JUDGMENT OF 14.7.1972 — CASE 52/69 GEIGY v COMMISSION
In Case 52/69
THE COURT composed of: R. Lecourt, President, J. Mertens de Wilmars and H. Kutscher, Presidents of Chambers, A. M. Donner, A. Trabucchi (Rapporteur), R. Monaco and P. Pescatore, Judges, Advocate-General: H. Mayras Registrar: A. Van Houtte
gives the following
JUDGMENT
Issues of fact and of law
I — Statement of the facts
II — Conclusions of the parties
III — Submissions and arguments of the parties
1. The submission concerning the jurisdiction of the Commission to adopt the contested measure in respect of the applicant
A — The applicant's view
Complaint concerning the statement of reasons
Criticism of the effects doctrine (Auswirkungsprinzip)
(a) According to the law of the Member States
(b) According to international law
B — The defendant's view
The complaint concerning the statement of reasons
The jurisdiction of the Commission based on the conduct of the applicant inside the Common Market
The jurisdiction of the Commission based on the effects produced inside the Common Market by certain conduct of the applicant outside the Common Market
(a) The question whether the Commission's claim to jurisdiction accords with international law
(b) The question whether the jurisdiction claimed by the Commission accords with the internal law of the Member States
C — The applicant's reply
The legal personality of the Community under international law
The activity of the applicant within the common market
The claim to jurisdiction based on effects
(a) According to public international law
(b) According to the internal law of the Member States
D — The defendant's rejoinder
The legal personality of the Community under international law
The activity of the applicant within the Common Market
Jurisdiction justified by the effects which the conduct of the applicant has produced within the Common Market
(a) Jurisdiction of the Commission under the rules of international law
(b) The question whether the Commission's claim for jurisdiction accords with the internal law of the Member States
2. The submission concerning notification of the decision
3. The submission concerning the commencement of the administrative procedure
4. The submission concerning the communication of the notice of objections to the applicant in Switzerland
5. The submission concerning the right to be heard
6. The submission concerning the period of limitation
7. The submission concerning the concept of, the reasons for and the evidence of the concerted practice
8. The submission concerning the adverse effect on trade between Member States
9. The submission concerning the restriction on competition
10. The submission concerning the applicant's error
11. The regularity of the statement of defence
IV — Procedure
Grounds of judgment
The submissions concerning the administrative procedure
(a) The complaint relating to the signing of the notice of objections by an official of the Commission
(b) The complaint relating to disparities between the notice of objections and the decision to commence the administrative procedure
(c) The submission concerning the service of the notice of objections
(d) The complaint concerning the continuation of inquiries after the notice of objections had been served
The submission relating to notification of the decision
The submission as to the limitation period
Substantive submissions as to the existence of concerted practices
Arguments of the parties
The concept of a concerted practice
The characteristic features of the market in dyestuffs
The increases of 1964, 1965 and 1967
The effect of the concerted practice on trade between Member States
The jurisdiction of the Commission
The fine
Costs
I —. Statement of the facts
II —. Conclusions of the parties
1. Annul, in so far as it applies to the applicant, the Decision of the Commission of the European Communities of 24 July 1969 concerning proceedings under Article 85 of the EEC Treaty (IV/26.267—Dyestuffs) (OJ L 195 of 7.8. 1969, p. 11et seq.);
2. Order the Commission of the European Communities to bear the costs.
III —. Submissions and arguments of the parties
1. The submission concerning the jurisdiction of the Commission to adopt the contested measure in respect of the applicant
A —. The applicant's view
(a). According to the law of the Member States
(b). According to international law
B —. The defendant's view
(a). The question whether the Commission's claim to jurisdiction accords with international law
(b). The question whether the jurisdiction claimed by the Commission accords with the internal law of the Member States
C —. The applicant's reply
(a). According to public international law
(b). According to the internal law of the Member States
D —. The defendant's rejoinder
(a). Jurisdiction of the Commission under the rules of international law
(b). The question whether the Commission's claim for jurisdiction accords with the internal law of the Member States
2. The submission concerning notification of the decision
3. The submission concerning the commencement of the administrative procedure
4. The submission concerning the communication of the notice of objections to the applicant in Switzerland
5. The submission concerning the right to be heard
6. The submission concerning the period of limitation
7. The submission concerning the concept of, the reasons for and the evidence of the concerted practice
8. The submission concerning the adverse effect on trade between Member States
9. The submission concerning the restriction on competition
10. The submission concerning the applicant's error
11. The regularity of the statement of defence
IV —. Procedure
1. An expert's report shall be obtained in respect of the following questions:
2. The parties may by agreement between themselves propose the name of an expert to the Court before 1 October 1970.
1. It is common ground that from January 1964 to October 1967 three general and uniform increases in the prices of dyestuffs took place in the Community.
2. By a decision of 31 May 1967 the Commission commenced proceedings under Article 3 of Regulation No 17/62 on its own initiative concerning these increases for presumed infringement of Article 85(1) of the EEC Treaty against seventeen producers of dyestuffs established within and outside the Common Market, and against numerous subsidiaries and representatives of those undertakings.
3. By application lodged at the Court Registry on 3 October 1969 Geigy AG, now Ciba-Geigy AG, has brought an application against that decision.
(a). The complaint relating to the signing of the notice of objections by an official of the Commission
4. The applicant asserts that the notice of objections, for which Article 2 of Regulation No 99/63 of the Commission makes provision, is irregular because it is signed by the Director-General for Competition per procurationem although, according to the applicant, no such delegation of powers on the part of the Commission is permitted.
5. It is established that the Director-General for Competition did no more than sign the notice of objections which the Member of the Commission responsible for problems of competition had previously approved in the exercise of the powers which the Commission had delegated to him.
6. Therefore this submission is unfounded.
(b). The complaint relating to disparities between the notice of objections and the decision to commence the administrative procedure
7. The applicant asserts that the notice of objections refers to the possible imposition of fines, although the decision to commence proceedings only refers to proceedings to establish infringements.
8. It is the notice of objections alone and not the decision to commence proceedings which is the measure stating the final attitude of the Commission concerning undertakings against which proceedings for infringement of the rules on competition have been commenced.
9. Therefore this submission is unfounded.
(c). The submission concerning the service of the notice of objections
10. The applicant complains that the Commission served the notice of objections in a manner which did not accord with Swiss law, the law of the place where the notice was to be served.
11. The purpose of the notice of objections for which Article 2(1) of Regulation No 99 makes provision is to enable those concerned to put forward their arguments in the context of proceedings initiated against them by a decision adopted by the Commission in the exercise of the powers which Articles 3 and 15 of Regulation No 17 confer on it.
12. The submission must be rejected.
(d). The complaint concerning the continuation of inquiries after the notice of objections had been served
13. The applicant argues that the Commission, in undertaking inquiries after the notice of objections had been served, failed to appreciate the nature of that notice which, as appeared from Regulations Nos 17 and 99, must constitute the final measure of inquiry.
14. The Commission has the right and where appropriate the duty to institute fresh inquiries during the administrative procedure if it appears from the course of that procedure that additional investigations are necessary.
15. Therefore these complaints are unfounded.
16. The applicant argues that the contested decision is irregular in that it provides, in Article 4, that it may be notified to one of its subsidiaries.
17. The second paragraph of Article 191 of the Treaty provides that decisions shall be notified to those to whom they are addressed and shall take effect upon such notification.
18. Irregularities in the procedure for notification of a decision are extraneous to that measure and cannot therefore invalidate it.
19. Therefore this submission is inadmissible for want of relevance.
20. The applicant argues that the contested decision is contrary to the Treaty and to the rules relating to its application because the Commission, in commencing on 31 May 1967 proceedings concerning the price increase of January 1964, exceeded any reasonable limitation period.
21. The provisions governing the Commission's power to impose fines for infringement of the rules on competition do not lay down any period of limitation.
22. Therefore the submission is unfounded.
23. The applicant complains that the Commission has not proved the existence of concerted practices within the meaning of Article 85(1) of the EEC Treaty in relation to any of the three increases mentioned in the contested decision.
24. That decision states that prima facie evidence that the increases of 1964, 1965 and 1967 took place as the result of concerted action is to be found in the facts that the rates introduced for each increase by the different producers in each country were the same, that with very rare exceptions the same dyestuffs were involved, and that the increases were put into effect over only a very short period, if not actually on the same date.
25. The applicant argues that the contested decision is based on an inadequate analysis of the market in the products in question and on an erroneous understanding of the concept of a concerted practice, which is wrongly identified by the decision with the conscious parallelism of members of an oligopoly, whereas such conduct is due to independent decisions adopted by each undertaking, determined by objective business needs, and in particular by the need to increase the unsatisfactorily low rate of profit on the production of dyestuffs.
26. Article 85 draws a distinction between the concept of concerted practices and that of agreements between undertakings or of decisions by associations of undertakings; the object is to bring within the prohibition of that article a form of coordination between undertakings which, without having reached the stage where an agreement properly so-called has been concluded, knowingly substitutes practical cooperation between them for the risks of competition.
27. Therefore the question whether there was a concerted action in this case can only be correctly determined if the evidence upon which the contested decision is based is considered, not in isolation, but as a whole, account being taken of the specific features of the market in the products in question.
28. The market in dyestuffs is characterized by the fact that 80 % of the market is supplied by about ten producers, very large ones in the main, which often manufacture these products together with other chemical products or pharmaceutical specialities.
29. In the territory of the Community, the market in dyestuffs in fact consists of five separate national markets with different price levels which cannot be explained by differences in costs and charges affecting producers in those countries.
30. The increases of 1964, 1965 and 1967 covered by the contested decision are interconnected.
31. In 1964 all the undertakings in question announced their increases and immediately put them into effect, the initiative coming from Ciba-Italy which, on 7 January 1964, following instructions from Ciba-Switzerland, announced and immediately introduced an increase of 15 %. This initiative was followed by the other producers on the Italian market within two or three days.
32. As regards the increase of 1965 certain undertakings announced in advance price increases amounting, for the German market, to an increase of 15 % for products whose prices had already been similarly increased on the other markets, and to 10 % for products whose prices had not yet been increased. These announcements were spread over the period between 14 October and 28 December 1964.
33. As regards the increase of 1967, during a meeting held at Basel on 19 August 1967, which was attended by all the producers mentioned in the contested decision except ACNA, the Geigy undertaking announced its intention to increase its selling prices by 8 % with effect from 16 October 1967.
34. Viewed as a whole, the three consecutive increases reveal progressive cooperation between the undertakings concerned.
35. The fact that this conduct was not spontaneous is corroborated by an examination of other aspects of the market.
36. Nor is it any more plausible that the increases of January 1964, introduced on the Italian market and copied on the Netherlands and Belgo-Luxembourg markets, which have little in common with each other either as regards the level of prices or the pattern of competition, could have been brought into effect within a period of two to three days without prior concertation.
37. The function of price competition is to keep prices down to the lowest possible level and to encourage the movement of goods between the Member States, thereby permitting the most efficient possible distribution of activities in the matter of productivity and th capacity of undertakings to adapt themselves to change.
38. The applicant argues that the uniform price increases were not capable of affecting trade between Member States because notwithstanding the noticeable differences existing between prices charged in the different States consumers have always preferred to make their purchases of dyestuffs in their own country.
39. However, it appears from what has already been said that the concerted practices, by seeking to keep the market in a fragmented state, were liable to affect the circumstances in which trade in the products in question takes place between the Member States.
40. Therefore this submission is unfounded.
41. The applicant, whose registered office is outside the Community, argues that the Commission is not empowered to impose fines on it by reason merely of the effects produced in the common market by actions which it is alleged to have taken outside the Community.
42. Since a concerted practice is involved, it is first necessary to ascertain whether the conduct of the applicant has had effects within the Common Market.
43. The applicant objects that this conduct is to be imputed to its subsidiaries and not to itself.
44. The fact that a subsidiary has separate legal personality is not sufficient to exclude the possibility of imputing its conduct to the parent company.
45. It is not denied that at the time the subsidiaries of the applicant established within the common market were place entirely under the latter's control.
46. The submission as to lack of jurisdiction raised by the applicant must therefore be declared to be unfounded.
47. The applicant complains that insufficient reasons were given in the decision, in that it does not mention the relationship existing between the parent company and its subsidiaries by way of justification of the Commission's jurisdiction.
48. The fact that no statement is included showing why the Commission has jurisdiction does not stand in the way of a review of the legality of the decision.
49. Therefore this objection is unfounded.
50. Furthermore the applicant claims that the Commission did not take into account its special situation as an undertaking having its registered office outside the Community.
51. It appears from the examination of the submission concerning the jurisdiction of the Commission that that jurisdiction is based not only on the effects arising from a course of conduct pursued outside the Community, but also on an activity pursued within the Common Market and imputable to the applicant.
52. Therefore this submission is unfounded.
53. In view of the frequency and extent of the applicant's participation in the prohibited practices, and taking into account the consequences thereof in relation to the creation of a common market in the products in question, the amount of the fine is appropriate to the gravity of the infringement of the Community rules on competition.
54. Under Article 69 (2) of the Rules of Procedure the unsuccessful party shall be ordered to pay the costs.
On those grounds, Upon reading the pleadings; Upon hearing the report of the Judge-Rapporteur; Upon hearing the parties; Upon hearing the opinion of the Advocate-General; Having regard to the Treaty establishing the European Economic Community, especially Articles 85 and 173; Having regard to Regulation No 17/62 of the Council of 6 February 1962; Having regard to Regulation No 99/63 of the Commission of 25 July 1963; Having regard to the Protocol on the Statute of the Court of Justice of the European Communities; Having regard to the Rules of Procedure of the Court of Justice of the European Communities, THE COURT hereby:
1 Dismisses the application;
2 Orders the applicant to bear the costs.