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Member States.
(2) Recent declarations of the Commission give the
impression that it at present desires international con-
centrations only in a few sectors, particularly with
regard to highly technological products. For all re-
maining sections, the Commission considers concentra-
tion control to be necessary with the possibility of pro-
hibiting concentrations.
(3) In a Study on "The Problem of Concentration of
Enterprises in the Common Market" of 1966, the Com-
mission—for the first time—showed the way to control
and to influence the concentration of enterprises by
means of Article 86 of the EEC-Treaty on the basis
of the law as it is. In the Study the Commission takes
the view that the acquisition of an enterprise by
another one which is in a "market dominant position"
may be an abusive exploitation of this position. The
exploitation is termed abusive, if,
objectively,
the be-
haviour of the enterprise is a misbehaviour in view of
the aims stipulated in the EEC-Treaty.
(4) In its decision of 9 December 1971 against
Continental Can, the Commission has—for the first
time—converted this theory into practice. The Con-
tinental Can Company of New York, the largest packag-
ing manufacturer in the world, since 1969 holds a
majority in the largest German packaging manufactur-
ing company. In 1970, it furthermore acquired a
majority in the largest packaging manufacturing com-
pany of the Benelux-countries, Thomassen and Drijver,
Deventer/Holland.
(5) In this decision, the Commission asserted that
Continental Can through its German subsidiary held a
dominant position on certain markets. The acquisition
of the largest Benelux manufacturer was termed an
abusive exploitation of that dominant position :
If, by the merger of a dominant enterprise with
another one the dominance is strengthened to such
an extent that competition—which would have re-
mained in existence, actually or potentially, despite
the initial dominant position—is practically elim-
inated for the goods concerned in an essential part
of the Common Market, then this is a behaviour
incompatible with Article 86 of the Treaty.
(6) Continental Can filed a complaint against this
decision with the European Court of Justice, among
other things on the following grounds :
(a) Abusive exploitation" of a dominant position
requires a casual nexus between this position and
the act which is qualified as an abuse. There is
no connection between Continental's allegedly
dominant position in Germany and the acquisi-
tion of the shares in the Dutch Company.
(b) The authors of the EEC-Treaty have consciously
disregarded the idea of including regulations
against mergers. This is apparent if one compares
this Treaty with the Treaty of the European
Coal and Steel Community (MUV). In view of
this it is inadmissible by means of interpreta-
tion to insert such provisions into Article 86.
(c) It is undisputed that market dominance as such
is permitted. Article 86 starts from this fact, only
prohibiting the abuse, not the position; conse-
quently, a mere increase of market power cannot
be prohibited.
(d) The application of Article 86 cannot be sub-
stantiated with the help of general merely pro-
gramatic provisions of the EEC-Treaty. Those
have no higher rank than Article 86.
(e) Article 86 unlike Article 85 does not empower
the Commission to grant an exemption. There-
fore, the Commission's theory means a general
rigid rule, resulting in legal uncertainty.
(f) If the Commission thinks provisions against
mergers necessary, they have to be introduced by
changing or amending the Treaty, or, perhaps
by a Regulation to be based on Article 235
EEC-Treaty. Article 86 is the wrong way.
(7) In his lecture, Dr. Gleiss could not yet consider
the European Court's judgment of 21 February 1973
by which the decision of the Commission was reversed.
The Court in essence confirmed the theory of the Com-
mission. According to this judgment, a behaviour is
abusive within the meaning of Article 86, "if an
enterprise in a dominant position increases it in such a
manner that the degree of dominance achieved hinders
competition essentially, so that only enterprises remain
on the market, which in their behaviour depend on the
dominant enterprise".
This means, that not only mergers but also other
forms of increase of market power can be an abuse
within the sense of Article 86. But the Court reversed
the Commission's decision because it failed sufficiently
to prove the market dominance of Continental Can in
Germany and the restraint on competition effected by
the merger.
Decision of professional inter©
Local authority liable for erroneous report given by
Inspector as to foundations of house.
The decision in this case involves the liability of a local
authority in the exercise of its statutory powers and the
liability of local authorities for the negligence of their
inspectors and employees, etc.
The case is fully reported in the High Court at
(1971) 2. All E.R. 1003 and in the Court of Appeal
at (1972) I. All E.R. pages 462-490.
In this particular case a Building Inspector of a local
authority inspected foundations which required Bye-
Law approval by the local authority concerned in
October 1958. It was subsequently ascertained that the
foundations had been badly laid so as to create a hidden
defect and the defective foundations caused damage
to the house after the premises had been purchased by
a subsequent owner. The subsequent owner Mrs.
Dutton, brought an action against the Defendant local
authority for damages for the negligence of their Build-
ing Inspector in approving for the purpose of the
Building Bye-Laws the foundations of the house which
had been built by the first-named Defendants, Bognor
Regis United Building Co. Ltd., insofar as the walls
cracked, the staircase slipped, and the doors and win-
dows would not close.
Mr. Justice Cusack held that Bognor Regis U.D.C.
were liable for their Inspector's negligence in not en-
suring that the foundations had been properly con-
structed and laid in conformity with the Statutory Bye-
Laws. The Trial Judge awarded the Plaintiff £2,115
damages against the second Defendants, Bognor Regis
U.D.C., with interest at 6% from the date of service
of the writ. The Court of Appeal (Lord Denning,
Sachs and Stamp LJJ.), upheld the decision of the
High Court and dismissed the appeal. Leave to appeal
to the House of Lords was granted but the appeal was
subsequently withdrawn.
[Dutton v. Bognor Regis Building Co. and Bognor
Regis Urban District Council—C. A.—(1972) I. All
E. R. 462.]