Claimants were manufacturers of equipment of types A and B, constructed using raw material of which Respondent 1 was a producer. Pursuant to a shareholders' agreement, Respondent 1 acquired an interest in Claimant 1, in return for contributing to Claimant 1 its interest in a joint venture engaged in manufacturing equipment of type B. Respondent 1 had acquired that interest through a prior merger with a company that held a majority interest in the joint venture. The shareholders' agreement was accompanied by a master agreement containing a non-competition clause forbidding Respondent 1 to engage directly or indirectly in the business of manufacturing, selling, maintaining or modernizing equipment of type A. Subsequently, Respondent 1 announced its intention to merge with Company X, whose business operations included the manufacturing, installation and servicing of equipment of types A and B, to form a new entity, Company Y. As all parties involved were European, the merger was referred to the European Commission for approval, which was granted subject to certain conditions, including the requirement that Respondent 1 enter into negotiations with Claimant 1 and its holding company, Claimant 2, to terminate its obligations under the non-competition clause. Respondent 1 refused to comply with this condition, arguing that the clause was void and unenforceable. Finnish law was applicable to the master agreement. Claimants argued that, although Respondent 1 was not a competitor by virtue of its own activity, it became one through its merger with Company X. They further maintained that the non-competition clause did not violate European competition law, as the case fell under the ancillary restraints exception to Article 81(1) of the treaty establishing the European Community.

Les demandeurs fabriquaient des équipements de types A et B, construits à l'aide d'une matière première dont le défendeur 1 était un producteur. En application d'une convention d'actionnaires, le défendeur 1 avait acquis des parts du demandeur 1, en échange de la cession à ce dernier de sa participation dans une coentreprise fabriquant des équipements de type B. Cette participation résultait d'une fusion antérieure du défendeur 1 avec une société qui détenait une participation majoritaire dans la coentreprise. La convention d'actionnaires était accompagnée d'un accord-cadre contenant une clause de non-concurrence interdisant au défendeur 1 d'exercer, directement ou indirectement, une activité de fabrication, de vente, de maintenance ou de modernisation d'équipements de type A. Le défendeur 1 a par la suite annoncé son intention de fusionner avec la société X, dont les activités incluaient la fabrication, l'installation et l'entretien d'équipements de types A et B, afin de créer une nouvelle entité, la société Y. Toutes les parties en cause étant européennes, la fusion a été notifiée à la Commission européenne, qui l'a approuvée sous certaines conditions, exigeant notamment que le défendeur 1 engage des négociations avec le demandeur 1 et sa société mère, le demandeur 2, afin de mettre fin à ses obligations au titre de la clause de non-concurrence. Le défendeur 1 a refusé de se plier à cette condition, arguant que la clause était nulle et non exécutoire. La loi finlandaise s'appliquait à l'accord-cadre. Les demandeurs ont fait valoir que le défendeur 1, bien qu'il n'ait pas été leur concurrent du fait de son activité propre, le devenait par sa fusion avec la société X. Ils soutenaient également que la clause de non-concurrence n'était pas contraire au droit européen de la concurrence, car l'opération entrait dans le cadre des exemptions à l'article 81(1) du traité instituant la Communauté européenne, au titre des restrictions accessoires.

Los demandantes eran fabricantes de equipos de tipo A y B construidos con la misma materia prima que la producida por el demandado 1. De conformidad con un acuerdo de accionistas, el demandado 1 adquirió una participación en el demandante 1 a cambio de una participación del demandante 1 en una joint venture dedicada a la fabricación de equipos de tipo B. El demandado 1 había adquirido dicha participación a través de una fusión previa con una empresa que tenía una participación mayoritaria en la joint venture. El acuerdo de accionistas se acompañaba de un contrato marco que incluía una cláusula de no competencia que prohibía al demandado 1 toda participación, directa o indirecta, en el negocio de la fabricación, venta, mantenimiento o modernización de equipos de tipo A. Posteriormente, el demandado 1 anunció su intención de fusionarse con la empresa X, que cuenta la fabricación, la instalación y la revisión de equipos de tipo A y B entre sus operaciones comerciales, con el objeto de crear una nueva entidad, la empresa Y. Dado que todas las partes involucradas eran europeas, la fusión se remitió a la Comisión Europea para su aprobación, que fue concedida con sujeción a determinadas condiciones, incluyendo la exigencia de que el demandado 1 entablara negociaciones con el demandante 1 y su sociedad de cartera, el demandante 2, para poner término a sus obligaciones bajo la cláusula de no competencia. El demandado 1 se negó a cumplir este requisito alegando que la cláusula era nula e inaplicable. La ley aplicable al contrato marco era la finlandesa. Los demandantes sostuvieron que, aunque el demandado 1 no era un competidor en virtud de su actividad propia, su fusión con la empresa X lo había convertido en tal. Afirmaron, además, que la cláusula de no competencia no infringía la legislación europea en materia de competencia, dado que el caso entró en el ámbito de la excepción prevista para las restricciones accesorias, no obstante lo dispuesto en el artículo 81(1) del Tratado Constitutivo de la Comunidad Europea.

'8.3. The various competition law issues

8.3.1 The competition law issues raised in the case as well as the arguments put forward by the parties in support of their respective positions can be addressed in various orders, none necessarily more proper than the other. The Arbitral Tribunal has decided to deal with the issues in the following sequence, namely:

(i) The application of Article 81(1) to Article 8 at the time the Master Agreement became effective;

(ii) The application of Article 81(1) to Article 8 at the time the merger between [Respondent 1] and [Company X] became effective;

(iii) The relevance of the ancillary restraints doctrine; (iv) The relevance of the possibility for [Respondent1] (or following the merger, [Respondent 2]) to sell the shares in [Claimant 1].

8.4. The application of Article 81(1) to Article 8 of the Master Agreement at the time the Agreement became effective

8.4.1 Article 81(1) prohibits as incompatible with the Common Market all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the Common Market. As clarified by the ECJ, the effect on trade and competition must be appreciable in order for an agreement, decision or concerted practice to fall under the prohibition.1

8.4.2 For an agreement to be caught by the prohibition contained in Article 81 (1) it must have as its "object or effect" the prevention, restriction or distortion of competition within the Common Market.

8.4.3 As pointed out by the ECJ in its Technique Minière judgement, the fact that object or effect are alternative requirements leads first to the need to consider the precise purpose of the agreement at issue in the economic context in which it is to be applied.2

8.4.4 The interference with competition referred to in Article 81(1) must result from all or some of the articles of the agreement itself. Where however an analysis of the agreement does not reveal the effect of competition to be sufficiently deleterious, the consequences of the agreement should then be considered and for it to be caught by the prohibition it is then necessary to find that those factors are present which show that competition has in fact been prevented or restricted or distorted to an appreciable extent. This latter test requires analysing any restrictive clauses in the light of its wording and its economic and legal context. This requires an analysis of all relevant circumstances such as determining the relevant market, the competitive conditions of that market, whether or not the parties are actual or potential competitors, their market shares etc.3

8.4.5 Although it is clear from the Technique Minière judgement that the analysis of the object of an agreement and the possible subsequent analysis of its effects are separate, they are nevertheless intertwined since even if an agreement has as its object to restrict competition it must be likely to affect trade between Member States and to restrict competition to an appreciable extent in order to fall under the prohibition of Article 81(1). In effect it appears that it is only in plain and obvious cases such as in the case of an agreement on price fixing that "the object" as distinct from "the effects" has been held to be determinative.4

8.4.6 The object of the Master Agreement is clearly not to restrict, prevent or distort competition. Its object is to further specify the rights and obligations of the Parties in relation to [Claimant 1]'s acquisition of [Respondent 1]'s shares in [the joint venture] and [Respondent 1]'s subscription of the [Claimant 1] shares. None of the Parties has suggested that these transactions amount to restrictions of competition in and of themselves and the Tribunal has indeed found no evidence that that would be the case. To the contrary, there is some evidence to suggest that the acquisition by [Claimant 1] of [Respondent 1]'s share in [the joint venture] would have some pro-competitive effects since it would allow [Claimant 1] as sole shareholder of [the joint venture] to bring together the [equipment A and B] businesses thereby increasing its competitiveness in the marketplace. Since the Master Agreement does not have as its object to restrict competition then neither can the non-compete obligation found in Article 8 of the Agreement when put in its proper economic context.

8.4.7 The second issue to be considered by the Arbitral Tribunal is therefore if, at the time the Master Agreement became effective, Article 8 could be considered to restrict competition to an appreciable extent.

8.4.8 A non-compete obligation of the kind found in Article 8 of the Master Agreement whereby one party ([Respondent 1]) undertakes not to directly or indirectly compete with another party ([Claimant 1]) by engaging in a certain business may be considered a restriction of competition if and to the extent the parties are actual or potential competitors.

8.4.9 The Respondent No. 2 does not maintain that [Claimant 1] and [Respondent 1] were actual competitors at the time the Master Agreement became effective. Already from the written witness statement of [the chair of the executive board of Respondent 1] it is evident that [Respondent 1] itself had never been active in the [equipment A and B] industries and that [Respondent 1] itself did not have any separate operational know how or resources in those industries. Thus, its only interest in either of these industries at the time of the Master Agreement was its indirect shareholding in [the joint venture] which would disappear when [Claimant 1] acquired these shares. [The joint venture] was of course active in the [equipment B] industry but not in the [equipment A] industry.

8.4.10 However, the Respondent No. 2 maintains that [Respondent 1] and [Claimant 1] were potential competitors since the non-compete obligation prevented [Respondent 1] from engaging in the [equipment A] industry in the future, for example by acquiring or merging with a company active in that industry.

8.4.11 There exists no case law from the ECJ or the Court of First Instance defining the concept of potential competition. It is however clear from decisions of the Commission as well as from notices and guidelines of the Commission that it is not sufficient for parties to be considered potential competitors merely for one party to be able to enter the market of the other party by acquiring a third party already active in that market.5 In the Commission's notice concerning the Assessment of Co-operative Joint Ventures pursuant to Article 85 of the EC Treaty,6 it is stated that "competition between parent companies can be prevented, restricted or distorted through cooperation in a JV only to the extent that companies are already actual or potential competitors. The assumption of potentially competitive circumstances presupposes that each parent alone is in a position to fulfil the tasks assigned to the JV and that it does not forfeit its capabilities to do so by the creation of the JV. An economically, realistic approach is necessary in the assessment of any particular case. In the recently published Guidelines on Vertical Restraints,7 the Commission states that "a potential supplier is an undertaking that does not actually produce a competing product but could and would be likely to do so in response to a small but permanent increase in relative prices". It is not sufficient that there exists a theoretical possibility to enter the market.

8.4.12 In the Tribunal's view, [the chair of the executive board of Respondent 1]'s witness statement confirms that [Respondent 1] at the time the Master Agreement entered into force had neither the operational know-how nor resources nor indeed any interest to enter the [equipment A] industry or-by itself, after having sold its interest in [the joint venture] to [Claimant 1]-the [equipment B] industry in the foreseeable future. Further, the possibility for [Respondent 1] to enter into the [equipment A] industry by acquiring a third party already active in that industry or by merging-as it later did-with an undertaking already active in that industry is not sufficient for [Claimant 1] and [Respondent 1] to have been potential competitors when the Master Agreement became effective.

8.4.13 The Respondent No. 2 has argued that the Commission has confirmed that Article 81(1) applies to the non-compete obligation found in Article 8. In this connection the Respondent No. 2 has referred both to the Commission's decision in the [Respondent 1]/[Company X] merger and to a letter from the Commission to [Respondent 1] . . . However, neither the Commission's decision nor said letter can be interpreted to mean that the Commission had made the required analysis of the application of Article 81(1) to Article 8 and even less that it had come to any conclusion as to whether or not the article violated Article 81(1). In fact this has been confirmed by the Commission itself in [another letter] . . .

8.4.14 The Arbitral Tribunal therefore finds that at the time the Master Agreement became effective, Article 8 of the Master Agreement did not violate Article 81(1) of the EC-treaty.

8.5. The application of Article 81(1) to Article 8 when the merger between [Respondent 1] and [Company X] became effective

8.5.1 . . . [Respondent 1] and [Company X] notified their intention to merge to the Commission in accordance with Council Regulation (EEC no. 4064/89) ("the Merger Regulation").

In its decision . . . the Commission decided to declare the merger compatible with the common market. This decision was however subject to commitments by the merging parties. One of these commitments was that [Respondent 1] would enter into negotiations with [Claimant 1] to annul the non-compete obligation relating to [equipment A] found in Article 8 of the Master Agreement. According to the Commission's decision . . . [Company X] at the time had a market share of 10-15% of the EUwide market for [equipment A] whereas [Claimant 1] had a market share of 12-17%. Both companies were among the four major players on said market.

8.5.2 Given the market shares of [Company X] and of [Claimant 1] on the [equipment A] market in the EU at the time of the notification, it is clear that virtually any agreement between them restricting either [Company X]'s or [Claimant 1]'s activities on the [equipment A] market in the EU would (save for particular circumstances which would result in the restriction falling outside Article 81 altogether) prima facie be considered to fall under the prohibition of Article 81 (1) of the EC-Treaty. This would in particular apply to hard-core restrictions such as an undertaking by one party not to compete with the other.

8.5.3 There is no doubt under German law that [Company Y resulting from the merger of Company X and Respondent 1] was the legal successor to [Respondent 1]; but there was much debate between the parties whether under German law the general principle of universal succession should be modified so as to ensure that the scope of the non-compete and other obligations in Article 8 of the Master Agreement was limited to that part of [Company Y] which derived from [Respondent 1]. For reasons which follow, the Tribunal does not consider it necessary to decide the issues raised by this debate.

8.5.4 Even if the Tribunal were to assume in [Company Y]'s favour that Article 8 could not extend to any part of its activities derived from [Company X], the Tribunal finds that [Respondent 1] and later that part of [Company Y] derived from [Respondent 1] did enter "indirectly" into activities competing with [Claimant 1]'s [equipment A] business and "indirectly" competed with [Claimant 1] within the meaning of Article 8. As an imminent and future partner of [Company X] under the merger and, indeed, by planning for that merger-which may by itself be a violation of Article 8-[Respondent 1] was indirectly participating in [Company X]'s activities and indirectly competing with [Claimant 1]-or, respectively, firmly intending to do so. There can be no clear-cut separation from the respective activities of [Respondent 1] and [Company X] without gutting the word "indirect" of all practical meaning. There is also no doubt that with the merger, the [Respondent 1] part and the [Company X] part were financially integrated; and indeed the two parts were subjected to joint accounting. In these circumstances, the [Respondent 1] part derived a financial benefit from the [Company X] part competing with [Claimant 1]; and that benefit in the view of the Tribunal, whilst not "direct", is nonetheless "indirect" competition by the [Respondent 1] part. Such indirect competition is sufficient for the Tribunal's conclusion as set out in para. 8.5.2 to apply. The fact that [Company Y] benefitted from [Respondent 1]'s behaviour might also have to be considered.

8.5.5 The Claimants argue that the non-compete obligation found in Article 8 of the Master Agreement falls outside Article 81 (1) altogether with reference to the so-called "ancillary restraints doctrine" and to the fact that [Respondent 1] could at any time remove the restriction by selling its shares in [Claimant 1]. The Tribunal will address those arguments later. However, before doing so the Tribunal needs to consider another argument made by the Claimants, namely that the efficacy of Article 8 of the Master Agreement under EC competition law can only be judged at the time it was made . . .

8.5.6 As the Tribunal has found that Article 8 of the Master Agreement did not restrict competition at the time the Master Agreement became effective, it is necessary for the Tribunal to examine whether EC competition law requires a re-examination of the applicability of Article 81(1) to the non-compete obligation found in Article 8, in the light of new circumstances, in the case at hand the merger between [Respondent 1] and [Company X] which as previously concluded made [Company Y] and [Claimant 1] competitors in the EU-wide [equipment A] market.

8.5.7 The Claimants provide no support for their contention that the applicability of Article 81(1) can only be judged at the time the Master Agreement was made and the argument indeed seems to be unfounded.

8.5.8 The primary object of the competition rules of EC-Treaty is to help achieving the goals of the European Community as set out in Article 2 of the EC-Treaty. In this respect the competition rules of the EC-Treaty is a matter of public law.

8.5.9 According to Article 81(2) any agreement or decision prohibited by Article 81(1) shall be automatically void. As established by the ECJ this means that a restrictive agreement being prohibited under Article 81(1) is invalid and unenforceable from the time it fell foul under Article 81(1).8 Consequently already the wording of Article 81(2) as interpreted by the ECJ implies that an agreement which when entered into falls outside Article 81(1) may well as a result of changed circumstances later be hit by the prohibition of Article 81(1).

8.5.10 Further, according to Regulation 17/62,9 Article 8, a decision according to Article 81(3) granting an exemption from Article 81(1) may be revoked or amended in case of changed circumstances. The same is true for agreements benefiting from group exemptions regulations. According for example to the new group exemption regulation relating to vertical agreements, the benefit of the regulation may be withdrawn if new circumstances so warrant.10

8.5.11 Based inter alia on the foregoing it appears clear that an agreement which fell outside Article 81(1) when the Agreement was entered into may well due to changed circumstances fall under the prohibition of Article 81(1) at a later point in time.

8.5.12 The Arbitral Tribunal further notes that no individual exemption has been sought for the Master Agreement and that no group exemption regulation applies to the Agreement.

8.5.13 Thus, the Tribunal finds that unless the particular circumstances referred to by the Claimants, namely the application of the ancillary restraints doctrine or the possibility for [Respondent 1] to be free from the non-compete obligation by selling its shares in [Claimant 1], would be shown to render Article 8 of the Master Agreement outside Article 81(1) altogether, Article 8 of the Master Agreement must be considered to have restricted competition and to have affected trade between member states to an appreciable extent from the date the merger between [Respondent 1] and [Company X] became effective.

8.6. The ancillary restraints doctrine

8.6.1 The Claimants' main argument for the validity of Article 8 in relation to the competition law issue is that the non-competition obligation found in the article should be regarded as an ancillary restriction (i.e. a contractual obligation that is objectively necessary for the full achievement of the objectives of a larger transaction of which it forms part and which transaction is not of itself restrictive). On this basis the Claimants hold that the obligation of [Respondent 1] and its legal successors to refrain from operating a competing [equipment A] business must fall outside Article 81 because it is necessary to implement a broader transaction, namely [Claimant 1]'s acquisition of [Respondent 1]'s shares in [the joint venture] in exchange for a ten per cent shareholding in [Claimant 1] and the strategic alliance which the Claimants insist was the object of these transactions.

8.6.2 In support of their argument the Claimants have submitted an opinion by [a professor acting as witness]. In his opinion [the witness], referring primarily to the Gøttrup-Klim case, states that it is well established that a clause that is "necessary" to ensure that legitimate business activities can be efficiently pursued will not be deemed restrictive for Article 81(1) purposes. Referring to Advocate General Tesauro, in his opinion in the Gøttrup-Klim case, [the witness] opines that there is a generally applicable ancillary restraints doctrine. According to [the witness], the obligation not to compete found in Article 8 of the Master Agreement was necessary to ensure that the legal and economic function of the commercial objective of the cooperation between [Claimant 1] and [Respondent 1] could be discharged.

8.6.3 Respondent No. 2's arguments against the application of the ancillary restraints doctrine to the case at hand may be summarized as follows: the Claimants' interpretation of the doctrine is incorrect and misleading. Neither the ECJ nor the Commission have ever implied such a doctrine as interpreted by the Claimants. The doctrine can be said to have been implied only in a very limited number of cases regarding particular agreements with particular features and then only under very strict application criteria. The Master Agreement bears no resemblance whatsoever to the agreements in respect of which the ancillary restraints doctrine has been discussed. Even if the ancillary restraints doctrine were applied to the present case as suggested by Claimants, it would not justify the non-compete obligation found in the Master Agreement.

8.6.3.1 First of all, Article 8 could not be deemed objectively necessary for the existence and implementation of the transactions contemplated by the Master Agreement since said Agreement was merely a technical device to implement the understanding reached in the Shareholders' Agreement . . ., during the negotiations of which no non-competition clause was ever discussed.

8.6.3.2 Secondly, there is no support for the Claimants' view that there existed any "strategic alliance" between the Parties.

8.6.3.3 Thirdly, the non-compete obligation could not be deemed to be directly related to the transactions contemplated in the Master Agreement since one of these transactions, namely the acquisition by [Claimant 1] of [Respondent 1]'s share in the [joint venture equipment B] business, could never warrant a non-compete obligation relating to [equipment A] and since there can be no direct relation between the non-compete obligation and the second part of the transaction, namely the subscription of [Claimant 1] shares as there exists no direct link between the acquisition of a minority shareholding and an unlimited non-compete clause.

8.6.3.4 Fourthly, ancillary restraints have to remain subordinate in importance to the main object of the agreement to which they relate. This implies inter alia that they have to be proportional in terms of duration and scope in relation to the provisions of the agreement. Since the non-compete obligation of the Master Agreement is of a general nature limited neither in duration nor in geographical scope it is unproportional in relation to the provisions of the Master Agreement.

8.6.3.5 Finally, as the non-compete clause of the Master Agreement is of a general nature, limited neither in geographical scope nor in duration, it constitutes a serious restriction of competition, i.e. a non-compete obligation. No such far-reaching restriction of competition can fall under the ancillary restraints doctrine.

8.6.4 The Tribunal agrees with the Claimants that there does exist in EU competition law an ancillary restraints doctrine, the application of which cannot be deemed limited to certain categories of agreements.11 On the other hand it appears clear from both existing case law and legal doctrine that application of the ancillary restraints doctrine must be strict and that it is virtually impossible to identify in the abstract whether a particular restraint should be treated as ancillary to a particular type of agreement. Thus, whether a certain restriction will be regarded as ancillary will depend on the circumstances of each particular case.12

8.6.5 In the Tribunal's opinion-which appears to concur with the approach of the Parties-a restraint can only benefit from the ancillary restraints doctrine provided that the following cumulative criteria are met:13 (i) the restraint must be directly related to a broader contractual arrangement, which is not in itself harmful to competition;

(ii) the restraint must be objectively necessary for the existence of the broader contractual arrangement;

(iii) the restraint must be subordinate to the main object of the contractual arrangement; and

(iv) the restraint must not constitute a particularly serious restriction of competition.

8.6.6 In the light of the foregoing it is for the Tribunal to analyse whether the factual circumstances in the case at hand meet the aforementioned criteria. In this connection the Tribunal notes that the Claimants must bear the burden of proof that the circumstances are such that the ancillary restraints doctrine applies to Article 8 of the Master Agreement.14

8.6.7 It is obvious to the Tribunal that the transactions comprising the Shareholders' Agreement and the Master Agreement aimed at something more than a mere swap of shares in [the joint venture] in exchange for shares in [Claimant 1]. As a ten-per-cent shareholder of [Claimant 1]'s A and B shares, these transactions clearly provided [Respondent 1] with a "foot in the door" of [Claimant 1], conferring a strategic advantage if and when the entire [Claimant 1] group were put up for sale. This is particularly evident from Recital (e) to the Shareholder's Agreement and the letter . . . which referred to a "long term industrial relationship and cooperation between the partners in the [equipment B] business". It is confirmed by [Respondent 1]'s acquisition of [Claimant 1]'s A-shares (shares which were not available on the open market, as distinct from [Claimant 1]'s B-shares); the fact that contractual negotiations were conducted at the highest level within both [Claimant 1] and [Respondent 1]; and the fact that the transactions required [the chair of the executive board of Respondent 1] (or another person designated by [Respondent 1] and accepted by [Claimant 1]) to become a member of [Claimant 1]'s board of directors-as in fact occurred.

8.6.8 It is equally obvious to the Tribunal that the relationship between [Claimant 1] and [Respondent 1] did not in fact amount to a "strategic alliance", as invoked by the Claimants. The Tribunal had some difficulty in following the precise legal meaning intended by [Claimant 1]'s use of this ambiguous phrase. It was expressly not used by the parties at the time of their contractual negotiations, and it is not now intended by [Claimant 1] to describe a legal partnership or joint venture. It is however meant to describe something more substantial and permanent than a long-term relationship.

8.6.9 In the Tribunal's view, none of the factors on which the Claimants relied in this respect supported its case. The involvement of senior figures on both sides during the negotiations, the acquisition of [Claimant 1]'s A shares (including pre-emptive rights and the effect of a 10% minority shareholding under Finnish law) and [the chair of Respondent 1's executive board]'s membership of [Claimant 1]'s board do not establish any form of "alliance" beyond an intention to maintain a long-term relationship between [Claimant 1] and [Respondent 1]. The other factors invoked by the Claimants were still less supportive of [Claimant 1]'s case: the travel and hotel discounts made available from [Respondent 1] and [Claimant 1] were minimal; the prospect of [Claimant 1]'s [raw material] purchases from [Respondent 1] came eventually to nothing, and the Parties' co-operation in China and elsewhere, whilst evidencing a separate intent to co-operate where the Parties' interests overlapped, cannot amount to any permanent "alliance" between [Claimant 1] and [Respondent 1]. It is also significant that following the sale of its interest in [the joint venture] to [Claimant 1], [Respondent 1] did not by itself have any operational know-how or resources in relation to the [equipment B] industry. Of course, [Respondent 1] had never had any operational know-how or resource in relation to the [equipment A] industry.

8.6.10 On the factual evidence adduced in these arbitration proceedings, the Tribunal finds that the Parties' transactions established an intent to maintain a long-term relationship consisting of support by [Respondent 1] of [Claimant 1], upon the latter's request, in those markets where [Respondent 1] enjoyed specific experience and reputation-but nothing more.

8.6.11 The question then is whether in a co-operation of this nature the non-compete obligation found in Article 8 of the Master Agreement meets the previously mentioned criteria for the application of the ancillary restraints doctrine.

8.6.12 With respect to the direct relation to the broader contractual relationship, the Tribunal notes that it has not been argued that the transactions contemplated by the Shareholders' Agreement and the Master Agreement in themselves are harmful to competition and indeed in the Tribunal's opinion that is not the case. Further, although [the joint venture] was only involved in the [equipment B] industry whereas the non-compete obligation of Article 8 of the Master Agreement only refers to [equipment A], the Tribunal nevertheless finds that the long-term industrial relationship envisaged by the transaction contemplated by the parties was sufficiently broad for there to be a direct relation between the non-compete obligation and the broader contractual arrangement. The first criteria is therefore met.

8.6.13 With respect to the objective necessity, the Tribunal decides that, in order for a restriction to be considered objectively necessary for the existence of an agreement, the restriction must be of such importance that in its absence the transaction to which it relates would not have been implemented at all or at the very least-as Advocate General Tesauro stated in his opinion in Gøttrup-Klim-that the non-compete obligation is necessary to ensure that the legal and economic function of the agreement can be fully discharged.15

8.6.13.1 In this context the Arbitral Tribunal first of all notes that it is undisputed that [Claimant 1] did not bring the issue of the non-compete obligation to the negotiating table until after the Shareholders' Agreement had been signed. Since it is the Shareholders' Agreement that suggests a broader co-operation between [Claimant 1] and [Respondent 1] and since further, the Shareholders' Agreement contains at least the basic structure of the transactions between the parties, the fact that the controlling shareholders of [Claimant 1] did not even mention the possibility of a non-compete obligation during the negotiations of the Shareholders' Agreement provides a strong indication that a non-compete obligation on the part of [Respondent 1] was not, even in the mind of the negotiators for [Claimant 1], necessary for the implementation of the transactions. Further, the Tribunal fails to understand why a non-compete obligation tied to [Respondent 1]'s 10% shareholding in [Claimant 1] would be objectively necessary for the broader contractual arrangement contemplated. It was certainly not objectively necessary for [Claimant 1] to realise the full value of the acquisition of the [joint venture]-share since [the joint venture] was only active in the [equipment B] industry and [Respondent 1] further had no technical or commercial know-how whatsoever relating to the [equipment A] industry. Neither can it in the opinion of the Tribunal have been objectively necessary for the kind of support that [Claimant 1] realistically could have been expecting from [Respondent 1] in relation to the [equipment A] industry. As stated in Recital (e) of the Shareholders' Agreement the support that [Claimant 1] had reason to expect would at least primarily relate to the field of [equipment B].

8.6.13.2 The Tribunal therefore concludes that the non-compete obligation of Article 8 of the Master Agreement, was not objectively necessary for the implementation of the overall transactions contemplated by the parties. Since the criteria of the ancillary restraints doctrine are cumulative, the Tribunal finds that the non-compete obligation cannot be regarded as an ancillary restraint for the purposes of Article 81. Consequently Article 8 of the Master Agreement cannot for this reason be deemed to fall outside the prohibition of Article 81(1).

8.7. The release mechanism

8.7.1 Finally the Claimants, supported by [the professor they called as witness], argue that Article 8 of the Master Agreement anyway has no appreciable effect on competition and therefore falls outside Article 81(1) because [Company Y] can escape the obligation at any time by simply selling its shares. In support of this argument the Claimants refer to two decisions by the EC-Commission in concentration cases, namely Digital/Kienzle16 and ICL/Nokia Data.17

8.7.2 In response to the Claimants' position Respondent No. 2 argues that the question whether a party subject to a non-compete restriction may release itself from it by selling its shares is irrelevant when assessing the appreciability of the non-compete restriction. Furthermore it claims that Digital/Kienzle referred to by the Claimants does not deal with the question of whether a non-compete clause constitutes an appreciable restriction but only addresses the question whether a non-compete clause is ancillary or not.

8.7.3 The Arbitral Tribunal first notes that the two decisions referred to by the Claimants in support of their position are cases decided under the Merger Regulation. The object of the Commission's investigations under Merger Regulation differs substantially from the object of an investigation into a possible violation of Article 81(1). Therefore conclusions by the Commission in cases under the Merger Regulation do not necessarily apply to cases concerning the application of Article 81(1). Further, in the two cases referred to by the Claimants, the non-compete clauses were both considered ancillary to the respective concentrations and the observations of the Commission regarding the possibility for the respective sellers to free themselves from the non-compete obligations would appear to be related to the Commission's considerations when finding the non-compete clauses ancillary. Thus, the two cases do not appear to provide support for the position that a release mechanism of the kind found in Article 8 of the Master Agreement in and of itself would be sufficient for a non-compete obligation to be considered not to have appreciable effects on competition.

8.7.4 Further, as previously pointed out by the Tribunal, the object of the competition rules of the EC-Treaty is to safeguard the overall aims of the Treaty. According to Article 3.1(g) of the EC-Treaty Article 81 is a basic provision, which is indispensable for the performance of the Communities' tasks and in particular for the functioning of the internal market. In addition, an agreement which falls foul under Article 81(1) is invalid and unenforceable from the time it does so. The wording of Article 81 provides no exemption for otherwise prohibited agreements on the basis that the restriction could be easily removed. Already for these reasons the Tribunal finds that the mere fact that [Respondent 1] or after the merger [Company Y] could free itself from the non-compete obligation found in Article 8 of the Master Agreement by selling its shares in [Claimant 1] does not make the Article fall outside the prohibition of Article 81(1).

8.8. Conclusions of the Arbitral Tribunal regarding the application of Article 81(1) to Article 8 of the Master Agreement

To summarise, the Arbitral Tribunal makes the following findings in relation to the application of Article 81(1) to Article 8 of the Master Agreement:

(i) At the time the Master Agreement became effective, Article 8 of the Master Agreement did not restrict competition within the common market and consequently fell outside the prohibition of Article 81(1).

(ii) From the date when the merger agreement between [Respondent 1] and [Company X] became effective, Article 8 of the Master Agreement has affected competition and trade between member states to an appreciable extent in violation of Article 81(1). From such time the Article has been automatically void according to Article 81(2) and therefore also unenforceable.'

1
See e.g. Case 5/69 Völk v. Vervaeke [1969] ECR 295, grounds 5-7, Case 22/71 Béguelin Import v. GL Import Export [1971] ECR 949, para. 16. See also Commission Notice on Agreements of minor importance which do not fall within the meaning of Article 85(1) of the EC Treaty, [1997] OJ C 327/2, para. 19.

2
Case 56/65, [1966] ECR 235, pp. 247, 249-250. See also Commission's guidelines on the applicability of Article 81 of the EC Treaty to horizontal cooperation agreements, [2001] OJ C 3/2, para. 20.

3
Ibid., p 249-250.

4
See e.g. Bellamy and Child, Common Market Law of Competition, 4 ed., §§ 2-096-2-100.

5
See e.g. The Guidelines on the applicability of Article 81 of the EC Treaty to horizontal cooperation agreements, [2001] OJ C 3/2, para. 9, note 8 and 9; Commission Notice on the definition of the relevant market for the purposes of Community competition law, [1997] OJ C 372/5, para. 20-24 and The Guidelines on vertical restraints, [2000] OJ C291/1, para. 26. See also Commission Decision 90/410/EEC Elopak/Metal Box Odin, para. 24-28 and Commission Decision 91/619/EEC Aerospatiale- Alenia/de Havilland, para. 14.

6
[1993] OJ C 43/2, p 2, para. 18.

7
[2000] OJ C 291/1, para. 26. See also note 5 ante.

8
See Case 48/72 Brasserie de Haecht v. Wilkin (No 2) [1973] ECR 77, grounds 9-11 and 24-26. See also Bellamy and Child, § §10-024 and 11-020. See also e.g. Technique Minière, p. 250; Case 22/71 Béguelin Import v. GL Import Export [1971] ECR 949, para. 25-29; Case 319/1982 Société de Vente de Ciments et Bétons [1983] ECR 4173 para. 11; Case 66/86 Ahmed Saeed v. Zentrale, [1989] ECR 803, grounds 20 and 26-29. See also Wish, p. 318 et seq.

9
Council regulation No 17: First Regulation implementing Articles 85 and 86 of the Treaty, [1962] OJ 13/204.

10
Commission regulation (EC) No 2790/1999 on the application of Article 81(3) of the Treaty to categories of vertical agreements and concerted practices, [1999] OJ L 336/21, Article 6.

11
See Opinion of Mr. Advocate General Tesauro, Case C-250/92 Gøttrup-Klim v. Dansk Landbrugs Grovvareselbskap [1994] ECR I 5641, para. 16. See also Faull and Nickpay, The EC Law of competition, § § 2.87-2.99, 7.37. See e.g. Technique Minière, pp. 247, 249-250; Case 26/76 Metro SB-Großmärkte v. Commission, [1977] ECR 1875, para. 20-21; Case 258/78 Nungesser v. Commission [1982] ECR 2015, para. 44-58; Case 42/84 Remia and others v. Commission [1985] ECR 2545, para. 17-20; Case 161/84 Pronuptia [1986] ECR 353, para. 15-22; Case C-234/89 Delimitis v. Henninger Bräu, [1991] ECR I-935, para. 10-27; Case C-250/92 Gøttrup-Klim v. Dansk Landbrugs Grovvareselbskap, para. 31-35; Case C-399/93 Oude Luttikhuis v. Verenigde Coöperatieve Melkindustrie, [1995] ECR I-4515, para. 10-20. Cf. See also Bellamy and Child, §§ 6-080-6-088, Wish, p 207-211 and opinion of Advocate General Lenz, case C-415/93 Union Royal Belge des Sociétés de football Assosiation et ors v. Bosman et ors [1995] ECR I-4921 paras 266-269.

12
See Faull and Nickpay, §§ 2.90-2.93.

13
See e.g. Faull and Nickpay, § 2.91.

14
See e.g. Section 9 of Commission's explanatory memorandum on treatment of ancillary restraints under the Merger regulation.

15
Case C-250/92, para. 16.

16
Case IV/M.057 (22 February, 1991).

17
Case IV/M.105 (17 July 1991).