OPINION OF MR MAYRAS — JOINED CASES 40 TO 48, 50, 54 TO 56, 111, 113 AND 114/73 SUIKER UNIE AND OTHERS v COMMISSION

Mr President,

Members of the Court,

General introduction

It was at the end of the first marketing year following the entry into force of the basic Regulation of the Council, No 1009/67, on the common organization of the market in sugar that the Commission of the European Communities was informed that there were obstacles to free Community trade in sugar.

Quite apart from refusals to sell, which caused certain sugar consumers to complain, a combination of the following facts also attracted its attention:

As these facts raise the presumption that they are practices which restrict competition on the common market, the Commission, as far back as 1969, in accordance with Regulation No 17/62 of the Council, undertook the necessary investigations and obtained information from many producers, dealers and consumers of sugar.

When these investigations had been completed it introduced, on 31 May 1972, upon its own initiative, the procedure specified in Article 3 (1) of this Regulation against twenty-two producers and sales organizations and their members representing about 90 % of Community production.

The objections raised against these undertakings were notified to them between 24 July and the following 29 July, a time-limit of two months being given to them within which to deliver their defences in writing.

After these undertakings had acceded to this invitation their representatives, as Article 19 (1) of Regulation No 17 provides, were heard by the officials of the Directorate-General for Competition and Agriculture, in the presence of officials of the Member States concerned.

Finally, after having received on 5 December 1972 the opinion of the Advisory Committee on Restrictive Practices and Monopolies, the Commission adopted on 2 January 1973 its Decision entitled European Sugar Industry based on Articles 85 and 86 of the Treaty which was notified to the twenty-two undertakings. It calls upon them, on the one hand, to put an end immediately to the infringements which it had found to exist; on the other hand it imposes on sixteen of the undertakings fines totalling 9 million units of account.

It is only the latter undertakings which have challenged in your Court the decision which they claim should be annulled and, in the alternative, rectified so far as the amounts of the fines which have been imposed are concerned.

Apart from the recent Frubo case it appears to me that this is the first time that you have had to deal in such a direct way with the problem of the application of the rules of competition in the Treaty to the production of and trade in an agricultural product (Article 42 of the Treaty) which is covered by a common organization of the market (Article 40).

On this problem another has been grafted: are the instruments and mechanisms provided by a regulation relating to the common organizations of markets and by Community implementing regulations, on the one hand, and the systems maintained or created by national authorities in the same sector, on the other hand, such as to guarantee or permit, provided that there is neither a cartel nor an abuse of a dominant position, the free movement of the product under consideration and free competition between producers?

The anti-trust bodies of the Member States are familiar with this problem with which the Community authorities may well be confronted more and more frequently. It is namely the problem of cartels which, according to Article 59 of the French regulation of 30 June 1945result from the application of texts of laws, regulations and other legislative documents; it is also the problem of cartels between farmers or farmers associations' expressly mentioned by German law on competition (Article 100 (1) GWB).

In a Community context the impact of competition law on existing common organizations of the market in agricultural products calls for the consideration of Regulation No 26/62 of the Council. Article 2 of this regulation states that Article 85 (1) of the Treaty shall not apply to such of the agreements, decisions and concerted practices as form an integral part of a national market organization or which are necessary for attainment of the objectives set out in Article 39 of the Treaty.

These considerations show why it appeared to me to be advisable, before embarking on the examination of the applications, to describe the main features of the sugar market and to give particulars of the regulations in the light of which the conduct of the applicants must be evaluated.

I — The nature of the sugar market

For a long time sugar and its raw materials — cane sugar or beet sugar — has been affected, on a national level, by intervention measures adopted by public authorities and by agreements between economic operators.

At the present time there is still no country where the sugar sector of the economy is completely exposed to market forces.

The respective development of the cultivation of beet and cane sugar and competition between sugar based on these two plants have been decisively influenced by the subsidies granted to sugar beet producers.

Without going back to the decrees enacted, at the time of the continental blockade, by Napoleon I to promote sugar production, such interventions started to play a leading role in Europe from the beginning of the second half of the 19th Century. They took the form of multiple measures for aid and support granted to beet producers and sugar manufacturers by national governments. Whatever methods were adopted by these measures, the financing of them was in the end charged to the consumer or the taxpayer, so much so that Lamartine, who, although a poet, was also a politician, could declaim in a speech before the National Assembly:

These policies led to large scale dumping which brought about a fall in prices on the world market and were therefore detrimental to the development of sugar producing countries.

By way of reaction these interventions by public authorities or private agreements caused endeavours to be made to organize production and sales internationally on a more or less free market basis and at the same time to make certain that the market was reasonably stable and, without creating too much disturbance, to bring the volume of production into line with the volume of consumption. Let me mention on this point the convention signed at Brussels on 5 March 1902 and the later International Sugar Agreement, under which export quotas were fixed for countries which are net exporters.

The world sugar market is strictly speaking a very narrow residual market (marche résiduel) which hardly represents more than 15 % of world production. As early as 1960 two-thirds of the sugar traded internationally was sold at special prices, guaranteed and fixed under agreements; the world price, as defined by the International Sugar Agreement, only applied to about one third of the international trade in this product.

This disproportion has increased: 55 million metric tons out of the 80 million metric tons produced in the world in 1974 were consumed in the producing countries. The remainder, 25 million metric tons, that is to say hardly more than one third of world production, was traded internationally. But 13 million metric tons were sold pursuant to bilateral agreements such as the American Sugar Act, the Commonwealth Agreement or the agreement made between Cuba and the Soviet Union. These agreements are concerned with preferential markets. Thus the volume of sugar actually put on the world market is estimated to be only 12 million metric tons. Having regard to this situation the sugar market, which is very sensitive to political or economic crises, is also used for speculative operations. It is for this reason that there is a close connexion between the movement of stocks and prices, in spite of modern methods of marketing and transport which in the normal course of events ought not to justify the building up of very large stocks.

Although sugar stocks are to some extent necessary because the sugar marketing year properly so-called is so short and because the gap between marketing years has to be bridged, building up such stocks is a highly speculative operation. It only needs an actual shortage of some hundreds of thousands of tons to make the price rocket above the highest production costs or, on the contrary, a known or potential surplus of two million metric tons to make it drop to such an extent that it falls below the cost price.

These price variations are made even larger by speculation on the futures markets in New York, London and Paris. There are reasons for supposing that the periods of scarcity are only temporary break-downs in the development of production which continually increases and which is a long way from being caught up by consumption. In fact in the developed industrial countries consumption in practice only goes up in proportion to the population increase, the rate of which is very low; on the other hand in the developing countries, which have a large population increase, consumption is curbed by the low standard of living.

So far as the Community market is concerned its chief characteristic, just like the world market at that time, was a definite tendency to over-produce.

During the four marketing years 1968/69 to 1971/72 with which the present cases are concerned the total production of white sugar in the Community went up from 6800000 metric tons to approximately 8100000 metric tons.

During the same period consumption only increased from 5900000 metric tons to 6500000 metric tons, that is to say from 120000 to 150000 metric tons per year.

Production therefore exceeded Community consumption by 11 % to 24 %.

If these figures are broken down between the five Member States — Belgium and Luxembourg together being treated as one State — they show that two States, France and Belgium, have continually produced a sugar surplus, while in the other States production and consumption are in balance or there is a deficit. Owing to its economic structure Italy has a deficit.

During this period the pattern of Community trade was not enlarged to any appreciable extent except in the case of imports into Italy.

With regard to Community exports of white sugar to the world market they went up from 1100000 metric tons in 1968/69 to 1600000 metric tons in 1971/72.

II — The common organization of the market in the sugar sector

It is this very special sector of sugar production which Regulation No 1009/67 untertook to organize by trying to reconcile such contradictory objectives as: the maintenance of the standards of living of sugar beet farmers and sugar manufacturers, the stabilization of the markets, the availability of supplies, the increase of productivity in accordance with rational criteria and, finally, a reasonable level of consumer prices.

Strictly speaking only the agricultural aspect of sugar production, that is to say primarily beet growing, should have come within the agricultural provisions of the Treaty, as the sugar industry like the other industries in the Community is bound to be subject to the general system, in particular to the rules of competition. And it could appear to be calculating backwards to base the price of the product which has to be protected — sugar beet or, to a lesser extent cane sugar — on the price of a sugar product arising at a later stage. However as the Commission stated in its original proposals for the organization of the market: because the marketing of beet is distinguished by special characteristics the income of beet growers can only be guaranteed by means of the price of sugar.

It was moreover impossible to succeed in obtaining comparable prices for beet in all the Member States, having regard in particular to the very different rules governing the relations between beet growers and sugar manufacturers. Moreover the world sugar market is based on the price of white sugar.

Guided in this connexion by earlier Netherlands regulations the authors of Regulation No 1009/67 therefore tried to overcome the difficulty by taking into consideration the stage when the product is processed. Agricultural producers saw that an adequate price was only guaranteed indirectly through a link established between the intervention price in force in the production area under consideration and the price of beet

Having said that I must add that the provisions of Regulation No 1009/67, which apply more directly to the present cases, relate to the price system, to national quotas and to the system of aids: they enclose the market and keep it within bounds both at the production stages and at the prices level.

The white sugar produced by industrial companies is a homogeneous product which is standardized in accordance with strict criteria. It is its price rather than the trade-mark which induces the buyer to purchase.

Nevertheless Community regulations proceed on the basis that there are four qualities of sugar for the purposes, inter alia, of sugar purchases by the intervention agencies.

Of these four grades it is Category 3 (standard category or quality, the basic quality on the Paris Sugar Market for white sugar) which in theory is the most important: it is for this standard quality that, according to Articles 2 and 3 of the basic regulation, the target and intervention prices are fixed each year.

I say in theory, because in fact this quality was not produced by the manufacturers of certain countries which only offered the most expensive kinds (Categories 1 and 2).

The processing industry on the contrary considered this quality to be satisfactory for their production. In particular the wish of German sweet manufacturers to obtain supplies of sugar in this category met, soon after the Community organization had been set up, with an unconditional refusal from the sugar industry. To purchase sugar of this quality produced in the other Member States afforded them no help, because the cost of transporting the latter quality of sugar was almost equivalent to the higher price asked for the category immediately above. This situation gave rise in 1969 to the opening of an inquiry by the Bundeskartellamt (The Federal Cartel Office) which apparently never came to anything.

The production of dearer kinds of sugar was also encouraged by the Community intervention system: a producer obtains for sugar in Category 1 offered to the intervention agency a price which is noticeably higher than the price of sugar in Category 2 and much greater than the actual cost of processing it.

Eventually producers managed to get Grade 2, which was dearer, accepted as the standard quality instead of Category 3 for which there was apparently no demand and this led to an increase in the processing margin of refineries of 0·50 u.a. per 100 kg, which had already risen to 0·88 u.a. per 100 kg in 1971/72.

Let me now examine the provisions governing prices.

Originally the Commission suggested that the Council should only control the production of sugar and the sugar market — as it did in the other market organizations — by means of the price mechanism, as the restriction of production by quotas was only envisaged as a last resort in order to stabilize the market in the case of any serious imbalance.

However under pressure from the German and Italian delegations who had come round to accepting this way of considering the problems of beet growers and national sugar manufacturers, and, moreover, with the support of the European Parliamentary Assembly (Resolution of 20 January 1965) the system of national quotas was retained side by side with the system of prices and in conjunction with this system.

Although the Community organization of the sugar market does not directly include within its field of application the wholesale and retail stages, its main feature, in comparison with the other market organizations, is a complicated downstream (en aval) price structure under which first of all the price of the finished product downstream is fixed and then the cost of the raw material upstream is determined. The target price was fixed for white sugar, a product of first-stage processing or even the end product, whereas, in the other organizations the target price is determined on the basis of the agricultural raw material. The reason for this, as I have said before, is that in most cases sugar beet is not in its original state strictly speaking capable of being marketed and exported.

We know that Regulation No 1009/67 provides that the Council shall fix each year, so far at any rate as the sugar produced in the common market is concerned, on the one hand, a target price, on the other hand, an intervention price and it is necessary to recall the respective functions which they perform in a common organization of the market

The first price fulfils an economic objective: it is the price at or near to which it is desired that transactions are carried out on the internal Community market

The intervention price is the price at which the intervention agencies empowered by the Member States to do so, must buy the sugar which is offered to them by producers. Fixed at a level slightly below the target price it tends to facilitate the movement of the product in question; but it is also a guaranteed price, a floor price, to the extent to which the normal effect of intervention should be to provide economic operators with a guarantee that the market price cannot in general fall, except in certain cases limited in time and space, below the intervention price.

On this point Regulation No 1009/67 in no way differs, so far as its objectives are concerned, from most of the texts governing the common organizations of the market in agricultural products. The Commission which has had the opportunity, in connexion with many disputes relating to the implementation of such organizations, to define before the Court the meaning and extent of the target price and the intervention price, cannot therefore in the present cases depart from the position which it has continually adopted.

But the system which applies to sugar is different, so far as the method of price-fixing is concerned, from the traditional plan adopted in the other sectors.

In the system adopted for cereals, for example, the basic target price and the method of fixing prices and the intervention price are fixed for the production area having the largest deficit isburg in Germany) which also happens to be an area where consumption is at a high level; the prices which are derived from them decrease according to the distance from this area.

Prices are therefore effectively fixed for each region.

However the opposite system has been chosen for sugar.

The common target price and the intervention price are fixed for the production area in the Community having the largest surplus, that is to say, the region formed by the eight sugar departments of the North of France. This price is also applicable for the three Benelux countries and Germany.

No provision has been made for fixing prices for each region, as was done in the case of the cereal sector of the market.

It is true that the regions where sugar is both produced and consumed are relatively near to each other and that Member States, with the notable exception of Italy and, to a lesser extent Luxembourg, are in a position to meet all their requirements of sugar for eating from their own production.

The immediate effect of such a situation, which moreover is due to natural and climatic factors, is that trade hardly crosses the boundaries of the region.

Target prices and derived intervention prices have only been fixed for Italy and the overseas departments of the French Republic.

Fixing regional prices for the area having a deficit which is furthest away (Palermo) is effected by adding transport costs from the North of France to Italy. To the extent to which these derived prices are higher than those fixed for the principal production zone, this system has the additional effect of placing marginal producers at an advantage.

Therefore the competitive position of producers is hardly affected by their situation in relation to the principal production area, but rather by the degree of self-sufficiency of the areas of consumption.

The common organization has, as it were, taken over the role of national provisions relating to the equalization of transport costs. The nearness or distance of the main production area, at least so far as Italy is concerned, only has a limited effect on the incomes of producers who are in the target price-intervention price bracket

Given that with very few exceptions the situation of national sugar factories in relation to the national areas of consumption is more favourable than that of a sugar producer of the other Member States, it was foreseeable that intra-Community trade would be limited, even on the assumption of a most favourable distribution of sugar and a reduction to the minimum of transport costs.

Finally the intervention price, a guaranteed price, must come somewhere between the beet growers' income and the price which, since it is the result of market forces, should in general tend to approximate to the target price.

Between these two poles the Council was called upon to take account of the need to guarantee farmers an appropriate purchasing power, so as to avoid in this way any decline in beet growing. Further, whereas the difference between the target price and the intervention price amounts to 8 % for cereals, the authors of the regulation have reduced this difference to 5 % for sugar. This alteration was considered adequate because, contrary to what happens in the case of most agricultural products, the marketing of sugar, a product which keeps well, is only fraught with limited risks.

These considerations explain that the intervention price was fixed at a relatively high level, especially profitable at least for the most efficient and best placed producers.

But, it will be said, this fact should have persuaded those producers who have surpluses available to offer them to intervention agencies, which, within the national quotas, must purchase all the sugar which is offered to them. These agencies can only resell it on the domestic market at a higher price than the intervention price; they are only authorized to sell sugar at a lower price for the purpose of denaturing or can only sell it at the world price if it is exported to third countries in its original state or after processing.

However, it is clear that, during the periods with which we are concerned, this system of intervention only operated occasionally — and moreover unsuccessfully — and made a loss, because the agencies hardly sold any sugar except at prices below the intervention price of sugar intended for denaturing or export outside the Community.

It appears that the Commission, on the assumption that large quantities would have been accepted by the intervention agencies, should have been able to maintain the market price at a level appreciably close to the intervention pnce as long as there was clearly over-production. This was evidently the case since it exceeded, during the period under consideration, domestic consumption by an average of 16 %.

So far as the producers were concerned, it would have been, as a rule, in their interests to offer their surpluses to the intervention agencies — that is to say, at the guaranteed floor price — if the price of sugar on the open market coming under the pressure of surpluses had been inclined to fall to a lower level.

But it has to be recorded that this situation never materialized to any significant extent, even in the countries which had a very large surplus like France and Belgium. On the contrary it is a fact that, with certain limited exceptions, producers of these countries and in particular la Raffinerie tirlemontoise showed a marked reluctance to offer sugar to intervention agencies whatever pretexts they put forward to justify this forbearance.

There is no doubt that the real reason for this is that the intervention agencies were in the eyes of the producers dangerous potential competitors, capable of exercising a considerable influence on the market if they had been able to intervene on a large enough scale.

In the second place I regard this as confirmation that the guaranteed price was fixed at a higher level than was made necessary by the need to avoid the risk of a decline in beet growing, although a wider distribution of beet cultivation in the Community would have been desirable.

Finally, on considering these findings I am inclined to think that, in spite of the pressure brought about by surpluses, an artificial shortage was in fact created, to a certain extent by means of export refunds and denaturing premiums which were an indisputable advantage for the sugar industry.

The most striking feature of the common organization of the market in sugar, which distinguishes it from all the other organizations of the market of the European Economic Community, is the fixing of production quotas.

This system was established, on a provisonal basis, by Article 23 (1) of Regulation No 1009/67 for a period which was to terminate on 1 July 1975; but we know that it has recently been extended, subject to an adjustment of quotas.

Contrary therefore to the initial proposals of the Community this organization of the market does not imply that the objective of freedom of production has been attained. It leads in fact in the end to a restriction by quotas of this production.

It is on the basis of a production target of 6480000 metric tons per marketing year in the Community that national basic quotas, expressed in terms of white sugar, were fixed for each of the Member States. They amounted during the period with which we are concerned to 1750000 metric tons for the Federal Republic of Germany, to 2400000 metric tons for France, to 1230000 metric tons for Italy, to 550000 metric tons for the Netherlands and the same quantity for Belgium and Luxembourg, production being practically non-existent in this latter State.

These national quotas, derived from the basic production target, are apportioned by the national authorities of each State among the factories and undertakings in their territory having regard, on the one hand, to their annual average production during a reference period and, on the other hand, to the size of the national quota.

In conjunction with the system of prices this system tends to restrict production and encourage its regional specialization, while at the same time guaranteeing a minimum level of production, even in those regions which are the most unsuitable for beet growing. Regional specialization should therefore, as I see the situation, cover production over and above the basic quotas.

The aim of the restriction of production by quotas is also to achieve guaranteed prices. Such a guarantee, at the level of the intervention price, was, in the beginning, granted, not at the rate of 100 % of estimated human consumption in the Community, but at the rate of 105 % of this consumption.

After having made considerable progress during the years preceding the 1964/65 marketing year, as a result of an increase in consumption per head of the population and also in the population growth, the rise in the amount of sugar consumed by human beings proved to be much slower and more limited; a partial drop in the consumption per head of the population was even recorded in Germany, Belgium and the Netherlands.

It follows that in determining the basic quotas the Council proceeded on the basis of an optimistic assumption and that, from the beginning of the first marketing year, the amount of these quotas exceeded human consumption by 500000 metric tons, that is to say by almost 10 % throughout the Community.

In addition, so far as that part of production which exceeds this quota of 105 % is concerned, the concept of a maximum quota fixed at 135 % of the basic quota is applied. The sugar manufacturers can still within this limit benefit from guaranteed outlets, provided however they pay a production levy of which 60 % can be passed on to the suppliers of beet, the sugar manufacturers themselves only bearing 40 % of it.

The effect of this levy is therefore not only to reduce the manufacturing margins of sugar producers but also to lower appreciably the price paid to the beet grower. It is, as it were, an absorption levy.

But, as a maximum ceiling has been put on the production levy and as it would have been higher had it not been for this ceiling, the result is that the cost of absorbing surpluses has fallen not only on producers but also on the Community as a whole.

With regard to the amounts of sugar produced over and above the maximum quota, they cannot be sold on the domestic market; they must be exported in their original condition outside the Community without the producers being able to benefit from any export refunds.

Now the increase in production during the period under consideration tends to prove that, except in Italy, producers did not keep to the basic quotas which they were allotted. They have made extensive use of those maximum quotas in spite of the requirement to pay the production levy which reduced their return quite appreciably. It is therefore certain that it was still in their interest to produce sugar over and above the basic quotas. It even turned out in France, Belgium and the Netherlands that the maximum quotas themselves were exceeded.

Now that this analysis has been completed two observations can be made on the general system established by Regulation No 1009/67, so far as prices on the one hand and production quotas on the other hand are concerned:

Does this mean however that the common organization of the market in sugar has excluded all effective competition so that the concerted practices, in which the principal European producers are alleged to have engaged, could not in any case have any effect on trade between Member States?

I do not for one moment think so.

First of all the system established by Regulation No 1009/67 has in no way changed the unequal distribution of Community production between Member States in relation to national consumption. It has not in any way altered the fact that there are countries, principally France and Belgium, which owing to their structure have a very large surplus, and countries which have a deficit, especially Italy, to some extent the Netherlands and, at least for certain regions and in certain marketing years, the Federal Republic of Germany whose sugar balance has been in equilibrium since the beginning of 1971.

These facts implied that intra-Community trade should be developed, at least to the extent to which it was necessary to make good the deficits of those States which were not in a position to ensure their own self-sufficiency.

Such trade was in addition made possible by the provisions of Article 35 of the Regulation which prohibits, within the common market, any customs duty and quantitative restriction or measure having an equivalent effect and also recourse to a system of minimum prices as provided by Article 44 of the Treaty.

It is true that Community trade can only represent, in comparison with world production, a residual market covering a small fraction of this production; but this fact could not have the effect of abolishing competition within the Community. On the contrary, this competition had of necessity to be all the livelier on this market, because it could only cover relatively small quantities in relation to the total surplus production of the most favourably situated regions.

Finally the system of Community prices, which are not selling prices to users, dealers or consumers, allowed producers a sufficient margin of freedom to negotiate prices on the market, after having taken into account the strength and weakness of their position, the return, their plant and the actual level of their manufacturing costs.

In this respect fixing intervention prices at a high level allowed producers who engaged in the greatest degree of specialization to be particularly competitive and should have induced them to extend their sales to their competitors' markets in the nearest Member States, to the extent to which transport costs were not in this respect an insuperable obstacle.

I would like to add that since sugar is a homogeneous and to a very great extent a standardized product, in spite of certain consumer habits, competition could not only cover prices but also the other conditions of sale.

The conclusion can be drawn that the common organization of the sugar market did not exclude a considerable margin of competition capable of being impeded by concerted practices within the meaning of Article 85 (1) of the Treaty.

III — The concerted action between European producers

The findings of the procedure initiated by the Commission caused it to blame the principal European producers for engaging in such practices, which from the beginning had as their consistent objective the protection of national markets or, so far as Germany is concerned, the regional markets on which diese producers, neglecting completely the real opportunities for competition offered by the common organization of the market, tried to maintain their former position by obtaining acceptance of the principle of chacun chez soi (everyone in his own home).

It is therefore the partitioning of the markets which is the back cloth against which the various specific complaints made by the Commission must be seen.

It is therefore necessary to decide whether we are confronted with a general cartel or only, on the contrary, with practices which are isolated and precisely defined.

In order to do so it is necessary to take care not to confine our attention to the form of the complaints. A fragmented presentation of the various infringements, artificially dividing up and severing the complaints from each other and leaving out of account at the same time the general objective of the cartel formed by the producers and the striking similarity of the techniques employed to achieve this objective would only succeed in giving a fragmentary view of the facts.

Conversely the fact that the Commission adopted a single decision and the Court ordered that for the purposes of the oral procedure the cases shall be dealt with jointly does not mean that there must necessarily be a finding in favour of a general cartel.

In fact it is indisputable that the Commission has from the beginning proceeded on the basis that there was one single cartel. If during the procedure it was led to modify this argument, the only reason is that owing to the partitioning of the national markets it was bound to examine the situation created by the concerted practices on each of the markets separately and has obviously only been able in the end to make complaints against each of the undertakings in question in connexion with those practices for which in its opinion those undertakings were to blame.

But, for my part, I do not think it is possible simply to rule out any idea of a general concerted action, because, as we shall see, the links which existed, even before 1968, between the large European producers, the common purpose pursued by them and the similarity of the methods employed to achieve this purpose throw light on their behaviour since the implementation of the common organization.

As is known the manufacturers in question are themselves responsible for 90 % of the sugar production of the Community. In each of the producing countries the combination of producers, which had been vigorously prepared even before 1968, has since then been consolidated.

In France, the principal European producer and a country having a very large surplus, five undertakings are responsible for three-quarters of national production: the companies Béghin and Say which merged on 1 January 1973, the companies Lebaudy Suc and Générale sucrière — the latter has since 1972 owned the majority of the capital of the first company — and finally Sucre Union. The Sucres et Denrées company plays a leading role in the sugar trade.

In Belgium — a country which also has a surplus — the Raffinerie tirlemontoise alone produces directly more than half the national output In addition, as it controls, by means of its majority holdings, the production of the factories of Warneton, Oreye and Moerbeke-Waes, and through marketing agreements the production of the undertakings of Liers, Embressin and Naveau, it exerts — or is in a position to exert — a decisive influence over approximately 85 % of Belgian production.

In the Netherlands two undertakings — Coöperatieve vereniging Suiker Unie (SU) and the Centrale Suiker Maatschappij (CSM), linked together by agreements for mutual cooperation, are responsible for the entire national production and, if account is taken of imports, control more than 80 % of the market

In Germany the producers have grouped themselves in marketing associations the territories of which are celarly demarcated:

The Norddeutsche Zucker for Schleswig-Holstein and part of Lower Saxony:

The Westdeutsche Zucker-Vertriebsgesellschaft for the Western part of Germany of which the most important member is the Pfeiffer & Langen undertaking which, itself, is responsible for about naif of the production of this area;

Finally in the Southern part of the Federal Republic of Germany the Südzucker-Verkaufsgesellschaft, within which the Süddeutsche Zucker AG occupies the most important position as it is responsible for 70 % of production.

In the case of Italy combinations of producers in that country also increased. Three principal groups share the market between themselves:

The first group was formed round the Eridania company: it produces more than one third of sugar production;

The second, the Gruppo Padano, is in practice on a par with the first group as a result of takeovers and the acquisition of controlling interests, in particular of such an interest in Società italiana per l'industri degli Zuccheri;

A third group was formed by a combination grouped round the Agricola industriale Emiliana company.

Finally if certain smaller undertakings are responsible for the balance of Italian production, there is nevertheless no independent commercial network for marketing sugar as this is under the control of the large producers.

These European undertakings maintained, before the common organization of the market was brought into force, contacts which were encouraged, if not regularized, by the creation on a national scale of groups, associations and syndicates.

In Belgium it was the Confédération professionnelle du sucre and its off-shoots, in Germany the Verein der Zuckerindustrie and the Wirtschaftliche Vereinigung Zucker, in France, the Syndicat national des fabricants de sucre and la Chambre syndicale des raffineurs, in Italy, Assozucchero. In the Netherlands close cooperation exists, it has been said, between the two undertakings which are responsible for the whole of domestic production.

These organizations of national producers nave been a European Committee of sugar producers on a Community level. It is within this committee — and more particularly its common market commission — that discussions began, before the entry into force of Regulation No 1009/67, on the question of the foreseeable effects of the common organization of the market and that the measures which had to be taken by the European sugar industry in order, in particular, to avoid the existing imbalance between the amount of sugar at a guaranteed price and the requirements of the domestic market, were considered.

At a meeting held at Munich in May 1968 attended by representatives of national groups together with direct representatives of certain producers the common intention that the solutions which have been worked out allow sugar manufacturers to ensure by their own efforts the marketing on the domestic market and for export of the whole of their production was confirmed.

The main prupose, to be implemented by identical methods on the various national markets, consists in distinguishing two markets.

It is interesting in this connexion to refer to an introductory note drawn up by the Association syndicale française concerning this agreement which moreover was notified to the Commission and also to a draft agreement relating to a cooperative society for Belgian sugar manufacturers.

These documents enable us to understand the position taken up by the undertakings concerned in relation to the two different markets and the conclusion which must be drawn from this position, namely that Community producers must be put on exactly the same footing with regard to these two markets, which is tantamount to saying that they must all be given the opportunity to earn the weighted average return corresponding to the quantities absorbed by each of the two markets in question.

In order to achieve this result the first of these texts proposed special measures for the organization of the export and denaturing markets.

On the other hand no such proposal was made for the market in sugar intended for human consumption because in this field the problem could be adequately solved within the scope of the concerted action between producers by adopting the methods which undertakings could put into effect themselves without any difficulty, in accordance with a policy which was precisely defined by the representative of the Raffinerie tirlemontoise in the formula: No movement of goods from country to country save by agreement between producer and producer.

What is called trade based on rationalization (le commerce de rationalisation) which implied close cooperation between national groups of producer-refiners and was for them a preferential market had therefore to be applied to intra-Community trade in sugar.

Similar techniques were used to carry out this policy, which is the common foundation of the various concerted practices, against which specific complaints have been made, and also lays down the all important method of controlling deliveries of sugar from one Member State to another with the object of protecting national markets.

The first of these methods consisted of direct deliveries of white or raw sugar from one country to another, from producer to producer, in other words between competing undertakings.

Deliveries of white sugar were often made in packages supplied by the purchasers and bearing their own trade-mark. The sugar was resold at the same price as their own production price. The producer-suppliers refused to accept offers to purchase either from dealers or industrial consumers of sugar, giving as their reason that the amounts available had to be reserved for their domestic market.

These practices, which were carried out regularly, cannot be convincingly justified either by the situation of the Community market in sugar or by the commercial interests alone of the producers.

They can only be explained by a coordinated policy, the principles of which, laid down by the most important producers, were intended to maintain the partitioning of national markets.

Except in the case of the Italian market which is subject to domestic regulations specially designed for State control of the economy and moreover carefully drawn up so as to reserve the largest part of imports to national sugar manufacturers, deliveries from producer to producer amount at the very least to a strong prima facie evidence of a concerted action having as its object the elimination of competition in sales territories enjoying privileges.

This evidence is corroborated by the fact that, although certain deliveries — in smaller quantities — were nevertheless made to industrial consumers or dealers in these protected sales territories, these operations were, as a general rule, only carried out with the consent of producers established in these areas. Further such deliveries were exceptionally large.

Another procedure was also used which was designed to prevent traders and consumers from buying directly any sugar other than home produced sugar. It consisted in applying increased prices, calculated by reference to the prices fixed by producers, in their own territory, in such a way that in the end purchasers were induced to buy only from their own national undertakings.

Finally, producers brought pressure to bear on traders in order to compel them to conform to their policy, either by insisting that they refrain from operating in neighbouring countries unless they adhere to the conditions laid down by the undertakings of these countries, or by imposing clauses specifying the destination of the sugar. In this way they prevented their purchasers from putting on the market for human consumption quantities sold for denaturing, processing by industry or export to third countries.

These various methods were implemented jointly or severally, according to the situation on the various national markets, as the examination of specific complaints will confirm.

This implies, in my opinion, that, even if there was not a general cartel within the strict meaning of this word, the concerted practices between various producers or groups of producers were carried out in accordance with a single plan, and sprang from a common intention and not simply from parallel but independent conduct based on considerations of pure commercial interest

That is why, if the evidence of the concerted practices has to be specifically evaluated within the context of each of the complaints enumerated by the contested decision and after taking into account the individual behaviour of each of the undertakings, I am inclined to the view that the nature of these courses of conduct is such as to fall within the definition of a concerted practice which you laid down for the first time in the case of the dye-stuffs.

It is this requirement that there must be conduct common to the participating undertakings which enables a distinction to be drawn between the concept of a concerted practice and that of an agreement, in that, according to the case-law of your Court, provided that the existence of an agreement is established and that its object is to produce an adverse effect on competition in the common market, it falls within the scope of the prohibition laid down by Article 85 (1), without it being necessary to ascertain whether it has in fact had any effect on competition.

A concerted practice, on the contrary, cannot be entirely severed, owing to its very nature, from the effects which it has on the conditions of competition, since it must become apparent from the behaviour of the undertakings concerned.

This view which I expressed in relation to the dye-stuffs case, is on the same lines as that given by Mr Advocate-General Joseph Gand in connexion with the international quinine cartel.

Unlike an agreement, he said, a concerted practice presupposes, according to the majority opinion, that there is a specific concerted action, so that it is necessary to prove, on the one hand, the actual conduct of the undertakings concerned and, on the other hand, the existence of a link between this conduct and a pre-established plan.

In fact, the finding of common or parallel courses of conduct of undertakings may not, in itself, be sufficient to amount to a concerted practice. It is still necessary to show that these courses of conduct do not originate in the structure or the economic conditions of the market But, as you held in your judgment of 14 July 1972: Although parallel behaviour may not by itself be identified with a concerted practice, it may however amount to strong evidence of such a practice if it leads to conditions of competition which do not correspond to the normal conditions of the market, having regard to the nature of the products, the size and number of the undertakings and the volume of the said market.

This is especially the case if the parallel conduct is such as to enable the persons concerned… to consolidate established positions to the detriment of effective freedom of movement of the products in the common market and to the freedom of consumers to choose their suppliers … and, let it be added, so far as sugar is concerned, of industrial consumers of this product

Reference back to this case-law leads me to give my opinion also on the question of the taking of evidence of a concerted practice.

There is no doubt in my view that the burden of proof lies on the Commission but I do not share the opinion held by some of the applicants that the power conferred on the Commission to impose fines, in a matter which is quasi criminal, excludes the admission of presumptive evidence and that the rule in dubio pro reo should prevail.

This argument in my opinion fails to acknowledge the fact that Community competition law is not governed by the principles of criminal procedure; the Commission has no judicial function; however inconsistent it must be, the procedure provided for by Regulation No 17 is at all times administrative.

On the other hand the evidence of a concerted practice may, in most cases, only consist of evidence or presumptions which the investigations of the Commission have brought to light

It is the combination of these presumptions — provided that they are strong, precise and relevant — which more often than not alone enables the existence of a concerted action corroborated by the actual conduct the undertakings concerned to be proved, and it only remains for the Community judge to determine, finally, whether the material produced as evidence by the Commission is conclusive.

Moreover this is the view which you took in the dye-stuffs case when you held that the question whether there is 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 question.

IV — Applicability of the rules of competition to agriculture

Before I begin to examine each of the specific complaints made by the contested decision I must give my opinion on a question of general application.

It is the question of the application of the rules of competition enacted by the Treaty to production of and trade in agricultural products.

In fact according to Article 42 of the Treaty, the provisions relating, in particular, to cartels and the abuse of a dominant position do not apply, in this field, except to the extent determined by the Council, account being taken of the objectives of the agricultural policy of the Community set out in Article 39.

It must be clearly understood that the authors of the Treaty did not wish to exempt, in principle and permanently, production of and trade in agricultural products from the prohibitions of Articles 85 and 86; but they considered that is was necessary to adopt in this connexion specific measures taking into account the patterns of the various agricultural economies and also the implementation of the common organizations of the market.

In order to do so they gave the Council power to determine within what limits and subject to what exceptions the provisions of Articles 85 and 86 could be applied to agriculture.

Article 1 of Regulation No 26 of 4 April 1962 states, in principle, that Articles 85 to 90 of the Treaty and provisions made in implementation thereof apply to the production of and trade in agricultural products.

However this regulation provides in Article 2 (1), first sentence, for two exceptions to this principle by exempting from the rules of Article 85 (1) alone agreements, decisions and practices which form an integral part of a national market organization or are necessary for attainment of the objectives set out in Article 39 of the Treaty.

Further, and this is the object of the second sentence of the same paragraph, a specific preferential system is provided for agreements of farmers or farmers' associations belonging to a single Member State to the extent to which these agreements concern the production or sale of agricultural products or the use of joint facilities for the storage, treatment or processing of agricultural products and under which there is no obligation to charge identical prices, unless that Commission finds that competition is thereby excluded or that the objectives of Article 39 of the Treaty are jeopardized.

This special exemption is not moreover found in the proposal for a regulation submitted by the Commission. It was inserted at the request of the European Parliament and of the majority of the national delegations which wanted in this way to legalize cooperatives and groups of agricultural producers which exist in all the Member States and are considered with favour by the national legislative systems.

By virtue of paragraph 2 the Commission is given sole power to determine either on its own initiative or at the request of any of the persons concerned, after consulting the Member States and hearing the undertakings or associations of undertakings concerned, by a decision which shall be published, which agreements and concerted practices fulfil the conditions for exemption specified in paragraph 1.

The interpretation of Regulation No 26 is bound to raise many problems which relate, first of all, to the field of application of this text, in the second place to the procedure under which it may be implemented and finally to the nature and extent of the exemptions which it provides.

There is no doubt that the main purpose of Article 2 of the Regulation is to encourage collaboration by farmers, since such cooperation leads to modernization and rationalization as well as production and marketing of their products; this intention is particularly evident in the preferential treatment given to cooperatives and associations of farmers to the extent to which for example their objective is the production or sale of such products or the use of joint facilities.

The question may therefore be asked whether the benefit of the exceptions from the application of Article 85 (1) also includes industrial undertakings which process agricultural products such as sugar factories and refineries.

There does not appear to me to be any doubt that the answer to this question is in the affirmative:

In addition the enumeration made in the second sentence of paragraph 1 is not exhaustive.

Further, although the undertakings which produce sugar are not farms, the common organization of the market establishes a close interdependence between these industrial processing undertakings and beet growers, either through quotas, which are indeed fixed at the sugar factory level but which have a direct effect on the cultivation of beet, or by a production levy, if the basic quotas are exceeded, since farmers can be charged with payment of part of this levy, or again by the system of Community sugar prices which determines the purchase price of the raw material, or finally by means of agreements between persons engaged in the sugar industry relating to the cultivation and purchase of beet

A second question therefore has to be asked: was the Commission legally entitled to make use of the powers conferred upon it by Article 85 (1) and Regulation No 17 in connexion with the concerted practices which it charged the undertakings in question with having engaged in, without having first made a decision in accordance with the conditions specified by Article 2 of Regulation No 26? In other words was it not under a duty to comply, first of all, with the procedure which this Regulation requires it to adopt?

If the answer to this question is in the affirmative, the Commission should, therefore, after consulting Member States and hearing the undertakings concerned, have taken a decision the purpose of which was to ascertain whether the conditions of exemption provided by paragraph 1 of this Article were or were not fulfilled.

Many applicants have not failed to submit that these procedural rules have been infringed by maintaining that the practices for which they are blamed were, according to the circumstances, an integral part of a national organization of the market, which in these proceedings consisted of the national regulations of the Italian sugar market, or were necessary for attainment of the objectives laid down by Article 39 of the Treaty; they infer from this that the Commission should have taken in relation to them a positive decision, which stated that for these reasons Article 85 (1) did not apply.

I ask you, My Lords, to reject this submission. The procedure provided by Regulation No 26 and, in particular, the prior consultation of Member States is in my opinion only obligatory if the Commission intends to ascertain whether the exemption conditions are effectively fulfilled and accordingly takes a positive decision stating that the prohibitions of Article 85 (1) do not apply to the agreements, practices and decisions in question.

On the other hand, it does not appear to me that the Commission has to adopt this procedure if it is of the opinion that there are no grounds for admitting that one or other of the exemptions applies.

Regulation No 26 moreover does not make any reference to the procedure which must be adopted in order to apply Article 85 to agreements or concerted practices which did not fulfil the necessary conditions for benefiting from these exemptions.

In these circumstances the implication of the principle laid down in Article 1 of this Regulation, that not only Article 85 but provisions made in implementation thereof apply, is that the procedure to be adopted is the general procedure relating to competition specified in Regulation No 17.

It is this solution which you have recently advocated in your judgment of 15 May last (Frubo, Case 71/74), by stating that To require it (the Commission) to consult Member States, even in cases where it is in no doubt that the exceptions provided for under Regulation No 26 cannot apply would oblige the Commission to fulfil unnecessary formalities and needlessly delay inquiries into the matters concerned.

With regard to the discussion on the merits of this question, that is to say of the question whether the concerted practices — or some of them at least — were likely to benefit from one or other of these exceptions, I will only make the following observations.

So far as the first ground for exemption is concerned three of the French applicants, the companies Générale sucrière, Béghin and Say on the one hand, and two Italian firms Eridania and Industria degli zuccheri on the other hand, maintain, within the context of the complaint relating to the protection of the Italian market, that the regulations adopted by the Italian authorities must be treated as a national organization of the market within the meaning of Regulation No 26 or represent, at the very least, an internal regulation having equivalent effect within the meaning of Article 46 of the Treaty.

If this system is considered in conjunction with the common organization introduced by Regulation No 1009/67, it can be said to have aimed at the stabilization and regularization of the Italian sugar market, in order to guarantee the employment and standards of living of beet producers; it included, according to the applicants, measures having equivalent effect to customs duties, aids to sugar manufacturers and beet growers; it fixed maximum prices; finally it contained provisions for fixing quotas and sharing out sugar imports in

The concerted practices for the protection of the Italian market, which the Commission alleges that the applicants engaged in, were indissolubly linked to this national organization; they were an integral part of it.

There are two possible answers to this argument.

The first view which can be taken is that the exception was designed to ensure that national market organizations existing before the establishment of common organizations were not adversely affected. Regulation No 26, adopted in 1962, in fact preceded the development and fulfilment of the common agricultural policy. Its application would therefore in this connexion only be transitional, since these national market organizations, in the absence of any express provision to the contrary made by Community institutions, were to be replaced by progressive stages by common organizations.

You have held that from the beginning of the entry into force of the latter organizations the Community authority alone can in fact decide whether to retain, on a provisional basis, any national market organization relating to the products in question:

Similarly you held in your judgment of 10 December 1974 (Case 48/74, Charmasson) that, although the Treaty provided that the national market organization may be retained until such time as a common organization is established, it only contemplated such a retention however until the end of the transitional period, which is the date when the common agricultural policy must be finally adopted.

The application of these authorities implies that a national market organization could not therefore legally exist in Italy after the entry into force of Regulation No 1009/67. Althugh it is true that this Regulation provides for certain measures for granting aid to Italian sugar producers, it in no way guaranteed ana authorized the retention, in this country, of a national market organization or domestic regulations having equivalent effect

But it seems to me to be pointless to resolve in this field of argument the problem raised by the existence of the Italian regulations. It will be evident when the complaint relating to the protection of the Italian market is examined that it is mainly on the effects which this de facto system has had on competition that I shall base the reasons for my conclusions.

With regard to the second exception concerning the agreements necessary for attainment of the objectives set out in Article 39 of the Treaty, reliance thereon implies that the criterion of necessity (nécessité) be evaluated in the light of the specific facts of the case. The weight to be attached to these facts must therefore be determined during the examination of the particular complaints, to the extent to which a submission based on this exception is put forward.

V — Formal submissions of a general nature

Without referring to the submissions based on the absence or inadequacy of the reasons for the decisions or on internal contradictions in the decision, which I shall examine in connexion with the substance of the case, I would like now at this stage in my opinion to consolidate and consider the formal submissions of a general nature, whether they have been put forward by one undertaking only or are common to several of them. All these submissions may be reduced to one, namely the failure of the Commission to allow the applicants to avail themselves of their right to defend themselves. The evaluation of these submissions depends, to a great extent, on the view taken of the necessary procedure for the implementation of the provisions of Articles 85 and 86 of the Treaty and of the nature of the fines intended to punish infringements of these Articles.

In this connexion your case-law to date draws attention to some general principles that you will have to bear in mind: the procedure before the Commission is administrative and not judicial, moreover as I had the opportunity of saying following Advocates-General Roemer and Gand, fines are not criminal law sanctions.

These formal submissions are connected with the following points:

VI — Protection of the Italian market — The problem of sugar imports

It is known that Italian sugar production falls far short of national consumer demand. During the marketing years 1968/69 to 1971/72 it fluctuated between 1100000 metric tons and 1300000 metric tons, whereas during the same period consumption, showing a small but steady increase, went up from 1400000 metric tons to more than 1500000 metric tons.

Italy therefore depends upon imports, especially from the Member States of the common market which owing to their economic structure produce a surplus. It is in particular France and Belgium which have a surplus.

The Commission concludes from this situation that at least after the frontiers were opened following the entry into force of the common organization of the market Italy should have been pre-eminently a territory of lively competition for imports of sugar both for human consumption and the processing industries.

However it found that from the beginning of the first marketing year this free competition had in reality been eliminated. The reason it puts forward for this is that French and Belgian producers have shared out between them their deliveries to Italy, standardized their conditions of sale and in addition given undertakings to their customers, the Italian producers, that they would only sell to non-producers and in particular to consumer industries, at a higher price.

These conceited practices were organized and developed in a more special way from the beginning of the 1969/70 marketing year onwards when very large contracts for the import of sugar were entered into between:

The members of this group with the exception of Süddeutsche Zucker AG entrusted a wholesaler, the French company Sucres et Denrées, with the task of centralizing the offers and organizing transport and deliveries.

The evidence of the concerted action, according to the Commission, is found in the meetings held by the parties concerned first in Paris on 29 July 1969 and then at Genoa on the eleventh of the following September. At the first meeting the parties concerned discussed the methods which should be adopted to prevent outsiders making offers on the Italian market at prices lower than the ones which they applied themselves; during the second meeting they solved the problems connected with deliveries in such a way, as the commercial letters exchanged afterwards show, that sugar has in fact been imported into Italy in accordance with principles laid down by a common accord.

The Italian producers, who alone had a distribution network, resold the sugar delivered direct to them, amounting to 75 % of total imports, either direct for consumption or to the processing industries at the same prices and subject to the same conditions as home produced sugar.

In so far as any free sales had been effected, and the volume was small, the suppliers undertook to demand payment of a surcharge which varied, according to the marketing year, from FF 1-25 to FF 1-75 per quintal.

During another meeting on 22 September 1970 the members of the two groups confirmed and clarified their arrangements with a view to overcoming certain difficulties which had arisen between suppliers and importers.

These are the main grounds upon which the contested decision is based and from which the Commission infers that these actions, which it considers are concerted practices within the meaning of Article 85 (1) of the Treaty, have eliminated all competition between operators on the Italian market.

According to the Commission's argument, had it not been for the concerted action, the producers in countries with a sugar surplus would have been able to sell their products individually to Italian buyers after freely negotiating the pricies and the amounts offered and use the normal distributive networks.

There can be no doubt, my Lords, that the suppliers and importers have engaged in a concerted action. The findings of facts disclosed by the Court file show clearly that, if exports to Italy were relatively small during the first marketing year because in this country there were stocks left over from an exceptionally good harvest in the previous year, they increased in the following marketing years to and sometimes exceeded 300000 metric tons; nor can it be denied either that in this particular trade the proportion of deliveries to Italian producers by the supplier's group increased by progressive stages until it reached on average three-quarters of these imports.

Similarly some of the telex messages exchanged, particularly between Eridania, the representative of the Italian group, and Sucres et Denrées, show that in general the operations were carried out on the basis of the principles laid down during the meetings mentioned by the Commission.

But, my Lords, leaving out of account the formal submissions made by some of the applicants, it is my belief that the fundamental — essential — problem raised by the first complaint, which some of the applicants have not failed to stress, must be examined straightaway.

In fact their argument is based on the fact that during the relevant period Italian national regulations were in force, which they maintain made their conduct, to which exception is taken, necessary and inevitable and did not leave any appreciable margin of competition on the Italian market.

Has not the Commission itself acknowledged in its decision that there was a special situation on this market created both by Community regulations and special measures taken by national authorities?

These measures led first of all to the establishment by Order No 1195 of the Interdepartmental Committee on Prices, on 22 June 1968, that is to say on the eve of the entry into force of Regulation No 1009/67, of the Cassa conguaglio zucchero (a sugar equalization fund), which moreover replaced the three pre-existing equalization agencies. Its function is to undertake the necessary equalizations for the gradual integration of the Italian sugar economy into that of the Community and for the establishment of a common market in the sugar sector.

There is no doubt that the funds of the Cassa, which were raised by a contribution called sovraprezzo levied on both domestic and imported sugar, whatever the quality and kind, had to be used for financing aids authorized for the benefit of beet producers and beet processing industries by Article 34 of the basic Community regulation, but they were also used for other purposes which are not provided for by Community regulations and arise out of various measures of aid granted by the Italian government to sugar producers, to which I shall have occasion to return to later in my opinion.

The sovraprezzo fixed by the same regulation at Lit 23 per kg — this rate remained unchanged until 1973 — represented the difference between Italian prices and the new Community prices, that is to say the derived intervention price applicable in this country.

On the other hand it had been the policy of the Italian Government for a long time to fix a uniform sugar price throughout the whole of the national territory for home produced as well as imported sugar in such a way that consumers in the regions furthest away from production centres do not pay a higher price for this foodstuff than consumers living in the Po valley.

Before the introduction of the Community system maximum prices had been fixed, the last one by an Order of 6 August 1965 (No 1119) both for sales by producers free at factory and for sales for direct consumption. These prices naturally varied according to the qualities. This order, which was repealed on the entry into force of the common organization of the market, was nevertheless reissued in November 1969: in order to prevent increases to Italian consumers which are not caused by a variation in Community prices. Order No 1236 of the Interdepartmental Committee on Prices (CIP) did not however fix a new maximum consumer price but decided, which comes to the same thing, that the maximum limits of the price differentials for the various qualities and varieties of sugar, the charges for packaging the product, the trading margins tor the sale of this product for consumption must remain those which result from a comparison with the price quotations in Order No 1119 of 1965, both for sales by producers and for sales for consumption.

A circular, No 1237, gave the ex-works price of sugar; the maximum standard price for consumption was derived directly from that price, since it is arrived at by adding together various items, some of which arise under Community provisions fixing the derived intervention price while others arise under measures taken by the CIP.

In spite of the argument which arose on this point during the hearing it seems to me therefore to be an established fact not only that the system of maximum prices has been extended by these measures but that these maximum prices were in fact applicable not only when the sugar was consumed but also when it was produced, in particular therefore to sales of sugar to industrial consumers.

It is not moreover disputed that, although on the application of the Italian sugar industry, the Consiglio di Stato annulled on 29 February 1972 Order No 1236 and its explanatory circular, this Court admitted that the measures taken were in substance lawful; the system of prices which was implemented in this way has in fact continued to be applied.

However, as the Commission has itself conceded, the requirement that the whole of the sovraprezzo must be paid in conjunction with the impact of transport costs made it in fact impossible to import Community sugar into Italy. The suppliers could in fact only offer their products at a price higher than the maximum fixed by the Italian authorities. The CIP itself took the view that imported sugar could only be supplied to consumers at prices higher than domestic prices, which, it acknowledges, conflicts with the objectives to be pursued.

Even before the common organization of the market an equalization fund for the price of imported sugar had moreover been in existence since 1963, which was given the task of granting financial aid for the purpose of covering the difference between the price of sugar on the world market and the prices fixed on the home market This body showed a loss, because it had imported sugar at a price above the home market price. This deficit had to be taken over by the new equalization fund, set up, as has been mentioned, in 1968.

It was therefore necessary to find a way of making it possible to import from the other Member States.

In February 1969 by a first transitional measure the flat rate of the sovraprezzo was reduced to Lit 8 per kg on imported sugar for industrial use. Then in May by Order No 1215 of CIP a system of open tenders for import quotas was introduced, the purpose of which was the intention of the Italian administration to obtain from successful tenderers the highest rate of the sovraprezzo having due regard to the maximum internal prices.

The task of organizing the invitations to tender, open in principle to all the operators concerned, was assigned to the sugar equalization fund, which had the power to fix the proportion of the sovraprezzo which it considered to be adequate. From 1969 to 1972 this rate varied from Lit 6·40 to 11·50 per kg according to the particular invitation to tender.

The Cassa fixes the quantities as well as the qualities of sugar to be imported through each invitation to tender.

Tenders shall not be accepted unless they are for at least 1000 metric tons.

After examining the tenders which it has received the Cassa awards import quotas according to the quantity and amount of the sovraprezzo offered by the tenderers.

Completion of the arrangements made for importing the sugar covered by the quota was guaranteed by security of a relatively high amount Finally, if a successful tenderer did not comply with the conditions specified in the notification of the award, he had to pay the whole amount of the sovraprezzo on the sugar which he had imported.

This system was applied to imports of white sugar, while in the case of raw sugar a fixed reduction of about 50 % of the sovraprezzo was granted outside any of the tendering procedures.

Finally in order to allow commercial operators who did not have an organization enabling them to take part in open tenders — an instructive definition which refers in particular to industrial users — it was decided by Order No 1234 of 24 October 1969 to authorize certain imports outside the tendering procedures but subject to the quantities being limited and the rate of the sovraprezzo being fixed by the Cassa. However these operations could only cover a very small proportion of the import quotas awarded.

Such regulations combining maximum prices with invitations to tender could not fail to have a decisive impact on the behaviour of Italian producer-purchasers and also on French, Belgian and even German suppliers.

In this connexion the following considerations must be borne in mind:

In the first place, as it has been the aim of Italian policy only to allow those quantities to be imported which are absolutely necessary to fill the gap between home production and demand, this objective could be and has in fact been attained because the Cassa has the right to decide when an invitation to tender should be held and how much sugar should be imported at each of these invitations.

Consequently it can be asserted that the concerted action between the buyers' group and the suppliers' group could not affect the total volume of imports coming from other Member States.

In the second place the amounts put up to tender were so large (between approximately 50000 to 170000 metric tons) that, on the one hand, buyers found that there was a strong incentive to tum to exporters, whose output is adequate, who can guarantee regular bulk deliveries and are able to enter into an agreement at sufficiently low prices, mainly because they can get unusually satisfactory freight rates which the railway undertakings could not have offered for smaller amounts.

These considerations account for the fact that buyers therefore applied to a pool of foreign producers. With the exception of Süddeutsche Zucker AG these producers came to the conclusion that it was to their advantage to entrust an international dealer, who could give the necessary guarantees for the successful completion of the import operations, with the execution of these operations.

On the other hand because there is no independent distributive network in Italy, and also because it was almost impossible for industrial consumers, who have no storage facilities and more often than not have to obtain their supplies on a day to day basis, to take part in the invitations to tender, there is no doubt that the only buyers who were in a position to do so were Italian producers.

Just as Sucres et Denrées was appointed as their agent by most of the exporters, the task of conducting the commercial negotiations for each invitation to tender was assigned in the same way to one of the Italian producers, Eridania, a company, whose commercial and financial operations and output are among the largest in Italy.

Moreover the Court file gives the impression that if the grouping of Italian producer-buyers round Eridania was not actually enforced by the national authorities it was at least strongly recommended by them.

Besides it is also quite clear that before the entry into force of the common organization Italian producers had already set themselves up as importers.

It must also be remembered that CIP by its Order of 24 October 1969, had to take certain special measures designed to allow consumers, even if they had not themselves applied to take part in an invitation to tender, to benefit, to a limited extent, from the tenders, provided that they gave notice of their intention to import individually amounts less than the 1000 metric tons which is the minimum amount which participators must tender.

If however the total amounts for which these consumers applied exceeded 10000 metric tons, the entitlement of each of them was reduced in proportion. Many of the applications submitted upon these terms were only accepted in part, a fact which was unlikely to encourage the parties concerned to make use of this opportunity. In the final analysis it suited them better to obtain their supplies direct from domestic producers. Finally the total number of licences to purchase without participating in the invitations to tender was in any case confined to 20 % and later to 25 % of total imports.

Having regard to the effects of these regulations I doubt, my Lords, whether any really effective margin of competition can still remain for those importing Community sugar.

By the use of maximum prices combined with the system of invitations to tender, which was clearly organized so as to reserve to the greatest possible extent the right to participate to producers only, the national authorities have clearly locked up (verrouillé) the Italian market

However, although there is no doubt that the group of purchasers and the group for foreign suppliers negotiated, conferred together and in the end saw to it that they procured by their efforts about three-quarters of the import quotas under the invitations to tender, it must nevertheless be shown that the object of the practices, to which exception is taken, was to restrict or distort competition to an appreciable extent.

You have invoked this criterion of appreciable extent in several judgments:

You have not yet given your views on the question whether it cannot be said that the concerted practices restrict competition to an appreciable extent, as the Commission claims they do, if normal competition is strictly limited, if not eliminated, by national regulations for State control of the economy which force commercial operators to agree to adapt their behaviour to the requirements of such regulations. It appears to me that this is the situation in this case and that the reduction of the margin of competition must be attributed to the system worked out and applied by the national authorities and not to the concerted action of the group of importers and of the similar group of suppliers. In these circumstances deliveries from producer to producer cannot be regarded, at least so far as the Italian market is concerned, as conclusive proof of an infringement of Article 85 (1) of the Treaty.

However the Commission has merely mentioned the special measures taken by the national authorities without having ascertained their consequences. It simply states that, if there had not been the concerted action to which it objects, suppliers would have been able to sell freely on the Italian market However this statement which is not accompanied by any evidence does not seem to me plausible in the light of the analysis which I have just made of the machinery set in motion by the Italian regulations.

In my opinion it must at least be accepted that the Commission completely failed to examine what is after all an essential aspect of the problem and that it has therefore been ed to take a decision, which is not only with regard to its form based on inadequate reasons but is founded on inadequate data and disregards certain crucial facts.

The conclusion to which I have therefore come is in my view sufficient to justify the annulment of the contested decision in so far as it finds that there have been infringements of Article 85 (1) relating to the protection of the Italian market and imposes fines in respect thereof.

There is nevertheless another legal ground upon which a similar solution can be based and which some of the applicants, in particular Générale sucrière and also moreover — although for other reasons — the intervener, Unione Nazionali Consumatori (The National Association of Italian Consumers) have not hesitated to invoke.

I refer to the question whether Italian regulations are not incompatible with certain provisions of the Treaty and of Regulation No 1009/67.

My examination of this question is subject to some preliminary observations.

In the first place it is advisable in this connexion to disregard the concept of a national organization of the market, within the meaning of Regulation No 26/62, in so far as Article 2 (1) of this regulation provides that Article 85 shall not apply to such of the agreements, decisions and concerted practices which form an integral part of such an organization. There appears to me to be no doubt that any incompatibility of Italian regulations with Community law would, in itself, be likely to prevent the application of the exemption provided for in this Regulation.

However — and this is my second observation — that does not mean that Regulation No 1009/67 and the later texts have not called for the adoption by Member States of certain supplementary measures with the object of ensuring their application, if only for example for the purpose of dividing the quotas granted to Member States among their undertakings.

It must therefore be borne in mind that the organization of the European sugar market is governed both by Community rules and by measures taken by Member States intended to supplement them without nevertheless altering its structure and its scope.

In order to safeguard the exclusive powers of Community institutions your case-law has in fact unequivocally determined the limits within which national authorities can intervene when there is a common organization of the market

The Bollmann judgment lays down the principle that, as a regulation relating to such an organization is directly applicable, Member States, unless otherwise expressly provided, are precluded from taking steps, for the prupose of applying such a regulation, which are intended to alter their scope or supplement their provisions (Judgment of 18 February 1970 in Case 40/69, [1970] ECR 79).

Under the same head the SAIL judgment holds that after the entry into force of Regulation No 804/68 a final, although in certain respects incomplete, organization of the markets in the milk and milk products sector was carried out; from that moment onwards only the Community authority could decide whether to retain, on a provisional basis, any national system of organization, intervention or supervision relating to the products in question (Judgment of 21 March 1972 in Case 82/71, Rec. 1972, p. 138).

This is also the meaning of the Van Haaster judgment (30 October 1974, Case 190/73 [1974] ECR 1134) in which you held that, as the organization of the markets in live trees and other plants, bulbs, roots and the like, cut flowers and omamental foliage is based on the freedom of commercial transactions in conditions of genuine competition such a system excludes any national system of regulations which could impede directly or indirectly, actually or potentially, trade within the Community.

Finally, and this is my third observation, to the extent to which, in the light of this case-law, it would be possible after considering the Italian regulations to sever from them those parts which would appear to be incompatible with Community regulations, such an examination could not nevertheless lead you to deliver a judgment on the illegality of certain measures in force in Italy. When an application relating to competition is brought before your Court, you cannot, when dealing with such a case, extend its jurisdiction in this way so as to include the procedures specially provided by Articles 169 or 92 of the Treaty for adoption by the Commission with the object of establishing either a failure by a Member State to fulfil its obligations under the Treaty or its implementing regulations or the incompatibility of certain forms of national aid with the common market.

On the other hand there is in my opinion no reason why you should not accept all the consequences flowing, on the one hand, from the fact that the Commission, before taking its decision on the concerted practices in question, did not seriously consider whether the Italian regulations were not in fact incompatible with Community rules, and, on the other hand, from the fact that since 1968 the Commission has refrained from taking those measures to bring to an end the situation created by these regulations which it is empowered to take.

However, my Lords, it seems to me that there can be hardly any doubt that many aspects of the Italian system ought to have convinced the Commission of the need to examine it before making a decision.

The first of these aspects is the procedure adopted for the invitations to tender. As I have shown, the effect of the general organization and the rules of this procedure — which was moreover intentional — was to enclose importers in a tight network of administrative requirements which in fact restricted admission to the invitations to tender and consequently made importing more difficult for several commercial operators and especially for industrial consumers of sugar. The fact that imports outside the tendering procedures were in theory free does not in any way conflict with this finding, since such operations were subject to payment of the whole of the sovraprezzo which made them economically out of the question.

However, as the amounts of sugar put out to tender were fixed by the Cassa conguaglio (the equalization fund), the system permitted restrictions on imports by quotas to be ensured. It is difficult not to see in this system a measure having equivalent effect to a quantitative restriction prohibited by Article 35 (1) of Regulation No 1009/67.

A second observation stems from the need for the sovraprezzo. Although this contribution was levied on home produced sugar as well as imported sugar, it could no less be regarded as a tax having equivalent effect to a customs duty to the extent to which, as you have held in the Capolongo-Maya case (Case 77/72, judgment of 19 June 1973, [1973] ECR 623) an internal duty applying systematically to domestic and imported products according to the same criteria may nevertheless constitute a charge having an equivalent effect to customs duty on imports if this duty is intended exclusively to support activities which specifically benefit the taxed domestic product.

However the fact is that the sovraprezzo was intended to finance aids for the benefit of Italian beet and sugar producers, whether these aids were authorized by Regulation No 1009/67 or granted unilaterally by national authorities. There are therefore grounds for thinking that this method of financing contravenes both the prohibition in Article 35 (1) of this regulation on the levying on sugar, within the Community, of any customs duty or tax having equivalent effect and also the prohibition under Article 95 of the Treaty on imposing any discriminatory internal taxatiòn.

Further, as has just been mentioned, the revenue from the sovraprezzo was not only appropriated to the financing of aids authorized by Community regulations; it is clear from Article 6 of Order No 1195 of CIP that part of this revenue was used to provide other financial advantages for Italian sugar manufacturers.

This is what happened in the case of the repayment of certain revenue duties charged on the purchase and carriage of sugar beet; in the case of aid granted to sugar manufacturers by way of compensation for all payments made to beet growers under a previous Italian decree; in the case of aid relating to the cost of storing the exceptionally large production of the 1967/68 marketing year or even in the case of making good by means of the sovraprezzo the deficit accumulated by the preceding equalization fund in relation to the price of imported sugar.

Even if it is conceded that the sovraprezzo does not ipso facto infringe Article 95 of the Treaty, such aids appear to come within the field of application of Article 92 (3). Again even if it is assumed that they can be regarded as being compatible with the common market, they must in addition not alter conditions of sale to an extent which is contrary to the public interest However it is for the Commission, which is under a duty to examine these aids together with the Member State concerned, either to authorize their retention or to decide to abolish or modify them under Article 93.

The method of financing these aids may in itself make them illegal, as you held in the case of France v Commission (Case 47/69, judgment of 25 June 1970, [1970] ECR 493).

Finally the question arises whether, after the entry into force of Regulation No 1009/67 and the application of Community sugar prices, the Italian authorities could still, even at the consumption stage, lay down maximum prices if only by using the system of price differentials in relation to the derived intervention price.

For all these reasons there are serious grounds for doubting whether the Italian regulations: that is to say levying and appropriation of the sovraprezzo, maximum prices or price differentials, the system of invitations to tender, are compatible with the objectives and principles of Regulation No 1009/67 and with certain provisions of the Treaty.

As I have already mentioned you do not have to decide this question in the present actions. But may I be permitted to say that, before finding the applicant undertakings guilty of infringing Article 85 (1), the Commission was under a duty to carry out a careful examination of this problem and, to the extent to which it could, it seems to me legitimately, presume that some of the essential parts of the Italian national system were illegal under Community law, it should have made use — either under Article 69 or Article 92 of the Treaty — of the powers vested in it to obtain their modification or repeal.

However it acquiesced in the continuance of the situation created by the system, which, as I have said, had a definite effect on conditions of competition and, therefore, on the conduct of importers and suppliers. It is only after more than six years that in connexion with one specific point — the method of financing aids granted to beet producers and to the sugar industry — it decided, as it has just informed the Court, on 4 December last to commence proceedings for failure to fulfil an obligation by a letter addressed to the Italian Government

This delayed initiative can only strengthen my opinion.

For all these reasons I submit that the contested decision be annulled in parte qua.

VII — Protection of the Netherlands market

So far as the sugar market in the Netherlands is concerned, the Commission claims that two Netherlands producers: Suiker Unie and Centrale Suiker Maatschappij, on the one hand, and the Raffinerie tirlemontoise and Pfeiffer & Langen, on the other hand have committed infringements of Article 85 (1) of the Treaty, the first three undertakings during the four marketing years in question, whereas the German firm is only proceeded against in respect of the 1971/72 marketing year.

These infringements consist of concerted practices which are alleged to have as their object and effect the control of sugar, deliveries on the Netherlands market from Belgium and the Western part of Germany and, consequently, the protection of that market

Two other complaints, which are in law different from the first, since they are based on Article 85 of the Treaty, are directed against the Raffinerie tirlemontoise which the Commission blames for having brought economic pressure to bear on the two principal Belgian dealers, the firms Export and Hottlet, in order to compel them to limit their exports to the Netherlands or, furthermore, in a more general way, to the Community market and to third countries.

The Netherlands producers are said to have acted in the same way in relation to certain national traders, the firms Internatio, Jacobson and Dudok de Wit, with a view to compelling them to stop importing certain sugar, in particular sugar from France.

Although these three complaints apply to different aspects of the producers' conduct, concerted practices, on the one hand, abuse of a dominant position, on the other hand, they are no less linked together to the extent to which they originate in the same plan, in a coordinated policy by which the producers of the two countries not only endeavoured to maintain absolute control of the sugar trade between Member States by means of direct deliveries from producer to producer, but also to force dealers, over whom they had an advantage, to conform to their policy and only to carry out transactions within the terms of this policy.

Having made these observations I must, before examining the merits of these complaints, pause and consider for a few moments a submission put forward as a preliminary issue by Suiker Unie. This undertaking raises against the Commission the objection that it has only been in existence, in its capacity as a legal person, since 2 January 1971; that, as a result, the defendant cannot in law impute to it infringements committed before its formation.

In order to come to a conclusion on this issue it is necessary to recall that in 1966 four Netherlands undertakings which were sugar producers, incorporated as cooperatives, the members of which were sugar beet farmers, decided, with a view to coordinating their operations, to form a cooperative association or society under the name: Coöperatieve Vereniging Suiker Unie UA, with power to take certain common decisions for making the best possible use of plant at sugar factories, investments and prices. However the farmers who produce sugar beet were, under this first organization, still members of the original cooperatives which themselves continued, in accordance with instructions given by the association, to be responsible for the marketing of sugar which it produced.

In the minds of the persons concerned this organization was only meant to be temporary; it was one of the stages leading to the formation of a completely integrated sugar association of which sugar beet farmers were to become members at a later date.

This objective was attained in 1970. A new Coöperatieve Vereniging Suiker Unie UA was formed, while the old association added to its name the word Beheer, which means administration. Moreover it ceased trading on 31 December of the same year and ceased to exist some months later.

On 2 January 1971 the new association replaced the four original cooperatives and assumed all their rights and obligations, thus becoming itself a producer and not only a coordinating body.

The applicant infers from this conversion that it is a new legal person different in law from the original association, although it has retained the name. The Commission could not therefore make it liable for acts and things said to have been done and executed by the former.

Even if it is admitted, my Lords, that there is authority for this reasoning in the domestic laws of the Netherlands, it would imply that the pecuniary sanctions imposed by the Commission in application of Regulation No 17 are criminal law sanctions within the strict meaning of this expression.

I have already said that they are nothing of the kind; this is expressly confirmed by Article 15 (4) of the regulation.

The fines are not imposed on natural persons; they are imposed on undertakings, which are without any doubt legal persons, but in their capacity as economic entities.

And it is the economic facts which must be made to prevail in this case without going into the question whether or not the applicant Suiker Unie is or is not the legal successor of the former association.

In this connexion it is sufficient to state that, under the first organization the four original cooperatives, which were without any doubt owners of plant for the production of sugar, although the operations were closely coordinated by an association enjoying wide powers, existed side by side.

This trading complex has been replaced by the applicant association which, having acquired the assets and taken over the liabilities of the original cooperatives, not only enjoys powers of coordination but has also become a single economic entity.

It appears to me to be in conformity with the spirit of Regulation No 17 that the prior conduct of the organization which this entity has replaced without any break in continuity must be imputed to it.

To reject this interpretation would be tantamount moreover to depriving the regulation of all useful effect and the Commission of the powers conferred upon it by this text, in the event — which is a practical possibility — of a change in the legal personality of an undertaking occurring between the date when a course of conduct designed to prevent freedom of competition has been established against that undertaking and the date when the Commission makes its decision. The latter is entitled in such a case to impute the prior course of conduct to the new legal person, provided that the latter is responsible for the same economic entity.

I submit therefore that you should reject the preliminary submission put forward by Suiker Unie.

It is now necessary to consider how the Netherlands producers, of the one part, and the Raffinerie tirlemontoise, of the other part, arranged to channel imports of Belgian sugar onto the Netherlands market.

First of all it is a fact, that during the four marketing years in question Suiker Unie and Centrale Suiker bought directly from their competitor increasing amounts of white sugar which they sold to the Netherlands, through their own distributive network, subject to the same conditions and at the same prices as home produced sugar and, more often than not, under their own trade-mark.

It can at the same time be recorded that the Raffinerie tirlemontoise in fact made no other deliveries on the Netherlands market with the exception of a few hundred metric tons exported freely for denaturing.

Further this undertaking made it absolutely clear to the Belgian dealers that the latter would only be allowed to export to the Netherlands at the request of and through Netherlands producers.

Moreover, during the first two marketing years, it appears that the Netherlands producers were unable to control their national market completely. In fact owing to imports of large quantities of sugar from France — to which I will return — or of smaller amounts from Belgium by small independant undertakings of the Raffinerie tirlemontoise, there was quite lively competition on the Netherlands market, which even triggered off what was called the sugar war.

There is no doubt that it was these events which caused the Raffinerie tirlemontoise and the Netherlands producers to decide from the beginning of 1970/71 to bring pressure to bear on national dealers with a view to making them maintain strict discipline in the sugar between both countries.

The Raffinerie tirlemontoise granted the two Belgian exporters Export and Hottlet the exclusive right to sell sugar in the Netherlands, provided that they restrict their deliveries to those purchasers or consumers who would be approved by the producers of this country and cease to export any sugar produced by independent Belgian refiners to the Netherlands market

For their part Suiker Unie and Centrale Suiker, which aimed at acquiring exclusive control of the market for sugar for eating in the Netherlands, made their consent to deliveries of Belgian sugar — other than those which were delivered direct to them — subject to the condition that this particular product is only sold to the milk products industry which consumes 50000 to 70000 metric tons of sugar per year and moreover exports from the Netherlands tinned condensed milk which it manufactures.

The Netherlands traders who traditionally supply this industry were therefore forced to point out that the sugar imported from Belgium by them was in fact intended for the milk products industry and to state in their offers to purchase that they would only resell to customers approved by national producers.

The same restriction was applied to sales of sugar to the chemical industry but the amounts involved were much smaller.

The result was that from the beginning of the 1970/71 marketing year these dealers had in turn become an integral part of the system implemented by a common accord between the Raffinerie tirlemontoise and the Netherlands producers, the deliveries of Belgian sugar being effected through the wholesale trade of both countries.

In short therefore the policy adopted in order to protect the Netherlands market is based, on the one hand, on direct deliveries from producer to producer, which are not disputed, and on the other hand, on channelling Belgian exports through dealers to specific destinations or consignees.

The implementation of this plan appears to me to be sufficiently proved by numerous documents from the Raffinerie tirlemontoise itself as well as from the firm Export, the latter providing the principal evidence.

I do not intend to make a detailed analysis of the contents of these documents as I need only refer again to the facts which emerge from them:

Export declares inter alia:that it has decided to give up negotiating sales of Belgian sugar with Netherlands consumer-purchasers to meet what this firm calls the particular demand in the Netherlands which consists, on the one hand, of sugar for eating, on the other hand, of consumption of sugar products in the Netherlands, excluding the milk products industry. Export also excluded from its renunciation its trade in denaturing sugar and with the chemical industry.

Similarly, so far as the relations between Netherlands producers and dealers is concerned, a note from Export to the Raffinerie tirlemontoise refers to the undertaking given by the three traditional importers of the Netherlands to Suiker Unie and Centrale Suiker: not to import for consumption in the Netherlands except with their consent. That this undertaking was in fact honoured by the three importers emerges in particular from the commercial correspondence between Jacobson and Export.

In the case of the Netherlands market these documents substantially confirm and throw light on the principles which can be extracted from the general circumstances surrounding the concerted action between the principal European producers and which the Raffinerie tirlemontoise in a letter to Export of 31 August 1970 moreover defined in a concise, distinct and clear manner:

These could not be a more explicit admission.

The Raffinerie tirlemontoise is so aware of this that it acknowledges that the documents produced for the court file are damning (accablantes). It should moreover be borne in mind that production of some of these documents, which come from its own records, were only obtained with difficulty since, in September 1971 the Commission had to impose upon it a fine of 4000 u.a. for having only supplied the investigators with inadequate and incomplete information.

Without challenging the authenticity of the documents which have been produced, any more than the relevance of the facts which they disclose, the Raffinerie tirlemontoise endeavours to justify itself by pleading that its relationship with Export at that time was difficult. This company feared that it would in fact be deprived by progressive stages of its commercial function with the Raffinerie, the main reason being the direct deliveries from producer to producer.

The Raffinerie tirlemontoise, instead of explaining frankly to Export that it was in its own interests to eliminate agents in certain transactions, said that it preferred to take refuge behind its foreign colleagues.

In other words it invoked the requirements of a concerted action between producers who were competitors, so as not to hurt the feelings of the directors of Export

It cannot be denied that relations between the two firms were definitely strained at least until the time when Export, as has been seen, finally conformed to the common policy. There is no doubt that the Commission was made acquainted with the concerted action by exchanges of letters and notes stressing the difference of opinion which became apparent during the first two sugar marketing years between the two undertakings.

But the fact remains that these documents can be produced as conclusive evidence, not only moreover to establish that pressure was brought to bear on Export but also to bring to light the conduct of Suiker Unie and Centrale Suiker in their relations with the principal Belgian producer and the exporters of this country.

The fact that the evidence against the Netherlands producers is thus based on correspondence exchanged between third parties in no way weakens the position taken up by the Commission, to the extent to which this correspondence makes it possible to establish the relevance of the facts, which moreover an analysis of the actual behaviour of the Netherlands undertakings fully confirms.

I consider that the existence of concerted practices between these undertakings and the Raffinerie tirlemontoise has been proved, as they knowlingly substituted practical cooperation between them for the risks of competition with the object of enabling Netherlands producers to maintain positions which they had established on their national market.

Therefore trade between two Member States was directly affected.

Therefore it is equally true that the competition which should normally have existed has been distorted, as consumers and industrial users of sugar were not able to enjoy the advantage of freely choosing their suppliers.

Moreover whether the operations were direct deliveries from producer to producer or the channelling of deliveries of Belgian sugar to the Netherlands to specific destinations or consignees, they in fact covered a substantial proportion of all Belgian exports. According to the Commission these supervised operations represent on average 70 or 80 % of total production for three of the marketing years in question. The only notable exception relates to the 1969/70 sugar marketing year during which, before moreover the concerted action had produced all its effects, independent Belgian producers of the Raffinerie tirlemontoise could still operate on the Netherlands market.

In view of these facts it is useless for the applicants to claim that deliveries from producer to producer do not come within Article 85 (1) of the Treaty. These deliveries in themselves amount to no more than an indication of a concerted practice but they fit into the pattern of the concerted practices, the implementation of which has been proved; they are one of the means of engaging in these practices and cannot therefore be severed from them.

It only remains for me to add that, if, from the beginning of 1970, large supplies of sugar produced by the Raffinerie tirlemontoise were no longer delivered direct to Suiker Unie or to Centrale Suiker, but through the usual dealers, this fact does not alter the conclusion that must be drawn, because the destination clause which had to be accepted, as has been seen, by Belgian exporters is, in this case, a determinative part of the conceited action.

Before dealing with the situation of Pfeifer & Langen in its relations with the Netherlands market, it remains for me to reject a formal submission by Suiker Unie and Centrale Suiker based on an alleged infringement of Article 190 of the Treaty. They assert that certain of the allegations or statements in the statement of the reasons upon which the contested decision is based are too general, too concise or sometimes even too disjointed to fulfil the requirements for statements of reasons imposed upon the Commission by Article 190.

In fact, my Lords, it would be difficult to imagine that some inaccuracies in the drafting or certain elliptical forms of wording could not be found in such a long and detailed decision. But the purpose of the obligation to state the reasons upon which a decision is based, so far as the decisions taken in application of Article 85 et seq. of the Treaty are concerned, is to enable the undertakings concerned to understand the exact scope of the complaints made by the contested decision so that they can challenge their validity effectively. It is obvious that in this case the ommission cannot be accused of any infringement of an essential procedural requirement, because the statement of the reasons upon which the contested decision is based leaves no room for any ambiguity not only with regard to the nature and the seriousness of the complaints which it made, but also with regard to the facts upon which these complaints are based.

I must now dispose of a final submission, put forward by both Centrale Suiker and the Raffinerie tirlemontoise. These two applicants invoke the benefit of the second exception provided by Article 2 (1) of Regulation No 26 in that their conduct should, in any event, be held not to come within the application of Article 85 (1), on the ground that it was necessary for attainment of the objectives set out in Article 39 of the Treaty.

Centrale Suiker for its part maintains that, if it had decided not to buy sugar from the Raffinerie tirlemontoise, its production and distribution facilities would have been under-utilized; in such circumstances it could not have paid producers of Netherlands beet a price higher than the minimum price specified by Community regulations. The result would have been that one of the objectives laid down in Article 39, namely the one which is to ensure a fair standard of living for the agricultural community could not have been attained in the Netherlands.

This is just a straightforward statement which is not supported by any prima fade evidence; Centrale Suiker does not even endeavour to show that its purchases of sugar from the Raffinerie tirlemontoise alone would have enabled it to guarantee sugar beet farmers a price higher than the minimum Community price. In addition its reasoning implies that the Community authorities fixed this minimum price themselves at too low a level to ensure attainment of the objective in question. This seems to me to be contradicted by the link which Regulation No 1009 establishes between the intervention price of white sugar and the guaranteed minimum price which sugar beet farmers may charge. Finally, Centrale Suiker does not state that the concerted practices in which it engaged would have been equally necessary for attainment of the other objectives referred to in Article 39 of the Treaty.

It is a similar argument which the Raffinerie tirlemontoise puts forward relying specifically on the link established between the intervention price of sugar and the price of beet. It maintains that if it could not sell, particularly in the Netherlands, part of its surpluses, to the full extent of its maximum quota, and earn at least as much as the intervention price, it could not pay Belgian sugar beet farmers the minimum price which Regulation No 1009/67 guarantees them. In any case it explains mat it could not sell sugar to the Belgian intervention agency because the national authorities would have dissuaded it from doing so.

It wishes to justify in this way its policy which consisted in particular of selling direct or through the trade considerable amounts of sugar to competing producers or to large-scale purchasers, in particular to the Netherlands milk products industry and at a price at least equal to the intervention price.

This argument is wrong. By virtue of Article 9 (1) of the basic regulation the national intervention agencies must buy all the sugar offered to them by producers; if these producers had requested the Commission to do so it would have not failed to intervene to make sure that this obligation was fulfilled by the national authorities.

In fact the Raffinerie tirlemontoise endeavoured to avoid using the intervention system as much as possible.

There are even less grounds for its view that the intervention price must be regarded as a guaranteed price; that is only true to the extent to which the intervention system operates effectively, which has not been the case on the sugar market and particularly in Belgium.

With regard to the sugar which the Raffinerie disposed of at a lower price, for denaturing, it is known that its agents were forbidden to resell it on the market for human consumption, in order to avoid a fall in prices on this market It cannot claim to have contributed in this way to the attainment of another of the objectives of Article 39, which is to ensure that supplies reach consumers at reasonable prices.

In any case Article 39 does not appear to me to be compatible with a policy of partitioning national markets adopted by producers by concerted action.

Up till now I have only examined the relations between the Raffinerie tirlemontoise and the Netherlands market But the Commission also blamed the German firm Pfeifer & Langen for engaging in a concerted practice with producers in the Netherlands and particularly Suiker Unie.

The facts relating to the conduct of Pfeifer & Langen are similar to those which have been used against the Belgian undertaking, to the extent to which they make it clear that there was, if not a general cartel between European producers, at least a common policy for not interfering with situations which had been established on the various national markets.

Apart from the fact that, according to the Commission, the participation of Pfeifer & Langen in the protection of the Netherlands market is shown by the fact that this company delivered sugar to Netherlands producers, whereas its deliveries to other purchasers of the Netherlands were insignificant, its conduct is established by certain documents on the Court's file — although they are fewer and less illuminating than the documents which condemn (accablent) the Raffinerie tirlemontoise.

In the first place there are documents relating to the conduct of Pfeifer & Langen before 1 July 1970, even though complaints are only made against this undertaking in respect of facts occuring after this date. These documents might at least amount to evidence of the German firm's intention not to undertake anything on the Netherlands market which would offend Suiker Unie or Centrale Suiker. But in fact the few cases where supplies were refused, which these documents disclose, can be explained by the state of production at that time in the Western part of Germany; it seems to me that they cannot be used in evidence against Pfeifer & Langen.

In the second place the notes and minutes drawn up by Export on 23 April and 6 May 1970 only refer specifically to this company's relation with the Raffinerie tirlemontoise and not to the conduct of German producers on the Netherlands market

These documents indeed refer to the existence of a comprehensive concerted action between European producers and set out its guiding principles. But it must be conceded that their contents are too general and too vague to afford proof that this concerted action was the subject of implementing measures between Pfeifer & Langen and Netherlands producers.

The fact that Pfeifer & Langen did not supply the Netherlands market with a large amount of sugar is also explained by the fact that the level of prices in Western Germany was not apparently below the price level of the Netherlands; it can therefore be accepted that the German firm found that there was little point in trying to get a footing on the market in question. Having regard moreover to the position of Suiker Unie and Centrale Suiker there would be every reason to suppose that any serious attempt in this direction would have encountered vigorous opposition from these undertakings.

Having made these observations I am therefore, after taking into account the evidence produced by the Commission for the Court's file, extremely doubtful whether the Netherlands producers and Pfeifer & Langen did in fact engage in a concerted action.

The fact remains however that at the beginning of 1971 this undertaking did sell to the Limako company, a subsidiary of Suiker Unie and controlled by the latter, quite a large amount of sugar (20000 metric tons according to the Commission, only 10000 metric tons if Suiker Unie is to be believed), subject to conditions which could only be connected with the general objective of the concerted practices which had as their object the protection of the Netherlands market.

This sugar, produced over and above the quota after 1 July 1969 by Pfeifer & Langen could not be carried forward under the provisions of Article 32 of Regulation No 1009/67, as its manufacturer did not produce evidence that it had exported it outside the Community in its original state and without a refund before 1 July 1971. It had therefore by virtue of Regulation No 2645/70 of the Commission, to be considered to have been disposed of on the domestic market and a levy equal to the sum of the highest levy and 1.00 u.a. per 100 kg had to be levied on it as such.

In this case it is known that the Commission has, by Regulation No 458/73, retroactively applied for this sugar a flat rate amount of only 2.00 u.a. per 100 kg. One of the ways of proving that the sugar had been exported was for the manufacturer in question to certify that he had produced the exported sugar. However, without committing myself on this point, this sugar produced over and above its quota by Pfeifer & Langen seems to have been replaced by an equivalent amount of sugar produced within its quota by Suiker Unie. In fact it appears that this amount was exported to third countries, while Suiker Unie saw to it that the sugar delivered to Limako was sold on the domestic market.

Therefore the operation could amount in the final analysis to a delivery from producer to producer. It amounts also to evidence a contrario of the practical implementation of a concerted action between Pfeifer & Langen and Suiker Unie, to the extent to which the sugar delivered to the subsidiary of the Netherlands producer would in the end have been intended for human consumption and for this reason had to be delivered by one producer to another.

But, my Lords, even if it is accepted that this reasoning can be upheld — and having regard to the evidence on the Court's file I am unable to say definitely that it can — it appears to me impossible to consider this transaction, which was moreover an isolated case, as being sufficient evidence of an concerted practice.

I submit therefore that you should reject the complaint which has been made, so far as the protection of the Netherlands market is concerned, against Pfeifer & Langen and should consequently annul the contested decision on this specific point.

The Commission's specific claim against the Raffinerie tirlemontoise is that it has infringed Article 86 of the Treaty.

As the undertaking has a dominant position on the Belgian and Luxembourg sugar market, it blames it for having abused this position by bringing economic pressure to bear on two Belgian exporters, the Export and Hottlet companies, during the four marketing years under consideration, with a view to compelling them only to resell to specified customers or for particular purposes the sugar with which it supplies them and also to make their own customers accept the same conditions. I have already stated that the applicants forced these dealers to conform to its sale policy, so that they would further the objects of the concerted action with Netherlands producers. In a more general way the Commission claims that the applicant strictly limited their commercial freedom of action in relation to intra-Community trade and also to exports to third countries and sales of sugar for denaturing.

The discussion of this complaint implies that attention be drawn to the three conditions which must be fulfilled in order that Article 86 can be applied.

It must be shown first that the dominant position relates to a substantial part of the common market.

This first condition is concerned less with the geographical size of the actual territory in which the undertaking concerned exerts its influence as with the economic importance of the market which it controls. Consequently, for the purpose of determining whether this condition is fulfilled, certain purely quantitative factors such as the level and the pattern of production and consumption have to be evaluated. But the qualitative facts which enable the relative size of the market on which the dominant position is maintained to be gauged in comparison with the whole of the common market are even more decisive. The density of the population, the level of its standard of living and the volume of trade must therefore be considered.

In this case the dominant position covers the Belgian and Luxembourg markets. It is a very significant fact that the production of sugar in these markets is relatively speaking very large; exceeding 500000 metric tons in 1968/69, reaching 770000 metric tons in 1971/72, that is to say nearly 10 % of all the sugar produced in the Community. In addition it produces large surpluses which have to be sold either in the other Member States or outside the common market, since local consumption, which is far from being small, is only on average approximately 350000 metric tons per year.

The main feature of the sugar economy of this region is therefore very large production which increased rapidly during the years 1968 to 1972.

Account must also taken, in relation to the size of the area, of its population which enjoys a high standard of living and of the high degree of industrial development in Belgium and Luxembourg.

The Belgian-Luxembourg market therefore appears within the Community to be a regional market distinguished by its special features from those adjoining it on the North and East

It constitutes therefore a substantial part of the common market, as moreover you have already acknowledged in your judgment of 21 March 1974 (Case 127/73, BRT [1974] ECR 315).

In the second place it has been shown beyond doubt that the Raffinerie tirlemontoise has a dominant position on this market, of which it is by far the largest producer since, according to its own statement, it accounts itself for 65 % of sugar produced in Belgium. This fact would be sufficient to show that it is able to exert a predominant influence. But there are other facts. It owns at least half of the capital of the two other refineries, the NV Suikerfabrieken van Vlaanderen at Moerbeke-Waas and the Raffinerie Notre-Dame company at Oreye; the board of directors of the three firms include certain common directors; it therefore has the power to control these undertakings. Although it denies that it has ever actually exercised this power, it is clear from the documents produced by the Commission that the latter undertakings have in a very general way adopted the sales policy applied by the Raffinerie tirlemontoise. The agreement entered into between these manufacturers and Belgian exporters contain in fact destination clauses which are exactly the same as those which the applicant makes its dealers accept.

This means that the Tirlemont group exerts influence upon 85 % of the market, after taking into account the fact that imports of sugar into Belgium are very small indeed. Finally the Raffinerie tirlemontoise also exerts influence upon other sugar factories or refineries having a smaller production capacity, either through a majority shareholding, which was the method used in the case of Warneton, or through marketing agreements, which was the method adopted in the case of Naveau.

The influence exerted by the Raffinerie tirlemontoise over the sugar manufacturers Liers and Embresin and Couplet and Donstiennes is just as effective.

This situation enables it to act independently, to determine its policy without taking account of the operations of its competitors, buyers or suppliers on its market.

Even though certain undertakings which it controls occasionally effected free exports of sugar to the Netherlands or Germany, these limited breaches of the policy of the Raffinerie tirlemontoise in no way call in question the fact that the latter undertaking effectively controls the Belgian-Luxembourg market.

As the applicant therefore dominates to a very great extent sugar production, has large surpluses, is engaged in carrying out a concerted policy with Netherlands producers and, as we shall see, with Pfeifer & Langen for deliveries to the Western part of Germany, it cannot permit Belgian exporters to transact business operations which would endanger its own policy.

It had therefore to persuade them to come to terms with it, if not simply to give in and carry out its instructions. It is in this way that the Raffinerie tirlemontoise abused its dominant position.

In this connexion the documents produced which relate to the supplying of Belgian sugar for the Netherlands market and the market of the Western region of Germany are in the first place highly significant.

These documents, which refer to the relations between the Raffinerie tirlemontoise and the firms Export and Hottlet, reveal that the applicant made its sales of sugar to these dealers conditional on the proper performance of the undertakings entered into with regard to foreign producers, whose consent had to be obtained to import sugar onto their market and for specific destinations and customers.

The abuse of the dominant position emerges not only from the instructions given to Export and Hottlet, within the context of the sales policy which they had to adopt, but also from the methods employed by the applicant to make them fall in line.

The applicant confronted exporters with an alternative: either the latter would submissively carry out their instructions and then reap the benefit of relatively favourable treatment, and this applies in particular to Export, or, if they intended to carry on business independently, they would find themselves deprived of their main, if not their only, source of sugar supplies. In fact most of the business transacted by the Belgian dealers consists of exporting this product, in particular to third countries. However, taking into account the fact that the Raffinerie tirlemontoise enjoyed a position which was almost a monopoly, they could only reasonably expect to buy sugar in sufficient quantities from the latter or from refiners which it controlled. Their actual commercial position, and even their survival, was at stake.

In addition it is a fact that owing to the applicant's relations with its counterparts abroad it was in a position to dispense with the use of dealers when disposing of a large part of its exports.

It is of course quite clear that the threat which it caused to press heavily on its exporters was never made in terms which amounted to crude menaces. It was expressed in modified language, although certain letters show quite clearly the fixed intention of the applicant not to tolerate any departure by traders from its requirements.

The pressure therefore took various forms according to the development of the relations between the applicant and traders and in particular with Export.

Sometimes it is only a question of the Raffinerie indicating to this firm the limits within which its commercial cooperation can be tolerated. This is borne out by the minutes, drawn up by Export, of a meeting with the representatives of the Raffinerie tirlemontoise on 20 April 1970. This document confirms that Export will remain a preferred buyer of sugar from the Raffinerie without being able to claim that it has been granted exclusive rights. Part of the surpluses are to be reserved to Hottlet within the terms of a gentleman's agreement.

However, after taking account in particular of the concerted action between European refiners … a series of direct transactions between refiners and producers are eliminated from the field of application of the commercial relations between Tirlemont and Export.

Going still further Export, in a note of 23 April, expresses the fear that the policy of the refiners does not allow it to supply the frontier regions of Benelux, France and Germany.

It is doubtful — this note records — whether we can obtain a quota, because the Raffinerie tirlemontoise will not wish to continue to adopt a policy contrary to the agreements it has concluded with other refiners.

Although expressed in the form of a doubt Export's fear of being confronted with a refusal to sell is easily detected in this document.

In other cases the pressure is much more obvious. On one occasion when some raw sugar was to be exported to a British undertaking, Tate and Lyle, with which the Raffinerie tirlemontoise is moreover linked financially, RT suggested that Export should act as broker, but on condition that the clearly defined common policy in relation to invitations to tender for exports be complied with.

Export's note relating to a conversation with a director of Tirlemont ends: as consideration (for the transaction in question), he asks us to give up our freedom to attend the invitations to tender for the export of raw sugar and also for white sugar. It is implied — the note adds — that the Raffinerie tirlemontoise refuses to offer us raw sugar which we would be free to sell wherever we like.

The telex messages exchanged between the two companies on 19 and 20 August 1970 must be noted as they point in the same direction; they have already been mentioned in connexion with the protection of the Netherlands market. These documents clearly define the conditions under which Export, in consideration of being allowed to continue to participate in the export trade to the Netherlands, had to stop dealing with Netherlands purchaserconsumers in connexion with deliveries of sugar for eating. The link which Tirlemont created between compliance with the strict destination clauses and the promise that Export could be called upon to cooperate by effecting the exports which had been authorized clearly emerges from these documents.

With regard to exports to third countries similar sacrifices are demanded from Export, which, on several occasions, according to an expression which could not be clearer, had to sacrifice its principals and, either refuse to submit tenders in answer to certain invitations to tender for exports, or agree to reduce its tenders.

This is confirmed by a note from Export acknowledging that Tirlemont had limited still further its freedom of action and its opportunities for taking action in connexion with applications for export refunds.

Finally, to take an unusually clear example of the requirements of the Raffinerie tirlemontoise, it is interesting to note that the confirmation of a sale sent by Export to the Netherlands firm Jacobson on 1 October 1970 stated that Export and Hottlet had been granted for the marketing year 1970/71 the exclusive right to sell granulated sugar belonging to Tirlemont for export to Belgium, but subject to the overriding condition that the trading policy of the Tirlemont group be adopted: as no transaction in Belgian sugar outside this policy can be approved by this group and cause us to lose the exclusive rights which have been granted.

The relations between the applicant and the Hottlet firm conform to the same pattern in the case both of deliveries for a specific purpose or for the sale of sugar exclusively for denaturing.

All the facts and information which have been obtained justify the assertion that the Raffinerie tirlemontoise has abused the strong position which it has on the Belgian and Luxembourg market by depriving Export as well as Hottlet of any opportunity to adopt an independent commercial policy. In this way it has restricted within narrow limits competition on the market for the sugar trade, in intra-Community trade and also in the case of exports to third countries.

These two dealers, whose operations were mainly devoted to the export of sugar, particularly to third countries, were of necessity almost entirely dependent on a producer who accounts directly for or controls very nearly all sugar production, which moreover included a large surplus.

Since they had no other large source of supplies, they could not take the liberty of refusing to comply with the requirements of an undertaking which enjoys a position amounting almost to a monopoly.

The Raffinerie tirlemontoise exploited these relations which were forcibly imposed (by its dominant position) in order to dictate to exporters the policy they were to adopt It restricted, if it did not eliminate, competition in the Belgian sugar trade.

Such conduct certainly comes within Article 86 of the Treaty. If a powerful undertaking threatens to place a weaker undertaking under an economic disadvantage if the latter does not accept its conditions, such a threat is an abuse of a dominant position. Objective criteria must be applied to such a situation. It does not matter therefore what methods are adopted provided that they result in economic pressure likely to restrict competition.

Article 85, which must be interpreted in accordance with the principle laid down in Article 3 (f) of the Treaty, requires that competition shall not be distorted, let alone abolished by such pressure.

Moreover the abusive practices mentioned in paragraph 2 of Article 86 include

I think that the methods used by the Raffinerie tirlemontoise in relation to Export and Hottlet come within one or other of these examples of infringement under Article 86.

Can a similar complaint be made against the Netherlands producers?

The Commission maintains that it can. During the 1968/69 marketing year the three Netherlands dealers: Internado, Jacobson and Dudok de Wit, old established importers of sugar, entered into contracts for the purchase of a large quantity of French sugar — in the region of at least 70000 metric tons — the delivery of which was to be spread over several marketing years.

Following these operations the national producers and in particular Suiker Unie, displeased by the fact that part of this sugar was resold, at a price lower than the price of the sugar which they themselves produced, on the market for human consumption — which they reckoned was reserved for them — threatened the dealers that they would make it impossible for them to carry on their traditional business of importing sugar admitted duty free (being a product intended for re-export after processing) for the milk products industry by themselves supplying this industry on the terms prevailing on the world market

The dealers, forced to give in to this threat, then undertook on the one hand, to sell the sugar imported from France at a price which would not be too competitive compared with the price of sugar produced in the Netherlands; on the other hand, to transfer the final quantities of sugar imported in this way direct to producers who would market these amounts themselves; finally, not in future to import sugar in this way into the Netherlands without the consent of the latter producers.

It is in these circumstances that, during the following marketing years 1969/70 and 1970/71, more than 14000 metric tons of sugar from France were bought by Suiker Unie and Centrale Suiker.

The dealers were then integrated in the commercial networks arising out of the concerted action between the Netherlands producers and the Raffinerie tirlemontoise. We have in fact seen that Belgian sugar intended mainly for the milk products industry had been imported through traditional Belgian and Netherlands trade channels on condition that the destination clauses, which had been made obligatory, were complied with.

The Commission's, allegations concerning the pressure brought to bear on Netherlands traders by Suiker Unie and Centrale Suiker are based mainly on an internal memorandum of the Belgian company Export dated 8 June 1970.

As we have learnt, this memorandum, drawn up by Mr Lemaire, a director of this firm, for his president, reports a conversation which Mr Lemaire had a few days before with Mr Dudok de Wit, who at that time was himself a director of the Netherlands trading company having the same name.

This document expressly refers to the representations which the Netherlands producers made to Netherlands importers through Mr Lindeboom, a director of Suiker Unie and to the threat to deprive the dealers of their traditional trade of supplying the milk products industry if they did not accept the terms of the agreement which they had thus been forced to accept.

The main foundation of the Commission's case is the conclusion it draws from this data that Suiker Unie and Centrale Suiker, linked together through close cooperation and having a dominant position on the Netherlands sugar market, compelled dealers to accept their conditions. The Commission regards this conduct as an abuse of their dominant position, an infringement coming within Article 86 since its effect was to restrict, indeed even to prevent, the sale in the Netherlands, under free conditions, of sugar from other Member States, in this case France, and in this way to affect trade between Member States.

Having regard to the importance of Export's memorandum for the purpose of checking the relevance of the facts put forward by the Commission you decided to hear the evidence, not only of the person who drew up this memorandum and of his interlocuter, Mr Dudok de Wit, but also of Mr Sanders, at that time the authorized representative and now deputy director of the Jacobson firm and finally of Mr Lindeboom, whose intervention was specifically called in question by Mr Lemaire.

It is true that the latter confirmed that he had recorded accurately and in full the tenor of his discussions with Mr Dudok de Wit, but in answer to the question which was put to him, he was unable to say whether the agreement entered into between Netherlands producers and the dealers had been concluded under some pressure, or, on the contrary, freely.

He said that this agreement related to commercial relations which were unconnected with Export's direct contacts; it was therefore impossible for him to give an accurate reply on this point

Messrs Dudok de Wit and Sanders explained that the Netherlands dealers, who are concerned in the purchase of a large amount of sugar in France ordered at a time when the fall in the French franc made this operation attractive, found, after the official devaluation of this currency, that they were in an awkward situation. In fact the sugar which had still not been delivered in October 1969 could no longer be imported into the Netherlands except on payment of compensatory monetary levies which were such a burden on the cost price that it became difficult for them to sell this sugar on the Netherlands market without incurring losses.

Only national producers would have been able to buy it in sufficient quantities and at short notice.

Dealers and producers were in regular contact with each other: it seems, according to the evidence of the witnesses, that on this occasion the dealers themselves took the initative and approached Suiker Unie and Centrale Suiker with a view to offering them the French sugar which they held.

The producers did not therefore make any inquiries with a view to purchase.

So far as the alleged threat which is said to have been uttered by Mr Lindeboom is concerned, Mr Dudok de Wit stated that Mr Lemaire had not properly understood what he said. In fact the declared intention of the producers to import directly themselves in order to supply the milk products industry was nothing new and, moreover, had begun to be put into practice. This fact in itself constituted a threat to the Netherlands trade. But during the negotiations between producers and traders relating to the sale of French sugar in the Netherlands, Mr Lindeboom never at any time adopted this method of pressure, at least not by using the words reported by Mr Lemaire.

Mr Sander's statement is somewhat different He admits that in the heat of a conversation concerning the conclusion of an agreement allowing dealers to sell part of the sugar imported from France the producers may have intimated that they would take retaliatory measures if the dealers did not in future stop importing French sugar.

But in his opinion the threat was hardly credible, because, on the one hand, it was unlikely that the producers would as it were compete with each other by importing sugar from third countries; on the other hand, in this field, the old-established importers were in any event better placed than they were for negotiating on the world market; finally the producers could not be given any guarantee that such imports would be possible in the future, as Community regulations relating to the import of sugar coming from third countries can be modified from one marketing year to another.

So far as Mr Lindeboom is concerned he categorically denies that he used threats during the conversations which he had on the matter in question with the Netherlands trade.

In fact these contacts were limited to a conversation between himself and Mr Kopmels, at that time an official of the Jacobson firm, with whom he had personal relations based on mutual trust. He merely convinced the latter of the need, both for producers and for traders to practise together self discipline in order to ward off the potential danger to the domestic price of sugar in the Netherlands caused by the currency situation. In addition the very idea that the Netherlands trade, represented by Mr Kopmels, could let itself be threatened by Suiker Unie appears to him to absolutely incredible.

To sum up the applicants maintain that their attitude does not amount to an abuse and merely represents normal commercial conduct: the French sugar had been offered to old-established traders at the dumping price and it was only logical for the manufacturers to counter this move by under-quoting their own prices. It was to be expected that their reaction to the loss of part of their traditional market, that for human consumption, would be temporary price concessions on the market (condensed milk) of their competitors. In addition the introduction of the compensatory money levies after the devaluation of the French franc made it necessary for dealers to find an outlet at prices which were not very competitive.

In order to determine the nature of the conduct in question, it seems to me that criteria must be applied which are not moral but objective: in order to establish that there is an abuse within the meaning of Article 86 it is not necessary to show that threats have been uttered or that they have been accompanied by a properly organized boycott, as happened in the case of the retail grocers at the time of the sugar war.

The grounds of your judgment in La Technique Minière of 30 June 1966 ([1966] ECR 250) apply, mutatis mutandis, to such abuses. It is appropriate you said to take into account in particular the nature and quantity, limited or otherwise, of the products, the position of the partners on the market for the product concerned, the relationship of the conduct to the whole of the relevant circumstances, the opportunities allowed for other commercial competitors in the same products through other channels.

If these criteria are applied to this case we reach the following conclusions:

This is what happened:

after Sucre-Union had refused to cancel the remaining deliveries French sugar was bought direct by Netherlands producers and marketed under their trade mark. The sugar sold to Netherlands traders later on by their Belgian counterparts was always assigned to the market for the condensed milk industry (for example, 5000 metric tons was sold on 1 October 1970 by Export to Jacobson). The sugar, which Hottlet purchased on 3 August 1971 from the Raffinerie tirlemontoise, was to be delivered in polythene jute sacks of 50 kilogrammes to be supplied by the purchaser, with the trade mark Suiker Unie and its destination was Holland — Suiker Unie.

Proof of the abuse appears to me therefore to flow objectively from the trend of the market, as shown by the specific conduct of the undertakings.

In this connexion Export's memorandum of 8 June 1970 is almost superfluous, although it is certainly relevant for the purpose of understanding the conduct of the undertakings.

The result of the hearing of the witnesses actively engaged in the matter, which you undertook — more than five years after the events — was requested in accordance with the procedure that all parties in an action should be heard, which is the usual practice in such circumstances. This hearing brought to light a shift of emphasis, certain understatements, some remorse, which is understandable having regard to the positions occupied by the participants, but it cannot replace an objective analysis of the facts or be a substitute for written evidence.

The only doubtful point is whether this episode of the sugar war ended with an agreement in proper form between traders and producers.

It appears that there was some bargaining between the Netherlands traders and their French supplier with the object of arranging for the disposal of the balance of the deliveries (in particular the question of containers) and there was on the other hand a written agreement between the Belgian and Netherlands trades (confirmations of sale were sent by Export on 1 October 1970 to Jacobson asking the latter to return a duplicate to him after signature).

But it does not seem to me — taking into account the dominant position of the manufacturers — that the fact that Suiker Unie and Centrale Suiker agreed with the old-established traders that the latter should only supply foreign sugar to the condensed milk industry — and the effective acceptance of this sharing out of the market — should be evaluated in a different way than the lines of action adopted by the Raffinerie tirlemontoise in relation to the Belgian trade or, as we shall see, the system established by Süddeutsche Zucker AG and Südzucker-Verkauf with their trade representatives. I am almost inclined to say that these methods reflect the variety of national temperaments.

When there is a dominant position which cannot be counteracted by competition, it is sufficient, in order to show that there has been an abuse, as Article 66 (7) of the ECSC Treaty states, that the undertaking holding this position uses it for purposes contrary to the objectives of the Treaty.

It appears to me that in the light of these criteria, the conduct of Suiker Unie and Centrale Suiker cannot be held to conform with the objectives of the common organization of the market and that, taking into account their dominant position, it represents an abuse of this position. These applicants have applied, according to the provisions of Article 86, dissimilar conditions to other trading partners and have thereby placed them at a competitive disadvantage. If, in addition, there was an agreement it could only in fact have been dictated.

VIII — Protection of the market in the Federal Republic of Germany

To a lesser degree than the Netherlands and in particular than Italy the Federal Republic of Germany was one of the Member States where markets should have been found for the surpluses of the other countries in the Community (Belgium and especially France). The importance of these potential trade outlets varied however according to the region under consideration since it depended on the requirements and availability each year of domestic sugar in this region.

In this connexion a distinction can be drawn between the Western part of the Federal Republic of Germany, which has a small deficit, and the Southern part of this country where, with the notable exception of Saarland, requirements and supplies are almost in balance, subject to seasonal variations. It must moreover be noted that since the establishment of the common organization, the cultivation of sugar beet has moved to the Southern part of Germany and expanded, and this region has almost attained self sufficiency. The principal undertaking in this region, the Süddeutsche Zucker AG, took part in the Italian invitations to tender and exported sugar to Italy at the rate of 10000 to 20000 metric tons per annum.

I shall therefore have to distinguish between two markets so far as the present applications are concerned; the one in the West and the one in the South of the Federal Republic of Germany.

A feature which these two regions have in common is that, until 30 June 1968, the date of the entry into force of the common organization, production of and trade in sugar was governed by a national organization of the market

The Federal Law on sugar of 1951 (Zuckergesetz) was itself completed by three other regulations relating to the price of sugar beet, the price of sugar and the equalization of transport costs. Under this law the Federal Republic of Germany was divided into sales areas. In order to avoid uneconomic transport costs each sugar factory was assigned a particular sector and could only sell its production within this sector. Refunds were only granted by the Caisse de compensation (compensation fund) for deliveries effected inside the area which had been assigned. In addition, in the field of contract the organization was strengthened by a commercial network which used a variety of methods of entering into agreements.

For the Federal Republic and also for the other Member States the transition of this organization to a common organization of the market entailed therefore a fundamental change of policy and it was undoubtedly to help it and its members to get used to the new organization that the Wirtschaftliche Vereinigung Zucker (sugar union) instructed a barrister in chambers in Stuttgart to give an opinion on the question of competition in relation to the common organization of the markets in sugar.

We know that the agreements for an association of German producers were worked out on the eve of the first sugar marketing year in the Community (1 July 1968), no doubt in order to take into account the new regulations, and that they covered the setting up and operation of three marketing organizations.

These agreements were notified to the Commission and are the subject-matter of a procedure which is still in progress. It can only be regretted that this aspect of the matter, which certainly has a bearing on the present proceedings, has not yet been clarified; the evaluation of the question whether the infringements for which German producers and their marketing associations as well as their partners in the common market are blamed can be upheld is closely connected with knowledge of the agreements notified to the Commission and of the agreements linking producers or marketing organizations and agents who resell the sugar.

It seems to me that it is in any case impossible to attempt to evaluate the trend of the market in the Federal Republic of Germany without taking account at one and the same time of the concerted action of the German sugar undertakings with their counterparts in the other Member States, the existence of this national partitioning of the market into sales areas and finally the setting up of the producers' commercial network.

This is why you will allow me to divide by argument into two parts, one centred on the complex formed by the Western part of the Federal Republic of Germany and the two complaints relating to it; the concerted action between the Raffinerie tirlemontoise and Pfeifer & Langen and the agreements entered into by Pfeifer & Langen and the Westdeutsche Zuckervertriebsgesellschaft with their agents and the other centred on the Southern part of the Federal Republic of Germany: the concerted action between the Süddeutsche Zucker AG and Béghin; to a lesser extent, the concerted action between Franken, a subsidirary of the Süddeutsche Zucker AG, and Sucre Union, and agreements entered into between the marketing organization Südzucker-Verkauf, of which the Süddeutsche Zucker AG is the principal member, and the resellers.

1. So far as the protection of the market of the western part of Germany is concerned the Commission refers to concerted practices between the Raffinerie tirlemontoise and Pfeifer & Langen during the three marketing years 1969/70 to 1971/72.

2. In addition to the complaint that it engaged, with the Raffinerie tirlemontoise, in a concerted practice having as its object the protection of its market against imports from Belgium, Pfeifer & Langen is blamed for having protected this market by entering into a concerted practice with its agents.

3. The main feature of the Southern sugar market in Germany, as in the Western part of this country, is a grouping of producers within a marketing organization, the Südzucker-Verkauf, subdivided into clearly demarcated zones. The five undertakings grouped together in this marketing organization account for 38 % of the total German production, of about 800000 metric tons per year. The marketing organization has a 90 % share of the market in its sales area.

4. I now have to give my view on the complaint that Südzucker-Verkauf abused a dominant position from the beginning of the marketing years 1968/69, by preventing its agents from reselling sugar which did not come from its members and by tying its customers through the grant of loyalty rebates.

IX — Concerted action relating to the invitations to tender for refunds on exports of Community sugar to third countries

My Lords I have completed my examination of all the complaints of concerted practice having as their object the partitioning and protection of national or regional markets within the Community and also of the abuse of dominant positions in which some of the applicant undertakings engaged.

Before submitting to you the conclusions which I have drawn from this examination so far as the fines which have been imposed are concerned, I must first ascertain whether and, where appropriate, to what extent there were valid reasons for the Commission making a final complaint against the Raffinerie tirlemontoise on the one hand, the three French producers, Générale sucrière, Say and Béghin and the trading undertaking Sucres et Denrées on the other hand relating to the export of sugar to third countries. I should add that two other French firms: Lebaudy-Suc and Sucre-Union, against which this complaint has also been made, have not brought an application in your Court.

In order to allow part of the surplus Community production to be exported to third countries at world prices, which at the time were much lower than Community prices and with a view to maintaining certain traditional patterns of trade Regulation No 1009/67 provided aid to exports in the form of the grant of export refunds. The general provisions governing this system have been adopted by Council Regulation No 766/68.

This text, which entered into force on the same date as Regulation No 1009/67, provided for two distinct systems for fixing export refunds; the system of the periodic fixing of refunds every two weeks under Article 2, which was applied forthwith and the system of fixing the refund by means of invitations to tender which was only used from the beginning of the second sugar marketing year 1969/70.

The procedure of invitations to tender, provided for by Article 4 of Regulation No 766/68, turned out in the end to be, as it were, the common law method of granting export refunds, even though periodic fixing went on concurrently, the amounts of the refund granted by this system generally being however lower.

The invitations to tender cover the amount of the refund to be granted which is fixed in the following way. The undertakings which are in competition with each other have to submit their tenders within a fixed time-limit and then an award is made to those tenderers who offered the lowest rate of refund in relation to the maximum amount fixed by the Commission after consulting the Management Committee.

It is within the framework of this system that, according to the contested decision, the undertakings in question during the year 1970 engaged in a concerted action relating to the submission of tenders both for the amounts of sugar which they intended to export and also for the amounts of sugar which they intended to export and also for the amount of the export refund. They thereby distorted the competition, which in normal conditions should have been generated by the individual and independent tenders of each undertaking participating in the invitations to tender.

Although the concerted action related to the export of sugar to third countries, it was likely to affect trade between Member States, because on the one hand it covered sugar produced in the common market and on the other hand its effect was to enable the originators of the concerted practices to modify in this way the amounts of sugar which each of them would have sold on the common market if there had been no such concerted action.

As the undertakings were naturally producers having large surpluses or their agents, they had to dispose of these surpluses outside their home market in the other Member States.

Thus, as the concerted action between tenderers answering the invitations to tender removes all doubt as to the possibility of exporting on specific terms, it is linked to the common plan of action of the producers aiming at the protection of certain national markets.

This, my Lords, is the essence of the Commission's argument A discussion of this argument implies the examination in turn of the evidence of the existence of the concerted action which is alleged and, if it is found that it does in fact exist, of its effect on intra-Community trade and competition, taking into account the conditions under which invitations to tender for export refunds were organized and the powers which the Commission enjoys in this field both to check and restrict the amounts of sugar to be exported and also to determine the financial conditions for export by fixing the maximum amount of the refund.

My reply to the first question can only be in the affirmative.

The evidence of the concerted action is found first of all in documents of a general nature which help to make the Court acquainted with the objectives of the producers; secondly in letters or telex messages between some of the applicants and their agents, in particular between Raffinerie tirlemontoise and Export concerning the invitations to tender; finally in the facts put forward by the Commission from which it emerges that the tenders submitted by the applicants relating to the proposed amount of the refund were identical or very similar indeed.

Looking at the problem from the general point of view it must be borne in mind that, as soon as the common organization of the market was established, European producers concluded after examining the Community regulations that two markets had to be distinguished: the market for human consumption within the Community and the one for sugar surpluses intended to be denatured or exported to third countries, and took the view that it was fair that each of them should obtain the same average return from the weighting of the amounts to be sold on the market for consumption and the amount for export or denaturing.

From that moment the concerted practice relating to exports was in its embryonic stage:

It is confirmed in particular by a memorandum of the firm Export of 17 February 1970. This document refers specifically to periodic meetings before the invitations to tender attended by representatives of the French producers, who are blamed and also by the Sucres et Denrées company, during which the Raffinerie tirlemontoise, because it was so far away, kept in telephonic communication with its partners. The purpose of these meetings is stated: it is to discuss the general level of refundsand the amount for which each member will tender, any reconciliation of these figures which may be necessary being arrived at during the multilateral discussions.

Although this is an internal memorandum it is all the more relevant because Export, after it had, like the Hottlet company and certain French commission agents, submitted in answer to the first invitations to tender of the year 1970 tenders for refunds at a particularly low level and had in this way obtained export licences for large amounts, conformed to the policy adopted by the producers.

This policy is expressly described in a telex message of the Raffinerie tirlemontoise to Export of 23 July as being designed: to eliminate competition for refunds so that each producer shall be guaranteed at least the intervention price and consequently to ending of the struggle to sell quantities on the home market where the price is more certain rather than having to export.

Export, under pressure brought to bear on it by the Raffinerie tirlemontoise, had already assessed the effects of this concerted action by producers and engaged in it as is shown by the note of its President of 25 March 1970 referring to the Paris meetings.

The other documents produced by the Commission confirm the existence of the concerted action, which moreover the applicants do not seriously challenge. They endeavour to minimize its scope, some of them arguing that it amounted merely to a straightforward exchange of information, others that it consisted of getting in touch with each other at each adjudication.

In the light of the documents produced for the Court's file this reasoning cannot be upheld.

Not only does the common intention of the applicants to eliminate all competition between them at the invitations to tender clearly emerge from these documents but they can be said to establish that there was in fact a common plan of action, the execution of which is confirmed by the results of the invitations to tender opened in 1970 or at least most of them.

If it is true that for the first six months of these operations the applicants' attempts to obtain refunds of a relatively high amount were defeated by the lower offers of the Belgian firms Export and Hottlet and by French commission agents, it is no less true that the tenders of the group of producers had been carefully coordinated and were in practice for almost the same amount.

Then from April 1970 the documents show that these producers were awarded large quantities in conditions which clearly show that they made every effort to divide between them the amounts for export by adjusting their respective tenders, frequently to within a few centimes.

As the facts have been substantially proved it is now necessary to ascertain whether the cartel was likely to affect trade between Member States and whether it had as its object and effect the distortion of competition within the common market

Although you have not until now had the opportunity of deciding whether, under Article 85 (1), cartels dealing solely with the export of products to third countries are compatible with the common market, you have acknowledged that the agreements or concerted practices do not have to relate strictly to trade between Member States in order that the prohibitions specified in this provision may apply. Moreover, according to the case-law of the Court, the sole purpose of this concept is to delimit the boundary between the powers of Community institutions and those of national authorities. It is therefore sufficient in any event to show that the cartel or the concerted practices have been such as to affect trade between Member States, even if the effect is indirect

Let me add that in the field covered by Article 86, the implementation of which implies that the same condition be fulfilled, you have expressly held in the Commercial Solvents v Commission case (judgment of 6 March 1974, Joined Cases 6 and 7/63 [1974] ECR 223 et seq.) that the concept that the prohibition on abuse of a dominant position, in so far as it may affect trade between Member States cannot be interpreted as limiting the field of application of this provision only to industrial and commercial operations supplying Member States and that it is therefore necessary to consider all the effects which the conduct complained of has on the pattern of competition in the common market without making any distinction between production intended for sale within this market and that intended for export.

This reasoning applies, mutatis mutandis, for the application of Article 85 (1). Moreover what the Commission complains of is not the fact that the total volume of exports to third countries has been able to be increased by the concerted action of the producers and that the amounts available for intra-Community sales have as a result been reduced, but the fact that the concerted action has adversely affected the pattern of competition within the common market.

The defendant takes the view that there is a causal connexion, at least an indirect one, between the concerted practices and competition to the extent to which these practices have as their object and effect the removal, for the benefit of undertakings, of all doubt concerning their exports outside the Community and thus enable them to avoid having to sell or endeavour to sell part at least of their surpluses on the Community home market under competitive conditions, which would have been necessary had it not been for this concerted action.

This is how the present issue arises and it will enable me to dispose of two of the submissions put forward by the applicants.

The first is based on the fact that, in order to show that competition in the common market has been impeded, the Commission relied on the ground that the invitations to tender allowed sugar produced on the territory of the common market, to be exported.

The applicants maintain that this ground is insufficient and, what is more, wrong in law, as the place where the sugar is produced has as a rule no effect on the application of Article 85.

The Raffinerie tirlemontoise, for its part, puts forward a second submission namely that the concerted action covered the invitations to tender for refunds and not the sugar market, that is to say, only the conditions for the grant of export licences.

These two submissions must be rejected for the same reasons.

First, although the contested decision in fact states that, since the invitations to tender are concerned with exports of sugar to third countries, it is necessary to bear in mind that they permit the export of sugar produced within the Community this is actually no more than a finding of fact intended to show that invitations to tender were only the method and the procedure which had to be adopted in order to obtain a licence to export the product in question.

The answer to the submissions put forward by the Raffinerie tirlemontoise is that the concerted action in connexion with the invitations to tender undoubtedly had, indirectly, an effect on the sugar market itself.

The applicants then endeavour to show that in any case the Commission enjoys in relation to the procedure for the invitations to tender such wide and stringent powers that in the end, it had such a complete control of exports that it was able to ensure that their volume does not disturb competition within the common market and cannot affect trade between Member States.

The applicants propose to infer from these premises that by admitting the existence and the object of the concerted action, for which they are blamed, it was for the Commission to see to it that these practices cannot have the slightest adverse effect on competition.

This argument, my Lords, is superficially appealing, because it is true that Community regulations give the Commission prerogatives which enable it, after taking into account the situation on the home market, to influence both the total volume of exports outside the Community and also the amount of the refunds, and after considering the methods of getting rid of the net surpluses of Community sugar production other than by exports to dispose of them by denaturing.

Nevertheless, I do not think that this reasoning is sound because the powers conferred upon the Commission do not enable it either to frustrate the type of concerted action used by the applicants or to defeat its object, which was to make sure that certain undertakings rather than others would obtain export licences for all or part of the amounts put up to tender.

The justification of the concerted practices was, as has already been mentioned, to allow the substitution of undertakings according to the volume of their available surpluses, so that the national markets or some of them are not exposed to competition which the producers intended, under the formula chacun chez soi (each in his own home) to reduce as much as possible, if not to eliminate completely.

What in fact is the nature of the legal steps which the Commission can take in this field? Of the two systems provided for by Regulation No 766/68 the system of advance-fixing of the refund does not give it the power to control effectively the amounts to be exported. The Commission has had therefore to neutralize as it were this system by fixing the amount of the predetermined refunds at an especially low level.

The Commission has preferred to resort to the procedure of standing or partial invitations to tender, because it considered that advance-fixing was too difficult a task for the European Agricultural Guidance and Guarantee Fund and that this system had an unfavourable effect on world prices.

On the other hand under the system of invitations to tender the Commission can take certain steps on its own initiative:

So far as undertakings are concerned they must, if they want to tender, submit within a specific time-limit tenders covering the amounts which they undertake to export as well as the amount of the refund offered. However in this respect the powers of the Commission are limited to the extent to which an award must be made to every tenderer whose tender does not exceed the maximum amount of the refund fixed by the Commission, since it is specifically stated that an award shall confer the right to the issue of an export licence showing the amount of the refund specified in the tender.

In addition a system of sharing out amoung tenderers the quantity of sugar covered by the award, according to the amount of the refund for which tenders where submitted and beginning with the lowest rate, makes it possible for the said quantity of sugar in the end to be used up.

Finally, when, as was often the case, several tenderers submitted tenders for refunds lower than the ceiling fixed for a particular invitation to tender, each of them found that it was granted an export licence for the amount which it had tendered beginning with the lowest tender, so that the maximum quota of sugar for export put up to tender was exhausted.

If several tenders offering the same amount of the refund represent in the aggregate an amount exceeding the maximum quantity they can only be taken into consideration after a proportional reduction of the amount submitted by each tenderer.

It emerges, my Lords, from these complex regulations, that the powers, which are by no means negligible, conferred upon the Commission undoubtedly enable it to control and, if necessary, to restrict, according to the situation on the Community market, on the one hand, the conditions on the world market, on the other hand, the total amount of sugar produced within the Community which is exported to third countries. Similarly, by influencing the maximum amount of the refund, it can also to a certain extent restrict exports. Finally it can also discontinue an invitation to tender to the extent to which the tenders for refunds appear to it to be too high.

But although these various methods allowed the Commission to adopt a general policy for exports and to control them for the whole of a marketing year, they did not enable it to prevent the concerted action of the tenderers because at each invitation to tender it was legally obliged, in the circumstances which I have described, to make an award to those tenderers who submitted a tender for an amount equal to or lower than the maximum amount which it had itself fixed. The only course open to the Commission in these circumstances would have been simply to suspend the invitations to tender. It must be conceded that such a drastic step would have stopped the flow of exports if it had been implemented systematically.

It is also reasonable to suppose that the Commission was only able to uncover the concerted action after having examined and compared the results of a relatively large number of invitations to tender. It could only therefore react with some delay. It is significant in this connexion that it was only during the year 1970 that the concerted policies were implemented.

I must also answer the argument of the Raffinerie tirlemontoise directed against the system of invitations to tender, the aim of which was to lower the amount of the refund and the effect of which, according to the applicant, was to force undertakings to sell at a price below the intervention price. My Lords, to the extent to which the Raffinerie tirlemontoise intended in the first place to call in question the legality of the provisions laying down the procedure for the invitations to tender with reference to the principles of the basic regulation, I need only remind you that Article 17 of this regulation (Regulation No 1009/67), after providing that the difference between quotations on the world market and prices within the Community may be covered by an export refund, expressly provided in paragraph 3 thereof that these refunds could be awarded under the procedure of invitations to tender and gave the Council very wide discretionary powers in this field to adopt general rules applicable to these refunds. The concept of an invitation to tender implied that under its procedure there is competition between tenderers according to the amounts of the refund which are tendered.

In the second place the intervention price is only a guaranteed price to the extent to which producers in fact make use of the intervention agencies, which they were able to do. However, as we have seen, in general the producers, and in particular the Raffinerie tirlemontoise, did not do so.

None of the principles of the basic regulation therefore laid down that the amount of the refund awarded enabled the sugar to be exported in every case at a level at least equal to that of the intervention price.

It now remains, my Lords, for me to give my opinion on the question whether the concerted practice, to which exception is taken, might affect to an appreciable extent competition within the common market, a view which the applicants, and in particular the Beghin, Say and Générale Sucrière companies, challenge expressly and by implication.

You have moreover invited the parties to give their views on this point and requested the undertakings to supply particulars of the amounts of white and raw sugar which each of them exported to third countries during 1970 and asked the Commission to give the total amounts of these products exported by other undertakings or organs of the Community.

At your bar, by a brilliant performance borrowing from the theory of sets (la théorie des ensembles), an attempt was made to convince you, on the one hand, that intra-Community trade is in practice limited in volume to the aggregate of the deficits of Member States which import sugar, and on the other hand, that the amount exported by the applicants following the invitations to tender only represented less than 3 % of the total production of Community sugar, valued for 1970 at 7 million metric tons.

I do not intend to question the figures put forward and to ascertain whether exports in fact amount to approximately 175000 metric tons as the applicants claim or 30000 metric tons if the Commission's figures are accepted. But what I challenge is the relevance of the comparison between the amounts exported pursuant to the concerted action and total Community production.

It appears to me to be more relevant, on the one hand, to compare in the first instance the amounts or sugar which the applicants have been able to export owing to their concerted actions outside the Community in 1970, and, on the other hand, to compare these quantities to the volume of intra-Community trade.

The first comparison is sufficient to gauge the extent of the concerted action, since — according to the divergent estimates of the applicants and the Commission — 25 % to 45 % of the amount of approximately 700000 metric tons of sugar exported in that year was supplied by undertakings engaging in the concerted practices. It would therefore only be necessary to take into account the amounts of sugar exported as a result of the invitations to tender, that is to say about 450000 metric tons. The adoption of this comparison shows that the applicants' share is more than one third of this amount, if the lower estimate is taken, or even two thirds on the basis of the figures put forward by the Commission.

The second comparison shows that compared with the volume of trade between Member States — that is to say a little under 800000 metric tons — the quantities exported to third countries pursuant to the conceited action were far from being negligible.

Account must be taken of the fact that this intra-Community market was a residual market, which should have been very sensitive to competition between producers having surplus sugar, had it not been for the policy of partitioning national markets.

By acting in concert for the purpose of exporting abroad the applicants have knowingly substituted practical cooperation between themselves for the risks of competition and consolidated situations which they have established to the detriment of the free movement of sugar in the common market.

In my opinion the Commission was justified in finding that they had infringed Article 85 (1).

X — The pecuniary sanctions which have been imposed

I can now, my Lords, deal with the problems relating to the pecuniary sanctions imposed by the Commission.

In this connexion it appears to me to be useful to recall the principles laid down in Article 15 (2) of Regulation No 17 and with which the Commission must comply when exercising the power conferred upon it by this provision to impose fines on undertakings which have committed infringements of Articles 85 and 86 of the Treaty.

This reference back will give me the opportunity of replying to the argument put forward by some of the applicants.

As I have already had the opportunity of stating, the pecuniary sanctions provided for by Regulation No 17 are not of a criminal law nature. Even if the provision had not expressly said so, it would be necessary to acknowledge that this is in fact the position, as Mr Advocate-General Gand stated in his conclusions relating to the international quinine cartel: because Member States have not transferred to the Community any criminal jurisdiction.

According to Mr Advocate-General Roemer Community fines are similar to the administrative fines provided for by the German law on restrictions on competition, which come within the purview of administrative infringements.

In the second place the aim of these sanctions is to punish unlawful conduct as well as to prevent its repetition.

Bearing in mind this aim you have inferred that the Commission's power to impose fines is in no way affected by the fact that the conduct constituting the infringement has ceased and that it can no longer have detrimental effects (Judgments of 15 July 1970, the quinine cases, Rec. 1970, p. 704). Therefore the argument based on the view that the fines which have been imposed were illegal because they had retroactive effect can only be rejected.

Article 15 of Regulation No 17 makes the imposition of a fine subject to the condition that the infringement found to have existed was committed intentionally or negligently.

The first of these expressions must be understood to mean that undertakings and their agents were aware that the conceited practices implemented between them or the abuse which they made of their dominant position restricted competition and therefore fell within Article 85 (1) or of Article 86. But that is not an indispensalbe condition. Mere negligence is sufficient to justify the imposition of a fine since undertakings ought not to have been unaware of the unlawful nature of their conduct

You have moreover held that the existence of a deliberate intention is an aggravating circumstance which the Commission may legitimately take into account in order to determine the amount of the fine (Judgment of 15 July 1970, Böhringer v Commission, Case 45/69, Rec. 1970, p. 810).

The Commission has to state in this connexion the reasons upon which its decision is based. This is what it did in this case without however giving the specific reasons relating to each of its complaints. I do not think that the general form of words which it used can be regarded as an insufficient statement of reasons because it is clear that this wording is explained, for each of the undertakings affected, by the detailed and reasoned statement of the context in which the infringements have been committed.

So far as the principal issue is concerned there is no doubt that the conduct of the undertakings was in fact intentional. Among the documents produced for the Court file we have found that a great many of them not only prove the substance of the infringements but throw light on the intentions of the applicants and their common intention to eliminate competition between producers on their respective markets and share out between them exports to third countries.

In the third place Article 15 (2) of Regulation No 17 in no way imposes upon the Commission, as Say, Béghin, Générale sucrière and Sucres et Denrées in particular claim, the obligation to apportion the fine among the different infringements found to have existed.

The argument arising out of the wording of this provision, which is exclusively based on the use of the word infringement in the singular, is not enough to justify such a conclusion.

Infringements of Community rules on competition cannot be treated in the same way as criminal offences and the Commission, so far as the fixing of the amount of the fine is concerned, is only bound by the double ceiling laid down by Regulation No 17, in absolute figures, the sum of 1 million u.a. or, where appropriate, a sum equal to 10 % of the turnover in the preceding financial year of the undertaking affected.

The Commission therefore has, subject to review by the Court, a wide discretionary power and does not have, in the case of cumulative infringements, to determine separately the proportion of the fine relating to each of the infringements which have been found to have existed.

What is more the principle of fixing individual fines does not preclude the prior determination of a lump sum to be apportioned between the various undertakings who are members of a cartel or which have engaged in concerted practices, as you held in the judgment of 15 July 1970. Böhringer v Commission (Case 45/69, ECR [1970] 812).

On the other hand the Commission in fixing the amount of the fine must have regard to the gravity and the duration of the infringements which have been found to exist.

You stated, in the same judgment, that the fine must be determined after taking into account, in particular, the way in which competition was restricted, the number and the size of the undertakings concerned, the respective proportion of the market which they control in the Community, and also the situation on this market at the time when the infringement was committed.

The Commission has not failed to undertake such an evaluation by giving its general views on the gravity of the infringements. It held against the applicants the fact that sugar is a basic foodstuff which has a special importance for the consumer; also the fact that the practices found to exist are clearly contrary to the objective of the establishment of a single market since they are essentially designed to partition the national or regional markets and to maintain positions previously established by producers.

The applicants make the general submission that the amount of the fines is clearly excessively high compared in particular with the pecuniary sanctions imposed previously by the Commission for infringements of the rules on competition. They regard them as an example of the systematically punitive spirit in which the procedure was carried out and which is illustrated by the information made available to the public by the Commission before the decision had even been finally taken.

It is true, my Lords, that, judged by the actual figures, the fines imposed may appear to be particularly heavy. The Commission does not, moreover, conceal the fact that it intended to punish more severely than in the past, practices which are against competition.

But it calls attention to the fact that in any event these sanctions are well below the maximum threshold for fines fixed by Article 16 (2) of Regulation No 17 according to the turnover of the undertakings in the last financial year preceding its decision. In fact the amount of the fines varies according to each of the applicants and after taking into account their degree of liability, from 0.5 % to 2 % at the most of their respective turnover. With the exception of the specific case of commercial undertakings such as the Sucres et Denrées company and the Südzucker-Verkauf marketing organization, I do not think, for my part, that the fines which have been imposed are excessive having regard to the gravity of the infringements found to have been committed by the contested decision and their effects on intra-Community trade.

It is certainly advisable to take into account the facts peculiar to the system established by Regulation No 1009/67 about which I have said that the systems of prices and in particular the national quotas in themselves contained some incentive to restrict trade in sugar between Member States and to continue some degree of partitioning of the national markets.

But, my Lords, it appears to me that the Commission has itself taken into consideration these facts which are likely to reduce to a certain extent the liability of the undertakings.

It has offered a clear explanation by mentioning:

Consequently if I had not myself submitted that certain complaints should be dismissed for the reasons which I have already given, I would be inclined to ask you to confirm the fines which have been imposed with the exception of those relating to undertakings which are not producers.

But I must accept the consequences of the solutions which I have thought it right to adopt concerning, on the one hand, the complaint of concerted practices for the protection of the Italian market, and on the other hand, the failure to implement the concerted action on the market in the Netherlands between the Netherlands producers and the Pfeifer & Langen firm.

If you share my view you will annual part of the contested decision to the extent to which it holds that infringements of Article 85 (1) have been committed by the undertakings concerned. Consequently you will also have to annual Article 3 of this decision to the extent to which it refers to those undertakings which have been fined by reason only of their participation in the concerted action relating to the deliveries of sugar in Italy. This is the position in the case of the six producers of this country:

Eridania zuccherifici nazionali,

Società italiana per l'industria degli zuccheri,

Cavarzere produzioni industriali,

Società agricola industriale Emiliana,

Zuccherificio del Volano,

and finally SADAM.

On the other hand with regard to the other undertakings concerned, namely the companies Béghin, Say, Générale sucrière, Sucres et Denrées as well as the Raffinerie tirlemontoise, and finally the firm Süddeutsche Zucker AG, it will only be necessary to rectifiy Article 3 of the contested decision by reducing the amount of the fine imposed upon each of them.

This reduction should take into account the relative seriousness of the infringement of Article 85 (1) which was designed to protect the Italian market, compared with the gravity of the other infringements which have respectively been found to have been committed.

In this connexion I do not believe that I have to state by how much, according to each individual case, the amount of the fines must be reduced, but it appears to me reasonable to take into account the fact that the Commission regards the complaint relating to deliveries on the Italian market as being exceptionally serious. In fact Italy — the area having the highest surplus in the Common Market — is or should be, as the defendant has asserted, the country to select for competition in intra-Community trade; it is also true that the amounts of sugar imported into this country from France, Belgium or even Germany has increased during the four marketing years under consideration, to a total of about 650000 metric tons within the context of the alleged concerted action.

In these circumstances there is little doubt that in fixing the amount of the fines special importance was attached to this complaint It is at least certain that owing to its gravity and duration it justified in the mind of the Commission a much heavier punishment than the complaint of engaging in a concerted action covering the invitations to tender for exports to third countries.

With regard to the protection of the Netherlands market much less importance appears to me to have been attached to the complaint made — in my opinion wrongly — against Suiker Unie and Centrale Suiker on the one hand, and Pfeifer & Langen on the other hand, if only by reason of the situation of the respective markets of the Netherlands and the western part of Germany, which in any event, could hardly have allowed imports of German sugar on to the Netherlands market except on a limited basis.

Moreover we have seen that the one delivery of sugar from Pfeifer & Langen to Limako which is contested only covered a relatively small amount While I recommend that you dismiss this complaint I suggest that you only reduce the amount of the fines imposed on these three undertakings to a strictly limited extent

Finally the specific question raised by the Sucres et Denrées company has to be decided. The Commission has admitted that it established a certain ratio between the amount of the fines imposed and the turnover of the undertakings in question. Now, although this factor in the calculation appears to me to be justified so far as the producers are concerned, it cannot be applied in the case of a commercial undertaking which is an intermediary and carries on business either as broker or by becoming the owner of sugar which it undertakes to export for the account of the producers. But it only becomes the owner of the product during the time required to despatch the sugar and to complete the transaction. Sucres et Denrées often did business in this way, in particular in the case of exports of sugar to Italy, and when it did so it assumed responsibility for guaranteeing the quality of the product exported and the financial aspects of the transaction.

Therefore it is fair to say that when the Commission fixed the amount of the fine which it imposed on Sucres et Denrées, it assessed as it were the same turnover twice, that of the French producers who trade with this undertaking and its own apparent turnover, although it is in fact paid on a commission basis.

When it fixed the amount of the fine imposed on this undertaking the Commission proceeded on the basis of a false evaluation. In order to make allowance for this mistake and for the fact that Sucres et Denrées is only held to be liable for engaging in concerted practices relating to exports to countries outside the Community, I am of the opinion therefore that it is advisable to reduce the amount of the fine to a very much greater extent than in the case of the companies Say, Générale sucrière and Béghin.

It would be appropriate, in my opinion, to proceed in the same way in the case of the marketing organization Südzucker-Verkauf, in respect of which the infringement of Article 86, found by the Commission to have existed, must be upheld, although, in order to determine the amount of the fine, account must be taken of the fact that we are dealing here not with a producer but with a marketing organization.

For these reasons my final conclusions are:

1 Translated from the French.