formulation of a request for a second panel this time by the US, Ecuador,
Guatemala, Honduras and Mexico. On this occassion, the group of experts concluded
that the European Regulation violated different items of the GATT agreement and
recommended that the EU modify specific rights particularly the preferential
rights awarded to the ACP as well as import licencing (was a price war between
third world countries?) EU representatives also presented an appeal to this panel,
asserting that the US was not a pro-ducing country and therefore could not be a
part of the ar-bitrage proceedings. In September 1997, the WTO rejected Europe’s
appeal and confirmed the panel’s earlier deci-sion.The decision seriously
questioned the system where Europe organized the banana market. Europe’s response
capac-ity, which allowed for either payment of an indemnization to the producing
countries for the damages inflicted or chang-ing the system, was significantly
curtailed because the US was not willing to accept compensation, demanding instead
that a change be made in the functioning of the European Market.
The CMO ruling did not altogether rejected the European ba-nana system moreover it
considered legitimate the EU market access limitations which were determined on
the basis of tonnage. Consequently, the quota of more than two million tons
granted to the “dollar banana” was accepted. Simi-larly the WTO accepted the
privileged access for ACP coun-tries. But also on the other hadn, launch an attack
on the very core of the European market system: import licence man-agement, as
well as the compensation awarded for losses in cases of climatic disasters by
providing import licences for “dollar bananas”.
The agreement that CR, N and Ve signed in 1994 with the EU did not include Ecuador
the world’s main banana producer, because it was not a GATT member at that time.
This agree-ment provided for a 200,000 ton increase in the quota and a reduction
from 100 ECUs to 75 ECUs in the import tariff per ton, as well as a more favorable
treatment in the awarding of import licences. In response to this these countries
dis-continue the demand process begun against the EU. When the next round the CMO
can be expected to be a element of lack of harmony of trade negotiations. A
crucial issue to be dis-cussed will be the compatibility that exists between the
Lome Convention and the WTO rules. Export certificates, the lowering custom
tariffs, and the European import quota lev-els are other areas that merit analysis
of the next round of negotiations. The most significant aspect that exit from this
case is the fact that certain products continue to be negotiated outside the
framework of the global trade nego-tiations. In the banana market out of total 45
million tons of bananas produced worldwide, close to 10 million are ex-ported.
Approximately 3.5 million of exports go to the US and 3.9 million tons to the
Union. Detail sales in the EU result in the invoicing of about US$6 billion, in
CA:CR,H and G as well EC and Col the banana is an important foreign currency
source. Since early XX century bananas started to grow in Latin America on a
large scale by the UFC. The three large multinationals that operate under the
trade names Chi-quita, Dole (Standard Fruit Company) and Del Monte, there is now
the Noba group in Ecuador (Bonita brand) the Colombian enterprise Banacol, Uniban
and Proban and the multinationas Fyffes (Ireland), Geest (UK) and Jamaica
Producers. Vertical restrains are agreements that are made between the parties at
different levels of the production process, a typical ex-ample being a
distribution agreement between a manufacturer of a product and a retailer .

In all judgement since UBC, the Court defined a dominant position as: a position
of economic strength enjoyed by an undertaking which enables it to prevent
effective competi-tion being maintained on the relevant market by giving it power
to behave to an appreciable extent in despondently of its competitors, customers
and ultimately of consumers.
-imposing prices depending on the country of buyer
-antitrust perspective: efficient allocation of resources
-European market was divided already by the differences in custom duties.

-COMMON CUSTOM TARIFF:


Germany: 0%
Ireland: 12%
Denmark 12%
Benelux 20%
Germany enjoyed a duty free import quota pursuant to the ba-nana's protocol that
was attached to the implementing con-vention based on Article 136 EC. Under these
rules the quota was adapted under this rules.
As you can see above Germany tariff was Zero per cent as with the bananas
judgements and after all the scandal Ger-many got away with cheap bananas. Some
mention must be made to the Fourth ACP-EEC Lome Convention which guarantees ACP
Countries duty-free imports into the Community subject to certain reserves
concerning the rules of Common Agricultural Policy (CAP) in none of the cases
reference is made to ILO workers convention and relation to wages. In UBC the
Commis-sion found that UBC did enjoy a dominant position over the supply of
bananas in six Member States, although the barri-ers to entry listed by the
Commission don’t appear to have been high and before the Court UBC stated that it
had made losses for in 4 out of the Last 5 years. It sold some 45% of the banana
to: Benelux, Germany, Denmark and Ireland. More than twice as many as its nearest
rival. The Court points that UBC supplied among 41% to 45% of the market defined
as relevant: several times as much as the supplied by the next largest banana
company . From the cumulative advantage of all these factors the Commission and
Court confirmed that UB was dominant. The Court agreed with the Commission on the
following: the Commission had analysed UBC conduct in a market comprising Germany,
Ireland, Denmark, Belgium, the Netherlands and Luxembourg but excluding the other
three Member States at that time: the United Kingdom, France and Italy.
UBC argued that the geographic market ‘should only comprise areas where the
conditions of competition are homogeneous’ and that this test was not satisfied by
the Commission cho-sen market. The defined market, then was internally more or
less homogenous and distinct in material respects from the wider market, defined
by product and by territory.
Another question was whether UB dominated the market, the Court established the
test where The Court examines the competitive situation on the market. UBC was by
no means the only active trader. The Court declared that “an undertaking does not
have to have eliminated all opportunity for compe-tition in order to be in
dominant position”; and it ob-served
that UBC’s market share, fixed by the Court at 45 per cent, was several times
fixed by the Court at 40 times greater than its nearest rival consequently limited
price wars had not altered the market shares. The Court concluded: The bigger the
market share, the more dominance is established. UBC (case 27/76) emphasises that
each market requires spe-cial attention and must be judged according to its own
pecu-liarities. It should be obvious from the approach taken in UBC that defining
a market involves a calculation of the barriers that surround that trade. At one
extreme even 100 per cent occupation of a market is not a cause for concern where
any other firm is able freely to enter that sell. Po-tential competition controls
the liberty of the firm in oc-cupation. So definition of the market requires an
apprecia-tion of its economic context.
Without finding:
-any one of the advantages vital
-or considering the possibility of new entrants coming in at one level only
· buying bananas
· Chartering ships etc.
· or of existing suppliers expanding the scale of business
It seems that UB had no power over price. On the accounting basis, at least, it
had made losses in 4 out of the previous 5 years and was fighting a price war in
Denmark.
The market organisation in bananas as it was finally adopted determines, apart
from certain aids for producers and quality norms, in its Title IV detailed rules
on imports of bananas from third countries, may be they can be use in the future
to help i.e. union workers in Central America to improve There wages through the
implementation of ILO Con-vention and the IACHR. According to the Lome Convention
tra-ditional imports of ACP bananas remain free of duties.
It can be abuse under Article 86 for a dominant firm to re-fuse to supply an
existing customer as a way of disciplining the latter. This first arose in United
Brands where UBC ter-minated supplier of it's Chiquita brand banana to its larg-
est Danish distributor because the distributor had promoted the bananas of a
competitor. The distributor was a long standing customer of UBC and when refusing
to give it pref-erential treatment in Denmark it became the exclusive im-porter
and distributor of a competitor’s bananas and took part of in promotion campaigns
for them. In retaliation UBC cut off supplies of Chiquita. The Commission held
this to be an abuse, saying that it was arbitrary interference in the distributor
business, designed to dissuade UBC’s and other’s form similar dealings with its
competitors. The ECJ upheld the finding of abuse, expressly citing Article 86(b)
and (c) and saying:
The elements in the description of the abuse in the para-graph form UB just quoted
are: the brand is one for which there is common preference, the cut off customer
is long standing the customer taste lasting by ‘regular commercial practice’; and
the orders from the customer must be ‘in no way out of the ordinary’. Long
standing clearly excludes first-time customer but it is unclear what period of
custom beyond that it connotes. Nor is an existing customer who places unusually
large orders to exploit particular resale opportunities protected. The ECJ clearly
considered that the distributor in UB was abiding by ‘regular commercial prac-
tice’. On normal contractual principles, had the distribu-tor had an agreement
with UBC which contained an exclusive purchasing obligation then its handling of
the rival bananas would have been a breach justifying termination, although such
exclusive arrangements may themselves be contrary to Article 86. UBC argued that
its marketing policy was more liberal than those of its competitors, and its
ripeness was free to deal with rival brands. It was just that in the case the
distributor had gone too far in promoting the rival brands at the expense of
chiquita’s. This argument was not satisfactorily dealt with by the ECJ. If a
dominant firm is so restricted in the control it can exercise over its dis-
tributors there would appear to be advantages in its inte-grating downstream.

now a Brief idea of the range of Article 86: it is in the cases on anti-
competitive abuses that discussion of objec-tive justification is most likely to
be found as in Tetra Pak 1 (BTG licence) OJ [1988] L272/27, [1988] 4 CMLR 881, on
appeal case T-51/89 Tetra Pak rausing SA v Commission [1991] 4 CMLR 334, [1993] 4
CMLR 586. In Decca Navigator System: OJ [1989] L43/27, [1990] 4 CMLR 627 the
Commission held that it is an abuse for an undertaking in a dominant position to
enter into an agreement with an actual or potential competi-tion with the
intention of sharing markets or suppress the efforts of competitors. The language
of objective justifica-tion and proportionality can be found with increasing fre-
quency in the decisions and judgements of the Commission, the Court of First
Instance(CFI) and the ECJ.
-Napier Brown -British Sugar OJ [1988] L284/41, [1990] 4 CMLR 196 at paras 64 and
70.
If UBC had achieved considerable efficiency in its banana business in the face of
strong competition from other firms.
The result of the case meant that it had to abandon the dis-tribution system which
arguable would be inferior in con-sumer welfare terms.
UBC held the ECJ that it had abused its dominant position by charging different
prices for its bananas according to the Member States of their destination. It
sold bananas to distributors, ripeness at Rotterdam, Bremerhaven and charged the
lowest prices for bananas destined to Eire and highest to those going to West
Germany. The different prices were not based on different costs: in fact transport
to Eire for which UBC paid itself, cost more than to other countries so that, if
anything, prices might have been: higher there. UBC was also condemned for
including clauses in contracts which distributors which had the effect of
preventing paral-lel imports from country to country for example: UB prohib-ited
the transportation of green (i.e. unripe) bananas; ef-fectively this meant that
bananas could not be transported from one Member State to another since once
Ripened, bananas perish quickly. The ECJ
reduced the fine on UBC from 1 million ECUS to 850 million ECUS
only because the Commission had erred on the separate issue of excessive pricing.
The ECJ a strict approach to price discrimination. The Court held that a
substantial price differential is strong evidence of discrimination in the ab-
sence of objective. Price discrimination is always of in-fringement of Article 86
EEC where the defendant holds a dominant position as in United Brands v Commission
and AKZO as well the definition of the relevant market was made in the case of in
Nederlansche Banden Industrie Mich-elin NV v EC Commission [1985] 1 CMLR 282. The
defence argu-ment that discrimination was forced upon the defendant by the muscle
of a dominant purchaser is generally rejected . The Court, and the Commission lay
great store by the need to avoid artificial division of the Common Market.
Practices that reinforce national boundaries are hence viewed as par-ticularly
serious. A supplier who, having instituted artifi-cial differential pricing in
different Member States seeks to enforce those differential runs to the risk of
large fines. In United Brands the supplier imposed price differen-tials for
supplies of bananas. To prevent entrepreneurs buy-ing bananas in cheap territories
and transporting them to expensive areas and there undercutting the prevailing
price level, the supplier contractually prohibited cross-supplies of green bananas
between the dealers (50% sold cheap in other markets in another fiction brand
banana) in different Member States. The ‘green-bananas” clause prevented cheap
unripe bananas being sold in expensive areas, bananas can’t be transported in a
grown condition. By this clause the sup-plier sought to maintain the
differentials. The Court held the practice to be an abuse of a dominant position.
As a general proposition prices should be related to cost. Thus differentials
should be justified by reference to scale eco-nomics and other savings enjoyed by
the supplier. Discrimi-nation may occur through the application of a single price
to customers who are different and justify different treat-ment. The most common
example of this is found in corrupt item or delivered price system. A dominant
undertaking which adopts price discrimination in a very selective manner with an
intent to exclude a rival by offering very favourable terms to the rival’s
customers but not offering equally fa-vourable terms to normal customers certainly
infringes Arti-cle 86. The offering of excessive low prices to certain categories
of customer, coupled to an exclusionary design, comes unimportant close to
predatory pricing as the ECS-AKZO decisions where predatory pricing is
demonstrate. Such be-haviour is likely to attract heavy financial penalties from
the Commission. Price discrimination is often achieved by means of the grant of
differential (discriminatory) dis-counts. May be defined as the failure to charge
like custom-ers like prices based upon the true cost of the supply. The ECJ has
adapted a strict approach to price discrimination it held that substantial price
differentials are strong evi-dence of discrimination in the absence of objective
justifi-cation . In addition, the price discrimination in the ab-sence of
objective justification ; continually a trespass of Article 86 EEC where the
defendant holds a dominant posi-tion as in UBC and AKZO. The defence argument that
discrimi-nation was forced upon the defendant by the creator of a dominant
purchaser is generally rejected . The ECJ and the Commission protection by the
requirement to avoid unreal disagreement of the Common Market. Practices that
reinforce national boundaries are hence viewed as particularly seri-ous. A
supplier who, having instituted differential prices in different Member States,
seeks to enforce those differen-tials runs the risk of large fines as in UBC the
supplier imposed price differentials for supplies of bananas. To pre-vent
entrepreneurs buying bananas in cheap territories and transporting them to
expensive areas and there undercutting the prevailing price level, the supplier
contractually pro-hibited cross-supplies of green bananas between dealers in
different Member States. The “green bananas” clause pre-vented cheap (unripe)
bananas being sold in expensive areas, bananas can’t be transported in a ripe
state. By this clause the supplier sought to maintain the differentials. The Court
held this practice to be an abuse of a dominant position as a general proposition
prices should be related to cost; thus differentials should be justified by
reference to scale eco-nomics and other savings enjoyed by the supplier. Discrimi-
nation may occur through the application of a single price to customers who are
different and justify different treat-ment. The most common example of this is
found when deliv-ered price system. A dominant undertaking which adopts price
discrimination in a very selective manner with an intent to exclude a rival by
offering very favourable terms to the ri-val’s customers but not offering equally
favourable terms to normal customers almost certainly infringe Article 86. The
offering of excessively low prices to certain categories of customer, coupled to
an exclusionary design, comes danger-ously to predatory pricing as the ECS-AKZO
decision, such behaviour is likely to attract heavy financial penalties from the
Commission. So Predatory Pricing is usually defined in terms of dominant firm
selling below cost. It is prohib-ited because of the concern that the firm
sacrifices present revenues for the purpose of driving rivals from the market-ing
then recouping its losses through higher profits earned in the absence of
competition. Predatory below cost pricing may be used to deter potential entrants
from the market. The cost level is generally viewed as an important element in
analysis because it is assumed that there can be few eco-nomic explanations for
selling at a loss other than a preda-tory design on competitors. A price above
cost can exert similar predatory or exclusionary effects and competition
authorities generally accept that in exceptional circum-stances and above cost but
excessively low price may be anticompetitive if a predatory intention on the part
of the defendant can be proven. In cases of above cost pricing the issue is
complicated by the difficulty of the differentiat-ing a predatory price from a
highly competitive price by a dominant concern. In EEC Law Complains of predatory
pricing are uncommon and the leading decision is that in ECS-AKZO where the
Commission imposes a fine of 10m ECU on AKZO for its predatory behaviour in
respect of ECS. Article 86(a) gives as one of the illustrations of an abuse
‘directly or selling prices or other unfair trading conditions: In [Re UB company
Case 27/76 UB v. Commission (1978) ECR 207 (1978) 1 CMLR 429].
The Commission again imposed a fine for excessive pricing and again its decision
was quashed by the ECJ because the Commission had failed to make out a clear case.
In no sense did the ECJ suggest that excessive pricing could be caught by Article
86. Rather said: ‘charging a price which is ex-cessive because it has not
reasonable relation to the eco-nomic value of the product supplied is...an abuse.’
Clearly therefore excessive pricing can amount to an abuse of a dominant position:
The difficulty is to know at what point a price is so high that it is abusive? The
prohibitory nature of the EEC system means that a legal test of excessiveness is
necessary; the impressionistic approach of the Monopolies and Merger Commission
(MMC) could hardly be suitable advis-ing clients on their immunity from fines or
damages actions under Article 86.
The Commission in [UB OJ [1976] L95/1, [1976] 1CMLR D28], inferred that the price
of bananas in Germany was too high by looking at the price charge in Ireland and
concluded: that since UBC could charge a low price in Ireland and still make a
Profit, it Most follows that the highest price charged in Germany was excessive.
The ECJ overturned the Commission on the grounds that was excessive the ECJ
consid-ered that the Commission had at least to require UBC to pro-duce
particulars of all the constituent elements of its pro-duction costs. The burden
was on the Commission to prove that UBC was charging unfair prices. Having
undertaken a cost analysis, the ECJ said that the Question to be ask is: “Whether
the difference bet the costs actually incurred and the price actually charged is
excessive? and if the answer to this Question: is in the affirmative.-“ To
consider whether a price has been charged which is either unfair in itself or when
compared to other competing products. The ECJ accepted that it may be extremely
difficult to apportion costs to particular products, but concluded that there were
not such difficulties in the case of the market for bananas. The test actually
suggested by the ECJ in UBC calls either for a value judgement (as to whether a
price might be con-sidered unfair in itself); or else involves an application of
the fictitious competitive price of a particular price. Both approaches obviously
involve difficulties and lack sci-entific precision but this is of course where
the EEC law has embarked, also is unclear: Whether all findings of ex-cessive
pricing must be supported by extensive cost analy-sis?. The ECJ in UB suggested
that there might be other ways of proving that a price is excessive. Apart from UB
the in-stances of excessive pricing, dealt with the ECJ and the Commission have
tended to arise in the context of the supply of services rather than of goods and
in situations where the suppliers enjoys either a statutory or de facto monopoly.
Article 86 would also catch discrimination which produces secondary line injury as
is clear from part (c); in UB identified secondary line injury, though the ECJ
overturned the Commission decision in the case .

Article 86 may apply where a joint venture reinforces the dominance of the
parties on the market or where it artifi-cially creates a dominant undertaking
The Court in respect of Mergers has stated that it is an abuse if the merger leads
to an “...alteration to the sup-ply structure that seriously endangers the
consumer’s free-dom of action on the market...” .In Hoffman La Roche v Commission
the Commission accept cost justification based upon such statistics and data as
the supplier can muster .

In UB the Commission and the Court found that UB was domi-nant in market where it
was unsuccessfully fighting a price war with its chief competitor and had made
losses in four out of the last five years. In Continental Can the Court in-sist on
the Commission analysis of firm’s market power in two steps:
1-it should define the relevant market and
2-then it should asses the firm’s dominance therein
Markets have been even more narrowly defined also from the demand side: in UB the
Court upheld the Commission’s choice of bananas in the relevant market. For the
banana to be re-garded as forming a market which is sufficiently differenti-ated
from the other fruit markets it must be possible for it to be singled out by such
special factors distinguishing it form other fruits that it is only to a limited
extent inter-changeable with them and is only expose to their competition in a way
that is hardly perceptible: it confirmed, that mar-ket oranges were not
interchangeable with bananas and apples markets only to a limited extent, despite
evidence of the easing of banana prices and a reduction in the quantities sold
during the season for summer fruit and oranges, perhaps because Of a finding in a
report by the FAO in 1975 “That price of oranges in all cases had no significant
impact on banana consumption”

UB presented difficulty for dominant undertakings wishing to protect their


commercial interests. There was some dispute in the case about the harm which UBC
actually suffered as a result of the distributor’s activities but UBC had clearly
felt threatened by them. The ECJ did recognise that a domi-nant undertaking is
entitled to protect its interests but the steps it takes must be justifiable and
reasonable. Two things in particular are to be note:
-They talk of the purpose of the behaviour being to streghthen and abuse the
dominant position: arguable UBC was only trying to prevent its position being
eroded. It had been suggested that where active steps to prevent erosion of a
dominant position involve the deliberate exploitation of market strength they will
constitute an abuse.
-It is unclear How far the undertaking may go in defence of its interests or the
action it takes is subject to the well-known community principles
‘proportionality’ but whether the action is within these, will be a matter for
the judge-ment of the competition authorities. It is when considering this point
in UBC the ECJ did not take note of the competi-tive environment, in particular
‘the banana war’ then raging between UBC and its competitors.
The effort of the ECJ’s judgement is the need to protect in-dependent small and
medium sized firms in their dealing with dominant undertakings. It can be an abuse
for a dominant un-dertaking to refuse supplies to an existing customer who wished
to compete with it's improve. The Commission has given no idea of what it sees as
“adequate notice” unlike UB involved the dominant firm refusing supplies as an
exclu-sionary tactic against the customer and such exclusionary tactics are viewed
particularly seriously. There may be a difference between using refusal to supply
to bring a dis-tributor into line and using it to force a competitor out of the
market.

the United Brands Case in which the Commission, and later the Court, found that a
New York enterprise, together with the United Brands and together with the United
Brands Conti-nental of Rotterdam and its other subsidiary Company formed a single
economic unit. The only relevant reference to the economical unit theory to the
case was the Commission’s statement that the subsidiaries were under the control
of the parent company and “and do not possess any legal auton-omy”. Implicating
that a Geographical relevant Markets must be defined geographically when assessing
an undertaking’s economic and commercial power is necessary to appreciate the
geographical of the market upon which it operates in order to determine who are
its competitors. As ECJ said in United Brands: “It went to describe the geographic
market as ” an area where the objective conditions of competition. . . must be the
same for all traders.- This meant that in the United Brands Case the ECJ excluded
from the market under consid-eration the United Kingdom, France and Italy for in
those countries State Regulations applied to the importer and or marketing of
bananas which resulted in preferential treat-ment for bananas from certain
sources. The relevant geo-graphic market was therefore held to comprise West
Germany, Ireland, Denmark and the Benelux countries despite the dif-ferences
between them in custom tariff, consumer habits, and commercial patterns. The
important point was that in those six countries the market was free and
unregulated so that the competitive conditions were the same for all producers.
Similarly in Tetra Park the Commission defined the whole Community as the relevant
geographic market despite market differences in consumer preferences between
Member States. Division of market into geographically distinct areas is of a
greater significance in the EEC as a result of transport and related costs and the
physical difficulties of exporting as well as discrimination against imports by
national au-thorities and disregard to third countries i.e. UBC case, here United
Brands trade-in all Member States yet the Euro-pean Commission, upheld by the
European Court of Justice felt it necessary to exclude France, Italy and the UK
from its market assessment, as the result of import arrangements and other special
circumstances operative in relation to ba-nanas in those countries. Similarly in:
[Sugar [1973] C.M.R.L D65] the Commission took into account differing transport
costs in defining the market and in GEMA the Commission confined to Germany as
they were effectively pre-vented from joining performing right societies abroad.
The United Brands had charged different prices for identical goods in each Member
State and had admitted that even on its lowest prices it had made reasonable
profits. The European Commission held that the UB had infringed Article 86, by
charging varying price and amount unfair tariff for its ba-nanas sold under the
Chiquita Brand name; in reaching its later conclusion the Commission noted that
branded bananas were sold at a higher price even though only slightly supe-rior
quality and the unbranded bananas were supplied more cheaply and at a profit by
United brands competitor’s. Nei-ther of these factors can sensibly be regarded as
strong evidence of profitable and the ECJ after declaring the Com-mission’s
analysis incompetent substituted with its own trial.

United Brands discriminated between national distributors in its prices of


chiquita banana and prevented cross-suppliers between distributors in different
Member States by prohibit-ing the resale of green (unripe) bananas in order to
isolate each market.
1- Wide price variations between Member States re-sulted 2-the largest being 38%
3-only a small part of which could be explained by dif-ferences in distri-
bution costs.
The Court had no doubt that by applying dissimilar condi-tions to identical
transactions was per se abusive under Ar-ticle 86. The prime objective of Court
and Commission in this case was to prevent a division of the Common Market along
national borders in line with their overall desire of market unity. In this case
the aim would appear to have been achieved at the possible prices of
redistribution wealth away from poorer nations as in this case bananas were trans-
ported from banana Republics a to those develop one’s, and increasing the
misapplication of resources by deflating de-mands in the poorer one’s and leaving
behind strikes, pollu-tion and massive exploitation of the Central American repub-
lics. In UB the Court stated that a firm that had consider-able expertise of
national and antitrust could hardly sub-stantiate such a claim. Having established
intentional or negligent conduct some assessment of the pressure. Duration of the
infringement is necessary to determine the amount of fine. In UBC gravity depended
upon a number of factors:
1- the nature of conduct
2- the market power of the firm concerned
3- the nature of goods concern
4- the conduct of firms
5- Mitigating factors thus far admitted by the Commission and Court included
negligible impact on competition.
The ECJ held that UBC had abused its dominant position charging different prices
of its bananas according to the aim of their destination as it sold fruit as in
contrast to Where VERTICAL RESTRAINTS (vertical integration): Where a producer
distributes its goods itself, it may develop a dis-persal network through internal
vertical growth. It may do this simply by vertical growth may be achieved through
ex-ternal growth by taking over distribution networks down-stream in the market.
Various considerations will influence a producer on his decision: Whether or not
to integrate ver-tically . On the one hand it may be costly to set up or take over
one’s own distribution channels. Also it may be more efficient to appoint an
independent undertaking with knowledge of and expertise in the distributive trade
than to attempt to break into this area one self. On the other ver-tical
integration may mean that a very high degree of effi-ciency and co-ordination can
be achieved in a way that would not occur if the goods in Question had to be
consecutively handed over from one firm to another. A vivid example of ef-ficient
integration is afforded by the organisation of UB. In EEC Law unilateral refusals
to supply are caught if at all, under Article 86. That they might constitute an
abuse was clearly established by the [ECJ in Commercial Solvents v. Commission
Cases 6, 7/73 1974] ECR 223, [1974] 1 CMLR 309]. Another example is cutting off
supplies as a disci-plinary measure against a distribution as with UB, although
there the supplier was trying to stop the customer (who wasn’t under an exclusive
purchasing obligation ) taking part in a competitors advertising campaign. The ECJ
said that it was abusive to stop supplying a long-standing cus-tomer who abides by
normal commercial practice and that or-ders should be met which were in no way out
of the ordinary. All these raises many Questions as: How far a dominant un-
dertaking is free to protect their own commercial interests? or Do dominant firms
have to carry on indefinitely supplying those who are now competitors and are they
never free to in-tegrate vertically if it means cutting off an existing cus-tomer?
In UBC the ECJ and the Commission invoked the well-know principle of
“Proportionality” and said: that a domi-nant undertaking, like any other
Undertaking, was entitled to take measures to protect its legitimate commercial
inter-ests but the action had to be proportionate to the threat A requirement that
coffee beans be resold only in a roasted form could effect exports: the Commission
required agree-ments to be amended so that the beans could also be sold in their
raw form for example: [Colombian Coffee OJ [1982] L360/61, [1983] 1 CMLR 703]; see
similarly [“the green ba-nana clause”] in [case 27/76 UB [1978] ECR 207, [1978] 1
CMLR 429.]

Inside the UB Case the Court using Article 86 gives an exam-ple of abuse of
dominant position:
1- exploitative abuses (taking direct advantage of market power to get supra-
competitive prices or other benefits)
2- certain kinds of anti competitive behaviour:(as discrimi-nation)
3- Continental Can/Hoffman la Roche: The Court held other kinds of anti-
competitive behaviour by dominant firms were unlawful
A- Mergers and the incipient predation theory
B- refusal to supply raw materials to competitors
C- rebates (given only to buyers dealing exclusively with the dominant firms)
D- H.L.R. the Court base on Article 3(f) of the Treaty gave a definition
covering all forms of anticompetitive behaviour
E- Article 86 (held the Court) prohibits a corporation al-ready dominant from
merging with or acquiring a competi-tor.
The conclusion is that in Article 86: The general concept of abuse is set forth
without further indication: It states that decisive criteria for finding abuse
-any use which is incompatible with the common market is abuse
-it is irrelevant whether the perpetrator of the abuse was aware of the prohibited
nature of his activities
-Any uses of dominant position that objectively can be qualify as abuse is clear.
And adding some complementary comments relating to Article 86:
a) The requisite measure of market control in the defini-tion of dominant
position:
Then OF So as in antitrust rules when ARTICLE 86 is apply IN SITUATIONS to
FOREIGN ELEMENTS

Most frequent problem: in International trade is the incon-sistency of the


antitrust laws that raises questions?
(a)-ECONOMIC UNIT THEORY: The only relevant reference to the theory in UB the case
was the commission statement that the subsidiaries were under control of the
parent company and do not posses any real autonomy. The Commission and the Court
have applied the theory in a number of cases as mat-ter of practice. The Court
definition of the theory is as follows: “The dominant position referred to in this
essay relates to a position of economic strength enjoyed by an undertaking which
enables it to prevent effective competi-tion 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 consum-ers.” A clear example of
the application of the theory is UB in which the Commission and later the Court,
found that a New York Enterprise, together with UB Continental BV of Rotterdam,
and its other subsidiary companies, formed a single economic unit. The Commission
had found that the UB Company had abused its position in 4 details:
1-namely forbidding ripeness/distributors to resell their bananas
2-refusing to continue to supply the rippers/distributor
who had taken part in an advertising compaign for a rival brand of bananas.
3-Discriminating between trading partners by charging prices that differed
considerably according to the purchaser’ coun-try.
4-And charging some of the customers unfair prices.
The Court upheld the Commission’s finding on the 1 and 3d counts and rejected the
4th for lack of proof. It accord-ingly reduced the fine. So the LIMITS ON THE
APPLICATION OF AN “EFFECT DOCTRINE” IN COMMUNITY LAW BASED ON THE INTENSITY OF THE
“EFFECTS” WITHIN THE COMMON MARKET and quoting AMERICAN LAW INSTITUTE Restatement
(second) of the [foreign relations law of the US, Section 18 (b) (1995)] The
extraterritorial reach of restrictive trade legislation conflict evoking:-the type
of legislation.

Under Community law -Regulation 17: provides that authori-ties in the Member
States are responsible for administrat-ing domestic legislation on competition and
are competent to determine whether or not the prohibition of article 86 apply but
only until or requiring termination of an in-fringement Article 9(3) of Regulation
17. with regards to: national economic systems in their various countries around
the World. As a Collision a Multinational United Brands (Chiquita bananas)
enterprise abuses of their dominant po-sition anywhere in the World in Central
America exploits and takes the bananas scaping taxation and buying govern-ments,
so the devastation is left in poor countries. This in economical development
clearly emphasises -the interna-tional dimension required for effective
competition policy under the multinationals-and the need for international co-
operation in combating restrictive business practices: as in the Third World the
effects of trade for example of ba-nanas in the planet.
When a Pertinent requirements of Article 86 and an impo-sition of a fined on non
community enterprises (NCES) hav-ing no presence within the Common Market. The
assessment of arrangements with foreign elements should also be under-taken in the
context of a number of Treaties of the Commis-sion with 3rd countries which extend
the Free Trade Area (FTA) of the Common Market to various other states, includ-ing
the EFTA countries. To interrupt -the prevention, re-striction or distortion of
competition within the Common Market at EC level Article 86 since lay down the EEC
anti-trust rules forming the anatomy of rules applying to under-takings, they are
applied to non community enterprises (NCES) or (NCE) and arrangements whole or
partly carried outside the territorial boundaries of the Common Market. Therefore
since this -relations on this basis are how the application of competition rules
reach out an extraterrito-rial application; to understand this it is necessary to
deal with the general role of competition policy examples are Article 3(f) and
Article 2. The object or role of pol-icy of competition policy varies of
situations examples are cases with foreign elements and solution to issues con-
nected with the extraterritorial application of community competition rules And
-Article 86 where the requisite meas-ure of market control in the definition of
Dominant Posi-tion. Commission narrow definitions or sources of limita-tion are
the limits of law within the European Community and international law imposing the
extraterritorial appli-cation of community law. And markets territorial scope
deals with jurisdiction where customary international law provides the only
restraint upon the conduct of nations in the area of extraterritorial application
of antitrust law or competition law.
How far a sovereign state is entitled under international law to give
extraterritorial application to its antitrust laws and after that one could look
at the special position in this respect of the Commission, which is not a
Sovereign State but a Community of Sovereign States to which those in-dividual
states have delegated certain aspects of their sov-ereignty?
If the answer is: yes! as in the recent banana judgement then the sovereignty is
to be found in Treaties related documents and implementing rules and regulations
as GATT, the Lome Convention etc. So then any State has a right to a damage or a
claim to redress? Germany was trying to get this final decision on the banana
judgement, instead in UBC had to pay a fine. Under jurisdiction in respect to
crime; exam-ple: extraterritorial penal jurisdiction. States are also entitled to
claim jurisdiction over offences committed abroad, which merely produce effects in
their territory even though those effects were constituent elements of offence;
Germany want it to be treated as a person, not as a terri-tory. But I think the
debate was concentrate in the objec-tive territorial principle, the debate on the
adequacy of the principle of territoriality as a basis for jurisdiction in
antitrust matters where only effects of offences commit-ted abroad are found
within the territory
Under the territorial application of each nation: the diffi-culty in the
application of the principles of jurisdiction of international law to the
community jurisdiction in anti-trust matters which don’t direct physical harm is
the extent to which the requirement of a “constituent element of the offence,
occurring within the territory can be applied where only economic effects Of the
antitrust offence have taken place within the territory.
The difficulty lies in the application of the objective test of territoriality to
antitrust cases examples are the mean-ing and effects of antitrust crime: the
effects doctrine and economic offences where in this case the law applicable de-
pends on the nature of its public and international law. The rules of
international law are those of private interna-tional law whereby Municipal Courts
commonly refuse to apply certain aspects of a foreign law. At the end in the
common world Community Antitrust law seems difficult to fit into this system
because breaches of rules could be sanctioned by administration (regulatory) or
criminal proceedings and by civil (private) proceedings. Examples are duty free
bananas. The difference in both articles is a degree rather than in kind.
Abuses prohibited under Article 86 are divide into two cate-gories:
-exploitative abuses
-anti competitive abuses
Article 86 various sanctions: administrative sanctions' ex-amples are: fines,
penalty payments as under Regulation 17 article 15/17 the remedies seem to be
criminal or quasi. Also this article can be exercise by the authorities pro-
viding direct effect. An attempt to classify the commis-sion competition rules
within the following categories: pub-lic law, criminal law, administrative law
deems to fail, be-cause of all the elements contains in the law. Provided that a
number of that abuse in United Brands such as:
a) unfair prices
b) unfair trading conditions
c) discriminatory treatment
d) refusal to supply
e) Article 15(4) of Regulation 17 provides that: fines re-sulting from the
proceedings under the Regulation are not criminal in character.

Summary of the text:


HOW DID I STRUCTURE THE MATERIAL(the future destiny of the european market order
for bananas) The recent banana judge-ment of the European Court of Justice and the
dispute of 5 October 1994 so called banana judgement Germany v Council case 280/93
[1994] ECR-I 4973 between various Latin American export countries and the EC
Council Regulation 404/93 on the common organisation of the market of bananas and
the German application for annulment of Title IV are illustrative of the
interrelationship between international and dispute set-tlement proceedings in the
field of GATT law and of the of-ten one sided use of GATT dispute settlement
system by the EC. The activities of GATT settlement procedures against third
countries, and legal disputes against third countries, prohibition on tariffs, non
tariff trade restrictions of trade distorting subsidies, what GATT law prohibits ,
and GATT disputes and their impact on competing procedures in between competitors
yet the EC’s eagerness to enforce the GATT Legal disciplines vis a vis third
countries. Almost a half century later, the handling of the banana dispute by the
EC political institutions an the ECJ continues to reveal a preference for power
and politics and a disregard for the rule of law to the detriment of EC citizens.
The EC has suc-ceeded in limiting the national foreign trade policy powers of the
EC Member States by EC guarantees of freedom of trade and non-discrimination in
intra-Community trade. The EC do-mestic policy constitution still needs to be
supplement by a foreign policy constitution limiting the foreign trade pol-icy
powers of the EC and protecting the freedom of trade of EC citizens in trade
relations with third countries. The principle of “primacy of international law”
over secondary EC law which underlies the EC Treaty provisions in Articles 228 to
234, suggests that the worlwide GAAT obligations of the EC should serve as the
‘uniform principles’ on which the EC common commercial policy ‘shall be based”
according to Art 113. Respect to its legal obligations under GAAT law and under
primary GATT dispute settlement system not only as a means to promote freedom and
non-discrimination abroad for the benefit of EC exporters, but also at home for
the bene-fit of the EC consumers, traders, competitors, tax payers and for the
general Interest of EC citizens and the rule of law.

INDEX:

competition law:
Article 3:p3,10,32,38.
Article 85:p5,11,12,14,58,61,63.
Arti-
cle86:p5,7,10,11,12,13,14,15,16,17,20,24,25,27,28,32,35,36,38,41,42,44,45,46,47,48
,49,52,56,61,62,63.
Article 87:p5.
Article90/92:p5,28.
Article 94/95:p6.
Article 228/234:p65.
Form A/B:p56,57.
Joint Ventures:p48.
Vertical agreements:/restraints:p54.
-Article 113: p5.
-Article 228: p5.
-Article 235,238: p5.
OECD:p9.
ECJ:p10,16,18,19,20,53,,54,55,65.
CFI:p42.
Regulation:p26,61,64,65.
FTA/EFTA:p27,62.
ECUS:p43,46.
Treaties:11,65
NCE/NCES:p61,62.
MMC:p46.
GAAT:p65.
FAO:p50.
Third countries:p26.
Cartels:p57.
UBC/UB/chiquita/greenbananaclause:p24,25,27,29,30:Art1(a)(b)(c)(d)ofthedecsion;31,
35,,36,37,38,39,40,41,43,45,46,47,49,50,51,52,53,54,55,57,60,61,62,63.
Hoffman:p13,17,20,21,24,25,27,62.
Continental:p15,30,58,60.
Michelin:p21,22.
AKZO:p21,22,23,31,32,34,44,45,46.
Metro:p22.
Hugin:p24,27,30.
Areeda:p31,34.
Decca:p42.
Boosey/British Gypsum/Napier Brown: p43.
Colombian Coffee: p55.
Germany v. Council: p64.
Tetra:p23,42
ATC:p31,32,33
AVC:p31,32,34.
ECS:p22,23,32.
BBI:p43.
Affect doctrine: p61.
Antitrust:p31,53

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1018HT Amsterdam- The Netherlands
++31(6)13894509
++31(20)7794788