61969C0041
OPINION OF MR ADVOCATE-GENERAL GAND
DELIVERED ON 10 JUNE 1970 (
1
)
Mr President,
Members of the Court,
The application made by the Netherlands company ACF Chemiefarma in Case 41/69 and by the German companies Buchler and Boehringer Mannheim in Cases 44/69 and 45/69 respectively will lead the Court for the first time to give judgment on a decision whereby the Commission of the European Communities, after finding that undertakings had infringed the provisions of Article 85 of the Treaty of Rome, has imposed a fine on them.
This indicates the importance of the judgment which the Court is to deliver. This is so first of all from the legal point of view, because the Court has in particular to clarify the procedural requirements for decisions of this nature, to rule whether and after what period of time actions in respect of infringements in connexion with competition are time-barred, but in addition because, having regard to the unlimited jurisdiction conferred on the Court by Article 17 of Regulation No 17 of thé Council, the dispute as a whole is brought before the Court so that it has full power to consider the facts and, according to the view it takes as to the existence of the alleged infringements and their gravity, it may uphold, cancel or reduce the fine or, if necessary, increase it. I should add that this importance is in practice increased by the heavy fines imposed by the contested decision.
Since the reports of the hearing set out very clearly the facts forming the basis for the decision, I shall limit myself first of all to recalling briefly how the dispute arose. At the beginning of 1967 the Commission obtained possession of certain documents and information, of American origin, concerning the activity of the international quinine cartel established between the undertaking NV Nederlandse Combinatie voor Chemische Industrie — generally known as Nedchem and currently named Chemiefarma — the companies Boehringer Mannheim and Buchler, a group of three French undertakings and two British undertakings, Carnegies and Lake & Cruick-shank. In July and November 1967 the Commission, in accordance with the conditions laid down in Article 14 of Regulation No 17, carried out investigations on the six undertakings which had their registered offices in the Common Market; investigations were also carried out on Belgian and Italian quinine purchasers. As a result of these various operations the Commission initiated proceedings and on 30 July 1968 addressed a notice of complaints to the undertakings responsible. The latter submitted written observations and were heard on 11 and 12 February 1969. After the Advisory Committee on Restrictive Practices and Monopolies had delivered its opinion, on 16 July 1969 the Commission adopted the contested decision which was published in the Official Journal of 5 August 1969 (L 192, p. 5 et seq.).
The statement of reasons for this decision is subdivided into four sections. First of all, the Commission reviews the successive phases in concluding and implementing the various agreements entered into by the undertakings (I). It then states that those agreements had as their object and effect the restriction of trade within the Common Market by various methods which it lists (fixing the sales prices of quinine and quinidine, sharing out of the markets, fixing supply quotas and a compensation arrangement for the amounts supplied, restriction on the manufacture of quinidine) and that those agreements were capable of affecting trade between the Member States so that they fell within the scope of Article 85 (1) (II). On the other hand, since the companies had not notified the Commission before 1 November 1962, they could not benefit from the provisions of Article 85 (3) (III). Finally, the Commission statss that fines may be imposed on the undertakings for the infringements committed by them between 13 March 1962 and the beginning of February 1965, at which latter date the cartel seems to have terminated, and it sets out the reasons for the difference in the amount of the fines imposed on the undertakings concerned (IV).
On the basis of those reasons the Commission, in Article 1 of its decision, finds that the undertakings accused have until the beginning of February 1965 committed an infringement of the provisions of Article 85 (1) of the Treaty in concluding and implementing the export agreement of 8 and 14 July 1959, the additional agreements of 1960, the gentlemen's agreements of 9 April 1960 and the agreements implementing or supplementing those agreements. In Article 2 it imposes on them fines ranging from 210000 to 10000 units of account.
The three French undertakings who were the least important and on whom the smallest fines were imposed accepted this decision. Adopting a different course, Chemiefarma, Buchler and Boehringer brought an action before the Court for the annulment of the decision of 16 July 1969 in so far as relates to them and, as an application to the Court's unlimited jurisdiction, for the cancellation or reduction of the fine imposed on them.
The submissions are identical and the pleas invoked by the applicants and the arguments with which they support them are substantially similar on many points. Since an order of 9 April 1970 joined the three cases for the purposes of the oral procedure, I shall thus deliver a common opinion with regard to them, indicating as may be necessary with regard to eahc question the particular aspect under which it is put forward by one or other of the applicants.
I shall consider the various pleas which have been raised in the following order, which I have adopted partly from convenience and partly from logic:
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the powers of the Commission;
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the procedure followed by the Commission and the statement of reasons for the contested decision, that is to say, the legality of the procedure ;
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the existence of an infringement of the rules on competition, which forms the central point of the discussion ;
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whether a fine may be imposed on the undertakings and the justification for its amount. Although logically it should be placed first, it is only then that I shall consider the question of limitation, since it is connected with the factual matter of the date when the alleged infringements were terminated.
I — The powers of the Commission
This submission has only been raised by Chemiefarma (Case 41/69). That undertaking maintains that the Commission did not have the necessary powers because the agreements were notified to the Bundeskartellamt and the Netherlands Minister for Economic Affairs neither of whom raised objections. The applicant requests you to consider whether Articles 88 and 89 of the Treaty and, if appropriate, Regulation No 17 in fact deny the Commission the power to take cognizance of agreements so notified.
The answer seems to me simple. In the first place, after the entry into force of Regulation No 17 on 13 March 1962, it is this provision which defines the rsepective powers of the Commission and of the national authorities in the implementation of Article 85 of the Treaty. Under the terms of Article 9 (3) of that regulation the authorities of the Member States remain competent only as long as the Commission has not initiated any procedure under Articles 2, 3 or 6 thereof. Such competence is consequently subsidiary to that of the Commission and the fact that it has not been employed in a given case cannot result in withdrawing the cartel from the power of the Community authorities. We also know that the gentlemen's agreements which constituted the keystone of the arrangement within the Common Market were not notified — and with good reason — either to the Netherlands authorities or to the Bundeskartellamt. This submission must therefore be rejected.
II — Submissions with regard to procedure and form
These factors will occupy me longer. In fact, as is natural owing to the novelty and importance of the matter on which there is as yet neither case-law nor even established administrative practice, many questions may be and indeed have been raised by the applicants. Although brevity may be sacrificed, the exact replies of the parties must be given not only for the solution to this case but in order to define the framework within which the Commission may operate.
The relevant provisions are Regulation No 17 of the Council of 6 February 1962 (OJ Special Edition 1959-1962, p. 87) and implementing Regulation No 99/63 of the Commission of 25 July 1963 (OJ Special Edition 1963-1964, p, 47) adopted in accordance with Article 24 of the former regulation. On most points, the submissions raised criticize the manner in which the provisions were applied in the present case; sometimes the applicants — especially Chemiefarma — also dispute the legality of various provisions in the regulations or plead the general principles of procedure which they endeavour to deduce wither from the legal systems of all the Member States or from one of them.
It is not always a simple matter to clasisfy these various submissions and in considering them I shall follow the course of the successive stagss of the procedure: notification of complaints and hearing the undertakings, the minutes of that hearing, the opinion of the Advisory Committee, the adoption of the decision by the Commission, and I shall end with the submissions relating to the statement of reasons for that decision.
A — The notice of complaints and the hearing of the undertakings
Article 19 of Regulation No 17 provides that before taking decisions, in particular as provided for in Articles 3 and 15 whereby the Commission may require the undertakings to terminate infringements and impose fines on them, the Commission shall give the undertakings concerned the opportunity of being heard on the matters to which it has taken objection. This is the principal point with regard to which the applicants invoke the infringement of the rights of the defence.
1.
In the first place they criticize in fairly similar terms the lack of clarity or the incomplete nature of the notice of complaints. These notices are practically identical for all the undertakings concerned and contain about fifty pages; the undertakings complain that they indicate in detail neither the facts to which the Commission referred nor the evidence.
Furthermore, alter this notice was communicated they made various requests to consult the Commission's file; the Commission however refused to produce the entire file although it allowed them to consult the documents mentioned in the notice of complaints.
All the undertakings except Boehringer availed themselves of the opportunity thus afforded them. They maintain in court today that this constituted an infringement of their right of defence and that they ought to have been able to consult all the documents on the file. They allege that this is so in particular because the procedure initiated was capable of resulting in a fine.
More precisely their citicism relates to the results of investigations carried out on Italian and Belgian undertakings, which are annexed to the Commission's statement of defence but which were not communicated to the undertakings at the time. Those investigations are mentioned at page 1 of the notice of complaints in the following terms : ‘Investigations have in addition been carried out on Italian and Belgian undertakings’. The result of those investigations is recorded on page 37 of the same document in the following terms: ‘The prices jointly fixed were uniformly maintained by the members of the cartel within the Common Market, first for exports to countries without a domestic quinine production, namely Belgium, Luxembourg and Italy…’.
In order to reply to the various points covered by those criticisms, a decision must be taken with regard to the nature of the procedure before the Commission and to the extent of the ‘rights of the defence’ which the undertakings may claim at that stage.
The Court has already had to apply Article 19 of Regulation No 17 in the Grundig case and you ruled that the preceedings before the Commission are administrative proceedings, which implies that the undertakings concerned must be enabled in advance to submit their observations on the complaints which the Commission considers that it must make with regard to them, that to this end they must be informed of the facts upon which the complaints of the Commission are based, although it is not necessary that the entire content of the file should be communicated to them.
That judgment was given in a case relating exclusively to the application of Article 85 of the Treaty but it seems equally valid if the Commission imposes the fines under Article 15 (2) of Regulation No 17. No matter what decision it takes (order to terminate an infringement, a decision granting the benefit of Article 85 (3), a fine), the Commission always acts as an administrative authority and the procedure laid down by Regulations Nos 17/62 and 19/63 is virtually the same in all cases.
In those circumstances perusal of the notice of complaints shows that it states clearly the facts which in the Commission's view constitute the infringement alleged against the applicants; in particular, it states that they continued until the beginning of 1965 to maintain a joint policy with regard to prices and to exchange information on their sales with a view to possible compensation; they therefore continued their cartel within the Common Market after 1962. Such information seems to me unequivocally to nofity the undertakings of the complaints against them and indeed to enable them to come to a decision on them.
A more specific point remains to be settled, that is to say, whether the undertakings which were not entitled to have the entire file communicated to the might then require communication of the resulls of the investigations carried out on the Italian and Belgian undertakings. It seems to me that a negative reply must be given as the ‘complaint’ and the ‘facts’ on which it is based — to repeat the terms of the Grundig judgment — is that they had restricted competition by uniformly applying common prices to exports to Belgium and Italy. As I have said, this was communicated to the undertakings which were able to dispute it and make known their points of view, if only by explaining in their written observations the transactions effected and the conditions pertaining to them. The results of the investigations undertaken constitute evidence; because of this, if the decision is contested they must be communicated in the course of the court proceedings, but they do not appear to me to fall under the provisions of Article 19 of Regulation No 17. It therefore seems to me that the submission should be rejected.
Chemiefarma raised other submissions relating to the legality of the procedure at this stage:
2.
The rules of procedure for hearing the persons concerned were laid down by Regulation No 99/63 of the Commission, as it was empowered to do by Article 24 of Regulation No 17 of the Council. The applicant doubts whether such a delegation is proper since ‘such activities are legislative and not executive’ ; in this respect it contradicts both Article 87 and the combined provisions of Articles 155 and 4 of the Treaty; in addition the European Parliament was not consulted on the question whether it was possible and desirable for the Council to delegate its powers in this sphere.
It does not seem that this submission should be upheld.
Although Article 87 requires the Council to adopt ‘any appropriate regulations or directives to give effect to the principles set out in Articles 85 and 86’, it does not follow from this that after the institution itself has laid down general rules in this sphere it may not delegate to the Commission power to adopt the implementing provisions necessary to give effect to those rules. This is indeed the concept contained in Article 155 of the Treaty when it states that the Commission shall ‘exercise the powers conferred on it by the Council for the implementation of the rules laid down by the latter’, for that article does not preclude the exercise of such power in the adoption of regulations. In other words, although the Council may not delegate to the Commission the task of establishing the principles governing a particular sphere, there is nothing to prevent it entrusting the Commission with the task of laying down the detailed rules for the implementation of such principles.
Article 19 of Regulation No 17 recognizes the undertakings' right to be heard before the Commission takes any decision concerning them and thus governs the essential point: the principle of the rights of the defence. Once this is accepted, the rules of procedure of the hearing which the Commission laid down in Regulation No 93/63, no matter how important they are, merely constitute a measure in implementation of the principle enunciated by the Council. Moreover, the preparatory studies in connexion with Regulation No 17 show that the provisions which were approved by Parliament contained a clause similar to Article 24. The submission of illegality raised by the applicant against this article is consequently unfounded.
3.
Another submission of illegality is raised by the same applicant, but this time against Article 9 (1) of Regulation No 99/63, under the terms of which ‘Hearings shall be conducted by the persons appointed by thé Commission for that purpose’. This provision violates the general principle of continuity in the composition of the administrative body before which proceedings are brought which may result in a penalty.
But is there any principle as rigid as this in a sphere which relates above all to practical organization? This must be doubted. The investigation of an administrative matter — above all where it is as complex as that now before us — necessarily presupposes the cooperation of a number of officials operating sometimes alone and sometimes in concert. It is neither possible for a third party to define the duties of each one nor to require that each one participates in such duties as a whole. This is a matter for the internal organization of the departments which must be organized by the Commission within the framework of its duties. And this is so, even though the procedure initiated may result in fines, as it nevertheless maintains its administrative nature.
4.
Chemiefarma again invokes the violation of a general principle of law according to which the administrative body in charge of proceedings is obliged to correct errors jointly with the undertakings concerned, ‘to complete insufficient arguments’ and to allow the undertakings concerned to be heard on all the essential elements of the proceedings. In the present case, since it had not taken into account the observations submitted by the applicant in reply to the notice of complaints, the Commission did not remove from its decision a number of inaccuracies listed by Chemiefarma.
If the latter wishes to restate in another form the submission derived from the infringement of the rights of the defence, it is sufficient to reply to it that they had been respected. If, despite this, inaccuracies remain in the contested decision, they no longer concer the regularity but the substance itself of the procedure, and the Court must consider whether its validity has thereby been affected.
B — Minutes of the hearing of the parties
Under the terms of Article 9 (4) of Regulation No 99/63, ‘The essential content of the statements made by each person heard shall be recorded in minutes which shall be read and approved by him’. In fact, at the time of the hearings on 11 and 12 Feburary 1969 it was admitted that the minutes would be drawn up and sent immediately afterwards to the persons concerned for correction and approval. The minutes were only sent to the undertakings on 10 June with a request to submit their observations within a period of three weeks: Buchler complied with this time-limit, Boehringer obtained an extension until 7 July whilst there was no reaction from Nedchem.
Nevertheless, in Application 41/69 Nedchem complaints that the Commission failed to observe Article 9 (4) of the regulation by allowing too long a period to elapse between the hearing and dispatch of the minutes, by only allowing it an insufficient period of time in which to submit its observations and by failing to have it approve the contents of the minutes. No matter what difficulties were involved in drawing up the draft minutes, it is surprising that it required four months, but this delay does not involve anything which might adversely affect the rights of the undertakings concerned. In those circumstances the period of three weeks seems sufficient for making corrections. The plaintiff, which neither suggested alterations nor, like Boehringer, requested an extension of the period for that purpose, may not now complain that the period of time was insufficient nor can it complain that the Commission failed to obtain its agreement.
The same applicant observes in addition that the minutes were only communicated to it in German and French and not in its native language, Dutch; this constitutes an infringement of the principle of the equality of languages which emerges from Article 217 of the Treaty and Regulation No 1 of the Council.
The Commission concedes this point. It admits that through an oversight it committed an error which it would have rectified if the undertaking had brought it to its attention. In the Commission's opinion, however, that error did not prevent the applicant from obtaining sufficient information from the German version of the draft minutes and consequently its right of action has not been adversely affected. This view seems even better founded since the principle invoked by Chemiefarma does not constitute an absolute bar and by merely requesting that a Dutch version should be communicated to it, the applicant has by implication renounced its right to plead this. This submission must thus be rejected.
C — Procedure before the Advisory Committee
This body was established by Article 10 of Regulation No 17 in order to establish liaison with the authorities of the Member States; it must be consulted prior to the taking by the Commission of most of the decisions in the sphere of Article 86 et seq., and in particular before fines are imposed. The Committee is composed of officials competent in the matter of restrictive practices and monopolies, each State appointing an official to represent it who, if prevented from attending, may be replaced by another official. The consultation shall take place at a joint meeting convened by the Commission to be held not earlier than 14 days after dispatch of the notice convening it. The notice shall, in respect of each case to be examined, be accompanied by a summary of the case together with an indication of the most important documents, and a preliminary draft decision. A report of the outcome of the consultative proceedings shall be annexed to the draft decision but not made public.
Chemiefarma considers the Advisory Committee to be an ‘obscure and hybrid institution’ and expresses doubt as to whether those provision sprovide adequate legal guarantees (for example, there is no guarantee of unity and continuity in its composition). Nevertheless, it seems that it does not expressly maintain that Article 10 is vitiated by illegality owing to this insufficiency.
On the other hand, the three applicants concur in maintaining that the opinion was delivered by a Committee which was in fact insufficiently informed:
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because it was not in possession of the final minutes of the hearings, but merely the preliminary draft minutes which required substantial amendments (Applications 41/69, 44/69 and 45/69) ;
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because the preliminary draft decision submitted to it did not show the amount of the fines contemplated (Applications 41/69 and 45/69);
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because it did not have a sufficient period in which to consider the matter brought before it (Application 41/69).
The parties therefore requested that the Commission should be required to produce the complete file submitted to the Advisory Committee. The Court refused to require production of the file after the defendant's agent listed the documents which it contained but it then required the agent to inform it how the body before whom the proceedings was brought had learned of the amount of the fines contemplated. We shall need to consider the value of the evidence adduced.
The Commission considers that this submission may not be taken into consideration because the Advisory Committee is intended to ensure liaison with: the Member States and not to guarantee the rights of the undertakings. Consequently, the applicants are not entitled to contest the procedure employed before the Committee, ‘since that relates exclusively to the Committee's competence’.
The objection is not relevant, if only because it is not clear how this body could contest a decision taken against an undertaking on the ground that it had not been properly consulted itself. On the other hand, it cannot be excluded that, if a procedural requirement to consult a body is laid down by a provision prior to taking a decision, the omission or the improper completion of that formality may in certain cases constitute an infringement of an essential procedural requirement invalidating the decision.
In this case however the submission appears to be unfounded.
In the first place, it is not disputed that the Advisory Committee only had at its disposal a preliminary draft of the minutes, without the amendments proposed by Buchler and Boehringer; but this would only constitute a procedural defect capable of affecting the contested decision if the version submitted to the Committee gave it an incorrect impression of the declarations of the persons concerned. This was certainly not so. In the course of the hearing the Commission's agent gave as an example the amendments requested by Buchler; they are of little importance. You have on the file the draft minutes and the final minutes including all the amendments requested by the various undertakings. A comparison of those two documents shows that although there were unavoidable errors of detail in the original version they do not relate to the substance. In accordance with Article 9 (4) of Regulation No 99/63 it is the ‘essential content’ of the statements made by each person which shall be recorded in the minutes. The Advisory Committee has thus not been inaccurately informed on this point.
What else can be said with regard to the information at the disposal of the Committee in connexion with the amount of the fines contemplated? In its statements the Commission only dealt with this question in general terms, stating that it had chosen a procedure which avoided divulging that amount too early. Its latest documents afford a more detailed view of the position. At the same time as the preliminary decision communicated on 30 May 1969 mentioning the criteria employed in apportioning the fines to be imposed but not their amount, the members of the Committee received a letter informing them of the approximate proportion of the fines which it was intended to impose on the various undertakings and that the amount in figures would be notified to them verbally during the meeting on 23 June. This is in fact what was done. Extracts from the minutes of the consultation show the total amount of the fines proposed, and it is sufficient to employ the scale supplied in the letter of 30 May to work out the figure proposed for each of the undertakings in question; a member of the Committee was moreover critical of the figure. It has thus been established that this body was informed, if not through the preliminary draft of the decision then at least from written and verbal information of the amount of the fine envisaged at this stage in the procedure for each of the undertakings.
It may be wondered whether the secret which the Commission wished to preserve required at this point the employment of such complicated procedures; on the other hand, it must be conceded that the Committee was able to give a ruling with full knowledge of the matter. I might concur with the applicants that the most important factor in a decision such as the present one is the amount of the fine imposed, which must be in accordance with the duration and gravity of the infringement alleged. With regard to those two aspects of the question the preliminary draft decision set forth the Commission's point of view and the schedule thereto realized this through a scale fixing the respective liability of each of the undertakings. From this point the members of the Advisory Committee could prepare themselves for deciding the substance of the proceedings and, unless their ability to do so is doubted, it must be considered that in terms of the factors already at their disposal they were in a position to give a ruling on the proposed fine with full knowledge of the matter even although they were only informed of the amount of the fine in figures during the hearing.
Finally, the foregoing considerations, together with the fact that the period of 14 days which must elapse between convening the meeting and holding it was largely observed, must lead to the rejection of Chemiefarma's objection that the body which was consulted had insufficient time at its disposal to consider the matter.
No matter how they are presented it seems to me that the complaints against the regularity of the procedure before the Advisory Committee must be rejected.
D — Conditions for the adoption of the Commission's decision
The Commission adopted the decision on 16 July 1969 after a report on the matter was communicated to it by the Commissioner in charge of competition matters, but without hearing the undertakings concerned.
Boehringer, and even more clearly Buchler, raise the question whether the fundamental rights guaranteed to a person liable to such serious penalties do not require that the hearing should take place in the presence of those persons who must decide a fine. If this is to be understood as putting forward a submission which amounts to disputing the legality of Article 9 (1) of Regulation No 99/63, it may be replied that no principle requires such a personal hearing.
Those same applicants in addition dispute the regularity of the decision on the ground that the Commission was insufficiently informed: its members did not have in their possession the final minutes — but I have said above that it is unnecessary to take this fact into account — and the entire file was not communicated to them.
The defendant is correct in emphasizing that division of labour is unavoidable in a collegiate body such as the Commission — a body which moreover is not in the nature of a court. For it to be in a position to take a valid decision, it is necessary and sufficient that each of its members was completely informed as to the essential factors of the matter — this was altered by the introductory note and speech by the Commissioner in charge of competition — and that the entire file should be available to it. This was so in the present case and it is therefore impossible to accept the complaint.
E — Submissions relating to the statement of reasons for the decision
1.
Boehringer considered that lack of detail in the notice of complaints constituted an infringement of Article 19 (4) of Regulation No 17 and levels at the contested decision the same criticism which it now bases on Article 190 of the Treaty. I think that it must meet with the same reply. For this provision to be observed it is sufficient that the statement of reasons should indicate with sufficient clarity the facts constituting the infringements alleged; perusal of the decision which, moreover, follows the statement of objections very closely shows that this was indeed the case in the present proceedings; it is therefore impossible to accept the submission.
2.
Chemiefarma also invokes against the Commission's decision the infringement of an essential procedural requirement and puts forward various submissions in this respect.
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First of all, it complains that the decision failed to reply to important parts of the observations submitted to the Commission after communication of the notice of complaints, in particular with regard to the special nature of the market in pharmaceutical products and the pointlessness of territorial protection.
Although under Article 190 of the Treaty the Commission must give reasons for its decisions, according to the Court's judgments these requirements are satisfied if the statement of reasons indicates clearly and coherently the essential considerations of fact and of law on which the decision is based, without requiring the author of the measure to repeat all the points discussed in the course of the administrative procedure.
In the present case the cartel related solely to the trade in raw materials — quinine and quinidine — employed in the manufacture of pharmaceutical products, and did not concern pharmaceutical specialities; it was therefore unnecessary to mention factors irrelevant to the dispute. With regard to territorial protection, perusal of the decision indicates that it includes the statement of reasons on which the Commission based its case in accusing the members of the cartel of having shared out the domestic markets.
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Furthermore, it maintains that the statement of reasons for the decision is vitiated by contradictions in particular with regard to the quantitative compensation and exchange of export figures, but this constitutes a mere allegation for which no clear explanations are given and which consequently cannot be accepted.
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Finally, it complains that the Commission limited itself in certain matters to making allegations without justifying them. An example of this is the allegation that the cartel was detrimental to consumers, although this fact was not considered in the contested decision. When Chemiefarma further maintains that the reference to the supplementary agreement of December 1964 is insufficient to establish that at that point there was still a joint policy with regard to prices, it raises a point disputed amongst the parties, which is closely related to the existence of the infringement alleged and which can thus be properly appraised only when consideration is given to the question whether the decision is well founded.
3.
This applicant also maintains that the contested decision differs in certain points from the notice of complaints and it considers this an infringement of Article 4 of Regulation No 99/63. Although in accordance with that provision the Commission shall in its decisions deal only with those objections in respect of which undertakings have been afforded the opportunity of making known their views, it does not follow from this that such a decision must reproduce exactly the original notice. Certainly it may not deal with infringements other than those contained in the notice but the Commission may present them differently in order to take into account aspects which come to light in the discussion intitiated. In the present case comparison of the two documents shows that the decision does not differ essentially from the notice of complaints and that in any event, although the decision withdraws' certain complaints initially maintained, it contains no complaint which did not already feature in the feature in the notice. The submission must therefore be rejected.
4.
Finally, to this submission of infringement of an essential procedural requirement must be added Chemiefarma's complaint that the contested decision violated a general principle of law that persons concerned should be made aware of their right to make an application and of the time-limits fixed for so doing; this was done neither in the decision itself nor in the accompanying letter.
It is no doubt sufficient to reply to the applicant that, since it lodged its application within the prescribed period, it is irrelevant to make this submission, but I consider it preferable to settle the question completely. Although the rule relied upon exists in Germany, it is nof known generally in the other Member States and it is thus impossible to consider it as a ‘general principle’ which applies to Community law in the absence of written provisions.
III — Whether there is an infringement of Article 85 (1)
After those rather lengthy explanations I can now broach the main point of the discussion: do the agreements drawn up by the applicants and the cooperation between them to which they gave rise constitute infringements coming within the scope of Article 85 (1)?
In order to decide this it is necessary to indicate the sphere within which such cooperation took place within the Common Market, to give details of the agreements concluded and to consider their scope and nature.
I shall then consider whether, once the cartel was established, it was continued in its entirety until February 1965 as the Commission says, or whether on the contrary it disappeared or was modified, totally or partially, and, if necessary, on what date.
A —
The very complete account given in the report of the hearing of the various aspects presented by the cartel allows me merely to review its essential here. Nevertheless, it is necessary from the outset to emphasize the complexity of the network of agreements drawn up between the members of this cartel and the great strength of the links thereby created between them.
1.
In the beginning an export agreement for quinine and quinidine was drawn up in July 1959 between Boehringer and Nedchem expressly excluding the countries of the Common Market from its scope. Buchler became a party to this agreement in March 1960; then on 7 April 1960 the three applicants on the one part and the French undertakings and the two British undertakings on the other part concluded an agreement governing the conditions for the adherence, with regard to quinine, of the French and British undertakings to the foregoing agreement. That agreement, which was described as an export agreement, was made public. But on the same day a meeting of the members of the cartel approved the provisions of two gentlemen's agreements concluded between the applicants and the French group on the one hand and Carnegies and Lake & Cruickshank on the other. They extend the provisions of the export agreement to all export sales, that is, to those in the countries of the Common Market. The terms are identical and I shall henceforth speak of the gentlemen's agreements. They were reduced to writing, dated 9 April 1960, but were unsigned and above all remained secret. Subsequently, in order to implement these agreements the undertakings concluded others either at their joint meetings or through an exchange of letters, for example in order jointly to fix the date and amount of the increases in price. It must finally be added that in the sphere of purchases as well as sales the undertakings concluded agreements relating to buying quinquina bark (the bark pool) and purchasing quantities of quinine from American strategic resreves (the stockpile agreement).
2.
The Commission raises four points with regard to which the cartel formed by the undertakings is contrary to the provisions of Article 85 (1); they all originate directly or indirectly from the export agreement and the gentlemen's agreements.
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The first point is the prices policy. Under the agreement the export prices of quinine and quinidine were to be fixed by a majority vote. This system was extended by the gentlemen's agreement to exports within the Common Market. The Court knows that in addition ‘directives’ were issued to clarify and standardize the methods of calculating prices, the conditions of delivery and payment and the information to be supplied by the members of the cartel with regard to quantities sold and supplies received. As a result of this until the end of 1964 uniform scales were established common to all.
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The second point is the sharing out of the market by allotting export quotas and establishing a system for compensation. The agreement of 7 April 1960 allots a quota for quinine to each member. On the other hand, quinidine was reserved to the three applicants who retained the quotas set out in the agreement drawn up between them the month before. The effect of the gentlemen's agreement was to extend those quotas to all export sales. This was also the case with regard to the provision authorizing an undertaking which supplied less than its quota to offer to an undertaking which had exceeded its quota to sell the corresponding quantity at a specified price. The existence of those two agreements, on official and the other secret, made it difficult to operate the compensation system; the problem was solved in the manner described in the ‘Note about equalization’ of 9 February 1960. Each member was required to communicate periodically to Nedchem the value and quantity of all sales effected by it in the course of the period under consideration, and all sales covered by the export agreement. Nedchem calculated the amounts to compensate each of those two categories of activities and the actual compensation took place on the basis of the gentlemen's agreement.
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The third point dealt with by the cartel is protection of the domestic markets for the manufacturers in those countries The principle was persistently upheld by the French undertakings in the course of negotiations preceding their adherence; it was accepted and in the course of the meeting of the members of the cartel on 2 March 1960 Nedchem's representative even had adopted the detailed rules in accordance with which this protection might be afforded without exciting the curiosity of the authorities dealing with competition.
—
Finally, the last aspect of the agreements drawn up between the various parties: in the gentlemen's agreement the British undertakings undertook not to produce quinidine and the French undertakings likewise undertook not to produce synthetic quinidine.
A review of the points dealt with by the cartel indicates the close connexion existing between the export agreement and the gentlemen's agreement. Let us first consider them chronologically: an initial agreement on exports entered into by the three applicants in 1958 was extended to the Common Market and it was only owing to the representations of the Bundes kartellamt that the agreement of 1959 was given a more restricted scope but consideration was immediately given to carrying out the earlier intentions more discreetly through the gentlemen's agreement. The negotiations prior to drawing up the gentlemen's agreement took place parallel with the discussions on the adherence by the French and British undertakings to the export agreement. There was a link also as to the substance since the gentlemen's agreement aimed precisely at extending the various terms of this agreement for effecting exports to territories where they were illegal; this link was so strong that, according to the very terms of the gentlemen's agreement, failure to implement it constituted ipso facto breach of the official agreements; we know how Nedchem endeavoured to interpret this provision in November 1962.
Two questions then arise.
3.
In the first place must the gentlemen's agreement be considered as an agreement, as it is by the contested decision, or as a concerted practice? Although both are referred to in Article 85 of the Treaty the distinction is not without significance, at least with regard to proving the infringement. In fact according to the Grundig judgment (Joined Cases 56 and 58/64, [1966] E.C.R. 299) for the purposes of the application of Article 85 there is no need to take account of the concrete effects of an agreement when it has as its object the prevention, restriction or distortion of competition. It is no doubt otherwise in the case of a concerted practice which, according to the prevailing view, presupposes that the agreement is actually carried out so that it is necessary to establish the actual conduct of the undertakings concerned and the existence of a link between such conduct and a prearranged plan.
In order to consider the gentlemen's agreement of 9 April 1960 as an agreement within the meaning of Article 85 (1), the contested decision is based on the fact that although the name is insufficiently precise that agreement expressly lays down written provisions binding the parties with regard to their conduct on the market. Even though I attach less importance than the Commission to the fact that provision was made for the settlement of disputes through arbitration, evidence of the binding nature of the gentlemen's agreement is clearly expressed in the provision stipulating that a breach of the gentlemen's agreement ipso facto constitutes a breach of the gentlemen's agreement ipso facto constitutes a breach of the export agreement. It is stated in the ‘Note about equalization’ of 19 February 1960 that the first of those documents depends on the second and in those circumstances it would be paradoxical to deny it the same nature. It should be added that the decisions of the Bundeskartellamt tend to consider arrangements of this type as actual agreements within the meaning of the legislation on competition.
Let us consider the gentlemen's agremeent as an acutal agreement the object of which, on all the evidence, is to restrict competition.
4.
The second question is equally awkward: it is whether the connexions existing between the export agreement and the gentlemen's agreement cause the former to fall under Article 85 (1). The applicants dispute this: Boehringer in particular complains that the Commission did not give separate consideration to different acts and situations although, according to the Grundig judgment, the infringement may only be found in the elements of the agreement covered by the prohibition. This is all the more true if two distinct agreements, with different content and scope, are concerned. Even if there was anything reprehensible in the gentlemen's agreement in that it extended provisions of the export agreement to the Common Market, the export agreement as such would in any event escape Article 85 (1). In any case, the undertakings considered it lawful which means that they did not intentionally infringe the prohibition.
I shall leave aside for the moment the last aspect which relates to the fine. For the rest the Commission firmly rebuts the applicant's argument and refuses to consider the export agreement apart because of the inseparable link between the various agreements which were different only in form. The Commission says that the system was an entity; it had thus no option but to consider the agreements as parts of a deliberately contrived whole and also to find that the export agreement fell under the prohibition laid down in Article 85 (1). It adds that together the undertakings participating in the international quinine cartel represented 70 % of world production and a veryhigh proportion of the total sales were exports to third countries; consequently the cartel cannot be compared to agreements which were previously granted negative clearance since they did not appreciably restrict competition within the Common Market.
Properly speaking the gentlemen's agreement is incomprehensible unless it is put in juxtaposition to the export agreement; the Commission was thus unable to consider the one without considering the other. Must it follow that this agreement might be the subject of the finding provided for in Article 85 (1) and covered by the prohibition? This is more doubtful but it could be conceded. Not so much owing to the considerable proportion of world production represented by the undertakings participating in the cartel, since it cannot be excluded that an agreement with regard to exports to third countries might have repercussions within the Common Market (the Commission does not endeavour to show that this was so in the present case) but owing to the clear link between the two agreements and the indivisible entity which they constituted. Although the Grundig judgment to which the applicants refer partially annulled the decision pronouncing the prohibition, this was. because the state of affairs held incompatible with Article 85 (1) did not stem ‘from the combined operation of all the clauses of the agreement, that is to say, from the aggreggate of its effects’. In this case it was indeed necessary to join the two agreements in order to produce the state of affairs penalized by the contested decision.
The following statement is to be found in a recent publication by a particularly authoritative writer: ‘The Bundeskartellamt's experiences with the international quinine cartel provide in addition an incentive to ensure that international export cartels which have been notified are not used as the framework for wider illegal restrictions (
2
)’. Because the agreement was the framework within which the gentlemen's agreement was situated it does not seem to me extraordinary that it should be treated in the same way.
B —
This is the aspect originally presented by the cooperation between the undertakings within the international quinine cartel. Nevertheless, although the applicants concede that the gentlemen's agreement was contrary to the provisions of Article 85 (1) and although they scarcely dispute that its application was continuing on 13 March 1962, the date taken into consideration in fixing the fines, they maintain on the other hand that it was expressly and finally terminated at the meeting on 29 October 1962, that after an almost total interruption the export agreement itself was put ‘in abeyance’ at the meeting on 14 October 1963 and was only applied sporadically in 1964, and that although the declarations of October and November 1963 again guaranteed protection of domestic markets they constituted at the most a concerted practice which did not involve appreciable restriction of competition as the shortage of raw materials at that time excluded any additional supplies. On the other hand, the Commission disputes that the gentlemen's agreement was terminated and maintains that at the most it became dormant like the export agreement and if it were necessary to concede that because of this only a concerted practice is involved the undertakings none the less intended that their respective conduct should continue to conform to the agreements. In sum, the contested decision considers that on the four points which I have described the cartel's policy remained unchanged until the beginning of February 1965.
1.
We must thus consider if and how the cartel developed. The entire dispute, initiated in the written procedure and continued at the bar, rests on conflicting interpretations of the minutes of the cartel's meetings and the correspondence between its members in 1962 and 1963. Before I outline this dispute, I should like to recall the context within which those events took place.
At a general level the entry into force of Regulation No 17 with its requirement of notification of certain agreements before 1 November required difficult choices to be made. Should undertakings do nothing and risks a fine, or terminate the cartel or notify certain agreements, and if so which? On the proposal of a French member of the cartel expert advice was obtained and the undertakings' lawyers agreed to discuss the matter at the meeting of the cartel on 21 September 1962 and subsequently on 29 October. Certain internal problems also arose, however, owing to conflicting interests: certain members requested an increase in their quota whilst Nedchem and Boehringer disagreed on the conditions for establishing a new bark pool.
The least which can be said is that the analysis carried out in the contested decision (No 10) of the meeting on 29 October 1962 is a very free interpretation of the minutes appearing in the file. It is indeed true that, as the Commission says, the meeting fell into two parts: during the first part devoted to legal questions there was discusison in particular on the impossibility of submitting the gentlemen's agreement to the Community authorities and the possibility of renouncing the export agreement which was particularly opposed by Nedchem and the French group; the conclusions of this part are summed up thus by the minutes : ‘After a discussion it proves that the export agreement is not cancelled, that all members intend to live in accordance with the gentlemen's agreement and that the meeting hopes to reach an understanding on a new purchase agreement’.
The provisions of the agreement remained to be drafted but this proved impossible owing to the conflicting points of view of Nechem and Boehringer; the former suspected that the latter wished to retain complete control over its supplies from the Congo and laid down the abolition of the prohibition on exporting bark as a condition precedent of its agreement; (Pharmakina, Boehringer's Congolese subsidiary benefited from this prohibition). Relations deteriorated further when Cruickshank, supported by Boehringer, requested revision of the quotas, which was opposed by Buchler, the French group and Nedchem.
The minutes summarize the conclusion reached in this second part as follows: ‘A general discussion follows in view of the opposing standpoints in particular as regard (sic) quota revision. It is found that no useful purpose would now be served by the lawyers drawing up a purchase agreement and the bark pool has come to an end. Therefore the original intention to live according to the gentlemen's agreement cannot be kept. Nobody however proposed to cancel the export cartel, apart from this all are free’.
The Commission considers that ‘such vague statements … do not allow definite conclusions to be drawn’ which means that the gentlemen's agreement remained unaltered. On the contrary, those statements seem to me precise but contradictory, and since they express the conclusions of the two discussions which preceded them the second must logically take priority over the first. At the hearing the defendant let it be understood more or less clearly that Nedchem drew up the minutes in accordance with its interests and that it endeavoured to intimidate those who were requesting revision of the quotas by threatening to terminate the gentlemen's agreement. This is pure supposition and the question may then be asked why Nedchem did not also ‘arrange’ the first part in order to diminish the contradiction between it and the second part. Finally, the Commission endeavoured to base its argument on an exchange of letters between Nedchem and Boehringer and Lake & Cruickshank in the course of the following weeks. In a circular letter of 2 November Nedchem maintained that its two partners had infringed the gentlemen's agreement and consequently the export agreement as well. It was thus incorrect in saying at the end of the meeting on 29 October that account would no longer be taken of the former but that the second would remain in force. Lake & Cruickshank again complained to Nedchem in the middle of November that it had infringed the gentlemen's agreement by lowering prices in the United Kingdom on 5 November. This exchange of complaints written in rixa seem to me less convincing than the minutes of the meeting. Furthermore it was the practice to send this document to the members of the cartel in order that they might make their corrections within a fortnight and the file indicates that this was done on various occasions. We have never been told that any of them protested against the representation of this as a unanimous decision; I therefore consider that there is no reason to doubt the accuracy of the declaration.
I should add that according to the contested decision (No 12) it was agreed at the meeting of the members of the cartel on 14 October 1963 that the export agreement and the gentlemen's agreements should continue to be valid but that their implementation should be suspended. It is certain that those two decisions were taken with regard to the agreement but it is by no means clear to me from the minutes that they applied to the gentlemen's agreement.
2.
In those circumstances, it seems to me that the only reasonable interpretation of the statement appearing at the end of the minutes of the meeting on 29 October 1962 is that it implies the end of the gentlemen's agreement. After that date there is no longer any formal agreement on a cartel within the Common Market. If nevertheless cooperation continued as the Commission maintains, it did so in the form of a concerted practice. The task of the Court is therefore to consider what the applicants' conduct was until the beginning of February 1965 in the four spheres referred to by the agreements and considered by the decision. According to the decision, cooperation continued up to the said date with regard to the four following points: fixing the sales prices of quinine and quinidine, sharing out of domestic markets for the benefit of the members who were producers in such countries, fixing supply quotas and the existence of an arrangement for compensating deliveries and finally the restrictions on the manufacture of quinidine. Those are the four points which must be successively considered.
Indeed the astonishing factor is that at this stage in the proceedings there is still considerable controversy, that is, facts are still in dispute. The discussion was for a long time restricted to the sphere of principles, and to bring the argument to the level of facts it required the Commission's replies to a number of questions put by the Court and the subsequent exchange of notse. It is largely as a result of the documents lodged in those latter weeks that I am able to deliver my opinion with sufficient certainty.
3.
The first infringement of the provision of Article 85 alleged against the undertakings in the decision — and this is the one which raises the most difficult questions — is that of maintaining until the beginning of 1965 a joint policy for export prices to certain countries of the Common Market where none of the undertakings had its place of business, namely Belgium, Luxembourg and Italy.
Under the provisions of the export agreement, which were extended to all sales by the gentlemen's agreement, prices were to be fixed by the majority and during the period when the agreement was in abeyance it was agreed that nothing should be altered unilaterally. Subsequently prices were altered on two occasions, 12 March and 28 October 1964, by a joint decision.
According to the contested decision, this system was applied in its entirety to the countries which I have just listed; the Commission refuses to consider the similar and simultaneious increases in price as independent decisions taken by their authors because their interests were of necessity identical with regard to supplies of raw materials for, after the termination of the bark pool, their positions on this market were divergent if not conflicting. The applicants dispute that they pursued the joint policy attributed to them. ín fact they scarcely reacted during the administrative procedure when the Commission formulated this objection; it was necessary for the defendant to produce with the rejoinder a list of 72 transactions involving destinations in those States, comparing the prices maintained with the export prices fixed jointly: these were identical in almost all the cases. Other lists were subsequently lodged by some of the applicants.
The Court is now in possession of ample evidence but the solution remains awkward for two reasons. The first is a question of classification in appraising whether such and such a price is to be applied to a transaction, it is necessary to define the product, its characteristics and its degree of purity; furthermore the amount sent and the type of packing may justify increases or reductions in the basic price, all of which factors are difficult to judge without the invoice. The second is a question of degree: in what circumstances may it be said that an undertaking deviates from price-lists? Are a few instances of deviation sufficient or on the contrary does it require, as I am inclined to think, a considerable number of divergences which cannot otherwise be logically explained?
Be that as it may, in reply to the Commission's criticisms and to the table annexed to the rejoinder the applicants have adopted the following attitudes :
—
Chemiefarma merely made some corrections with regard principally to the granting or refusing of rebates.
—
Buchler supplied a list of 49 export deliveries all falling within the period from October 1964 to March 1965. Of those transactions 36 were concluded with purchasers in third countries and consequently they seem to me irrelevant to the discussion. There remain 13 transactions concerning the Common Market, one which took place in March 1965 must be ignored because of its date. Another involves a rebate of 10 % on a scale but this rebate was agreed amongst the members. All the other transactions accord with the export price.
—
Rebutting the defendant, Boehringer produced a list of 70 deliveries for the period from 9 April 1964 to 29 January 1965 supplying the corresponding invoices in support. In order to deal with the conclusions which arise from it I shall not consider this argument in detail: only five deliveries are to be found which are not explicable in relation to the export prices to third countries.
It is to be noted that none of the applicants have extended the discussion to a date prior to 1964 and the number of departures from the export price is too low to estimate whether, as it is stated in the contested decision for the period referred to therein, they in fact applied the prices fixed jointly to exports to the said countries.
4.
The contested decision secondly complains that the undertakings resreved domestic markets for the manufacturers of those countries. Such protection was achieved by the gentlemen's agreement but it was renewed in the exchange of letters between the members of the cartel in October and November 1963. If this correspondence is not to be considered as an agreement the object of which was to wall off the domestic markets, in any event it constitutes the basis of a concerted practice. But a reply must then be given to the following objection put forward in particular by Boehringer: according to it those declarations were mere courtesy gestures without any actual content since the extreme scarcity of supplies of raw materials made impossible any increase in exports to which there were additional psychological and legal barriers. The Commission replies to this that the position on the market in raw materials did not alter in essentials during the period taken into consideration in imposing the fines since the sagging of price levels for exports of bark coincided with the purchase from the American stockpile; likewise the purchase price of bark remained largely stable until 1965. It is true that on the basis of internal memoranda from its quinine department the applicant maintained that there was a serious shortage of raw materials and that it was obliged to ration by quotas supplies of quinine and quinidine; the Commission confronts it with other notes from the same department which are appreciably more optimistic. It may be conceded that supplies constituted a permanent source of concern since they were irregular but there was no shortage. Furthermore the alleged legislative and psychological barriers do not explain either why the volume of trade should remain so small after 1962 or why with regard to supplies foreign producers should conform to internal prices. It must therefore be admitted that the provision protecting domestic markets continued to be applied during the period considered by the Commission.
5.
The third complaint in the decision relates to the system of quotas and to its corollary, the compensation arrangements.
The principle and conditions of its operation are known. The quota was originally established in terms of the sales made in the three preceding years and maintained the balance of power as it was when the cartel was created whilst at the same time it precluded the members from pursuing any independent sales policy since they could not alter their respective positions on the export markets.
According to the decision this system continued to operate even after 1962 and was a decisive factor until the beginning of 1965. In fact even during the period in which the agreements of October 1963 were in abeyance the undertakings continued periodically to communicate their sales figures which was a necessary condition for quantitative compensation. This was no doubt merely a moral and not a legal obligation; further, it doubtless had no prrctical effect during this period owing to the conditions on the market but it always remained capable of coming into play if the market situation should alter.
The Commission has however declared that it is unable to prove that there were further compensating deliveries during the period in dispute but it added that the contrary has not been proved; under Article 85 the important factor is that compensation should be guaranteed not that it should be carried out in practice. As it subsequently emerged that after October 1962 the only accounts produced related to sales to third countries the Commission replies that they afford the undertakings concerned a sufficient impression of the observance or otherwise of the quotas.
In the last resort the matter turns on this ultimate point: if the sales made by each of the members are shown to be in accordance with the quota fixed over a sufficient period, it may be supposed that this is not due to chance and that it indicates the existence of an agreement to maintain the situation provided for in the contract and perhaps of compensatory sales more or less concealed. At the hearing the Commission produced a table of the applicants' sales, which was intended to support its argument: in the case of each of the three applicants there is considered the portion which its sales represent of the total actual sales and the difference recorded between this percentage and the quota granted it. For example, for 1963 Nedchem's quinine sales represented 51.7 % of the total sales effected whilst its quota is 57.3 %. The difference is thus minus 5.6 %. In the case of Boehringer, the respective figures are 30.8 % and 25.2 % which give a difference of plus 5.6 %. In the case of Buchler the two figures are the same: 17.5 %. In the case of Nedchem, calculations made on the same basis for 1964 give 58.3 % and 57.3 %, that is a difference of plus 1 %, in the case of Boehringer, 23.3 % and 25.2 %, a difference of minus 1.9 %, and in the case of Buchler, 18.4 % and 17.5 %, giving a difference of plus 0.9 %.
Since those figures indicate only very slight differences the Commission considers that it must be admitted that the arrangements were in operation and that the quotas were observed.
I can indeed accept the accuracy of the figures thus supplied but their presentation is false: the difference must be calculated as a percentage of each individual quota, and not of the total combined quotas as the Commission did. If in 1963 Boehringer's sales were 30.8 % of the total actual sales and its quota was 25.2 % the difference in terms of this quota is not plus 5.6 % but plus 12 % which is far from negligible.
It must further be noted that the table produced by the Commission relates only to sales of quinine and that the same calculation made by Buchler for quinidine gives much more appreciable differences.
In sum, during the period in dispute the members of the cartel only communicated figures for sales to third countries; it has not been proved that they operated compensation arrangements; their sales figures in certain cases display appreciable differences in relation to the theoretical quota. Consequently it has by no means been proved that the members of the cartel continued to apply the system laid down by the agreements; no infringement of Article 85 (1) may be imputed to them under this head.
6.
Finally I shall merely mention for the record the final head of the infringement alleged against the members of the cartel — the prohibition of the British members from producing quinidine and of the French from producing synthetic quinidine. In the case of the French undertakings at least this constituted the consideration for the recognition of the protected market in quinine and it must be admitted that it lasted as long as that protection. It did not merely represent a theoretical interest since after the breach of the last links of the cartel one of the French undertakings began to produce synthetic quinidine.
7.
Consequently it seems to me to have been proved that, apart from the system of quotas and of compensation, the applicants continued after the termination of the genthemen's agreement to apply the restrictive practices which were established in 1960 within the Common Market. There are, moreover, no grounds for surprise that the applicants were always connected by several agreements. Thus the members had held preliminary meetings of the cartel in order to fix the prices which they applied by agreement to exports to Belgium and Italy. That those practices were capable of affecting trade between Member States seems scarcely in dispute despite Chemiefarma's statement; the fixing of prices and protection of domestic markets constituted obstacles to trade preventing consumers from benefiting from the conduct which the undertakings would have adopted had they not been connected as they were.
That those practices also had the effect of preventing or restricting competition seems equally clear. Chemiefarma indeed complains that the contested decision does not make known what degree of competition it considers necessary. The reply to this somewhat theoretical question might be that at any rate a system is required which does not wall off markets and fix prices.
Finally, it appears therefore that the agreements and concerted practices which I have described fall under Article 85 (1) of the Treaty.
IV — The fine
The contested decision is based on Article 15 (2) of Regulation No 17 under the terms of which the Commission may impose fines on undertakings where either intentionally or negligently they infringe Article 85 of the Treaty. That article also statss that in fixing the amount of the fine, regard shall be had both to the gravity and to the duration of the infringement and that such decisions shall not be of a criminal law nature.
A —
A difficult question is immediately encountered; that of the limitation period with regard to infringements of the rules on competition. Article 15 is silent on this point but the applicants maintain that the principle existing in more or less similar legislation of the Member States must also be applied in Community law, and assessment of the situation on the basis of those various provisions led them to conceive that the infringements alleged were time-barred. On the other hand, the contested decision considers that even if the principle is admitted, between the termination of the infringement (February 1965) and the investigations undertaken by the Commission in 1967 on the members of the cartel under Article 14 of Regulation No 17, the period of time is not capable of barring the initiation of proceedings against the undertakings concerned.
—
The Court must therefore rule whether this principle is to be recognized in Community law in the absence of any provisions, and if so, on what conditions.
I am able to find first of all that as a general rule the various legal systems, and not only those of the Member States, accord a place to periods of limitations. This procedure expresses a common truth in legal terms, that is, that time is the great healer, that after a more or less extensive period there always comes a point when, in the relationships of society, the past can no longer be called in question and even if it was wrongful it is better to wipe the slate clean. Nevertheless it is always the legislature which at the same time as it establishes the limitation period lays down the details for its application in terms of moral and legal concepts as the tactical and pragmatic requirements of the society in which it is to be applied.
The reasons at the basis of this process are also valid for the system of European law which is developing and no consideraiton peculiar to this system requires that this process be excluded. Since the absence of any provision by the Community legislature may not be interpreted as an intention to dispense with a principle so widely recognized, the Court can only recognize its existence and until the legislative body settles the question it must define the details.
In the first place it is necessary to define the period of limitation applicable to fines.
In this connexion, the parties have put forward three solutions to the Court. It has sometimes been said that the law of its domicile should be applied to every undertaking, as the Court ruled in its judgment in the Nold case in relation to capacity to be a party to legal proceedings. Or else reference should be made to the provisions adopted by the legal systems of the Member States with regard to competition and a common denominator worked out from those systems or that what appears most modern and most progressive should be adopted. The Commission's view is that consideration of those various laws does not indicate the existence of a common rule which might be transposed into Community law. In the absence of any provision it must be concluded that, for the initial period at least, there was no intention to bind the Commission and there was recognized to it the power to fix more exactly limits which may not be exceeded, subject to review by the Court. This system, which seems to approximate to that of the ‘reasonable period of time’ to be fixed in terms of the circumstances of the case, has some basis in jurisprudence. On the basis of the wording of wording of Article 15 of the regulation (the Commission may… impose) it was said that appraisal of the time-limit must take account of the special features of the proceedings (gravity of the infringement, whether it was likely to recur, whether it is current or in the past and whether it was terminated spontaneously etc.) (
3
).
A satisfactory solution can only be obtained by reverting to the ratio legis, whilst taking into account the role of the limitation period in all legal systems, the role of fines in competition law and finally the provisions on competition in Community law.
Although legal certainty is not a factor justifying the existence of limitation periods it is nevertheless inseparable from it. Short of depriving legal certainty of a major part of its force, limitation periods could not be fixed case by case in terms of the particular nature of the proceedings. The period must of necessity be fixed in advance precluding the system of the ‘reasonable period of time’ just as the necessity of applying Community law uniformly suffices to preclude consideration of each case according to its national law.
Secondly, from Article 15 we know that the fines are not of a criminal law nature, and even if the wording were not explicit this would have to be admitted since the Member States have not delegated to the Community any powers of a criminal law nature, properly so-called. There may be infringements of the provisions of Article 85 which give rise to fines but such infringements are not offences and such fines are not penalties. According to Article 87 of the Treaty they must ensure compliance with the prohibitions laid down in the foregoing articles, that is to say, suppress infringements and prevent their recurrence which explains why fines, as opposed to periodic penalty payments, may be imposed in respect of acts which have already come to an end when the Commission initiates proceedings. Furthermore the extremely high amount which may be imposed in accordance with Article 15 of the regulation is sufficient to indicate the gravity with which infringements of this nature are viewed by the Community legislature.
In fact — and this is the final point to be considered — in the Community system competition law not only has the functions generally attributed to it in the national legal systems, it must also and above all prevent markets being walled off between the States and enable a common market to be established. Consequently, the Commission is not wrong in considering that infringement of competition law in the Community system may involve more serious dangers than within the national legal systems. It may finally be added that discovery of the infringements is even more difficult since the Community is largely depdendent on the Member States, and indeed, as in the present case, on third countries.
Thus resort may be had to legislation of Member States only subject to serious reservations since the provisions common to them can only serve as a point of reference to the extent to which they may be transposed into the Community legal system whilst retaining their own special characteristics. I shall not return to the very full consideration of those verious legislative provisions in the written procedure. It is sufficient to recall that they involve differences relating to the very existence of a law on cartels, the degree of stringency in the appropriate system and the classification of infringements. Those differences also exist with regard to penalties and time-limits. Neither the first or the second are based on uniform criteria. To take an example, penalties are heavier in France than in the Netherlands but time-limits are longer in the latter country (six years as opposed to three) at least if the infringement was committed intentionally. As the Commission says, ‘definition of punishable acts, the level of the penalty and the period of limitation constitute legislative criteria which Community law cannot amend’. There is thus no common principle, far less a common principle which could be transposed into Community law.
Such, then, are the relevant characteristics of the Community legal system in the sphere of competition; the considerations set forth above lead me to recognize that a longer period of time is appropriate than that in existence in most of the legal systems of the Member States; the period should in my opinion be five years. It remains less than the period applied in the Netherlands for infringements committed intentionally. It is moreover the same as the period laid down by Article 43 of the Statute of the Court of Justice of the EEC in proceedings against the Community with regard to noncontractual liability.
—
Having established this point, the acts capable of interrupting the period of limitation must now be defined.
The contested decision considered as such an act the investigations carried out on the undertakings under the conditions laid down in Article 14 of Regulation No 17. This view does not seem to me correct. The Commission may, through officials authorized by it, undertake all necessary investigations into undertakings; the framework of such investigations as defined by the provision is extremely wide and the officials exercise their powers upon production of an authorization in writing specifying the subject-matter and purpose of the investigation.
In fact an identical authorization was employed with regard to the three undertakings; it was dated 17 July 1967 and signed on behalf of the Commission by the Director-General for Competition (the status of this senior official was disputed by Boehringer but the Commission seems to me to have replied satisfactorily to that objection). The document states that the official therein named is required to undertake an investigation on a specified undertaking in order to find whether or not the activities of the international quinine cartel conflict with the provisions of Articles 85 and 86 of the Treaty. It states that the official possesses the powers provided in Article 14 (1) of the regulation and mentions the provisions of Article 15 (1) with regard to the fines which may be imposed where undertakings fail to produce complete business records.
Since the inveestigation was carried out on the members of the cartel with the precise object of checking whether the cartel had infringed the provisions of the Treaty it may be likened to an inquiry which is capable of interrupting the period of limitation.
This naturally requires that the undertakings concerned were aware of the subject-matter, the scope and the possible consequences of the investigation. Consequently I do not consider the telephone calls made in advance by the official as sufficient evidence of this; on the other hand, production of the authorization provided for in Article 14 normally fulfils this requirement. It will be noted that in its reply Buchler denies ‘that the official … gave evidence of his capacity with regard to the applicant by producing an authorization in writing signed by the Director-General’, but this finding seems to have been made out of time since the undertaking made no reference to it in reply to the notice of complaints which referred to the investigations undertaken under Article 14.
What had just been said logically involves conceding that the limitation period may be interrupted on the different dates on which the authorization was produced to each undertaking at the time of the investigation. Those dates are 17 July 1967 in the case of Nedchem, 9 November 1967 in the case of Buchler and 15 November 1967 in the case of Boehringer. Since all three undertakings belonged to the same cartel the activities of which were being investigated this difference is regrettable but I do not understand how it could have been avoided. It has the curious consequence that if it is admitted, as I suggest, that the gentlemen's agreement came to an end on 29 October 1962 the infringement relating to it is time-barred in the cases of Buchler and Boehringer but not in that of Chemiefarma. Nevertheless, as the Court has unlimited jurisdiction it has no doubt power to fix the fine imposed on each undertaking in terms of its own liability disregarding a purely incidental anomaly.
One final point remains. After the termination of the gentlemen's agreement the cartel restricting competition continued in the form of a concerted practice or rather of a series of concerted practices relating to prices, the sharing out of the markets and the restrictions on the production of quinidine. Since the infringement presupposes an actual course of conduct, each kind of restriction of competition which took place within the framework of a concerted practice must be considered separately for the purposes of the limitation period.
If the Court agrees with me, it will find that except for the gentlemen's agreement in Cases 44/69 and 45/69 the infringements are not time-barred. A ruling must thus be given with regard to the fine.
B —
For the purposes of the fine the infringement is assumed to have been committed either intentionally or negligently. I shall not dwell long on this point.
After drawing up an agreement in order to comply with the request of the Bundeskartellamt the applicant companies opened discussions on the draft of the gentlemen's agreement; after this date they can no longer invoke their good faith. Their liability is further increased by the fact that shortly after the entry into force of Regulation No 17 they were made aware of the unlawful nature of the cartel from the point of View of Community law.
In fixing the amount of the fine, according to Article 15, regard shall be had both to the gravity and to the duration of the infringement. The Commission has given a clear and full explanation of the considerations guiding it in this connexion and its decision might pass without comment if it had not included amongst the agreements which contributed to restricting competition in all its essential aspects those relating to the fixing of quotas and quantitative compensation, which, as I have said, were in my view no longer applied after the termination of the gentlemen's agreement.
According to the criteria which were indicated at the bar as is permissible, the decision fixes the fines to be imposed on each of the undertakings. Three kinds of criticism are directed against the Commission in this connexion; of having imposed excessive fines on the first occasion on which it applied a penalty, but it may be considered desirable immediately to imbue the fine with its deterrent force; that instead of assessing the fines individually the Commission adopted a total amount of 500000 units of account which it subsequently apportioned amongst the undertakings: this does not constitute an illegal action if the allocation is then carried out taking reasonable account of the respective situations of each of the undertakings which seems to have been done; finally, each of the three applicants complains that it has been treated less favourably than the other two. The contradictory nature of those complaints immediately gives reason to doubt whether they are well founded. More precisely the fixing of very similar sums (210000 and 190000 units of account respectively) for the fines imposed on Nedchem and Boehringer seems to me justified. In fact, although the former on several occasions advocated a relatively low price it was the most influential party in the cartel and held a very important part of the market in the products in dispute; with regard to the latter it maintained a strong position with regard to supplies of raw materials. For those varied reasons their situations and liabilities thus appear somewhat similar. Buchler's lower fine of 65000 units of account corresponds to its quota and sufficiently takes into account its restricted influence within the cartel.
Nevertheless at a general level the decision includes the question of quotas amongst the infringements which rsstricted competition until the beginning of February 1965. The quotas were an important factor in the arrangements restricting competition within the common market; I thus consider that the fines imposed should be reduced by the same proportion for all, perhaps in the region of 20 %.
I should finally like to recall that Boehringer, which was ordered to pay a fine of 80000 dollars by an American court for its infringement of the anti-trust laws, and Buchler, which is involved in proceedings pending before an American court on the same grounds, both request that the fines which have been or will be imposed by the courts of the United States should be deducted from that imposed by the Commission. For various reasons those requests are at present inadmissible.
I am therefore of the opinion that in Cases 41, 44 and 45/69:
the fines imposed on the companies Nederlandse Combinatie voor Chemische Industrie, Boehringer Mannheim and Buchler should be reduced by 20 % of the amount fixed by the decision of the Commission of 16 July 1969,
the remaining submissions in the applications should be rejected, four fifths of the costs in each case should be borne by the applicant and the remainder by the Commission.
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1
)	Translated from the French.
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2
)	Kurt Markert: Die Anwendung des Gesetzes gegen Wettbewerbsbeschränkungen auf internationale Wettbewerbsbeschränkungen, in ‘Zehn Jahre Bundeskartellamt’, p. 205 et seq.
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3
)	Gleiss and Kleinmann: Keine Verjährung von Ordnungswidrigkeiten im Europäischen Kartellrecht, Neue Juristische Wochenschrift 1967, p. 2097.