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Gencor v. Commission: The Court of First Instance rules on collective dominance

United Kingdom
05/08/1999
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Three years ago the planned joint purchase and ownership of South African companies in which Gencor Ltd, the South African mining and metals firm, and the English company, Lonrho Ltd. held separate shares was declared by the Commission to be incompatible with the Merger Control Regulation (MCR). Gencor had argued that the MCR only applied to mergers within the European Community. The Commission found the operation would have created a dominant duopoly in the world platinum and rhodium market. Effective competition would have been significantly impeded in the common market as a result. The Court of First Instance upheld the Commission’s decision even though the South African competition authorities had no objections and the purchase agreement had in fact lapsed.

The Court of First Instance clarified that the MCR can be applied to prohibit concentrations that create or strengthen a collective dominant position even where there are no formal structural links between the parties in the market. The Court ruled that although structural commitments such as divestment, are more likely to allay the Court’s concern about the creation or strengthening a dominant position, behavioural commitments, such as making a dominant facility available to competitors, can be adequate to prevent the emergence or strengthening of a dominant position. Such undertakings are to be examined on a case-by-case basis.

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