88/138/EEC: Commission Decision of 22 December 1987 relating to a proceeding under Article 86 of the EEC Treaty (IV/30.787 and 31.488 - Eurofix-Bauco v. Hilti) (Only the English text is authentic)

• Articles: 5

Article 1

The actions of Hilti AG in pursuing, against independent producers of nails for Hilti nail guns, courses of conduct intended either to hinder their entry into and penetration of the market for Hilti-compatible nails or to damage directly or indirectly their business or both, constitute an abuse of a dominant position within the meaning of Article 86 of the EEC Treaty.

The essential features of that infringement are:

1. tying the sale of nails to the sale of cartridge strips;

2. reducing discounts and adopting other discriminatory policies when cartridge strips were bought without nails;

3. inducing independent distributors not to fulfil certain orders for export;

4. refusing to fulfil the complete orders for cartridge strips made by established customers or dealers who might resell them;

5. frustrating or delaying legitimately available licences of right under Hilti's patents;

6. refusing without objective reason to honour guarantees;

7. operating selective and discriminatory policies directed against the business both of competitors and their customers;

8. operating unilaterally and secretly a policy of differential discounts for supported and unsupported plant-hire companies or dealers in the UK.

Article 2

For the infringements described in Article 1, a fine of six million ECU is hereby imposed on Hilti AG.

The fine shall be paid into:

(a) account No 59000204, Commission of the European Communities (for payment in ECU), Lloyds Bank plc, The Manager, Payments Section, Overseas Centre, PO Box 63, 38a Paradise Street, UK-Birmingham B1 2 AB;

(b) account No 108.63.41, Commission of the European Communities (for payment in pounds sterling), Lloyds Bank plc, Overseas Department, PO Box 19, 6 Eastcheap, UK-London EC3P 3AB,

within three months from the date of notification of this Decision. After three months interest shall automatically be payable at the rate charged by the European Monetary Cooperation Fund on its ECU operations on the first working day of the month in which this Decision was adopted plus 3,5 percentage points, i.e. 10,25 %.

Should payment be made in pounds sterling the exchange rate applicable shall be that prevailing on the day preceding payment.

Article 3

Hilti AG shall forthwith bring to an end the infringements referred to in Article 1 to the extent that it has not already done so. To this end Hilti AG shall refrain from repeating or continuing any of the acts or behaviour specified in Article 1 and shall refrain from adopting any measures having an equivalent effect.

Article 4

This Decision is addressed to Hilti AG, FL-9494 Schaan, Fuerstentum Liechtenstein, c/o Hilti GB, Trafford Wharf Road, Trafford Park, UK-Manchester M17 1BY.

This Decision shall be enforceable pursuant to Article 192 of the EEC Treaty.

Done at Brussels, 22 December 1987.

For the Commission

Peter SUTHERLAND

Member of the Commission

(1) These arrangements are also reflected in the licence of right between Hilti and both Bauco and Eurofix where the following clause is found in relation to quality control/safety: 'The licence shall take all reasonable precautions to ensure that any Product (i.e. cartridge strip) sold under the licence for use with Hilti DX fastening tools is safe and suitable for use in such tools'. This wording was agreed between Hilti and Eurofix, once the Comptroller of Patents had decided in order to protect public interest that there was a justification for such a provision both to ensure quality control of cartridge strips by Eurofix and to protect Hilti's reputation by preventing faulty cartridge strips from being supplied for use in their guns.

Schedules & Appendices

ANNEX

Cases IV/30787 and 31488

UNDERTAKINGS

1. Hilti AG, for itself and on behalf of its wholly-owned subsidiary companies in the EEC, undertakes in good faith:

(a) to implement on a permanent basis the undertakings given on 27 August 1985 in the above cases on an interim basis, namely not, within the EEC, either directly or indirectly to tie the supply of direct fastening cartridge magazines to the supply of direct fastening nails; and, as a conequence, not to aggregate purchases of cartridge strips with purchases of other products for the purposes of calculating discounts;

(b) to implement, for direct fastening products, in a manner consistent with the undertakings contained in (a) and subject only to the three exceptions listed below, a discount policy based on precise organic and transparent quantity/value discount schedules applied uniformly and without discrimination;

(The three exceptions referred to above are:

(i) meeting a competitive offer,

(ii) contracts individually negotiated with customers who customarily or given special requirements or circumstances refuse to deal with Hilti except on the basis of such a contract,

(iii) special promotions, properly so called.

As a consequence of implementing such a discount policy certain types of discount would be eschewed including fidelity discounts and loyalty rebates).

(c) not, except for objectively valid reasons, to refuse to suply direct fastening products to existing customers nor, in fulfilling any order, to limit the quantity of direct fastening products to be supplied; and to continue to report to the Commission on a quarterly basis any refusal to supply direct fastening products indicating the reason for such refusal;

(d) to waive, as against present or future licences of right under its UK cartridge strip patent, its rights under its UK copyrights in its cartridge strip and, to the extent that they may exist in the EEC, under corresponding design rights in such strip;

(e) to provide warranty cover for its direct fastening tools not only where original Hilti consumables are used in them but also where non-Hilti consumables of matching quality are so used;

(f) to implement a competition law compliance programme specific to the Hilti Group and along the lines approved of by the Commission in the National Panasonic case and to inform the Commission of the steps taken to implement such a programme.

2. Hilti AG undertakes to use its best endeavours to encourage the independent distributors in the EEC of its direct fastening products to adopt the undertakings referred to in 1 above as part of their own policy.

3. Hilti AG undertakes to continue to implement the above undertakings in paragraphs 1 and 2 until such time as it is found not to be dominant or circumstances change so that it is no longer dominant. And, in either event undertakes to inform the Commission in writing before ceasing to implement any of the above undertakings.

For and on behalf of Hilti AG

by

Date: 4 September 1987.