## Facts

- Hilti AG manufactured nail guns and related consumables (nails, cartridges, and cartridge strips) for professional construction use and had a large installed base supported by a strong distribution network.
- As Hilti’s patents expired, independent firms including Eurofix Ltd and Bauco (UK) Ltd supplied nails compatible with Hilti nail guns; rivals could make compatible nails but generally could not make compatible cartridge strips.
- Eurofix (1982) and Bauco (1985) complained that Hilti used control over cartridge strips and related policies to exclude independent nail suppliers from the Hilti-compatible nails market.
- The Commission investigated and found three relevant product markets, each at least Community-wide: (1) Hilti nail guns, (2) cartridge strips compatible with Hilti guns, and (3) nails compatible with Hilti guns.
- The Commission found Hilti dominant in each market based on high market shares, brand and network effects, and effective control of cartridge strips.
- The challenged conduct included: (1) supplying cartridge strips only to customers who also purchased Hilti nails and granting combined-purchase discounts; (2) refusing to supply cartridge strips to independent nail producers and pressuring distributors/customers not to resell strips to rivals; (3) applying a general policy of refusing to honor tool guarantees if non-Hilti consumables were used; and (4) delaying patent-related licensing arrangements that could enable entry.
- Hilti claimed the practices were justified by safety, quality, and product-liability concerns, but the Commission found the claimed risks were not substantiated or addressed through consistent, targeted measures (e.g., systematic warnings or regulatory notification).

## Issues

1. What were the relevant product and geographic markets for nail guns and Hilti-compatible consumables, and did Hilti hold a dominant position in those markets?
2. Whether conditioning access to cartridge strips on the purchase of Hilti nails constituted abusive tying and leveraging under Article 86 EEC.
3. Whether refusal to supply cartridge strips to competitors, and restricting indirect access through distributors/customers, constituted an abusive foreclosure strategy.
4. Whether a general warranty/guarantee exclusion for use of non-Hilti consumables constituted an abuse by coercing customers and limiting multi-sourcing.
5. Whether safety, quality, and product-liability concerns objectively justified the restrictive conduct.

## Decision

- The Commission found distinct markets for Hilti nail guns, Hilti-compatible cartridge strips, and Hilti-compatible nails, each at least Community-wide.
- The Commission found Hilti dominant in all three markets during the relevant period.
- The Commission held Hilti abused its dominance by:
  - Tying cartridge-strip supply to the purchase of Hilti nails (including combined-purchase discounts).
  - Refusing to supply cartridge strips to independent nail producers and preventing distributors/customers from supplying strips to rivals.
  - Applying a general guarantee policy that penalized any use of non-Hilti consumables, independent of proof of causation.
  - Engaging in patent-related conduct that impeded entry, including delaying licenses of right.
- The Commission rejected Hilti’s safety/product-liability justification as insufficient on the facts.
- The Commission ordered Hilti to end the infringements and imposed a fine; subsequent judicial review largely upheld the findings but reduced the fine.

## Legal Principles

- Relevant markets may be defined by limited interchangeability and “system” constraints where an installed base ties customers to brand-specific consumables.
- A dominant firm abuses its position by tying an indispensable or quasi-indispensable input to the purchase of a separate product, thereby leveraging power into a related market and foreclosing rivals.
- A dominant firm’s refusal to supply, and interference with indirect access via distributors/customers, can be abusive where it has the object or effect of excluding effective competition in a dependent market.
- Warranty or guarantee policies can be abusive when used as a generalized deterrent to purchasing rival products, rather than being limited to case-specific instances where third-party products actually caused damage.
- Objective justification based on safety or liability requires substantiation and proportionate, consistent measures; unsupported or selectively applied safety claims do not excuse exclusionary conduct.

## Conclusion

The Commission concluded that Hilti’s control of Hilti-compatible cartridge strips and its tying, supply restrictions, and warranty policies unlawfully foreclosed independent nail suppliers and restricted customer choice in violation of Article 86 EEC, ordering cessation and imposing a fine.


Eurofix-Bauco v. Hilti, 1988 O.J. (L 65) 19 (Eur. Comm’n 1987)