Judgment — ECLI:EU:T:2007:22
Date: 2007-01-30
Language of the case: French
Court formation: Fifth Chamber, Extended Composition
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Competition;Dominant position
Concepts: Definition of abuse;Examples of abuse;Determining the amount of the fine;Admissibility and examination of applications, forms of order sought and pleas in law;Decision of the Commission;Hearing of persons concerned and of third parties / Access to the file;Criteria for establishing the existence of a dominant position;Product or products constituting a market
Procedure: Action for annulment - unfounded;Action for annulment - inadmissible
Origin: France

summary form in the application by putting forward complaints or arguments which are not contained in that application. The applicant must indicate in its application the specific complaints on which the Court is asked to rule and, at the very least in summary form, the legal and factual particulars on which those complaints are based (Case C-52/90 Commission v Denmark [1992] ECR I-2187, paragraph 17, and the order in Case T-85/92 De Hoe v Commission [1993] ECR II-523, paragraph 20). 168 Therefore, that plea is admissible in so far as the errors are clearly explained in the application, that is, the selection of different values to represent the same costs and the inference of price differences which are supposed to reflect free months of subscription offered to customers. On the other hand, the inclusion of advertising in the variable costs and the calculation of the average of the rates of recovery of costs in respect of the two services assessed, matters which are only referred to and developed in one of the annexes to the application, is not admissible. 169 That plea must therefore be rejected as being inadmissible in part, and, in any event, ineffective, as indicated in paragraph 165. (b) The complaints relating to the test of predation 170 According to WIN, the Commission’s error of law and manifest errors of assessment in applying the test of predation should result in the annulment of the decision finding a breach of Article 82 EC. WIN argues that it had a right to align its prices on those of its competitors, that there was no plan of predation and reduction of competition, and it was necessary to show that its costs were recovered. WIN’s right to align its prices on its competitors’ prices – Arguments of the parties 171 According to WIN, the right of any operator to align its prices in good faith on those previously charged by a competitor is at the very heart of the competitive process. That right is recognised by the Commission itself in its previous decisions, in the case-law of the Court and in the unanimous teachings of academic literature and economic analysis. The fact that the prices charged by competitors correspond to prices which are below cost for the undertaking concerned is of no relevance in this respect. 172 For that reason, in Decision 83/462/EEC of 29 July 1983 relating to a proceeding under Article [82 EC] (IV/30.698 – ECS/AKZO: interim measures (OJ 1983 L 252, p. 13), the Commission itself expressly permitted the dominant undertaking concerned to charge prices below cost for the purpose of aligning those prices, in good faith, on those previously charged by its competitors. The Court of Justice, in turn, in the appeal against that decision, held precisely that the Commission cannot, as a matter of principle, call into question the right of a dominant undertaking to align its conduct on that of its competitors and thereby clearly laid down this principle. 173 In addition, in its additional findings, the Commission distorted the facts by wrongly disputing WIN’s alignment of prices on those of its competitors. 174 The Commission takes the view that, although an undertaking is not strictly speaking prohibited from aligning its prices on those of its competitors, that possibility is not open to it if it involves charging prices below cost in respect of the services in question. In the present case, according to the Commission, since the pricing policy of the dominant undertaking does not enable it to cover its costs, aligning its prices on the promotional prices of another non-dominant operator is not justified. Furthermore, the Commission took the view that WIN’s competitors were not in a dominant position and disputed, for the sake of completeness, the accuracy of WIN’s claims that its pricing behaviour was no more than an alignment of prices on those of its competitors. 175 According to the Commission, the discussion on alignment is, in any event, futile. The decision in fact does no more than accuse WIN of maintaining its prices after March 2001, at a time when Noos and Mangoosta had increased their prices by more than 20% and thus when this could no longer be a question of alignment. It refers in this regard to recital 331 of the decision. – Findings of the Court 176 It must be pointed out first of all that the Commission is in no way disputing the right of an operator to align its prices on those previously charged by a competitor. It states in recital 315 of the decision that ‘[w]hilst it is true that the dominant operator is not strictly speaking prohibited from aligning its prices on those of competitors, this option is not open to it where it would result in its not recovering the costs of the service in question’. 177 WIN takes the view, however, that the Commission thereby disregards its previous decisions and the case-law of the Court of Justice. 178 In that regard, it should be observed that, in the previous cases relied on by WIN, the conferral on a dominant undertaking of a right to align its conduct was limited. That observation applies both to Decision 83/462 making an order for interim measures and the subsequent judgment of the Court of Justice (AKZO v Commission, paragraph 100 above, paragraph 134). 179 Indeed, in Decision 83/462, the Commission did not permit AKZO to align its prices generally on those of its competitors but only, in respect of a particular customer, to align its prices on those of another supplier ready and able to supply to that customer. In addition, that authorisation to align prices in very precise circumstances was not contained in the final decision adopted in that case (Commission Decision 85/609/EEC of 14 December 1985 relating to a proceeding under Article [82 EC] (IV/30.698 – ECS/AKZO Chemie); OJ 1985 L 374, p. 1). 180 WIN therefore cannot claim on that basis alone that, in its previous decisions, the Commission recognised the right of a dominant undertaking to align its prices on those of its competitors, even where that leads it to charge prices below cost. 181 In AKZO v Commission, paragraph 100 above, which is the only example by way of case-law referred to by WIN in support of its argument, the Court of Justice admittedly did not call into question, as a matter of principle, the right of a dominant undertaking to align its conduct. However, having held that the Commission was right to find that there was no competing offer in the particular case, the Court did not have to rule on the lawfulness of an alignment of prices by a dominant undertaking on those of its competitors where such alignment involved pricing below cost. 182 It is therefore not possible to assert that the right of a dominant undertaking to align its prices on those of its competitors is absolute and that it has been recognised as such by the Commission in its previous decisions and in the relevant case-law, in particular where this right would in effect justify the use of predatory pricing otherwise prohibited under the Treaty. 183 In the present case, the Commission takes the view that a dominant undertaking should not be permitted to align its prices where the costs of the service in question would not be recovered by the dominant undertaking. 184 It is therefore appropriate to examine whether that restriction is compatible with Community law. 185 It should be recalled that, according to established case-law, although the fact that an undertaking is in a dominant position cannot deprive it of the right to protect its own commercial interests if they are attacked and such an undertaking must be allowed the right to take such reasonable steps as it deems appropriate to protect those interests, such behaviour cannot be countenanced if its actual purpose is to strengthen this dominant position and abuse it (United Brands v Commission, paragraph 101 above, paragraph 189; Case T-65/89 BPB Industries and British Gypsum v Commission [1993] ECR II-389, paragraph 117; and Compagnie maritime belge transports and Others v Commission, paragraph 104 above, paragraph 146). 186 The specific obligations imposed on undertakings in a dominant position have been confirmed by the case-law on a number of occasions. The Court stated in Case T-111/96 ITT Promedia v Commission [1998] ECR II-2937, paragraph 139, that it follows from the nature of the obligations imposed by Article 82 EC that, in specific circumstances, undertakings in a dominant position may be deprived of the right to adopt a course of conduct or take measures which are not in themselves abuses and which would even be unobjectionable if adopted or taken by non-dominant undertakings. 187 WIN cannot therefore rely on an absolute right to align its prices on those of its competitors in order to justify its conduct. Even if alignment of prices by a dominant undertaking on those of its competitors is not in itself abusive or objectionable, it might become so where it is aimed not only at protecting its interests but also at strengthening and abusing its dominant position. Absence of a plan of predation and reduction in competition – Arguments of the parties 188 According to WIN, predation presupposes a significant reduction in competition. In its view, if there is no possibility of ousting competitors, or, at the very least, of hindering or restraining their conduct, a strategy of predation can in no way be considered to be rational. Therefore, by sanctioning WIN even though it recognised that its market share fell significantly during the period of the alleged infringement and that competition at the end of the period covered was healthy, the Commission committed a serious infringement of Article 82 EC. WIN could not possibly drive its competitors out of the market by maintaining prices that were too low. In addition, since the barriers to entry in this sector are low, it is particularly irrational to seek to oust competitors in a market segment of this type, as this would mean, even if there was foreclosure, having to face possible entry at every moment, which would remove any possible interest in ousting competitors. 189 The Commission committed a serious error of assessment in accusing WIN of driving Mangoosta out of the market. That undertaking in fact went bankrupt not because of WIN’s pricing but only as a result of a particularly risky strategic policy on its part. 190 Furthermore, WIN disputes the fact that the Commission attributes the slow progress of certain competitors to the fact that they were unable to align their prices on those of WIN. The Commission did not take account of the desire of WIN’s competitors to concentrate on the development of low-speed access, to the detriment of ADSL, which was not considered to be viable. 191 The Commission also committed a manifest error of assessment by considering to be predatory prices which were perfectly rational in the context of robust competition, which contributed to the development of the market and are the reason for the robust competition which exists today. Consumers, in any event, never suffered because they had the benefit of low prices. 192 Finally, according to WIN, the strategy which it adopted can in no way be regarded as indicating any predatory intention. The Commission simply pointed to various aspects designed to prove WIN’s supposed intention to eliminate its competitors, but failed to produce any actual plan of predation. The essence of the Commission’s argument relating to the alleged predatory intention is based on an arbitrary and biased selection of internal documents found at WIN’s premises. 193 The Commission considers in turn that demonstrating the specific effects of WIN’s predatory pricing is not decisive for the purposes of finding the infringement in question. It contends that Article 82 EC must be applied where there is a risk of eliminating competition, without having to wait for the object of driving out competition to be achieved. 194 As regards the plan of predation, the Commission argues that it is clear from the case-law that intent can be presumed where prices are lower than average variable costs and must be proved on the basis of sound and coherent evidence where prices are below average total costs but above average variable costs. The Commission considers that it set out in its decision sound evidence proving that the undertaking had deliberately engaged in a strategy of ‘pre-empting’ the market and restraining competition. – Findings of the Court 195 As regards the conditions for the application of Article 82 EC and the distinction between the object and effect of the abuse, it should be pointed out that, for the purposes of applying that article, showing an anti-competitive object and an anti-competitive effect may, in some cases, be one and the same thing. If it is shown that the object pursued by the conduct of an undertaking in a dominant position is to restrict competition, that conduct will also be liable to have such an effect. Thus, with regard to the practices concerning prices, the Court of Justice held in AKZO v Commission, paragraph 100 above, that prices below average variable costs applied by an undertaking in a dominant position are regarded as abusive in themselves because the only interest which the undertaking may have in applying such prices is that of eliminating competitors, and that prices below average total costs but above average variable costs are abusive if they are determined as part of a plan for eliminating a competitor. In that case, the Court did not require any demonstration of the actual effects of the practices in question (see, to that effect, Case T-203/01 Michelin v Commission [2003] ECR II‑4071, paragraphs 241 and 242). 196 Furthermore, it should be added that, where an undertaking in a dominant position actually implements a practice whose object is to oust a competitor, the fact that the result hoped for is not achieved is not sufficient to prevent that being an abuse of a dominant position within the meaning of Article 82 EC (Compagnie maritime belge transports and Others v Commission, paragraph 104 above, paragraph 149, and Case T-228/97 Irish Sugar v Commission [1999] ECR II-2969, paragraph 191). 197 It is clear therefore that, in the case of predatory pricing, the first element of the abuse applied by the dominant undertaking comprises non-recovery of costs. In the case of non-recovery of variable costs, the second element, that is, predatory intent, is presumed, whereas, in relation to prices below average full costs, the existence of a plan to eliminate competition must be proved. According to Case T‑83/91 Tetra Pak v Commission, paragraph 130 above, paragraph 151, that intention to eliminate competition must be established on the basis of sound and consistent evidence. 198 In the present case, the Commission established that WIN had a dominant position, and, in Article 1 of the decision, found that it was unable to cover its variable costs until August 2001 or to recover its full costs from that date until October 2002. In respect of the period in which WIN did not recover its full costs, the Commission was therefore required, in order to establish the infringement, to provide sound evidence of the existence of a strategy of ‘pre-emption’ of the market. 199 In recital 110, the decision refers to a number of documents, relating to the whole period at issue, which attest to the existence of WIN’s strategy of ‘pre-emption’ for the high-speed market, in particular: – a document dating from July 2000 expressing the following objective for the second quarter of 2000 and for 2001: ‘pre-empting the ADSL market with an all-inclusive offer [plus] package and accelerating investments for 2001, but with a negative impact on the balance sheet’; – an electronic mail of July 2000 relating to a discussion on the appropriate level of prices stating: ‘we will have difficulty in pre-empting this market if our prices are too high’; – the framework letter for 2001 containing the following wording: ‘our pre-emption of the ADSL market is imperative’; – a presentation dated 28 February 2001 on the subject of a ‘pre-emption campaign in the high-speed domain by [WIN]’; – the strategic plan for 2002 to 2004 reiterating the robust development of high-speed access for the period from 2001 to 2003 and the objective of ‘pre-empting a market considered to generate value’. 200 In addition, WIN’s documents prove that it was seeking to acquire and then hold onto very significant market shares. The framework letter for 2001 states, for example, that ‘70% … 80% of the ADSL market should accrue to [WIN]’. A presentation by the CEO of WIN to the board of France Télécom dated June 2001 refers to a market share of 80% over the entire period 2001 to 2004 in the segment of ‘“dissociated” offers, like Wanadoo ADSL’ and a market share increasing by an average of 50% in 2001 to 72% in 2004 in the segment of ‘“packaged” offers, like eXtense’. 201 It is true that WIN disputed the scope of those documents and, in particular, the significance of the term ‘pre-emption’ which they contain. According to WIN, such informal and spontaneous, even unconsidered words, are merely a reflection of the dialectics of the decision-making process. They bind only their authors and not the undertaking. 202 It should be pointed out, however, that those words come from management-level staff within the undertaking and that some of them were expressed in the context of formal presentations for the purpose of taking a decision or of a very detailed framework letter. Their spontaneous and unconsidered nature thus appears to be questionable. 203 In addition, in its application and above all in certain annexes to its application, WIN submitted that the majority of allegedly incriminating documents and statements were taken out of context and that the Commission knowingly failed to take into account a number of exculpatory statements. 204 It must be stated that, in its application, WIN merely argued that the Commission uses a number of extracts of internal documents that it fails to put in their proper context. Such a vague assertion does not enable the defendant to prepare his defence and the Court to give a ruling, if appropriate, without other information in support (Koelman v Commission, paragraph 166 above, paragraph 21). To allow the annexes to provide the detail of an argument which is not presented in a sufficiently clear and precise manner in the application would be contrary to their purely evidential and instrumental function. 205 It is therefore appropriate to reject WIN’s complaint that supposedly inculpatory documents were taken into account out of context and that a number of exculpatory statements were not taken into account. 206 For the sake of completeness, it should be pointed out that, even by placing the phrase ‘we will have difficulty in pre-empting this market if our prices are too high’ in context, that is, by preceding it with the words ‘we have gone in too high on the price’ and following it with the words ‘our competitors will price below us’, the notion of an intention to eliminate competition is still present. 207 Similarly, it is not possible to read the phrase ‘our pre-emption of the ADSL market is imperative’ as meaning anything other than an intention to ‘pre-empt’, even if it is put in the context suggested by WIN of widespread competition. The fact that the statement referred to by the Commission is followed by the statement that ‘the introduction of competition on the ADSL market will trigger a wave of price reductions by Netissimo (at retail and wholesale level) from the beginning of 2001’ and ‘the fixing of pricing conditions for unbundling of the local loop [will] also doubtlessly contribute to the lowering of ADSL prices’ does not weaken WIN’s declared imperative to ‘pre-empt’ the market. 208 The phrase ‘70% … 80% of the ADSL market should accrue to [WIN]’ is not in fact disputed. WIN merely asserts that no mention is made of a possible recourse to low prices and that there is therefore no link between the prices set and WIN’s objectives as regards market share. However, the fact that nothing is mentioned as to the way in which the 70 to 80% share of the ADSL market will be obtained does not detract from the objective pursued. 209 In any event, those statements, which are contained in internal company documents, are an indication of the existence of a plan of predation and reinforced by other evidence. 210 According to recital 279 et seq. of the decision, the intention of restraining competition is also apparent from the fact that WIN knew that its non-profitable pricing strategy combined with high sales volumes was not economically sustainable for its competitors. 211 In an electronic mail to the CEO of WIN, dated end of April 2001 (recital 279 of the decision and footnote 319), the person in charge of ADSL services refers to the competitors which either do not sign up to the offer of service support from France Télécom or are ‘on their way out’. 212 WIN also knew that the impossibility of matching its retail prices without suffering losses prevented AOL’s entry on the high-speed market. Indeed, an electronic mail from France Télécom to WIN’s director of strategic marketing dated 29 June 2001 attaches a statement from the CEO of AOL France, worded as follows (footnote 321 of the decision): ‘[I]n the days when we were owned by Cégétel, we launched an offer with Monaco Telecom and had 500 subscribers. We did not launch in France as France Télécom’s ADSL retail offer is not a money-maker for us. Technically, we are ready, but we are not in the business of losing money.’ 213 It is also clear from a document entitled ‘Note of analysis – Telecoms – Particular issues of internet regulation in France’ of 20 July 2001 that WIN had analysed in detail the advantages which it enjoyed as market leader (recital 280 and footnote 322 of the decision). It is apparent from that document that a competitor with less traffic than WIN would enjoy margins on the network costs several points lower than those envisaged for WIN. 214 It is clear from the foregoing that the announcement by WIN in 2001, and at the beginning of 2002, of its rather ambitious commercial objectives, which a non-dominant undertaking could have difficulty in achieving in the unfavourable profit-margin conditions at that time, had the effect of discouraging rival undertakings. This stemmed from WIN’s objective of eliminating competition. 215 On the basis of all the foregoing considerations, it must be held that the Commission furnished solid and consistent evidence as to the existence of a plan of predation for the entire infringement period. The logic which that strategy follows is clear from a note of WIN’s strategic management of December 2001 stating: ‘The high-speed and ADSL market will, for the next few years, continue to be conquest-driven, the strategic objective being to gain a dominant position in terms of market share, the period of profitability only coming later.’ 216 In accordance with AKZO v Commission, paragraph 100 above, and the Tetra Pak cases, paragraph 130 above, the Commission therefore established the two elements required in order to prove predatory pricing below average full costs by a dominant undertaking. 217 The arguments advanced by WIN as to the economies of scale and learning effects in order to justify its pricing below cost are not such as to call into question the finding made by the Court. An undertaking which charges predatory prices may enjoy economies of scale and learning effects on account of increased production precisely because of such pricing. The economies of scale and learning effects cannot therefore exempt that undertaking from liability under Article 82 EC. 218 It follows that the complaint based on the absence of a predation plan cannot be upheld. Recoupment of losses – Arguments of the parties 219 WIN submits that the recoupment of losses is entirely separate from the test of predation and the Commission must provide evidence of it. It takes the view that, if an undertaking in a dominant position cannot reasonably expect to reduce long-term competition with a view to recouping its losses, in particular because it is easy to enter the market in question, it is not rational for that undertaking to engage in a policy of predatory pricing. In that situation, the policy of low prices applied by the undertaking must be explained otherwise than by a strategy of predation. 220 According to WIN, that view is supported by all the economic and legal literature as well as by a number of courts and competition authorities, including those of the United States and several Member States of the European Union. The need to prove this has never been ruled out under Community case-law. 221 However, the conditions of competition on the market for high-speed internet access are completely different from those on which the Court of First Instance and the Court of Justice have had to rule in previous cases on predation. The barriers to entry on this market are low, growth is robust, the competitive situation is not frozen and there are numerous actual and potential new entrants. The Commission thus seriously errs in law in maintaining that it is not necessary to prove recoupment of losses. 222 Furthermore, according to WIN, the Commission committed a further manifest error of assessment, coupled with an error of law, by considering that it had furnished evidence of a possibility to recoup losses. 223 The Commission contends that proof of recoupment of losses is not a precondition to making a finding of predatory pricing contrary to Article 82 EC. It considers that the case-law is clear on this point. In the alternative, the Commission points out that the recoupment of losses in the present case is made plausible by the structure of the market and the related revenues which thus can be expected in the future. – Findings of the Court 224 In AKZO v Commission, paragraph 100 above, paragraphs 71 and 72, the Court of Justice sanctioned the existence of two different methods of analysis for determining whether an undertaking has applied predatory pricing. First, prices below average variable costs must always be considered abusive. In such a case, there is no conceivable economic purpose other than the elimination of a competitor, since each item produced and sold entails a loss for the undertaking. Secondly, prices below average total costs but above average variable costs are only to be considered abusive if an intention to eliminate can be shown (Case C-333/94 P Tetra Pak v Commission, paragraph 130 above, paragraph 41). 225 In Case C-333/94 P Tetra Pak v Commission, paragraph 130 above, paragraphs 42 and 43, the Court of Justice held that in the judgment under appeal the Court of First Instance had applied the same reasoning, reasoning which the Court of Justice endorsed. The Court of Justice explained that: ‘42 For sales of non-aseptic cartons in Italy between 1976 and 1981, [the Court of First Instance] found that prices were considerably lower than average variable costs. Proof of intention to eliminate competitors was therefore not necessary. In 1982, prices for those cartons lay between average variable costs and average total costs. For that reason, in paragraph 151 of its judgment, the Court of First Instance was at pains to establish – and the appellant has not criticised it in that regard – that Tetra Pak intended to eliminate a competitor. 43 The Court of First Instance was also right, at paragraphs 189 to 191 of the judgment under appeal, to apply exactly the same reasoning to sales of non-aseptic machines in the United Kingdom between 1981 and 1984.’ 226 In relation to the recoupment of losses, the Court of Justice added, in paragraph 44 of that judgment: ‘[I]t would not be appropriate, in the circumstances of the present case, to require in addition proof that Tetra Pak had a realistic chance of recouping its losses. It must be possible to penalise predatory pricing whenever there is a risk that competitors will be eliminated. The Court of First Instance found, at paragraphs 151 and 191 of its judgment, that there was such a risk in this case. The aim pursued, which is to maintain undistorted competition, rules out waiting until such a strategy leads to the actual elimination of competitors.’ 227 In line with Community case-law, the Commission was therefore able to regard as abusive prices below average variable costs. In that case, the eliminatory nature of such pricing is presumed (see, to that effect, Case T-83/91 Tetra Pak v Commission, paragraph 130 above, paragraph 148). In relation to full costs, the Commission had also to provide evidence that WIN’s predatory pricing formed part of a plan to ‘pre-empt’ the market. In the two situations, it was not necessary to establish in addition proof that WIN had a realistic chance of recouping its losses. 228 The Commission was therefore right to take the view that proof of recoupment of losses was not a precondition to making a finding of predatory pricing. 229 On the other hand, according to the Tetra Pak cases, paragraph 130 above, and AKZO v Commission, paragraph 100 above, it must be examined whether, where prices are lower than full costs but higher than variable costs, they form part of a plan to eliminate competition. However, in paragraph 215 above, the Court of First Instance came to the conclusion that the Commission furnished solid and consistent evidence as to the existence of a plan of predation for the entire infringement period. 230 It is therefore appropriate to reject all the pleas in law advanced in support of the application for annulment of the decision. II – The alternative claims for the cancellation or reduction of the fine 231 In the alternative, WIN disputes the amount of the fine which was imposed on it and requests that that penalty be cancelled or reduced very substantially. In support of its claims, it alleges breach of the principles that penalties must be specific to the offender and that they must have a proper legal basis, that the practices in question had no effect, that the determination of the duration of the infringement was wrong and that there was a breach of the principle of proportionality. A – Breach of the principles that penalties must be specific to the offender and have a proper legal basis 1. Breach of the principle that penalties must be specific to the offender (a) Arguments of the parties 232 According to WIN, by basing its findings on the conduct of France Télécom in order to penalise WIN, the Commission infringed the principle that penalties must be specific to the offender. First, the Commission admitted that it was action on the part of France Télécom that brought the infringement to an end. Secondly, the Commission took into account the conduct of France Télécom in assessing whether the infringement allegedly committed by WIN was intentional. 233 The Commission rejects that plea in essence by referring to its reply to the same plea advanced by WIN in its main claim for annulment. The Commission adds that WIN’s intention to foreclose the market is fully substantiated by the undertaking’s internal documents, the occasional references to France Télécom being in no way decisive. (b) Findings of the Court 234 This plea in law is to a large extent very similar to that relied on by WIN in its main claim for annulment. It is therefore appropriate to refer to paragraphs 66 to 71 above. 235 In addition, determining the end of WIN’s infringement as the date on which the prices charged by France Télécom were reduced does not mean that the Commission penalised WIN on the basis of France Télécom’s conduct. The infringement in question is very clearly attributed to WIN and not France Télécom. WIN could have ceased the infringement itself before France Télécom took action and in the absence of such action. The fact that the end to the infringement was not the result of WIN’s conduct does not in any way detract from the infringement. The infringement is directly linked to the level of costs. As certain costs are derived directly from the prices fixed by the suppliers, the end of the infringement can in certain cases be the logical result of the conduct of those suppliers. 236 The Court must therefore reject the argument alleging breach of the principle that penalties must be specific to the offender. 2. Breach of the principle that penalties must have a proper legal basis (a) Arguments of the parties 237 According to WIN, the decision penalised it on the basis of two new legal rules. First, the question of alignment entailed a complete reversal by the Commission of its previous practice. Secondly, the Commission applied a test of predation that was unprecedented and unpredictable. 238 There is no precedent for predatory pricing on an emerging market. The Commission applied for the first time the method of calculation used in this case by defining it in the course of the procedure. According to the method adopted by a number of national competition authorities, WIN takes the view that it could legitimately consider its prices not to be predatory. 239 The Commission in turn argues that Article 82 EC and Article 15(2) of Regulation No 17 constitute the only legal bases for the imposition of the fine in the present case and that there is nothing novel about those provisions. It relies on established case-law that its previous practice does not by itself serve as a legal framework for imposing fines in the field of competition. 240 The Commission adds, for the sake of completeness, that predatory pricing has already been classed as an infringement of Article 82 EC in the case-law. (b) Findings of the Court 241 WIN cannot claim that the conduct penalised did not constitute an infringement at the time when it was committed. Any abuse by an undertaking of its dominant position within the common market or on a substantial part of it falls within Article 82 EC. 242 It is settled case-law that the list of abusive practices contained in Article 82 EC is not an exhaustive enumeration of the abuses of a dominant position prohibited by the Treaty (Case 6/72 Europemballage and Continental Can v Commission [1973] ECR 215, paragraph 26, and Joined Cases C-395/96 P and C-396/96 P Compagnie maritime belge transports and Others v Commission [2000] ECR I‑1365, paragraph 112). 243 Furthermore, predatory pricing has already been classed as an infringement of Article 82 EC. It was sanctioned by the Commission and gave rise to AKZO v Commission, paragraph 100 above, and the Tetra Pak cases, paragraph 130 above, in which a test of predation was applied based on the distinction between variable costs and full costs, as was applied in the present case. 244 However, in the present case, the Commission adapted that test by spreading the costs of acquiring customers, in a way that was favourable to WIN, so as to take account of the features of the market in question. 245 In that regard, it must be pointed out that the application of the method used in those cases could, in any event, have enabled WIN to foresee that it might incur liability under Article 82 EC. WIN cannot rely on the fact that an adjustment to the method, which was favourable to it, was unforeseeable. 246 It also does not follow from the Commission’s previous practice or from the case-law that WIN could legitimately expect that its right to align its prices on its competitors would be accepted in the circumstances of the present case (see paragraphs 176 to 187 above) or that the method of discounted cash flows would be applied (see paragraphs 153 and 156 above) or that the margins after the end of the infringement would be taken into account (see paragraph 152 above). The market was also no longer in a start-up phase during the period investigated (see paragraph 106 above). 247 WIN, however, relies on Commission Decision 2001/354/EC of 20 March 2001 relating to a proceeding under Article 82 [EC] (Case COMP/35.141 – Deutsche Post AG) (OJ 2001 L 125, p. 27, recital 47), in which the Commission did not seek to impose a fine in respect of non-recovery of incremental costs, because the relevant measure of cost recovery that a ‘multi-product’ or ‘multi-service’ operator benefiting from a reserved area had to meet in competitive activities had not been clarified previously. 248 In that case, the complainant alleged that Deutsche Post AG was using revenue from the profitable letter-post monopoly in its reserved area to finance below-cost sales in the commercial parcel services sector with a view to driving out competitors in that sector. In its decision, the Commission penalised Deutsche Post’s granting of fidelity rebates and imposed on it a fine of EUR 24 million. However, the fine was not imposed in respect of the parcel services provided at below incremental costs. 249 It should be pointed out that the Deutsche Post case exhibited very particular characteristics. The undertaking was engaged in activities which, depending on the circumstances, related to its monopoly based on its public interest tasks or were open to competition. That case thereby raised the problem of defining the relevant measure of cost recovery for an operator benefiting from a reserved area and likely to cover its losses in another sector open to competition with the aid of the profits made in that area. In such a context, the undertaking in question could be uncertain as to the rules to be applied. However, the situation of WIN, which only operated on a competitive market, cannot be compared to that of Deutsche Post and in that regard is more akin to that of AKZO and Tetra Pak. 250 In addition, it should be noted that, although a fine was not imposed on that ground, Decision 2001/354 finds, in Article 2, that Deutsche Post infringed Article 82 EC by supplying mail-order parcel services at prices below the incremental costs of providing those services. Since that decision was delivered on 20 March 2001 and published in the Official Journal on 5 May 2001, WIN should have known at the time of the infringement at issue – March 2000 to October 2002 – that such action constituted an infringement. It will also be noted that, in the present case, it was WIN itself that disputed the use of incremental costs and, in its reply to the supplementary statement of objections, welcomed the fact that the Commission had abandoned that method. WIN is therefore not now in a position to criticise the Commission for making this change. 251 Finally, even if – despite the fact that predatory pricing is not a novel infringement – the particular features of the market for high-speed internet access are to be taken into account, the Commission’s decision not to impose a fine in a previous decision because of the relatively novel nature of the infringements found does not grant immunity to undertakings committing infringements which have not previously been penalised by the Commission. The Commission exercises its discretion in the specific context of each case when assessing whether it is appropriate to impose a fine in order to sanction the infringement found and to protect the effectiveness of competition law (Joined Cases T‑213/95 and T‑18/96 SCK and FNK v Commission [1997] ECR II‑1739, paragraph 239). 252 Consequently, the Commission did not infringe the principle that penalties must have a proper legal basis. B – Absence of effects of the conduct in question 1. Arguments of the parties 253 According to WIN, the Commission was not able to provide evidence that WIN’s alleged conduct in any way affected the market. The amount of the fine which was imposed on it should therefore be reduced for this reason as well. 254 WIN submits that the Commission itself contends in its decision that WIN’s market share will remain at around 50%, while it reached 72% in October 2002, the date on which the infringement ended, being a reduction of one third in only nine months. This suffices to show that the market structures were not affected on a sustained basis by WIN’s alleged anti-competitive conduct. 255 In addition, even during the period at issue, competition on the market for internet access was very healthy. In September 2002, there were over 70 retail offers. New ISPs entered the market, while the prices of offers fell under the influence of competitors. The development of competition was not hindered and the disappearance of Mangoosta is not attributable to WIN. 256 WIN takes the view in this regard that the Commission’s contention that WIN’s alleged conduct profoundly affected the structure of the market is no more than a presumption unsupported by any specific fact illustrating the actual difficulties experienced by WIN’s competitors. 257 The Commission disputes the data provided by WIN, contending that they relate either to the entire supply of internet access, both high-speed and low-speed, or the particular segment of the supply of high-speed ADSL internet access, depending on what suits WIN’s arguments best. 258 The Commission contends that a comparison of the increase in sales of the various players on the market in the course of 2001 until autumn 2002 clearly shows that WIN’s strategy enabled it to contain competition and strengthen its position. For example, there were no new significant entries on the market during the period at issue. 2. Findings of the Court 259 In accordance with the Guidelines on the method of setting fines imposed pursuant to Article 15(2) of Regulation No 17 and Article 65(5) of the ECSC Treaty (OJ 1998 C 9, p. 3), in assessing the gravity of the infringement, account must be taken of its nature, its actual impact on the market and the size of the relevant geographic market. 260 WIN has denied that the infringement in question impacted on the market. However, various elements indicate the contrary. 261 First of all, WIN’s market share on the high-speed market first increased from 50 to 72% (recital 400 and Table 8 of the decision) between the start of the infringement and August 2002, even though, according to the data provided by WIN in its response to the written questions from the Court, it subsequently fell to 63.6% in October 2002. Furthermore, the closest competitor to WIN had a market share of 8%, the other competitors all having below 2.5% (recital 376 of the decision). It is clear from Table 9 of the decision, not disputed by WIN, that over the entire period WIN increased the gap between it and its nearest competitor very significantly. 262 Secondly, one competitor, Mangoosta, disappeared from the market (recital 400 of the decision). WIN takes the view that Mangoosta’s bankruptcy is in no way due to WIN’s pricing but due only to Mangoosta’s very risky strategic policy. However, it should be pointed out that having launched its products at a price slightly higher than WIN’s, Mangoosta made such losses that it finally raised its prices by 20% in March 2001, which did not prevent it being placed in administration on 2 August 2001 (recital 384 of the decision). The disappearance of a very marginal competitor charging prices below cost but slightly above WIN’s at the very least constitutes evidence in this case of the difficulty of penetrating the market. 263 Thirdly, during the period covered, a significant decline in the market shares of the competing cable operators was recorded (Table 14 of the decision), while the competitors in the ADSL segment maintained very low levels of penetration. WIN does not dispute the decline in the cable operators’ market shares, arguing that this is not due to its pricing policy but to the development of ADSL to the detriment of cable. It should be pointed out, however, that in September 2001 WIN regarded the cable operators as the only genuine competitors on the market for high-speed internet access (footnote 444 of the decision) and that the ADSL segment was a ‘market at the end of 2001 dominated by [it] but not very active overall’. 264 Fourthly, WIN’s conduct had a deterrent effect on the ability of competitors to enter the market and to develop. Several of them in fact confirmed that they were unable to align their prices on those of WIN, given the costs involved, without incurring losses (see recital 379 and footnote 451 of the decision). The number of new entries on the market was also marginal. WIN referred to the cases of Dixinet and Net pratique. However, at the end of August 2002, Dixinet only had 10 subscribers to its ADSL and telephony services, while Net pratique, which did not launch its service until the summer of 2002, that is, at the end of the infringement, had no more than 1 400 subscribers six months later. 265 In that regard, WIN’s argument attributing the slow progress of certain competitors to a strategic choice and the desire to concentrate on the low-speed segment to the detriment of ADSL, which was regarded as not being viable, is not convincing. Even if certain competitors may have doubted, at the outset, the development of high-speed access, it cannot be presumed that they persisted in this belief in the face of the significant growth of this market. The action brought by T-Online, which supplied internet access under the name Club-Internet, before the French competition authority would seem rather to indicate the contrary. Similarly, the statement of the CEO of AOL France, referred to in paragraph 212 above, leads to the assumption that the reason for that undertaking’s absence from the high-speed market was at that time linked to the losses which it suffered because of WIN’s large-scale supply rather than its desire to confine its activities to the low-speed segment. 266 As regards WIN’s argument that consumers were not harmed by its pricing but, on the contrary, benefited from it, it should be recalled that the Court of Justice has held that Article 82 EC is not only aimed at practices which may cause damage to consumers directly, but also at those which are detrimental to them through their impact on an effective competition structure (Europemballage and Continental Can v Commission, paragraph 242 above, paragraph 26). 267 The Court must therefore reject this plea alleging that the conduct in question had no impact. C – Duration of the infringement wrongly determined 1. Arguments of the parties 268 WIN argues, first, that the end of the infringement of which it is accused is, according to the Commission, due to the reduction in prices applied by France Télécom on 15 October 2002. However, France Télécom announced the reduction with effect from April 2002, the application of that measure having been delayed by the tariff rebalancing by the Autorité de régulation des télécommunications (‘ART’) (the French telecommunications regulator). WIN could thus not in any event be held liable for the infringement after March 2002, so that the duration of the infringement can be no more than 13 months. 269 Secondly, the duration of the infringement found in the decision was longer than that referred to in the statements of objections. The Court should therefore hold that the duration of the infringement for which WIN can be held liable is a maximum of 17 months and reduce the fine accordingly. 270 The Commission’s answer to the latter argument is that the statements of objections cannot be read as restricting the duration of the infringement when the infringement was still ongoing. 271 As regards the argument based on France Télécom’s delay in reducing its prices owing to the process of tariff rebalancing ordered by ART, the Commission takes the view that this argument cannot be relied on. 2. Findings of the Court 272 In relation to the alleged extension of the duration of the infringement as compared to the statements of objections, reference should be made to paragraphs 49 to 52 above, from which it is clear that that argument should be rejected. 273 In relation to France Télécom’s announcement that it would reduce its wholesale tariffs with effect from April 2002, it should be pointed out that the infringement did not come to an end on that date but when the reduction in tariffs actually took effect. France Télécom’s reduction in tariffs led, mechanically, to a reduction in costs. WIN’s prices ceased to be below its full costs and the infringement came to an end. WIN could have brought the infringement to an end at any time without waiting for France Télécom to lower its tariffs, for example by raising its own prices or reducing other cost items. It did not, however, take any measure to this effect. 274 It follows from this that the Court should not reduce the amount of the fine imposed in the light of the duration of the alleged infringement. D – Breach of the principle of proportionality 1. Arguments of the parties 275 In the first place, WIN submits that when setting the amount of the fine, no account was taken of its cooperation and openness. Secondly, it criticises the fact that the Commission ignored the gradual end to the infringement both when setting the basic amount of the fine and in relation to the mitigating circumstances. The scale of the infringement was reduced as from August 2001 on account of France Télécom’s reduction in wholesale tariffs, even before the latter was informed of the Commission’s investigation. France Télécom’s willingness to resolve as quickly as possible the problem identified by the Commission was unstinting. 276 The Commission considers that there are no mitigating or aggravating circumstances in the present case. 2. Findings of the Court 277 First, in relation to the supposed cooperation, according to established case-law, cooperation in the investigation which does not go beyond that which undertakings are already obliged to provide under Article 11(4) and (5) of Regulation No 17 does not warrant a reduction in the fine (see, to that effect, Case T-12/89 Solvay v Commission [1992] ECR II-907, paragraphs 341 and 342, and Case T‑317/94 Weig v Commission [1998] ECR II‑1235, paragraph 283). 278 In recital 412 of the decision, the Commission refers to the fact that WIN sought to rely on its openness and full cooperation in the course of that proceeding as mitigating circumstances. The Commission notes however ‘that the undertaking merely complied in a normal manner with its obligations under Regulation No 17 with regard to the provision of information to the Commission’. 279 In its application, WIN submits that the Commission failed to take account of the fact that it cooperated fully in the proceeding and that it conducted itself entirely openly. WIN goes on to state that it was on its invitation that the Commission visited its premises and took copies of documents relating to costs and the development of its commercial offers. Neither its application nor its reply contains any further details on that cooperation. 280 It must be stated that WIN has not presented any evidence such as to invalidate the argument that it was merely complying with its obligations under Regulation No 17. WIN fails to establish, in particular, that it invited the Commission to its premises before the investigation was opened. In fact, the Commission contends, in its defence, that the applicant cannot infer a mitigating circumstance from the fact that the Commission merely carried out its onsite investigation on the basis of Article 14(2) of Regulation No 17 ‘by making an appointment with the undertaking to visit its premises’. 281 In the alternative, even if it were the case, the fact that it invited the Commission itself to visit its premises without waiting for the Commission to order investigations by way of a decision does not suffice to establish such close cooperation as to be able to warrant taking this into account for the purposes of mitigating circumstances. Article 14 of Regulation No 17 provides that, in carrying out the duties assigned to it by Article 81 EC, the Commission may undertake all necessary investigations into undertakings. Its authorised officials may enter any premises and take copies of business records. The Commission’s investigations may be conducted on the basis of a simple authorisation (Article 14(2)) or ordered by decision (Article 14(3)). The fact that the Commission did not order a decision in this case does not in itself mean that ‘effective cooperation by the undertaking in the proceedings’ existed within the meaning of the Guidelines on the method of setting fines imposed pursuant to Article 15(2) of Regulation No 17 and Article 65(5) of the ECSC Treaty. 282 Secondly, in relation to WIN’s argument that the infringement was gradually being brought to an end, it should be pointed out, first of all, that WIN did not itself take any measure to that effect. It cannot excuse itself by relying on efforts made by France Télécom. Secondly, even if steps taken by France Télécom might have had a positive impact on the market before the end of the infringement, those steps cannot change the classification of the infringement committed by WIN, by making it less serious. WIN’s predatory pricing on the market in question constitutes a serious infringement of the competition rules. The fact that the intensity of certain abusive components may have varied over the period in question cannot change that classification (see, to that effect Michelin v Commission, paragraph 195 above, paragraph 278). 283 It follows from the foregoing that WIN’s plea based on breach of the principle of proportionality must be rejected, so that the claims for the cancellation or reduction of the fine must be rejected. 284 On the basis of all the preceding considerations, the Court must dismiss the action. Costs 285 Under Article 87(2) of the Rules of Procedure of the Court of First Instance, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the applicant has been unsuccessful and the Commission has applied for costs, it must be ordered to pay the costs. On those grounds, THE COURT OF FIRST INSTANCE (Fifth Chamber, Extended Composition) hereby: 1. Dismisses the action; 2. Orders the applicant to pay the costs. Vilaras Martins Ribeiro Dehousse Šváby Jürimäe Delivered in open court in Luxembourg on 30 January 2007. E. Coulon M. Vilaras Registrar President Table of contents Facts and procedure Forms of order sought Law I – The claim for annulment of the decision A – The plea alleging breach of the rights of the defence and of essential procedural requirements 1. Arguments of the parties 2. Findings of the Court B – The plea in law alleging failure to state reasons 1. Arguments of the parties 2. Findings of the Court C – The plea alleging breach of the principle that penalties must be specific to the offender 1. Arguments of the parties 2. Findings of the Court D – Breach of Article 82 EC 1. Dominant position (a) Incorrect market definition Arguments of the parties Findings of the Court (b) Flawed assessment of dominance Arguments of the parties Findings of the Court 2. The abuse of a dominant position (a) The complaints in relation to the recovery of costs test Error as to the method of calculating the rate of cost recovery – Arguments of the parties – Findings of the Court Errors of calculation when applying the method used – Arguments of the parties – Findings of the Court (b) The complaints relating to the test of predation WIN’s right to align its prices on its competitors’ prices – Arguments of the parties – Findings of the Court Absence of a plan of predation and reduction in competition – Arguments of the parties – Findings of the Court Recoupment of losses – Arguments of the parties – Findings of the Court II – The alternative claims for the cancellation or reduction of the fine A – Breach of the principles that penalties must be specific to the offender and have a proper legal basis 1. Breach of the principle that penalties must be specific to the offender (a) Arguments of the parties (b) Findings of the Court 2. Breach of the principle that penalties must have a proper legal basis (a) Arguments of the parties (b) Findings of the Court B – Absence of effects of the conduct in question 1. Arguments of the parties 2. Findings of the Court C – Duration of the infringement wrongly determined 1. Arguments of the parties 2. Findings of the Court D – Breach of the principle of proportionality 1. Arguments of the parties 2. Findings of the Court Costs * Language of the case: French.