JUDGMENT OF 28. 3. 1984 — JOINED CASES 29 AND 30/83 CRAM AND RHEINZINK / COMMISSION
In Joined Cases 29 and 30/83
THE COURT (Fourth Chamber) composed of: T. Koopmans, President of Chamber, K. Bahlmann, P. Pescatore, A. O'Keeffe and G. Bosco, Judges, Advocate General: S. Rozès Registrar: J. A. Pompe, Deputy Registrar
gives the following
JUDGMENT
Facts and Issues
I — Facts and procedure
1. The applicants
2. The purpose of the applications
3. The contested decision
4. The facts on which the contested decision is based
A — The measures to protect markets
B — The reciprocal assistance contract between CRAM, R2 and Vieille Montagne (hereinafter referred to as VM)
5. Procedure
JI — Conclusions of the parties
A — In Case 29/83
B — In Case 30/83
III — Submissions and arguments of the parties
1. The liability of Rheinzink for the behaviour of its predecessor
2. The infringement of procedural rules
3. Concerted action between CRAM and RZ
(a) The arguments of CRAM
(b) The arguments of Rheinzink
(c) The Commission's defence
4. The agreement between RZ and Schütz
5. The reciprocal assistance contract between CRAM, RZ and VM
The Commission's defence
6. The amount of the fines
IV — Oral procedure
Decision
A — The concerted action
B — The export clauses
C — The reciprocal assistance contract
Costs
I —. Facts and procedure
1. The applicants
2. The purpose of the applications
3. The contested decision
1. In its entirety:
2. As regards Articles 1, 2 and 3:
3. ...
4. ...
5. ...
4. The facts on which the contested decision is based
A —. The measures to protect markets
2. You will have to furnish proof that the 240 tonnes have been exported to Egypt, as you promised in your orders of 7 September 1976 and 8 September 1976. We confirm our telephone conversation of 8 November 1976 when we pointed out that, according to our agents in Germany, the rolled zinc products we supplied to you for export to Egypt have been sold in whole or in part on the German market. In view of the special rates we quoted you for export to the Middle East, we feel this is a breach of good faith which justifies the above demands.
3. Not until points 1 and 2 have been settled will we discuss with you the question of the deliveries concerning the 631 tonnes for Egypt plus 44 tonnes for Iran ...
B —. The reciprocal assistance contract between CRAM, R2 and Vieille Montagne (hereinafter referred to as VM)
(a). From April to June 1977, by tie delivery by CRAM to VM, following stoppage due to a strike at the latter's plant, of 2427 tonnes of rolled zinc products;
(b). From May to August 1977, again because of the strike, by the delivery by RZ of 850 tonnes of rolled zinc products to VM's German subsidiary;
(c). In 1977, by the delivery by RZ to CRAM, following technical problems with the latter's slitting line, of 550 tonnes of rolled products under an open-ended contract for a total of 750 tonnes. These deliveries were stopped as soon as the defective machinery was again working properly.
5. Procedure
JI —. Conclusions of the parties
A —. In Case 29/83
1. Declare void Article 1 (1) of the Commission Decision of 14 December 1982;
2. Declare void or, at the very least, reduce the fine imposed on the applicant by Article 2 (1) of the said decision;
3. Order the Commission to pay the costs.
1. Dismiss the application as unfounded;
2. Order the applicant to pay the costs.
B —. In Case 30/83
1. Declare void Articles 1, 2, 3, 6 and 7 of the Commission Decision of 14 December 1982, which concern the company RZ;
2. Order the Commission to pay the costs.
1. Dismiss the application;
2. Order the applicant to pay the costs.
III —. Submissions and arguments of the parties
1. The liability of Rheinzink for the behaviour of its predecessor
2. The infringement of procedural rules
3. Concerted action between CRAM and RZ
(a). The arguments of CRAM
(A). The Commission was wrong to consider that CRAM had stopped deliveries to Schütz on 20 October 1976 without any explanation. In fact, deliveries were interrupted at that date quite simply because the order to which they related, namely the order for 240 tonnes of rolled zinc products, had been entirely fulfilled. Consequently, 20 tonnes of rolled products did not remain to be delivered on 20 October 1976, as the Commission claims in its decision. Thus, the cessation of deliveries on the abovementioned date was in no way abnormal.
(B). The Commission was wrong to suggest, in the contested decision, that there was some connection between the cessation of CRAM's deliveries to Schütz on 20 October 1976, on the one hand, and the complaint made to Schütz by RZ on 21 October 1976 that the former had failed to observe the clause concerning exportation to Egypt, on the other. According to CRAM, there was no relationship between those two events. Furthermore, the Commission has not proved that CRAM knew of the complaint made by RZ to Schütz.
(C). RZ's telex communication to CRAM on 26 October 1976 in no way constitutes proof of concerted action between the two undertakings. A brief examination of the text of the said telex message will demonstrate that it had nothing to do with the behaviour of CRAM towards Schütz.
(D). The Commission was wrong in considering that CRAM awaited the outcome of the inquiries conducted by RZ in regard to Schütz and Kestermann before demanding from Schütz, on 8 November 1976, payment of the sums which were owed to it. In fact, on 14 October 1976, CRAM had sent a telex communication to Schütz demanding, inter alia, payment of six outstanding invoices for September 1976. Schütz responded to that telex message by promising to pay the invoices before the end of October 1976. However, on 31 October 1976, CRAM found that three of the six invoices were still outstanding. Consequently, it sent Schütz another telex message, on 2 November, demanding payment of the sums due. What is more, Schütz also showed itself to be unable to meet invoices relating to deliveries made between 13 and 20 October 1976 which were due for payment at the beginning of November 1976. With regard to those, it proposed to CRAM, by telex message of 9 November 1976, that it would pay one half by means of a draft and the other by means of an irrevocable credit, on condition in both cases that CRAM fulfil the two other orders of 11 October 1976. It was in response to that message that CRAM, on 12 November 1976, formally requested Schütz to pay the eleven outstanding invoices for October without further delay. The Commission's view that there is some connection between the inquiries carried out by RZ in regard to Schütz and Kestermann on 27 and 29 October 1976 and CRAM's formal request for payment on 12 November 1976 is thus without foundation.
(b). The arguments of Rheinzink
(A). If CRAM's.cessation of deliveries to Schütz on 21 October 1976 was due to concerted action with RZ, as the Commission claims in its decision, it is hard to understand why RZ did not immediately stop deliveries to Schütz instead of waiting until 29 October 1976. In fact, on 26 October, RZ had received and confirmed another order made by Schütz. The same day RZ gave instructions to fulfil that order, worth about DM 250000. If RZ had known of Schiltz's operations from 21 October, it would have had every interest in blocking all deliveries to Schütz.
(B). RZ's telex message to CRAM on 26 October 1976 had no connection with CRAM's cessation of deliveries to Schütz. The Commission was not able to establish any link between those two events. Even if the communication had no meaning other than as part of a concerted effort to combat together parallel exports to the German market, as the Commission puts it, that is not enough to establish a plausible connection with the behaviour towards Schütz. In that connection, the applicant draws attention once again to the fact that RZ had, on that very day, given instructions for a large order from Schütz to be fulfilled.
(C). RZ stopped deliveries to Schütz because the latter had deceived it and because the re-export of goods to the Federal Republic of Germany was likely to damage it. The behaviour of RZ could thus, without difficulty, be explained solely by reference to its own interest. CRAM's cessation of deliveries on 21 October 1976 played no role in this context.
(D). The contested decision is based on the idea that a concerted practice Ís proved by the simple fact that two undertakings react in the same way to the same events. According to the applicant, this approach does not conform to the Court's case-law, which requires, to prove a concerted practice, coordination, practical cooperation knowingly substituted for the risks of competition and contact between the undertakings (see, for example, judgment of 16 December 1975, Joined Cases 40 to 48, 50, 54 to 56, 111, 113 and 114/73, Suiker Unie and Others v Commission of the European Communities, cited above, or judgment of 14 July 1981, Case 172/80, Züchner v Bayerische Vereinsbank AG, [1981] ECR 2021). As regards contact between CRAM and RZ, the Commission has only proved the existence of the telex message of 26 October 1976, which bears no relation to its behaviour towards Schütz.
(c). The Commission's defence
4. The agreement between RZ and Schütz
(A). The export to a nonmember country of the rolled zinc products delivered to Schütz was not part of the obligations which RZ imposed, by contract, on Schütz. That condition was in fact formulated on its own initiative to obtain delivery of the goods in question at more favourable export prices. The applicant adds that RZ delivered at particularly low prices because Schütz gave it false information. If RZ had known from the start that Schütz would re-export the goods to the Federal Republic of Germany, it would certainly have demanded the German market price.
(B). There is thus no question of an agreement whose object or effect is to restrict competition. Restriction of competition is the object of an agreement only when the two contracting parties have decided upon such an object. That is not so in the present case. Furthermore, the agreements concluded with Schütz did not have the effect of restricting competition, since Schütz exported all the goods it bought from RZ to Germany.
(C). Even if, by indicating the country of destination, an agreement invariably restricts competition, the disputed agreement did not have an appreciable effect either on competition or on trade between the Member States.
5. The reciprocal assistance contract between CRAM, RZ and VM
(A). The applicant observes first of all that the contracting parties simply wanted to reduce the risk of not being able to supply customers that they were obliged to supply. The contract in question was thus the basis of certain occasional deliveries by one party to another. It was a question of normal deliveries which, in the words of the Court, did not have as such the object or effect of interfering with competition (judgment of the Court of 25 November 1971 in Case 22/71, Béguelin Import v G. L. Import Export, [1971] ECR 949). Certainly, when a party to the contract is obliged to deliver certain quantities to another party in the event of the disruption of the latter's production, it cannot deliver the same quantities to third parties. Such an effect is, however, the normal consequence of every contract of delivery. Furthermore, the contracting parties limited the scope of the disputed contract to circumstances over which they had no control. The object of that restriction was specifically to preserve their freedom of decision as regards the quantities to be delivered to their regular domestic or foreign customers. It was not in any way a restriction on the free play of competition.
(B). Even if the contract at issue was capable of producing the effects attributed to it by the Commission, it has not caused appreciable damage either to competition or to trade between Member States. In fact, the Commission itself could only find three periods, in 1977, during which deliveries took place on the basis of the contract. Moreover, those deliveries were of limited size.
(C). Furthermore, among the disruptions noted by the Commission, two were due to strikes. The contract at issue is thus, to a large extent, an agreement to provide assistance in the event of a strike. An obligation to provide mutual assistance in such an event is quite permissible.
6. The amount of the fines
IV —. Oral procedure
1. By applications lodged at the Court Registry on respectively 23 and 25 February 1983, the Compagnie Royale Asturienne des Mines, SA, whose registered office is in Paris, and the company Rheinzink GmbH, whose registered office is in Datteln (Federal Republic of Germany), brought actions, pursuant to the second paragraph of Article 173 of the EEC Treaty, seeking a declaration that the Commission Decision of 14 December 1982 relating to a proceeding under Article 85 of the EEC Treaty (IV/29.629 — Rolled zinc products and zinc alloys), which was notified to the applicants and published in the Official Journal (L 362, p. 40), is partially void.
2. The first applicant (hereinafter referred to as Asturienne) requests that Article 1 (1) and Article 2 of the contested decision be declared void. The second applicant (hereinafter referred to as Rheinzink) requests that Article 1 (1) and (2), Article 2 and Article 3 of the decision be declared void.
3. Article 1 (1) of the decision states that the concerted action taken in 1976 by Asturienne and Rheinzink with a view to protecting the German market against parallel imports of rolled products effected by Gebr. Schütz NV of Aartselaar, Belgium (hereinafter referred to as Schütz), constitutes an infringement of Article 85 of the Treaty. Article 2 of the decision imposes fines on the two undertakings for their involvement in the infringement referred to in Article 1 (1).
4. Article 1 (2) of the decision states that the agreements concluded in 1976 between Asturienne and Schütz, on the one hand, and between Rheinzink and Schütz, on the other, requiring the latter to resell rolled zinc products in a specific country had as its object the restriction of parallel imports into the Community and therefore constituted an infringement of Article 85 of the Treaty.
5. According to Article 3 of the decision, the reciprocal assitance contract concluded on 5 August 1974 between Asturienne, Rheinzink and the Société des Mines et Fonderies de Zinc de la Vieille Montagne SA, whose registered office is in Angleur (Belgium), also constitutes an infringement of Article 85 of the Treaty.
6. Before examining the submissions contesting the existence of the alleged infringements, the preliminary submission raised by Rheinzink must be considered. According to that submission, Rheinzink is not in any event liable for the infringements found by the Commission, because these may be imputed only to the company Rheinisches Zinkwalzwerk GmbH & Co., which was dissolved in 1981, that is to say, between the dates on which the alleged behaviour took place and the moment when the Commission adopted the contested decision. Rheinzink points out that the decision refers exclusively to the company Rheinisches Zinkwalzwerk GmbH & Co.
7. Rheinzink admits that it is the sole legal successor of the dissolved company, the latter having been transformed into a limited liability company under the name Rheinzink. It refers, however, to Article 15 (2) of Regulation No 17, which allows the Commission to impose fines only on those undertakings which have committed infringements of Article 85 of the Treaty, in support of the view that the legal succession which took place could not make Rheinzink liable for the acts of another company which in the meantime had ceased to exist.
8. The Commission contends that, for the purposes of competition law, Rheinzink and Rheinisches Zinkwalzwerk GmbH & Co. are two successive legal forms of one and the same undertaking. The subjects of competition law are undertakings. The undertaking in question changed its name and its legal form at the moment of the transformation, but its objects, registered office and management remained unchanged. Consequently, the acts committed by the dissolved company may be imputed to Rheinzink as the sole legal successor of that company.
9. The Commission's argument must be accepted. Rheinzink has not contested that not only is it the legal successor of Rheinisches Zinkwalzwerk GmbH & Co., but it has continued the economic activities of that company. For the purposes of Article 85 of the Treaty, a change in the legal form and name of an undertaking does not create a new undertaking free of liability for the anticompetitive behaviour of its predecessor, when, from an economic point of view, the two are identical.
A —. The concerted action
10. The concerted action taken by Asturienne and Rheinzink which is the subject of Article 1 (1) of the contested decision must, according to the preamble to the decision, be seen against the background of measures taken to protect markets by certain major producers of rolled zinc products. Those measures were prompted by the fact that, at that time, the prices charged by those producers for rolled zinc products were higher in Germany and in France than in certain other Member States, in particular Belgium, and in many nonmember countries. Those price differences, which were sometimes considerable, favoured the activity of importers who bought rolled zinc products in a country where prices were low in order to resell them in a country where prices were higher, in particular in the Federal Republic of Germany. The concerted action taken by Asturienne and Rheinzink was designed to prevent such parallel imports.
11. The two applicants maintain that the Commission has not proved that they took concerted action with a view to the protection of the German market. They consider that the Commission based its decision on a number of factors; however, those factors were insufficient to make out the complaint of a concerted practice set out by the Commission and, what is more, the Commission disregarded other factors unfavourable to its case.
12. It is not disputed that during 1976 Asturienne and Rheinzink delivered large quantities of rolled zinc products to Schütz, in Belgium, for sale in Egypt, at prices close to those charged for sales intended for the Belgian market. The rolled zinc products sent to Belgium were relabelled by Schütz and then loaded on to lorries bound for Germany, where they were resold at prices lower than those normally charged in that country.
13. It is also agreed that this practice continued until the end of October 1976, that two employees of Rheinzink discovered, at that time, that the products delivered to Schütz were being re-exported to Germany, and that both Rheinzink and Asturienne discontinued their deliveries to Schütz between 21 and 29 October 1976.
14. According to the contested decision, the cessation of deliveries to Schütz by the two undertakings could not be explained other than by an exchange of information between them with a view to taking parallel action against Schütz as part of a concerted practice protecting the level of prices on the German market, in particular by preventing parallel imports or the reintroduction of rolled zinc products originating in Germany.
15. In arriving at that conclusion, the decision relies on the following factors :
16. The Commission's reasoning is based on the supposition that the facts established cannot be explained other than by concerted action by the two undertakings. Faced with such an argument, it is sufficient for the applicants to prove circumstances which cast the facts established by the Commission in a different light and which thus allow another explanation of the facts to be substituted for the one adopted by the contested decision.
17. The applicants have in fact proved the existence of such circumstances. The Commission was obliged to admit that, contrary to the findings in the decision, Asturienne had completely fulfilled an order from Schütz for 240 tonnes of rolled zinc products at the time when it ceased deliveries to it on 21 October 1976. Asturienne has also proved, by producing invoices and telex messages, that it had already had difficulties with Schütz regarding the payment of certain invoices relating to deliveries made in September, that it had demanded payment of those invoices by telex communications of 14 October and 2 November, and that problems of the same kind had arisen over payment of the invoices relating to the 240 tonnes delivered in October, as can be seen from a telex communication of 12 November.
18. In those circumstances, the cessation of deliveries to Schütz by Asturienne, and the moment at which that cessation tock place, can be explained by considerations arising from the financial relations between Asturienne and Schütz.
19. The fact that on 26 October 1976 Rheinzink sent a telex communication to Asturienne concerning the reduction of prices on the German market does not, in itself, constitute evidence establishing the existence of a concerted practice, not least because the Commission has not proved or even alleged that this had an effect on the prices charged by Asturienne.
20. It follows from the foregoing that the Commission has not produced sufficiently precise and coherent proof to justify the view that the parallel behaviour of the two undertakings in question was the result of concerted action by them.
21. Consequently, the applications of the two applicants must be granted on this point, and Article 1 (1) of the contested decision must be declared void.
22. Article 2 of the decision, which imposes fines on the two undertakings solely by reason of their having committed the infringements referred to in Article 1 (1) must, as a consequence, also be declared void.
23. As a result of that declaration of nullity, it is no longer necessary to examine Rheinzink's submission concerning the non-consultation of documents relating to the cessation of deliveries to Schütz by Asturienne.
B —. The export clauses
24. The decision states, in its preamble, that the clause stipulating that Schütz must export to Egypt the tonnages of rolled zinc products delivered by Asturienne and Rheinzink constitutes, by its very object, a restriction on competition. That clause, according to the decision, limits the freedom of the dealer to market the goods where he wishes and allows the two producers to prevent parallel imports within the common market. It thus serves to protect the German market, which is more vulnerable because of the high level of prices.
25. Rheinzink contends that the export clauses included in the contracts between it and Schütz did not infringe Article 85 of the Treaty. It maintains first of all that the condition regarding export to a nonmember country was not imposed by it but was inserted into the contracts at the initiative of Schütz, which thereby sought to obtain the goods at more favourable export prices. It goes on to claim that an agreement can have as its object the restriction of competition, within the meaning of Article 85 of the Treaty, only if the two contracting parties have together set themselves such an objective, which is manifestly not what happened in the present case.
26. Those arguments cannot be accepted. In order to determine whether an agreement has as its object the restriction of competition, it is not necessary to inquire which of the two contracting parties took the initiative in inserting any particular clause or to verify that the parties had a common intent at the time when the agreement was concluded. It is rather a question of examining the aims pursued by the agreement as such, in the light of the economic context in which the agreement is to be applied.
27. In that connection, the decision — the findings of which have not been contested on this point — states that Schiltz's first order to Asturienne, made at the request of a German buyer, was for rolled sheets in dimensions common in Germany and that Asturienne objected that such dimensions, while widely sold in Germany and in France, were not in demand in Belgium. Following that incident, Schütz obtained the same sheets from Asturienne and Rheinzink by leading them to believe that the sheets were to be re-exported to the Middle East and in particular to Egypt. The prices charged by the two producers were, however, almost identical to, or very close to, those which the same producers charged for their sales intended for the Belgian market.
28. In those circumstances, the conclusion cannot be avoided that the export clauses were essentially designed to prevent the re-export of the goods to the country of production so as to maintain a system of dual prices and restrict competition within the common market.
29. Rheinzink also claims that the agreement has had no appreciable effect either on competition or on trade between the Member States.
30. It does not however contest that, as far as production of zinc sheet is concerned, there are only six rolling mills of various sizes in the common market, of which Rheinzink is the only one in the Federal Republic of Germany. In that kind of market situation, it is impossible to accept the argument that a restriction of competition consisting of the isolation of the German market would not be appreciable.
31. Those considerations lead to the conclusion that the complaints made against Article 1 (2) of the decision must be rejected.
C —. The reciprocal assistance contract
32. By a contract concluded on 5 August 1974, Asturienne, Rheinzink and Vieille Montagne undertook to supply each other with rolled zinc products in the event of serious disruption resulting in significant loss of production at any one of their factories, for whatever reason. According to the contract, the assistance was to be forthcoming as soon as the production shortfall of the undertaking suffering the disruption exceeded 20 tonnes per day, or a total of 200 tonnes. Each of the other parties undertook, in such cases, to effect delivery of not more than 15000 tonnes on condition, however, that its own production was not disrupted. The contract provided that it was to be valid until 31 December 1976 and automatically renewed for successive periods of one calendar year, unless terminated, which has not happened.
33. According to the contested decision, the contract constitutes a restriction on competition by virtue of both its object and its effect. It deprives the parties of their independence of action, of their ability to adapt individually to circumstances and of the possibility of benefiting, by increasing direct sales to customers, from production stoppages or reductions in output sustained by the other undertakings. The contract could, moreover, compel the parties to supply each other with considerable tonnages. On the basis of those considerations, the decision concludes that a contract of such general scope and of juch long duration, being automatically renewable any number of times, institutionalizes mutual aid in lieu of competition and is likely to prevent any change in the respective market positions.
34. Rheinzink does not contest the facts found by the decision on this point. It considers, however, that the Commission has made an incorrect assessment of the reasons for the contract and its practical consequences. The three undertakings simply wished to reduce the risk of not being able to supply their regular customers in exceptional circumstances likely to interfere with production. The practical utility of the contract became apparent in a few exceptional cases where the contract served as a basis for occasional deliveries by one undertaking to another.
35. However a reciprocal assistance contract between producer undertakings might generally be evaluated in relation to the prohibitions contained in Article 85 of the Treaty, the terms of the contract in question are so general and indefinite that they could be put into effect in a way very different from that which the parties claim to have envisaged and which the have actually adopted until now. The undertakings to provide mutual assistance do not just relate to cases of force majeure and comparable situations, but to all cases of serious disruption, of whatever kind and from whatever source. It thus appears that the conditions for the application of the contract are so wide and so vague as to serve as a restriction of competition. To that consideration must be added the indeterminate duration of the contract and the fact that large quantities of rolled zinc products are involved, given the uncontested figures set out in the decision.
36. The complaints directed against the findings regarding the reciprocal assistance contract cannot therefore be upheld.
37. Consequently, the provisions of Article 1 (1) and Article 2 of the contested decision must be declared void and the remainder of Rheinzink's application must be dismissed.
38. Article 69 (2) of the Rules of Procedure provides that the unsuccessful party is to be ordered to pay the costs if they have been asked for in the successful party's pleading. However, according to the first subparagraph of Article 69 (3), where each party succeeds on some and fails on other heads, the Court may order that the parties bear their own costs in whole or in part.
39. In Case 29/83 the defendant, having failed in its submissions, must be ordered to pay the costs.
40. In Case 30/83 the parties, having each failed in some of their submissions, must bear their own costs.
On those grounds, THE COURT (Fourth Chamber) hereby:
1 Declares Article 1 (1) and Article 2 of Commission Decision 82/866/EEC of 14 December 1982 relating to a proceeding under Article 85 of the EEC Treaty (IV/29.629 — Rolled zinc products and zinc alloys — Official Journal 1982, L 362, p. 40) void;
2 Dismisses the remainder of the application in Case 30/83;
3 Orders the defendant to pay the costs in Case 29/83;
4 Orders the parties to bear their own costs in Case 30/83.