The em Wood Pulp em Case
The em Wood Pulp em Case
The em Wood Pulp em Case
1989
Recommended Citation
Andrew N. Vollmer & John Byron Sandage, The Wood Pulp Case, 23 INT'L L. 721 (1989)
https://scholar.smu.edu/til/vol23/iss3/9
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CASENOTE
ANDREw N. VOLLMER*
JOHN BYRON SANDAGE**
intended, and was the primary and direct result of the agreements and
practices."2
In their submissions to the Court, the industry applicants argued principally
that the Commission did not have extraterritorial authority over the conduct of
foreign persons that engaged in no wood pulp production in the EC, did not
maintain offices or subsidiaries within the EC, and entered into no concerted
agreements with the EC. 3 By focusing on the lack of any direct territorial
connection between themselves and the Community, the industry sought 4
to
invoke the stricter versions of the territoriality principle of jurisdiction .
The Court rejected these arguments, concluding first that nothing in article 85
itself precludes its application to persons situated outside the Community. The
Court reasoned that the concerted practices of the applicants satisfied the
wording of article 85(1): The practices had the object and effect of restricting
competition in the Common Market because they coordinated the prices charged
to customers in the Community. 5
The Court next concluded that the Commission's decision was compatible
with the territoriality principle as universally recognized in public international
law. The Court reasoned that: "an infringement of article 85, such as the
conclusion of an agreement which has had the effect of restricting competition
within the Common Market, consists of conduct made up of two elements: the
formation of an agreement, decision or concerted practice and the implementa-
tion thereof." 6 The Court could not accept that the Community had jurisdiction
only if the challenged conduct originated within the EC: "If the applicability of
prohibitions laid down under competition law were made to depend on the place
where the agreement . . . was formed, the result would obviously be to give
7
undertakings an easy means of evading those prohibitions." The Court
2. Id. at 11,547-54. The Wood Pulp case dealt solely with jurisdiction under article 85, but the
Commission is also likely to apply the Court's reasoning when it proceeds under article 86 against
an abuse of a dominant position.
3. The applicants also advanced additional arguments, not central to the Court's decision. The
Canadian undertakings argued that the Commission's actions interfered with Canadian sovereignty
and thereby breached the principle of international comity. See A. Ahlstrom Osakeyhti6 v.
Commission, [1987-1988 Transfer Binder] Common Mkt. Rep. (CCH) 14,491, at 18,606-07
[hereinafter Wood Pulp]. The Court rejected this contention on the tautological ground that it called
into question the Community's jurisdiction to apply its competition rules to the conduct at issue in
the case. Id. at 18,612.
The Finnish undertakings argued that the EC-Finland Free Trade Agreement superseded article 85
and provided the only basis for challenging the actions of the Finnish industry. Id. at 18,608. The
Court rejected the Finnish claims on the grounds that the Free Trade Agreements did not prevent the
application of article 85. Id. at 18,613.
4. See, e.g., Higgins, The Legal Bases of Jurisdiction, in ExTA-TERMuRIAL APPLCAO N OF
LAWS ANDRESPONSES THERTro 3, 5-7 (C. Olmstead ed. 1984).
5. See Wood Pulp, 14,491, at 18,611-12.
6. Id. at 18,612
7. Id.
8. Id.
9. Id.
10. Id. at 18,613.
11. Id. at 18,605.
12. See United States v. Aluminum Co. of America, 148 F.2d 416, 444 (2d Cir. 1945).
13. See 15 U.S.C. § 6a (1982).
FALL 1989
724 THE INTERNATIONAL LAWYER