Wood Pulp Case

The way the European Court of Justice should go concerning the Wood Pulp Case

The way the European Court of Justice should go concerning the Wood Pulp Case

“In 1984 the European Commission adopted a decision that found that forty wood pulp producers (six from Canada, ten from the US, eleven from Finland, ten from Sweden, one each from Norway, Portugal and Spain) and three of their trade associations (KEA from the US, Fincell from Finland and Svenska Cellulosa from Sweden) had infringed Article 81 (then Art. 85) of the Treaty by concerting on prices”(Motta, 2004). As a result several of the firms appealed this decision (Motta, 2004). Therefore, the European Court of Justice should be advised properly in order to make a sound decision concerning the EC decision as mentioned above. In order to advise the European Court of Justice properly, first the wood pulp market and second the EC decision will be described, afterwards there will be an evaluation of the EC decision.

The wood pulp market seems to be a market with perfect competition at first. This can be concluded, because the wood pulp market meets the following needs of perfect competition (Perloff, 2009): homogeneous products are sold, transaction costs are low, there are no barriers to entry or exit the market and buyers and sellers know the prices charged by firms, which implies transparency. Even though this case involves a system of quarterly price announcements, which again implies transparency, there is consolidated trading practice within this market (Motta, 2004). This definitely doesn’t belong to a market with perfect competition.

Therefore the European Commission decided on 19 December 1984 that forty wood pulp producers (as mentioned in the introduction), which covered 60 % of the market share, had infringed the European Union’s competition policy, after they had opened a proceeding against fifty-seven producers and associations in 1977 (Motta, 2004).

This...