Coca Cola: Commission’s findings of dominance in merger decisions do not have binding legal effects
Coca-Cola Enterprises Inc. (“CCE”), is the world’s largest bottler of the products of The Coca-Cola Company (“TCCC”). Since 1993 it has been the bottler of TCCC’s products in Belgium, France and the Netherlands. In 1997 the Commission authorised an agreement between TCCC and Cadbury Schweppes plc (“CS”) under the Merger Control Regulation. Under the terms of the transaction CCE was to take over the activities of Coca-Cola and Schweppes Beverages Ltd (“CCSB”).
However, in its decision the Commission found that CCSB was in a dominant position on the British cola market. The Commission also referred to the undertaking given by CCE to refrain, so long as it controlled CCSB, from certain forms of commercial practices considered illegal when employed by an undertaking in a dominant position.
Each of TCCC and CCE brought an action before the CFI for the annulment of the Commission’s decision in so far as it found that CCSB was in a dominant position on the British cola market.
The CFI first held that the mere fact that the contested decision (declaring the operation compatible with the common market) does not affect the applicants adversely does not dispense it from examining the possible legal effects of the Commission’s finding of a dominant position. That finding was challenged by both undertakings because it affects or could affect their economic and commercial interests and might be relied on by competitors before national courts.
However, according to the CFI, the finding of a dominant position, even if liable in practice to influence the policy and future commercial strategy of the undertaking concerned, does not have binding legal effects. The view as to whether there is a dominant position may alter over time, under the influence of a number of changing and market-led factors. Any subsequent finding of abuse of that dominant position contrary to EC law could only be made after a fresh appraisal by the Commission or by a national court.
The CFI considered that the undertaking given by CCE (to refrain from certain commercial practices) can only be the subject of an action for annulment if the Commission’s decision was conditional upon that undertaking being given. In the CFI’s view, this was not the case: the undertaking has no binding legal effects as its breach would not affect the lawfulness of the decision authorising the operation or entail its revocation. (The Coca Cola Company and Coca Cola Enterprises Inc. v Commission, Joined Cases T 125/97 and T 127/97, Judgment of 22/3/00)
