France and two French companies, SCPA and EMC, challenged the Commission's decision of 14 December 1993, in which it declared the concentration between Kali und Salz AG, Mitteldeutsche Kali AG and the Treuhandanstalt compatible with the common market. Today the Court of Justice has annulled that decision.

On 14 July 1993 the Commission, pursuant to Regulation (EEC) No 4069/89 on the control of concentrations between undertakings, was notified of a proposed concentration between Kali und Salz AG ("K+S"), a subsidiary of the BASF chemicals group, and Mitteldeutsche Kali AG ("MdK"), whose sole shareholder is the Treuhandanstalt ("Treuhand"), a public-law institution entrusted with the task of restructuring the undertakings of the former German Democratic Republic. K+S essentially operates in the potash, rock salt and waste disposal sectors. MdK combines all the activities of the former German Democratic Republic in the potash and rock salt sectors. The concentration plan was for MdK to be converted into a private limited company (MdK GmbH), to which K+S would contribute its potash and rocks salt activities and the

Treuhand would contribute DM 1 044 million. K+S would have 51% and Treuhand 49% of the shares and voting rights in the joint venture so created. In the Commission's opinion, the concentration could create a collective dominant position on the Community market apart from Germany and Spain.

The companies involved in the proposed concentration then offered to enter into certain commitments, in order to dispel concern that the concentration would create an oligopolistic dominant position on that market. Accordingly, by Decision 94/449/EC of 14 December 1993 relating to a proceeding pursuant to Regulation No 4064/89 (Case No IV/M.308 - Kali + Salz/MdK/Treuhand), the Commission declared the proposed concentration compatible with the common market, subject to compliance with the following commitments: K+S and MdK would withdraw from the Kali-Export GmbH export cartel in which K+S and SCPA worked together; K+S and MdK would set up their own distribution network in the Community, in particular in France, and they would terminate the current cooperation with SCPA as distribution partner on the French market. Those conditions were intended above all to loosen existing links between K+S and SCPA, a subsidiary of the French group EMC.

The relevant product market concerned potash-salt-based products for agricultural use, which included both potash sold for direct application in agriculture and potash sold for use in the manufacture of compound fertilisers. As to the geographical market of the product in question, the Commission identified two distinct markets:

• With respect to the German market, the Commission found in the contested decision that the planned concentration would lead to a de facto monopoly, since the market shares of K+S and MdK were 79% and 19% respectively, and concluded that the effect of the proposed concentration would be to strengthen the dominant position of K+S on the German potash market. However, in the Commission's opinion, the proposed concentration was not the cause of the strengthening of the dominant position of K+S on the German market - its dominant position would be strengthened even if the concentration did not proceed - because MdK would soon withdraw from the market if it was not acquired by another undertaking, its market share would then be absorbed by K+S, and it could be practically ruled out that an undertaking other than K+S would acquire all or a substantial part of MdK.

• With respect to the Community market apart from Germany, the Commission stated in its decision that, as a result of the proposed concentration, two entities would enjoy a dominant position: K+S/MdK and SCPA. The Commission's analysis was based, first, on its finding that supply outside the K+S/MdK and SCPA grouping was fragmented and came from operators who did not appear to be able to attack the total market share of about 60% held by the duopoly, and, second, on the strong probability that there would be no effective competition between K+S/MdK and SCPA, in part because of their long-standing close commercial links.

By application lodged in February 1994, France asked the Court of Justice to annul the Commission's decision. The Court of First Instance, with which SCPA and EMC had lodged corresponding applications against the Commission, which is supported by Kali und Salz GmbH (formerly MdK) and Kali und Salz Beteiligungs-AG (formerly K+S), declined jurisdiction in order to enable the Court of Justice to rule on the application for annulment.

The Court rejected the French Government's complaint that the Commission failed to comply with its obligation to cooperate with the national authorities and made an incorrect assessment of the effects of the concentration on the German market. That institution was also criticised for having made an incorrect assessment of the effects of the concentration on the Community market apart from Germany. On this point, the Court first held that collective dominant positions (oligopolies) do not fall outside the scope of the Community regulation on the control of concentrations between undertakings. It then considered the complaint that the Commission had misapplied the concept of a collective dominant position by concluding that a collective dominant position between K+S/MdK and SCPA would be created which was likely to impede significantly competition in the Community market apart from Germany. The Court found that the cluster of structural links between K+S and SCPA, which, as the Commission itself conceded, constituted the core of the contested decision, was not in the end as tight or as conclusive as that institution sought to make out, and also that it had not been shown that there was no effective competitive counterweight to the grouping allegedly formed by K+S/MdK and SCPA. The Court accordingly held that it was apparent that the Commission had not established that the concentration would give rise to a collective dominant position on the part of K+S/MdK and SCPA liable to impede significantly effective competition in the relevant market. It therefore annulled the Commission's decision in its entirety.

Unofficial document for the use of the media, not binding on the Court of Justice.

This press release is available in all the languages. For the full text of the judgment, please consult our Internet page http://curia.eu.int at about 15.00 today.

For further information please contact Tom Kennedy, tel (352) 4303 3355; fax (352) 4303 2500.