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AKZO Chemie BV v. Commission

1991 E.C.R. I-3359 (1991)

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AKZO Chemie BV v. Commission

European Union Court of Justice

1991 E.C.R. I-3359 (1991)

Facts

AKZO Chemie BV (AKZO) (defendant) sold benzoyl peroxide, a product with many uses, throughout Europe. AKZO sold it for use in plastics application. Another company, called ECS, sold it as a flour additive. Typically, companies sell products at prices at some point above the total of their fixed and variable costs. Fixed costs are those that remain constant regardless of the product quantity produced. Variable costs are costs that vary based on the quantity of product produced. Adding them together results in total costs. ECS complained to the European Commission (the commission) (plaintiff) that AKZO had threatened to push ECS out of the flour-additive market unless ECS agreed not to sell benzoyl peroxide in the plastics market and that AKZO took steps to make good on its threat by undercutting ECS’s prices to flour customers. ECS alleged that AKZO was engaging in predatory pricing by selling peroxide to flour customers at prices between AKZO’s average variable cost and average total cost, meaning AKZO was selling peroxide to flour customers at a loss, recouping only its fixed costs and some of its variable costs. The commission agreed that AKZO’s decision to sell peroxide at a price set between its average variable and total costs was an abuse of its dominant position under Article 102 of the Treaty on the Functioning of the European Union (TFEU). AKZO appealed.

Rule of Law

Issue

Holding and Reasoning

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