United Brands Company v Commission of the European Communities

European Union competition law seeks to ban cartels, collusion and other anti-competitive practices,[1] and to ban abuse of dominant market positions.[2] The primary aim is to prevent any distortion of the single market, rather than to provide individual redress. The particular objectives are to establish:

open, non-partitioned market; effective competition; no over-concentration, fairness, international competitiveness.[3]

United Brands Company (UBC) was the main supplier of bananas in Europe, using mainly the Chiquita brand. UBC forbade its distributors/ripeners to sell bananas that UBC did not supply. Also, UBC fixed pricing each week; charging a higher price in different Member States, and imposed unfair prices upon customers in Belgo-Luxembourg Economic Union, Denmark, The Netherlands and Germany.[4]

The Commission viewed United Brands' action as a breach of Article 86 of the Treaty of Rome (now Art 102 of the TFEU).[5] Article 86 prohibits "abuse of a dominant position" of a relevant market. The case was referred for a Preliminary Ruling to the European Court of Justice under Article 177 (now Art 267).

Agreeing with the Commission, the ECJ held that United Brands' behaviour was unlawful:

• The ECJ rejected UBC's claim that the product market was the "fresh-fruit market as a whole". Instead, because of the notion of cross elasticity of demand and product characteristics, the product market was defined as the banana market.
• UBC had about 45% of the EU banana market, and 45% was deemed to amount to a "dominant position".[6]
• Since the "green banana clause" effectively prevented any competing logistics firms from carrying Chiquita bananas, it was anti-competitive and in breach of Art 86.

• EU competition law
• Consten & Grundig v Commission