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Business: European Vigor

3 minute read

After an intensive investigation, Common Market trustbusters last month handed down their most severe decision ever against a single company. The target: United Brands, the big (1975 sales: about $2 billion) food multinational. The Competition Department of the European Economic Community fined the company $1.2 million for “an abuse of dominant position” in the banana market* and ordered an immediate 15% price rollback in five of the nine EEC countries. Key findings: United Brands priced unfairly by charging twice as much for Chiquita bananas in rich markets such as West Germany as in less prosperous ones, notably Ireland. Penalty for-noncompliance with the order: an additional fine of $1,200 a day.

The United Brands’ case highlights the accelerating pace of antitrust action in Europe. Though empowered by the EEC’s founding Treaty of Rome to prevent “distortion or restriction of competition,” the Brussels-based Competition Department at first did little to break up Europe’s traditionally cozy relationships between competitors. But since Luxembourg Diplomat Albert Borschette took over as antitrust chief in 1970, the EEC has become far more aggressive. Says Borschette: “I think it would be better for us to have three or four medium-sized companies in real competition [in each major market] than to have one big company for the whole Common Market.”

In more than 100 cases, the trustbusters have taken on industrial giants of both European and U.S. origin, including Kodak (for price fixing) and Pittsburgh Corning (for charging widely different prices in neighboring countries). EEC regulators have forced the dissolution of a price-fixing aluminum cartel, broken up a sugar price-fixing arrangement, and punished with a $200,-000 fine the Italian subsidiary of New York-based Commercial Solvents Corp. for refusing to sell anti-TB drugs to an Italian company that had resisted a takeover bid. Some 40 department detectives now show up without warning at company offices throughout the EEC and poke into files.

Despite their zeal, the trustbusters have sometimes seen their decisions reversed on appeal. Their most serious setback came in 1973 when the Common Market’s European Court of Justice overturned a ruling that would have forced Continental Can Co. to dispose of its European subsidiaries. The antitrust department will face another hard court fight with United Brands, which may well argue on appeal that market and shipping factors alone accounted for the price differences denounced by the department. Undismayed, Borschette is now contemplating antitrust actions against IBM and the big Swiss pharmaceutical house of Hoffmann-La Roche, both because of suspected anti-competitive pricing practices.

* The charges are entirely separate from United Brands’ admitted and widely publicized bribery of government officials in Germany, Italy and Honduras.

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