JUDGMENT OF 14.7.1972 — CASE 55/69 CASSELLA v COMMISSION
In Case 55/69
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
A — Submissions as to procedure and to form
1. Complaints concerning the commencement of the administrative procedure
2. Complaints concerning the course of the administrative procedure
3. Complaints concerning the reasons stated for the decision
4. The period of limitation
B — On the substance
1. The concept of a concerted practice
2. The competitive situation on the dye-stuffs market
3. The factual evidence
4. The fine
IV — Procedure
Grounds of judgment
Submissions relating to procedure and to form
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 the disparities between the notice of objections and the decision to commence administrative proceedings
(c) The complaint relating to a continuation of inquiries following notification of the objections
(d) The complaint concerning the hearing of the undertakings concerned
(e) Complaints relating to other infringements of the rights of the defence
The submission concerning the statement of reasons contained in the contested 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 fine
Costs
I —. Statement of the facts
II —. Conclusions of the parties
1. Annul, in so tar as it concerns the applicant, the Decision of the Commission of 24 July 1969, relating to proceedings under Article 85 of the Treaty (IV 26.267—Dyestuffs);
2. Order the defendant to bear the cost.
III —. Submissions and arguments of the parties
A —. Submissions as to procedure and to form
1. Complaints concerning the commencement of the administrative procedure
2. Complaints concerning the course of the administrative procedure
(a). The applicant argues that the Commission infringed Article 19(1) of Regulation No 17 and Regulation No 99/63 in that it continued its inquiries concerning the price increases of 1964 and 1965 after sending the notice of objections, and only commenced its inquiries on the increase of 1967 after sending that notice.
(b). The applicant complains that the defendant infringed Article 19(1) of Regulation No 17 and Regulation No 99/63 in that in the notice of objections the Commission confined itself to stating the deductions which it had itself made from certain allegedly established facts, without giving those concerned the opportunity of acquainting themselves more closely with those facts, and thus of discussing them. This applies in particular to the dates on which the various undertakings against which proceedings were taken allegedly sent instructions to their subsidiaries, and to the supposedly comparable wording of those instructions.
(c). The applicant argues that in giving unjustifiably short notice of the hearing (12 days) and in rejecting, without sufficient reasons, a reasoned request for postponement of the date fixed, the Commission infringed the rights of the defence in that it was not given the opportunity and the possibility of developing its point of view orally, taking into account the absence of the sales director responsible and of the applicant's advocate at the time of the hearing.
(d). Finally, the applicant argues that the Commission further infringed the rights of the defence in that the contested decision mentions the decision of the Bundeskartellmat of 28 November 1967. Yet on the one hand this was not mentioned in the notice of objections, and on the other hand the Commission did not have the right to take note of the results of investigations which it had not carried out itself. Finally, the Commission should have known that an appeal had been lodged against that decision of the Bundeskartellamt and that therefore there could be no question of attributing any conclusive value to it. It is argued that the fact that the said decision was annulled by the Kameergericht Berlin confirms the soundness of the complaint thus made.
3. Complaints concerning the reasons stated for the decision
4. The period of limitation
B —. On the substance
1. The concept of a concerted practice
2. The competitive situation on the dye-stuffs market
3. The factual evidence
4. The fine
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 4 October 1969 the undertaking Cassella Farbwerke Mainkur 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 only by the Director-General for Competition.
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 the disparities between the notice of objections and the decision to commence administrative proceedings
7. The applicant claims that the notice of objections refers to the possible imposition of fines, although the decision to commence proceedings only referred 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 the submission is unfounded.
(c). The complaint relating to a continuation of inquiries following notification of the objections
10. The applicant asserts that the Commission, in continuing its inquiries following communication of the notice of objections, conducted itself in a manner incompatible with the very nature of this notice which, as allegedly appears from Regulations Nos 17 and 99, must constitute the final measure of inquiry.
11. 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.
12. This submission is therefore unfounded.
(d). The complaint concerning the hearing of the undertakings concerned
13. The applicant argues that the period of twelve days within which it was required to appear before the Commission was not long enough to enable it to put forward its points of view orally, taking into account the absence, at that time, of the sales director responsible and of the undertaking's advocate.
14. Taking into account the time which had elapsed following communication of the notice of objections, it does not appear that the abovementioned period of notice was of a nature such as to jeopardize the defence of the undertakings concerned.
15. This submission is therefore unfounded.
(e). Complaints relating to other infringements of the rights of the defence
16. The applicant complains that the defendant infringed Article 19(1) of Regulation No 17/62 and Regulation No 99/63 in that the Commission, in the notice of objections, confined itself to stating deductions drawn from facts said to have been established, without however specifying those facts.
17. In order to protect the rights of the defence during the course of the administrative procedure, it is sufficient that undertakings should be informed of the essential elements of fact on which the objections are based.
18. Finally, the applicant complains that in the contested decision the Commission mentioned the decision of the Bundeskartellamt of 28 November 1967, although it did not have the right to take into consideration the result of investigations which it had not itself carried out.
19. Although the interested parties are entitled to dispute the facts as alleged by the Commission in support of its objections, there is nothing to prevent the latter, in applying the Community rules on competition, from using the results of investigations carried out by national authorities.
20. Therefore these complaints are unfounded.
21. The applicant argues that insufficient reasons are stated in the decision for the finding of the existence of the contested infringements, particularly as regards the facts.
22. The decision, considered as a whole, sets out clearly and coherently the essential elements of fact and law on which it is based.
23. Therefore this submission is unfounded.
24. 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.
25. 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.
26. Therefore the submission is unfounded.
27. 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.
28. That decision stated 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.
29. 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.
30. 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.
31. 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.
32. 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.
33. 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.
34. The increases of 1964, 1965 and 1967 covered by the contested decision are interconnected.
35. 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.
36. 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.
37. 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.
38. Viewed as a whole, the three consecutive increases reveal progressive cooperation between the undertakings concerned.
39. The fact that this conduct was not spontaneous is corroborated by an examination of other aspects of the market.
40. 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.
41. 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 the capacity of undertakings to adapt themselves to change.
42. The applicant complains that the contested decision did not take into account the fines which had been imposed upon it by the Bundeskartellamt by its decision of 28 November 1967.
43. Since the decision of the Bundeskartellamt has been annulled, this submission has become devoid of object.
44. 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.
45. 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.