## Facts

- United Brands (UB) marketed bananas in the European Economic Community (EEC) mainly through its subsidiary, United Brands Continentaal BV, which coordinated sales in most Member States.
- UB held roughly 40–45% of banana imports in the relevant EEC area and operated a vertically integrated supply chain (production, shipping, ripening, and distribution) supported by the “Chiquita” brand.
- The European Commission investigated UB after complaints from Danish and Irish firms regarding UB’s conduct in the banana trade.
- UB refused to supply the Danish distributor Olesen with Chiquita bananas after Olesen participated in advertising for a competing banana brand.
- UB used contractual restrictions (including a “green banana clause”) limiting distributors’ ability to resell unripened Chiquita bananas and, in practice, restricting dealings in competitors’ bananas.
- UB applied markedly different prices for Chiquita bananas across Member States, with substantial gaps between high-price and low-price countries, and without objective justification accepted by the Commission.
- The Commission concluded that UB had abused a dominant position under Article 86 EEC (now Article 102 TFEU), found (among other conduct) excessive pricing, and imposed a fine of 1 million units of account.
- UB brought a direct action to annul the Commission decision and to cancel or reduce the fine (and sought damages).

## Issues

1. Whether the relevant product market was bananas (as distinct from fresh fruit generally).
2. What constituted the relevant geographic market within the EEC for assessing market power and effects.
3. Whether UB held a dominant position in a substantial part of the Common Market.
4. Whether UB abused dominance by (a) refusing to supply Olesen and using contractual restrictions, (b) applying discriminatory prices between Member States, and (c) charging unfair or excessive prices.
5. What evidentiary and analytical tests govern findings of dominance, discriminatory pricing, and excessive pricing.

## Decision

- The Court largely upheld the Commission’s market definition, concluding bananas constituted a distinct product market and the relevant geographic market was a substantial part of the EEC where competitive conditions were sufficiently homogeneous.
- The Court upheld the finding that UB held a dominant position, relying on market share plus structural factors such as vertical integration, brand strength, and barriers to entry.
- The Court held UB abused its dominant position by refusing to supply Olesen to penalize dealings with a competitor and by using contractual restrictions that excluded competitors and impeded trade.
- The Court held UB’s substantial price differences across Member States, applied to equivalent transactions without objective justification and placing trading partners at a competitive disadvantage, constituted abusive discrimination.
- The Court accepted in principle that excessive pricing can be abusive when a price has no reasonable relation to the product’s economic value, but it scrutinized the Commission’s methodology and did not uphold all excessive-pricing conclusions.
- The Court annulled the Commission decision in part (including the finding of a general export ban, and certain aspects of the excessive-pricing analysis) and reduced the fine to 300,000 units of account.

## Legal Principles

- The relevant product market turns on interchangeability and competitive constraints; a product may form a distinct market when its special features make substitution with other products limited and competition from them only slight.
- 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.
- A dominant firm’s freedom to choose trading partners is constrained where a refusal to supply has the object or effect of restricting markets, excluding competitors, or harming consumers without objective justification.
- Applying dissimilar conditions to equivalent transactions that place trading parties at a competitive disadvantage constitutes abusive discrimination.
- A price may be abusive if it is excessive and bears no reasonable relation to the product’s economic value; one method of assessment is comparing selling price to costs to infer profit margins, but findings require a sound and transparent methodology.
- Conduct affects inter-Member-State trade when it alters competitive conditions or impedes parallel trade within the Common Market, even if volumes are not large.

## Conclusion

The Court confirmed UB’s dominance in the EEC banana market and found abuses through exclusionary refusal to supply and unjustified discriminatory pricing, while limiting the Commission’s determinations on an alleged export ban and parts of the excessive-pricing analysis, resulting in partial annulment and a substantially reduced fine.


United Brands Co. v. Comm’n of the Eur. Cmtys., Case 27/76, 1978 E.C.R. 207 (Ct. Just. Feb. 14, 1978)