## Facts

- Hoffmann-La Roche & Co. AG (Roche) produced and sold bulk vitamins to industrial and wholesale customers in the European Economic Community.
- The Commission identified multiple separate product markets corresponding to distinct vitamin groups; Roche produced a substantial share of several groups.
- The Commission found Roche used contractual arrangements with major buyers that required customers to purchase all or most of their vitamin requirements from Roche.
- Roche also granted “fidelity rebates” conditioned on customers obtaining all or nearly all requirements exclusively or preferentially from Roche, rather than rebates linked only to purchase volume.
- Some arrangements included “English clauses,” requiring customers to disclose competitors’ offers and giving Roche an opportunity to match those offers.
- By decision of 9 June 1976, the Commission found Roche had abused a dominant position under Article 86 EEC (now Article 102 TFEU) and imposed a fine.
- Roche sought annulment, challenging procedural fairness, market definition, dominance, the abuse findings, and the fine.

## Issues

1. Whether the Commission violated Roche’s right to be heard in administrative proceedings that could result in fines, including through limits on access to information and use of investigatory material.
2. Whether the relevant product markets were properly defined as separate vitamin markets, and whether Roche was dominant in those markets.
3. Whether exclusive purchasing obligations, fidelity rebates, and English clauses by a dominant firm constituted abuse, including the application of dissimilar conditions to equivalent transactions.
4. Whether the fine was lawful and proportionate.

## Decision

- The Court dismissed Roche’s annulment action and upheld the Commission’s infringement findings in substance.
- The Court held the administrative procedure respected the right to be heard because Roche was informed of objections and given an effective opportunity to respond.
- The Court accepted the Commission’s separate vitamin market definitions and rejected a broad market based on technological substitutability for vitamins C and E.
- The Court found Roche held a dominant position in several relevant vitamin markets, relying on very high, durable market shares and structural barriers to entry.
- The Court ruled Roche’s exclusive dealing obligations, loyalty (fidelity) rebate schemes, and related English clauses were abusive under Article 86.
- The Court upheld the Commission’s power to fine for intentional or negligent infringement and found the fine not disproportionate (subject to limited corrections that did not change the infringement outcome).

## Legal Principles

- In proceedings that may result in sanctions, the right to be heard is a fundamental principle; the undertaking must be able to comment on the facts, relevance, and evidence relied on to establish an infringement.
- A relevant product market requires effective competition among products that are sufficiently interchangeable or substitutable for all or most uses; a mere “chain of substitution” is insufficient.
- A dominant position is economic strength enabling an undertaking to prevent effective competition and to act to an appreciable extent independently of competitors, customers, and consumers.
- Very high market shares maintained over time are strong evidence of dominance, absent exceptional circumstances; entry barriers and industry structure may reinforce that inference.
- Article 86 abuse is an objective concept covering conduct that weakens the market’s competitive structure through methods departing from normal competition.
- Quantity rebates linked solely to volume may be compatible with competition; loyalty rebates conditioned on exclusive or quasi-exclusive sourcing by customers are abusive for a dominant firm because they tie customers and exclude rivals.
- Loyalty rebates can also constitute applying dissimilar conditions to equivalent transactions when purchasers pay different effective prices for the same product quantity depending on whether they source exclusively from the dominant firm.
- Exclusive purchasing obligations and English clauses may be abusive where they foreclose rivals by tying key customers and discouraging competing offers.

## Conclusion

The Court confirmed that Roche’s loyalty rebates and customer-tying arrangements unlawfully foreclosed competition in multiple vitamin markets, clarified durable high market share as strong evidence of dominance, and reaffirmed that the right to be heard must be respected in Commission proceedings that may lead to fines.


Hoffmann-La Roche & Co. v. Commission of the European Cmtys., Case 85/76, 1979 E.C.R. 461 (1979)