## Facts

- Commercial Solvents Corporation (CSC), incorporated in New York, enjoyed a world monopoly in the production of 1‑nitropropane, a key raw material needed to produce aminobutanol on an industrial scale.
- Aminobutanol was used as an emulsifier and as an intermediate input for manufacturing ethambutol, a medicine used to treat pulmonary tuberculosis.
- CSC owned 51% of the shares in the Italian company Istituto Chemioterapico Italiano SpA (ICI). Through that majority stake, CSC could appoint ICI’s directors and determine ICI’s commercial policy; CSC’s public reporting treated ICI as a subsidiary.
- In July and October 1970, ICI acquired 1‑nitropropane from a small Italian ethambutol producer and resold it as an emulsifier to small European paint manufacturers on condition that it not be resold for pharmaceutical purposes outside the European Economic Community (EEC).
- Laboratorio Chimico Farmaceutico Giorgio Zoja SpA (Zoja), an independent producer of ethambutol-based products, had purchased aminobutanol from ICI, which obtained its aminobutanol from CSC.
- In November 1970, Zoja sought further supplies of aminobutanol from ICI. ICI replied that CSC no longer had aminobutanol available for sale to ICI, and Zoja could not obtain regular supplies.
- In April 1971, Zoja complained to the European Commission (Commission) about the supply interruption.
- By decision of 14 December 1972, the Commission treated CSC and ICI as a single undertaking and found that the CSC–ICI group infringed the EEC Treaty by refusing to supply aminobutanol to Zoja; it ordered the infringement to end (including resumption of supply on non-discriminatory terms) and imposed a fine jointly and severally.
- CSC and ICI brought actions before the Court of Justice seeking annulment of the Commission decision and, in the alternative, reduction of the fine; the cases were joined.

## Issues

1. Whether CSC and ICI could be treated as a single undertaking for purposes of Article 86 EEC (now Article 102 TFEU) given CSC’s 51% shareholding and ability to direct ICI’s policy.
2. Whether the Commission could apply Article 86 to CSC, a non‑EEC company, where the challenged conduct was carried out in the EEC through its controlled subsidiary.
3. Whether CSC–ICI held a dominant position in the relevant raw-material market despite the theoretical existence of alternative manufacturing processes.
4. Whether a dominant undertaking abuses its position by refusing to continue supplying an established customer with an indispensable input in order to reserve the input for its own downstream production and eliminate that customer as a competitor in derivatives.
5. Whether an abuse on the upstream market, aimed at downstream foreclosure, was liable to affect trade between Member States.
6. Whether the Commission could order specific measures to bring the infringement to an end (including requiring renewed supplies) and whether the fine imposed was justified in amount.

## Decision

- The Court held that CSC and ICI formed a single undertaking for Article 86 purposes because CSC, as majority shareholder, could determine ICI’s commercial policy and the conduct at issue was linked to that control.
- The Court rejected the argument that CSC fell outside the Commission’s reach merely because it was incorporated in the United States, where the infringement was implemented in the common market through a subsidiary under CSC’s direction.
- The Court affirmed the finding of dominance, reasoning that dominance in the raw-material market was not displaced by alternative production routes that were not economically viable or not capable of industrial-scale output.
- The Court held that the CSC–ICI group abused its dominant position by refusing to supply Zoja, an existing customer, with aminobutanol in order to reserve the material for its own downstream ethambutol activity and thereby eliminate competition from Zoja in derivatives.
- The Court accepted that such upstream conduct, by weakening competition in the derivatives market, was liable to affect trade between Member States.
- The Court confirmed that the Commission could order measures needed to bring the infringement to an end, including an obligation to resume supplies on non-discriminatory terms.
- The Court upheld the infringement finding but reduced the fine, annulling the Commission decision only to that extent and setting the fine at 100,000 units of account.

## Legal Principles

- A parent and subsidiary may be treated as a single undertaking under Article 86 where the parent can determine the subsidiary’s commercial policy and the market conduct reflects that control.
- Article 86 may apply to a non‑EEC parent when the abusive conduct is carried out within the common market through a controlled subsidiary.
- Dominance in a market for a key input is not negated by alternative manufacturing methods that are not economically workable or not capable of industrial-scale production.
- A dominant supplier may abuse Article 86 by discontinuing supply to an established customer, without objective justification, where the aim is to reserve the input for its own downstream activity and eliminate the customer as a competitor in derivatives.
- In evaluating abuse on an upstream market, the likely effects on competition in a related downstream market may be considered, including whether the conduct is liable to affect trade between Member States.
- The Commission may order positive measures necessary to end an infringement, not merely declare that an infringement occurred.
- The Court may adjust a fine where, in light of the circumstances, the amount imposed is excessive even though the infringement is confirmed.

## Conclusion

The Court of Justice largely upheld the Commission’s Article 86 decision against CSC and ICI, holding that a dominant undertaking controlling an indispensable input abuses its position by cutting off an established customer to protect its own downstream derivatives business and that a U.S. parent can be held responsible where the conduct is implemented in the EEC through a controlled subsidiary, while reducing the fine imposed.


Instituto Chemioterapico Italiano SpA v. European Community Commission, [1974] ECR 223, [1974] 1 CMLR 309 (1974)