ICI v Dyestuffs (1972) Flashcards
(12 cards)
Facts of the case?
Involved Imperial Chemical Industries (ICI) and collaborators v Commission of the European Union
Uk based chemical company, producer of dyestuffs
Three price rises (64’,65’ and 67’) similar in time period and percentage increase industry wide. No formal agreement between the undertakings.
Market Features?
Oligopolistic, 80% of market was supplied by only 10 producers. High barriers to entry.
Specialty dyes were difficult to imitate/substitute.
Why was there an investigation into the price rises?
It was argued they were “independent decision” but an investigation launched because there were concerns concerted practices were at play.
Why was this a complex case?
Parents company argued that even if there was concerted practice, ICI’s headquarters were outside the EU and therefore outside of the jursidiction. This introduced an extra -territorial element.
Additionally, concerted practices were a new concept and it was unclear if they could exist without tangible evidence.
What was the ruling?
It was ruled that subsidiary conduct could be attributed to a parent company if the effects were felt within the EU.
Why is it a significant ruling?
provided a definition and criteria for concerted practices.
Criteria: “meeting of minds” needed
Intent can be assumed from circumstance e.g suspicious synchronised price rises
dissuaded co-operation and laid framework for future cases.
Expanded scope of competition law to include anti-competitve conduct by non-eu companies if effects are felt within EU.
Definition of Concerted Practices
“a form of co-operation between undertakings which without having reached the stage where an agreement properly so-called has been concluded, knowingly substitutes practical co-operation between them for the risks of competition”
Considerations when ruling on this topic
Parallel Behaviour/Conscious Parallelism
Price Leadership
Conscious Parallelism: what is it?
In oligopolistic market there is only a few players which means firms must take into account the actions of other firms to maintain market share, such as price rises or drops.
But this can harm consumers and discourage competition, by increasing barriers to entry. In this case fixed prices discourage cross-border trading due to less incentive. Less competitors…..
Does Conscious Parallelism always mean concerted practice?
NO. Sometimes copying another firms behaviour such as a price rise or drop can be a natural response to retain market share and authorities must take this into account when examining this behaviour.
Price Leadership
In oligopolistic markets there is often a price leader who initiates price changes. Avoids “price wars”, resulting in lower profits.
But also harms consumers, which is why it was decided the pattern of price increasses constituted concerted practices due to aligning on pricing decisions.
Extra Territorial Element
ECJ navigated around this by applying effects doctrine, stating that any conduct which has a direct, substantial and foreseeable effect within the EU (EEC at the time) is liable.
ICI’s activity resulted in big impact on trade and competition in MS. Liable.
Doctrine applies territoriality principle, considering where the effects were felt rather than where undertaking was based.
