Babcock and Wilcox Ltd, the ‘Babcock Family’ and regulation 17/62: A business response to new competition policy in the early 1960s

Abstract

This article explores through the lens of the British company Babcock and Wilcox Ltd the response of a group of European companies to the threat posed to their activities by the new EEC competition policy in the early 1960s. Regulation 17/62 was set to ban the market-sharing agreements which had been in place for many years between the companies in Europe. The article tracks their deliberations over the most suitable response that would allow market sharing to continue while minimising the risk of discovery. This rare insight into the inner discussions of cartel arrangements also highlights the role of legal advice in the solution adopted.

Keywords:

• European integration
• competition policy
• cartels

Notes

1. McGowan and Wilks, “First Supranational Policy.”

2. Warlouzet, Choix, 271‒3 and 292‒4.

3. Pace and Seidel, “Drafting,” 54.

4. Regulation 17/1962 because it was the seventeenth regulation issued by the Commission in 1962.

5. Warlouzet, “Centralization,” 730.

6. On this debate see McLachlan and Swann, Competition Policy, 13; Temple Lang, Common Market, 469; and Linssen, “Application,” 31‒3.

7. Warlouzet and Witschke, “Difficult Path,” 448.

8. On the negotiation of Regulation 17/62, see Gerber, Law and Competition; Hambloch, Europäische; Hambloch, “EEC Competition Policy”; Montalban, Ramírez Pérez, and Smith, “Competition”; Pace and Seidel, “Drafting”; Pitzer, Interessen; Seidel, “DG IV”; Warlouzet, Choix.

9. For exceptions see Ramírez Pérez, “Role”; Bührer and Warlouzet, “Regulating Markets”; and Rollings, British Business, 193‒217.

10. Corson, “Impact,” 427. He was talking generally, not specifically about European competition policy.

11. George and Joll, “Legal Framework,” 17. A more recent figure of the level of discovery is 10‒30% in Utton, Cartels, 44.

12. See Harding and Edwards, Cartel Criminality.

13. Levenstein and Suslow, “Studies”; Levenstein and Suslow, “What Determines?”; Levenstein and Suslow, “Breaking Up”; Levenstein and Suslow, “Cartels and Collusion.”

14. Bruland, “Babcock and Wilcox Company,” 222‒3.

15. Ibid., 237‒9; Boyce, Co-operative Structures, 116‒17.

16. Boyce, Co-operative Structures, 113‒40.

17. University of Glasgow Archives Services (hereafter GUAS) UGD309/1/5/35A, Brabazon to Worlledge, May 4, 1962.

18. GUAS UGD 309/1/1/9, board meeting minutes, May 27, 1947.

19. GUAS UGD 309/1/1/12, board meeting minutes, November 8, 1955.

20. GUAS UGD 309/1/1/13, board meeting minutes, May 14, 1957 and June 10, 1958.

21. GUAS UGD 309/1/1/14, board meeting minutes, April 14, 1959.

22. Boyce, Co-operative Structures, 126; and GUAS UGD309/1/5/35A, T. R. Brabazon to A. Reisner, “Treaty of Rome, German B&W Co.,” April 27, 1962.

23. GUAS UGD 309/186/24/3, “The Role of the Babcock and Wilcox Technische Maatschappij N.V.,” undated but November 1963.

24. GUAS UGD 309/186/24/3, “The Role of the Babcock and Wilcox Technische Maatschappij N.V.,” undated but November 1963.

25. See GUAS UGD 309/1/18/33 onwards.

26. GUAS UGD 309/186/24/3, T. R. Brabazon, “Patents in Relation to Babcock and Wilcox Technische Maatschappij N.V.,” July 30, 1963; and GUAS UGD 309/1/18/40 vol. II, H. L. Ewaldsen (DB&W), “Managing Directors’ Meeting at Baden-Baden on 26th/27th April 1967,” 4.

27. GUAS UGD 309/1/18/33, “Managing Directors’ Meeting: Notes of a Meeting held at Annecy, France, June 22nd and 23rd, 1960,” 8. The six EEC companies were the French and German Associates, Babcock-Smulders in Belgium and three licensees of B&W Ltd – Stork (in the Netherlands), Breda and Ansaldo (both in Italy). See also GUAS UGD 309/1/18/34, “The Position of the B&W Companies in the Common Market and Analysis of their Products (including licensees) and their Marketing,” presented at the Managing Directors’ meeting, June 1962.

28. GUAS UGD 309/186/24/1, T. R. Brabazon, Assistant Secretary, B&W Ltd to the Foreign Department, Barclays Bank Ltd, “Babcock Europe Technische Maatschappij N.V.,” May 3, 1962.

29. For example GUAS UGD 309/1/18/40 vol. II, H. L. Ewaldsen (DB&W), “Managing Directors’ Meeting at Baden-Baden on 26th/27th April 1967.”

30. Morival, “Europe du Patronat”; Warlouzet, “Influencer.” See also, Warlouzet, Choix.

31. UK National Archives (hereafter TNA) FO 371/134508/M611/748, R. S. Isaacson to D. F. Hubback (Treasury), September 20, 1958.

32. van Themaat, “Rules of Competition”; Coppé, “Economic and Political Problems”; and European Commission, General Report (July 1962), quoted in Allen, Monopoly, 147.

33. UK Council of the European Movement, European Industrial Conference, 73‒7.

34. Schumacher, “Procedure,” 367.

35. Honig et al., Cartel Law, 1.

36. Honig et al., Cartel Law, 3. See also Goyder, EEC Competition Policy, 27; Graupner, Rules, 3; Campbell and Thompson, Common Market Law, 101; Thiesing, “Rules,” 122‒3; Balekjian, Legal Aspects, 236.

37. McLachlan and Swann, Competition Policy, 129.

38. Temple Lang, Common Market.

39. McLachlan and Swann, Competition Policy, 131. For contemporary examples see Minoli, “Industry’s Views”, and Thiesing, “Rules,” 125.

40. Steindorff, “Provisions,” 196.

41. For contemporary examples see “EEC Cartel Policy,” 45; and Pujade, “Harmonisation,” 88. For an historical review see Pace and Seidel, “Drafting.”

42. McLachlan and Swann, Competition Policy, 452‒3; Griffith Johnson in Antitrust Developments, 9.

43. Goyder, EEC Competition Policy, 28‒9; Linssen, “Application,” 31‒2.

44. Becker, “Vertical Agreements,” 89.

45. Warlouzet, “Centralization”; Hambloch, “EEC Competition Policy.”

46. Pace and Seidel, “Drafting,” 55. See also Ramírez Pérez and van de Scheur, “Evolution.”

47. Warlouzet, “Centralization.”

48. McGowan, Antitrust, 110; Schweitzer and Patel, “EU Competition Law,” 213.

49. Pace and Seidel, “Drafting”; Warlouzet, “Centralization”; Buch-Hansen and Wigger, Politics, 55.

50. Graupner, Rules of Competition, 24.

51. Snijders, “Application,” 191; McLachlan and Swann, Competition Policy, 137.

52. London Chamber of Commerce, Annual Report for 1962, 9; FBI, Rome Treaty; FBI, Restrictive Practices; PEP, Cartel Policy. On meeting attendance see “Registration of Agreements,” 137; and GUAS UGD309/1/5/35A, T. J. Wells (FBI) to J. H. Worlledge, July 30, 1962.

53. For example, Honig et al., Cartel Law; Lewis and Kemp, Registration.

54. GUAS UGD 309/1/5/35A, Brabazon to Worlledge, May 4, 1962.

55. GUAS UGD 309/1/5/35A, Brabazon to A. Reisner, “Treaty of Rome, German Babcock and Wilcox Company,” April 27, 1962.

56. Ibid.

57. GUAS UGD 309/1/5/35A, Brabazon to Worlledge, May 4, 1962.

58. GUAS UGD 309/1/5/35A, Brabazon, “Treaty of Rome – Restrictive Practices,” July 6, 1962.

59. GUAS UGD 309/1/5/35A, Brabazon to Haxby, September 5, 1962.

60. Ibid.

61. Pierre Lepaulle, http://www.ourstory.info/3/FF/c/Lepaulle.html (accessed March 25, 2014). The key text is Lepaulle, Traite Theorique, which was still being cited in the 1985 Hague Convention on the Law Applicable to Trusts and on their Recognition. He may also have helped Jews in France during the Second World War, see Weisberg, Vichy Law, 329‒30.

62. GUAS UGD 309/1/5/35A, Brabazon, “Treaty of Rome – Restrictive Practices,” July 6, 1962.

63. GUAS UGD 309/1/5/35A, Brabazon to P. H. Dunn, B&W Ltd, explaining the new draft agreement with the Dutch associate, September 18, 1962.

64. GUAS UGD 309/1/5/35A, Lepaulle to Brabazon, October 1, 1962.

65. GUAS UGD 309/1/5/35A, Lepaulle to Brabazon, October 30, 1962.

66. Ibid.

67. GUAS UGD 309/1/5/35A, Brabazon to Worlledge, November 6, 1962.

68. GUAS UGD 309/1/5/35A, K. J. McKillop, December 19, 1962, covering letter from Green, December 14, 1962.

69. Ibid.

70. GUAS UGD 309/1/5/35A, Lepaulle to Brabazon, October 30, 1962. On the role of lawyers in the development of EEC policy see Vauchez, “Making”; and Vauchez, Brokering Europe.

71. GUAS UGD 309/1/5/35A, Lepaulle to Brabazon, November 27, 1962.

72. GUAS UGD 309/1/5/35A, Brabazon to Worlledge, September 13, 1962.

73. GUAS UGD 309/1/5/35A, K. J. McKillop to WTBA members, December 7, 1962; Rollings, British Business, 213.

74. GUAS UGD 309/1/5/35A, Brabazon to Worlledge, “Treaty of Rome – Rules and Competition,” January 4, 1963.

75. GUAS UGD 309/1/5/35A, Worlledge to Brabazon, January 11, 1963.

76. GUAS UGD 309/1/5/35A, Brabazon to Worlledge, January 18, 1963, reporting on his visit to Paris.

77. GUAS UGD 309/1/5/35A, Brabazon, “Diary Note,” January 24, 1963; Brabazon to Marine Department (B&W Ltd), January 24, 1963.

78. GUAS UGD 309/1/5/35A, undated and unsigned note (probably by Brabazon), written around January 25, 1963.

79. GUAS UGD 309/1/5/35A, “Diary Note,” February 13, 1963.

80. GUAS UGD 309/1/5/35A, Report from Brabazon to Worlledge on visit to Oberhausen, February 27, 1963.

81. GUAS UGD 309/1/5/35A, Brabazon to Lepaulle, April 4, 1963.

82. GUAS UGD 309/1/5/35A, Brabazon to Worlledge, October 30, 1963.

83. GUAS UGD 1/18/35, “Report of Managing Directors’ Meeting, Vienna June 1963,” 6‒7.

84. Ibid., 7‒10. The draft list is in Appendix 6.

85. GUAS UGD 309/1/5/35A, Worlledge to McNeil, “Treaty of Rome,” November 5, 1963; Intercompany meeting, November 18, 1963 and following correspondence.

86. GUAS UGD 309/186/24/1, “Note of a Meeting held in Babcock House on the 29th January 1964.”

87. GUAS UGD 309/1/18/4, “British, French and German Companies: Code of Conduct,” June 10, 1964.

88. For example, GUAS UGD 309/1/18/39, “Report of Managing Directors’ Meeting at Baden Baden, Germany April, 1967,” 1.

89. GUAS UGD 309/1/18/4, “Babcock Products,” E. J. Hulland to P. H. Dunn, February 27, 1969.

90. Boyce, Co-operative Structures, 126‒8.

91. GUAS UGD 309/1/5/35A, Brabazon to A. A. Webb (Managing Director, Babcock-Smulders), September 19, 1962.

92. GUAS UGD 309/1/5/35A, Brabazon to Webb, January 4, 1963. See also UGD 309/1/5/35A, Brabazon to Worlledge, January 18, 1963 on Lepaulle reporting that many French companies were also following this policy; and more generally, McLachlan and Swann, Competition Policy, 148.

93. GUAS UGD 309/1/5/35A, “The Treaty of Rome: Rules of Competition,” unsigned by probably Brabazon, January 18, 1963.

94. GUAS UGD 309/1/5/35A, C. Del Marmol, “Common Market Notification,” January 4, 1963, translated by Babcock- Smulders and sent by Webb to Brabazon, undated but January 1963.

95. GUAS UGD 309/1/5/35A, Brabazon to Webb, January 25, 1963.

96. Utton, Cartels, 91; Pace and Seidel, “Drafting,” 85‒6.

97. Junkerstorff, “Competitive Rules,” 389.

98. GUAS UGD 309/1/1, board meeting, July 12, 1960; and UGD 309/1/18/33, H. Seidl to McNeil, notes by McNeil, August 4, 1960.

99. Levenstein and Suslow, “Breaking Up,” 470.

100. GUAS UGD 309/1/5/35A, Lepaulle to Brabazon, October 30, 1962.

101. GUAS UGD 309/1/5/35A, Brabazon to Worlledge, “Treaty of Rome – Oberhausen, Visit on 26.2.1963.”