61998CC0283_EN
Opinion of the Advocate-General
Opinion of the Advocate-General
1. On 24 July 1998 Mo och Domsjö AB (MoDo) lodged at the Registry of the Court of Justice an appeal against the judgment of the Court of First Instance of 14 May 1998 in Case T-352/94 Mo och Domsjö v Commission (the contested judgment) which had ruled on its application for annulment of Commission Decision 94/601/EC of 13 July 1994 relating to a proceeding under Article 85 of the EC Treaty (IV/C/33.833 - Cartonboard) (the decision).
2. In that decision the Commission imposed fines on 19 manufacturers which supplied cartonboard in the Community. The fine imposed on MoDo was fixed at ECU 22 750 000. While the Court of First Instance upheld the application in part, it did not reduce the fine.
3. For the background to the proceedings, the material passages in the decision, and the reasoning of the Court of First Instance, I refer you to the contested judgment.
4. In its appeal the appellant submits that the Court of Justice should:
(i) annul the judgment of the Court of First Instance of 14 May 1998 in Case T-352/94 at least in part;
(ii) annul Commission Decision 94/601/EC of 13 July 1994 relating to a proceeding under Article 85(1) of the EC Treaty (IV/C/33.833 - Cartonboard) in so far as it relates to the appellant at least in part;
(iii) cancel or at least reduce the amount of the fine imposed on the appellant;
(iv) order the Commission to pay the appellant's costs before the Court of Justice and the Court of First Instance.
5. In support of its appeal, the appellant submits that the Court of First Instance erred in law in that it:
(i) held that the Commission's failure to set out in the Decision the factors of which it had systematically taken account when fixing the appellant's fine was not an infringement of the duty to state reasons such as would justify annulment in whole or in part of the Decision and the fine imposed;
(ii) and, ... in the alternative, ... in that it held that its own conclusion that the Commission had failed to prove in full the alleged effects of the infringement could not materially affect its assessment of the gravity of the infringement and thus could not lead to a reduction in the fine.
6. The Commission contends that the Court should:
(i) uphold the judgment in its entirety;
(ii) dismiss the appeal as inadmissible, or in the alternative unfounded, in so far as it
(a) asks the Court to review the CFI's exercise of its unlimited jurisdiction in respect of fines;
(b) seeks the annulment in part or whole of the decision;
(iii) dismiss it as unfounded for the remainder;
(iv) order MoDo to pay the Commission's costs in the appeal.
7. Several other appellants against the judgments of the Court of First Instance also raise the two pleas on which MoDo relies.
8. As MoDo is the only undertaking to have submitted just those two pleas, I will deal in this opinion with those issues as a whole, that is to say, I will also examine the arguments submitted by other undertakings in support of those two pleas.
9. In my opinions relating to the appeals of those other undertakings, I will therefore merely refer to the present opinion.
Admissibility of the appeal
10. The Commission considers that there are serious doubts as to the admissibility of the appeal in two respects.
11. First, the Commission submits as follows.
12. In its application to the Court of First Instance, MoDo sought annulment of Article 1 of the decision, which found that MoDo had infringed Article 85(1) of the EC Treaty (now Article 81(1) EC). That claim was rejected by the Court of First Instance.
13. MoDo does not expressly appeal against that rejection. Its grounds of appeal relate only to the passages in the contested judgment concerning the level of the fine. It does not allege that the Court of First Instance wrongly applied or interpreted Community law in upholding Article 1 of the decision.
14. Nor, most significantly - again in the Commission's view - does MoDo challenge the ruling of the Court of First Instance in paragraph 34 of the contested judgment that some of MoDo's arguments could concern only the level of the fine which had been imposed on it and, consequently, could not, even if founded, lead to the annulment of the decision itself as a whole. Those pleas are submitted once more in the appeal.
15. In my view, the Commission's description of the situation is correct.
16. The appeal must therefore be rejected as inadmissible inasmuch as it seeks annulment of the whole of the contested judgment.
17. Second, the Commission argues that the appellant's second plea is inadmissible. In that plea MoDo submits that the Court of First Instance erred in law in not reducing the fine even though it had taken the view that the Commission had proved only in part the effects of the infringements found in the decision.
18. The Commission submits that the Court of Justice has made it clear that, in the context of an appeal, it is not for it to examine the assessment by the Court of First Instance of the appropriate level of a fine when the Court of First Instance exercises the unlimited jurisdiction conferred on it by Article 172 of the EC Treaty (now Article 229 EC) and by Article 17 of Regulation No 17 of 6 February 1962, First Regulation implementing Articles 85 and 86 of the Treaty.
19. Although that is correct, the Court of Justice stated in the judgment in Ferriere Nord, which the Commission also cites, that it had jurisdiction to consider whether the Court of First Instance has responded to a sufficient legal standard to all the arguments raised by the appellant with a view to having the fine abolished or reduced.
20. The Court of Justice cannot therefore refrain from examining MoDo's arguments from that point of view.
21. Furthermore, one other appellant, Cascades SA (Cascades), has submitted the same plea, presenting it as a question of interpretation of the concept of effects of the infringement and of the relative importance to be attributed to the effects on the market of an infringement in comparison with the objects pursued by the members of a cartel and the means they have adopted. In my opinion, that is a question of law.
22. I therefore propose that the Court of Justice should not uphold the second plea of inadmissibility raised by the Commission.
The first plea
23. MoDo and eight other appellants submit that the Court of First Instance erred in law in finding that the fact that the Commission has not set out in the decision the factors which it had systematically taken into account in order to fix the amount of the fines was not an infringement of the obligation to state reasons which justified the annulment in whole or in part of the decision.
24. When it examined that complaint in paragraphs 266 to 280 of the contested judgment and in the corresponding paragraphs in the other judgments, the Court of First Instance approached the question in several stages. It pointed out, first, relying on its judgment in Van Megen Sports v Commission, that it is settled law that the purpose of the obligation to give reasons for an individual decision is to enable the Community judicature to review the legality of the decision and to provide the party concerned with an adequate indication as to whether the decision is well founded or whether it may be vitiated by some defect enabling its validity to be challenged; moreover, the scope of that obligation depends on the nature of the act in question and on the context in which it was adopted.
25. It notes that the scope of the obligation to state reasons for a decision imposing fines on several undertakings for infringement of the Community competition rules must be assessed in the light of the fact that the gravity of infringements falls to be determined by reference to numerous factors including, in particular, the specific circumstances and context of the case and the deterrent character of the fines and that, as the Court of Justice explained in its order of 25 March 1996 in SPO and Others v Commission, no binding or exhaustive list of criteria to be applied has been drawn up.
26. Still setting out the relevant case-law, it stresses, referring to its judgment in Martinelli v Commission, the margin of discretion which the Commission has in the matter and as a result of which it is under no obligation to apply a precise mathematical formula.
27. Next, the Court of First Instance examines the statement of reasons in the decision and makes the following findings: The decision sets out both the criteria taken into account in order to determine the general level of the fines and the amount of the individual fines (points 168 and 169 of the decision). Moreover, as regards the individual fines, the Commission explains in point 170 of the decision that the undertakings which had participated in the meetings of the Presidents Working Group (the PWG) were, in principle, regarded as ringleaders of the cartel, whereas the other undertakings were regarded as ordinary members. Lastly, in points 171 and 172 of the decision, the Commission states that the amounts of the fines imposed on Rena Kartonfabrik A/S (Rena) and Stora Kopparbergs Bergslags AB (Stora) must be considerably reduced in order to take account of their active cooperation with the Commission and that eight other undertakings were also to benefit from a reduction in the fine, although to a lesser extent than Stora and Rena, owing to the fact that in their replies to the statement of objections they did not contest the essential factual allegations on which the Commission had based its objections.
28. The Court of First Instance also states that in the course of the proceedings the Commission provided additional figures relating to the method of calculating each of the individual fines. It finds that although those fines were not determined by applying those figures alone in a strictly mathematical way, they were nevertheless systematically taken into account for the purposes of calculating the fines.
29. The Court then states that the Commission's decision does not explain:
- that the fines were calculated on the basis of the turnover of each undertaking on the Community cartonboard market in 1990;
- that the basic rate applied to those turnover figures was 9% for the ringleaders and 7.5% for the ordinary members;
- that the reduction given to Stora and Rena for their cooperation was of two thirds and the rate of reduction given to the eight other undertakings was of one third.
30. The appellants submit that the Court of First Instance should have found that the absence of those figures in the decision was a defect in its reasoning which justified annulment of that decision.
31. What approach did the Court of First Instance take? It held first that points 169 to 172 of the Decision, interpreted in the light of the detailed statement in the Decision of the allegations of fact against each of its addressees, contain a relevant and sufficient statement of the criteria taken into account in order to determine the gravity and duration of the infringement committed by each of the undertakings in question ... (paragraph 273 of the contested judgment).
32. However, although it might have been thought that those findings would have appeared to it to suffice to reject the plea that there was an inadequate statement of reasons in the decision as regards the fixing of the fine, the Court then sets out further considerations. It thus states that where, as in the present case, the amount of each fine is determined on the basis of the systematic application of certain precise figures, the indication in the decision of each of those factors would permit undertakings better to assess whether the Commission erred when fixing the amount of the individual fine and also whether the amount of each individual fine is justified by reference to the general criteria applied (paragraph 275 of the contested judgment). It then states that, as the final amount of each individual fine was not the result of a strictly mathematical application of the factors taken into account, the disclosure of those factors would not have posed problems from the point of view of Article 214 of the EC Treaty (now Article 287 EC) in regard to business secrets, as was also attested by the fact that this disclosure was made at a press conference held on the very day on which the decision was adopted.
33. The finding that the Commission chose to reveal to the press information that was not contained in the decision itself is immediately followed by a reference to the fact that it is settled law that the reasons for a decision must appear in the actual body of the decision and that, save in exceptional circumstances, explanations given ex post facto cannot be taken into account.
34. Returning to the explanations for the amounts of the fines in the decision, the Court of First Instance then finds that they are at least as detailed as those provided in the Commission's previous decisions on similar infringements. Those decisions, although they had previously been the subject of review by the Community judicature, had not been criticised in that regard even though an inadequate statement of reasons is a plea that must be raised by the Court of its own motion.
35. It was only in the judgments delivered in 1995 in the actions contesting the Commission's decision imposing fines in respect of the cartel on the welded steel mesh market (the welded steel mesh judgments) that the Court of First Instance had stressed for the first time that it is desirable for undertakings to be able to ascertain in detail the method used for calculating the fine imposed without having to bring court proceedings against the Commission's decision in order to do so (paragraph 277 of the contested judgment).
36. According to the Court of First Instance, it follows from that line of cases commencing in 1995 that ... when it finds in a decision that there has been an infringement of the competition rules and imposes fines on the undertakings participating in it, the Commission must, if it systematically took into account certain basic factors in order to fix the amount of fines, set out those factors in the body of the decision in order to enable the addressees of the decision to verify that the level of the fine is correct and to assess whether there has been any discrimination.
37. According to the Court of First Instance, the fact that the contested decision was not in conformity with that requirement cannot, however, justify annulment in whole or in part of the fines imposed, having regard to the novel nature of the welded steel mesh judgments and the fact that in the proceedings before the Court of First Instance the Commission had shown itself to be willing to supply any relevant information relating to the method of calculating the fine.
38. That line of reasoning is severely criticised by the applicants, who point to a contradiction in it. They claim that the Court of First Instance could not, without erring in law, find that a number of figures were missing from the decision, confirm its case-law that the Commission must, where as in the present case it has systematically taken certain factors into account, make the addressees of the decision aware of those figures, and at the same time reach the conclusion that the failure to set out that information in the decision does not call its validity into question.
39. However, again according to the appellants, apart from that contradiction the reasoning of the Court of First Instance also infringes the principles laid down by the case-law of the Court of Justice.
40. The first infringement stems from the fact that the Court of First Instance held that it was able to limit, with retroactive effect, the interpretation of the requirements of Article 190 of the EC Treaty (now Article 253 EC) regarding the fixing of fines which it had set out in the welded steel mesh judgments, whereas the Court of Justice has always held that the legal interpretation of a rule of Community law takes effect ex tunc, unless the actual judgment in which it is made states to the contrary. The second infringement stems from the fact that the Court of First Instance, ignoring case-lase which the Court itself cites, could not hold that a defect in the statement of reasons may be made good by explanations given in a press conference or subsequently during the proceedings before the Court of First Instance.
41. The Commission answers the appellant's argument by making a distinction between the various considerations set out by the Court of First Instance.
42. In the Commission's view, in paragraph 273 of the contested judgment, the Court basically held that the statement of reasons for the decision was in accordance with the requirements of Article 190 of the Treaty, its subsequent statements having to be regarded as mere obiter dicta. Moreover, those dicta do not present any problem for the Commission, because following the welded steel mesh judgments it had adopted already in January 1998, that is to say before delivery of the judgments in the cartonboard cartel cases, 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 so as to bring its practice into line with the Court's wishes.
43. The Commission also points out that since delivery of the contested judgment the Court of First Instance was called upon, in its judgments delivered in 1999 in the cases relating to restrictions on competition in the steel beams sector, to clarify its 1995 case-law. It cites in that regard the judgment of 11 March 1999 in Case T-151/94 British Steel v Commission in which it was held as follows: In its judgment in Case T-148/89 Tréfilunion v Commission ... the Court stressed that it was desirable for undertakings - in order to be able to define their position in full knowledge of the facts - to be able to determine in detail, in accordance with a system which the Commission might consider appropriate, the method of calculation of the fine imposed upon them by a decision for infringement of the rules on competition, without being obliged, in order to do so, to bring court proceedings against the Commission decision. That applies a fortiori where, as here, the Commission has used detailed arithmetical formulas to calculate the fines. It is desirable in such a case that the undertakings concerned and, if need be, the Court should be in a position to check that the method employed and the steps followed by the Commission are free of error and compatible with the provisions and principles applicable in regard to fines, and in particular with the principle of non-discrimination (paragraphs 626 and 627).
44. It must, however, be pointed out that such figures, provided at the request of one party or of the Court of First Instance pursuant to Articles 64 and 65 of the Rules of Procedure, do not constitute an additional a posteriori statement of reasons for the Decision, but rather the translation into figures of the criteria set out in the decision where they are themselves capable of being quantified. In this case, although the Decision does not contain any indications as to how the fine was calculated, the Commission provided, during the present proceedings, at the request of the Court, figures relating, in particular, to the breakdown of the fine according to the various infringements with which the undertakings were charged. It follows that ... the Decision is not vitiated by a deficient statement of reasons (paragraphs 628 to 630 of the judgment in British Steel v Commission, cited above).
45. Lastly, the Commission considers that, even if a decision imposing a fine were not to contain all the information which the Court of First Instance has held to be desirable, that could not constitute an infringement of the principle of sound administration which could, by itself, justify annulment. There is therefore no inconsistency in the reasoning of the Court.
46. What assessment should be made of the arguments developed by the Court of First Instance in rejecting the appellants' contention that the Commission had not given reasons, in accordance with the requirements of Article 190 of the Treaty, for the fine imposed on them?
47. Has the Court of First Instance contradicted itself in adopting an interpretation of that article but then refusing to draw the appropriate conclusions from it, as the appellant alleges, or did it adopt a line of reasoning which, although complex and subtle, was in fact coherent, as the Commission submits?
48. For my part, I admit to some difficulties in regarding the Court's reasoning as completely linear and of unimpeachable logic. It seems to me to be difficult to brush aside the appellant's objections and my impression is only strengthened both by the way in which the Commission is at pains - the task not being easy - to marshal the various considerations put forward by the Court in order to show that they are wholly rational, and by the rather laboured adjustment made in British Steel v Commission, cited above.
49. However, it must be stated that the Commission placed the Court of First Instance in an uncomfortable position in supplying the press with specific information as to the way in which the various fines had been fixed, information which had not been set out in the decision addressed to the undertakings that were required to pay those fines. Nevertheless, it is important not to exaggerate the importance of that additional information.
50. First, the press release issued by the Commission when it adopted the decision did not contain the relevant figures and, second, at the press conference held on the same occasion the Commissioner responsible for competition policy did not give all the figures which the Court found to be missing from the decision.
51. As far as can be discerned from the Bulletin de l'Agence Europe of 15 July 1994 and some press articles annexed to the application to the Court of First Instance by one of the applicants, Cascades, the Commissioner explained that Stora and Rena had received a reduction of two thirds of their fine (rather than fines that were considerably reduced as stated in the decision) and eight other undertakings received a reduction of one third (instead of fines reduced to a lesser extent). The Commissioner added that other undertakings had received a fine of around 9% of their turnover in the Community. (The figure of 7.5% was not given.) Lastly, he mentioned the amount of the various fines imposed on the various undertakings.
52. It must therefore be stated that the additional information, compared with that in the decision, is not of the magnitude claimed by the appellants.
53. The confusion caused by the reasoning adopted by the Court of First Instance in rejecting the plea alleging infringement of Article 190 of the Treaty stems from the fact that the examination of the statement of reasons for the decision is made in two successive phases which apply two different standards to the same statement of reasons, the first being clearly less demanding than the second. That breakdown into two successive phases reflects, apparently, the Court's wish to make a distinction between two types of information which the undertaking on which a fine has been imposed must be able to glean from the decision: first, information relating to the duration and gravity of the infringement alleged against it; second, information relating to the manner of calculating the amount of the fine imposed on it.
54. The first phase, which reaches its conclusion in paragraph 273 of the contested judgment, is not truly criticised by the appellants and it would be difficult to do so. The second phase, which ends in paragraph 279 of the contested judgment, on which the appellants' criticisms are centred and which the Commission considers to be a mere obiter dictum, is, on the other hand, clearly problematical from the point of view of its consistency. It is difficult to see how one can reconcile the statement that when certain basic factors have been systematically taken into account in order to fix the fines the Commission must set them out in the body of the decision in order to enable the addressees of the decision to verify that the level of the fine is correct and to assess whether there has been any discrimination; the finding that in the present case the fines were indeed fixed in that way; the finding that the factors in question are not indicated in the decision; and the conclusion that the decision is not vitiated by an inadequate statement of reasons.
55. The Court of First Instance seeks, however, to reconcile them by referring to the particular circumstances which it believes are constituted by the disclosure of the calculation factors during the proceedings before it and in the novel nature of the interpretation of Article 190 of the Treaty which the Court gave in the welded steel mesh judgments. However, in so doing, it in fact lays itself open to the two objections made by the appellants. First, it is, as the Court of First Instance itself points out, settled law that, save in a few exceptional circumstances restricted to the law relating to the employment of Community officials, a defect in the statement of reasons cannot be remedied by additional information supplied ex post facto before the Court. Second, it is settled law that the limitation of the temporal scope of an interpretation given by the Court can only be the exception and must be justified by overriding considerations relating to the requirements of legal certainty and, moreover, can be made only in the judgment which supplies that interpretation. Those conditions are manifestly not satisfied in the welded steel mesh judgments.
56. Consequently, if the Commission's duty to state reasons in fact required that the information referred to by the Court in paragraph 272 of the contested judgment, and the corresponding paragraphs of the other judgments, should have appeared in the body of the decision, the Court should have found that the decision contained an inadequate statement of reasons.
57. I do not, however, think that the Commission was required to set out the figures in question in its decision. What is in fact the extent of the obligation to state reasons laid down by Article 190 of the Treaty in the particular case of a decision imposing a fine?
58. As the Court of First Instance most pertinently pointed out, the statement of reasons in such a decision must provide the undertaking concerned with adequate information for it to ascertain whether the decision is well founded or whether it may be vitiated by some defect enabling its validity to be challenged, that is to say, to provide it with the necessary information for it to assess the expediency of seeking its review by the Court of First Instance. It must also, quite obviously, allow the Court to review the legality of the decision. That review must itself respect the wide discretion which is, according to the relevant case-law, enjoyed by the Commission. It is not therefore logical to require such a decision to contain a particularly detailed statement of reasons, since, even if known, the grounds on which the Commission relied could not be admitted by the Court as grounds for annulling the decision.
59. It is true that, although the Commission has a very broad discretion when fixing the amount of a fine, it is nevertheless required to observe certain rules. Those rules are either fixed by Regulation No 17, which gives the Commission power to impose fines, or follow from the case-law, through the general principles laid down in it. Article 15(2) of Regulation No 17 provides that in fixing the amount of the fine, regard shall be had both to the gravity and to the duration of the infringement.
60. The Commission must therefore explain in its decision how long the infringement lasted and give its assessment of the gravity of the infringement. However, as stressed in the order in SPO and Others v Commission, cited above, and cited by the Court of First Instance, the gravity of infringements must be determined by reference to numerous factors, such as ... the particular circumstances of the case, its context and the dissuasive element of fines; moreover, no binding or exhaustive list of the criteria which must be applied has been drawn up.
61. What is striking on reading that decision is that the Court of Justice did not wish to confine the Commission within a rigid framework, even as regards the nature of the criteria to be taken into consideration.
62. It follows, a fortiori, that the Commission cannot be required to disclose figures such as the percentage of turnover or the percentage of the reduction given which it used as reference points or guidelines during its preparatory work, in particular where it was a question of weighting the fines to be imposed on various undertakings which had participated, with varying degrees of intensity, in the infringement.
63. Even if it used certain mathematical formulas in its preparatory work, the Commission must be able to adjust the fines to suit the desired deterrent effect, without being required to quantify that element. The very extent of the discretion which the Court of Justice has recognised that the Commission enjoys requires us to reject the appellants' claim that the exercise of the power to impose fines must be confined within a system of mathematical formulas.
64. Moreover, it is important that the fines should not become foreseeable, that is to say that the undertakings could, on the basis of the mathematical criteria adopted by the Commission in previous decisions, calculate the cost/benefit by attempting, before deciding to set up a cartel, to determine the fines which they might incur and compare them with the benefits which might be gained from market sharing or the fixing of common prices.
65. Admittedly, the general principles of Community law continue to apply. Thus, when it imposes fines on undertakings which participated in the same infringement the Commission must observe the principle of equal treatment, which means that identical situations should be treated identically and different situations should be treated differently.
66. The Commission will therefore have to explain its reasons for drawing a distinction between the various participants in one and the same cartel when it fixed the amount of the fines. However, the Commission cannot be obliged to publish coefficients of differentiation nor, a fortiori, explain in its decision why certain fines were reduced by two thirds and not by three quarters or one half.
67. In my opinion, they are the points on which a statement of reasons in the decision is absolutely necessary and which must satisfy the needs of the undertaking and of the Court of First Instance. The Commission is, of course, free to include in its decision a statement of reasons which exceeds those minimum requirements if it so wishes and, as the Court of First Instance held, that may be desirable in certain cases. However, as long as that minimum standard is observed one should not and cannot, in the light of the case-law of the Court of Justice, take the view that there is an infringement of Article 190 of the Treaty and, in my view, the Court of First Instance wrongly set out to compare the statement of reasons in the decision with the more demanding standards which it had thought it could lay down in the welded steel mesh judgments.
68. I have yet to establish whether the Court of First Instance ought not to have taken the view that in the present case the minimum requirements flowing from Article 190 of the Treaty were not satisfied. In that regard, I consider that the decision is quite clear as to the Commission's assessment of the gravity of the infringement (points 167 and 168) and I note that in points 169 to 172 of the decision the distinctions drawn between undertakings and the justifications for them are adequately explained. The fact that slightly more precise information was disclosed subsequently in the circumstances which I have recalled is not of such a nature as to call into question the Court's finding that the statement of reasons in the decision itself satisfies the requirements of Article 190 of the Treaty.
69. Admittedly, if the Commission does not see any drawbacks in disclosing certain mathematical factors, it must disclose them in the decision itself. The fact that in the present case it gave limited additional information in a press conference certainly merits censure, but that does not justify the conclusion that the statement of reasons was insufficient or that the fines should be reduced.
70. The fact that, in my opinion, certain grounds in the contested judgment should not be confirmed does not mean that the contested judgment should be annulled. It follows from the case-law of the Court of Justice that [i]f the grounds of a judgment of the Court of First Instance reveal an infringement of Community law but the operative part appears well founded on other legal grounds, the appeal must be dismissed. The plea of alleged infringement of Article 190 of the Treaty which the Court of First Instance is claimed to have committed in not finding that the statement of reasons for the decision was inadequate in regard to the amount of the fines must, therefore, be rejected.
The second plea
71. MoDo and the other appellants which have relied on this plea contend, in essence, that the Court of First Instance erred in law in finding that its own conclusion that the Commission had not proved all the alleged effects of the infringement could not materially affect its assessment of the gravity of the infringement and, therefore, could not lead to a reduction in the fine.
72. One of the appellants, Cascades, adds that the Court of First Instance misinterpreted the concept of effects of the infringement on the market which it took into account in determining the amount of the fines. Furthermore, it alleges that the Court made a legally incorrect classification of certain effects alleged by the Commission.
73. In any event, it argues, even if the Court of Justice were to consider that the interpretation by the Court of First Instance of the concept of effects of the infringement on the market was correct, the contested judgment should be annulled because it infringed the principle of proportionality by retaining the level of the fine even though the Court itself accepted that only part of the effects alleged by the Commission had been proved.
74. According to MoDo, which has set out this argument in detail, the failure to reduce the fine necessarily means that, in regard to matters appreciably less serious than those which the Commission took into account, the Court of First Instance chose to assume the Commission's policy role and to impose what amounts in practice to a heavier fine for a less serious infringement. That is contrary to law or, in the alternative, is contrary to law when the Court of First Instance does not expressly indicate that it is taking an exceptional step and set out the reasons justifying it.
75. Before assessing the scope of that plea, it is first necessary to examine how the question of the effects of the infringement was dealt with in the decision and then in the contested judgment.
76. In points 133 and 134 of its decision the Commission considered the objective pursued by the members of the cartel, which was, in its view, artificially and secretly to regulate the market and coordinate their behaviour in such a way as to ensure that their concerted price initiatives would be successful.
77. In point 135 of the decision the Commission continued its reasoning as follows:
Given the manifestly anti-competitive objective of the cartel, it is not strictly necessary, for the application of Article 85(1), for the Commission to find that there was also an appreciable effect upon market conditions.
However in the present case the evidence shows that there was a definite - and adverse - effect upon competition in the market.
78. It is therefore for the sake of completeness, and in the framework of demonstrating the existence of a cartel prohibited by the Treaty, that the Commission goes on to examine, in points 135 to 137 of the decision, the effects of the cartel.
79. Next, in point 168 of the decision, containing the statement of reasons for the general level of the fines, the Commission listed seven considerations in order to justify the general level of the fines. Amongst them, in last place, is the fact that the cartel was largely successful in achieving its objectives.
80. The Court of First Instance took the view that this consideration refers to the effects on the market of the infringement found in Article 1 of the Decision (see paragraph 292 of the contested judgment). It then examined the assessment which the Commission had made, in the course of proving the existence of an unlawful cartel, of the effects of the collusion on prices.
81. The Court concluded that a first type of effects taken into account by the Commission, which had not been contested by the applicant, had in fact occurred. It consisted in the fact that the agreed price increases were actually announced to customers. The new prices served as a reference point in individual negotiations on transaction prices with customers (paragraph 297 of the contested judgment).
82. On the other hand, the Court found that the Commission had only partially proved the existence of the close linear relationship between the increase in announced prices and the market prices.
83. Lastly, the Court of First Instance did not uphold the Commission's assertion that the level of transaction prices would have been lower if there had been no collusion between the producers (paragraph 304 of the contested judgment). In that context, the Court also took the view that the reference made by the Commission to the statements of the producers themselves was insufficient for a conclusion that the cartel had largely been successful in achieving its objectives.
84. Summarising its findings, the Court of First Instance noted that the effects of the infringement described by the Commission had been only partially proved and stated that it was going to analyse the implications of that conclusion in the exercise of its unlimited powers in regard to fines when it assessed the seriousness of the infringement found (paragraph 307 of the contested judgment).
85. When it reached that stage of its judgment (paragraph 358 of the contested judgment), the Court did not, however, take the view that its findings regarding the effects of the infringement justified a reduction in the general level of the fines fixed by the Commission.
86. What approach did the Court of First Instance adopt in evaluating whether or not the general level of the fines was still justified? As we have already seen in regard to the first plea, the Court based its reasoning on the settled case-law of the Court of Justice, according to which the gravity of infringements falls to be determined by reference to numerous factors including, in particular, the specific circumstances and context of the case and the deterrent character of the fines, and no binding or exhaustive list of criteria to be applied has been drawn up.
87. The Court of First Instance pointed out that the Commission had determined the general level of fines by taking into account the duration of the infringement and the following considerations (point 168 of the decision):
- collusion on pricing and market sharing are by their very nature serious restrictions on competition,
- the cartel covered virtually the whole territory of the Community,
- the Community market for cartonboard is an important industrial sector worth some ECU 2.5 million each year,
- the undertakings participating in the infringement account for virtually the whole of the market,
- the cartel was operated in the form of a system of regular institutionalised meetings which set out to regulate in explicit detail the market for cartonboard in the Community,
- elaborate steps were taken to conceal the true nature and extent of the collusion (absence of any official minutes or documentation for the PWG and JMC; discouraging the taking of notes; stage-managing the timing and order in which price increases were announced so as to be able to claim they were "following", etc.),
- the cartel was largely successful in achieving its objectives.
88. The Court of First Instance then went on to state that the Commission was entitled to take account of the fact that clear infringements of the Community competition rules were still relatively frequent and that, accordingly, the Commission was entitled to raise the level of the fines in order to strengthen their deterrent effect.
89. It also pointed out that the Commission had been correct in stating that, on account of the specific circumstances of the present case, no direct comparison could be made between the general level of the fines adopted in the decision and those adopted in the Commission's previous decisions, in particular in Commission Decision 86/398/EEC of 23 April 1986 relating to a proceeding under Article 85 of the EEC Treaty (IV/31.149 - Polypropylene) (the Polypropylene decision). Unlike in the case of the Polypropylene decision, no general mitigating circumstances could have been taken into account in the present case in order to reduce the general level of the fines.
90. Furthermore, the Court of First Instance stated: The adoption of measures to conceal the existence of the collusion shows that the undertakings concerned were fully aware of the illegality of their conduct. Accordingly, the Commission was entitled to take those measures into account when assessing the gravity of the infringement, since they constituted a particularly serious aspect of the infringement which differentiated it from infringements previously found.
91. Lastly, the Court noted the lengthy duration and obviousness of the infringement which had been committed, despite the warning which the Commission's previous decisions, in particular the Polypropylene decision, should have provided.
92. On the basis of those factors, the Court of First Instance considered that the criteria set out in point 168 of the decision (cited in paragraph 87 above) justified the general level of fines set by the Commission (paragraph 358 of the contested judgment).
93. As regards the effects of the cartel, the Court added as follows:
Admittedly, the Court has already held that the effects of the collusion on prices, which the Commission took into account when determining the general level of fines, are proved only in part. However, in the light of the foregoing considerations, that conclusion cannot materially affect the assessment of the gravity of the infringement found. The fact that the undertakings actually announced the agreed price increases and that the prices so announced served as a basis for fixing individual transaction prices suffices in itself for a finding that the collusion on prices had both as its object and effect a serious restriction of competition. Accordingly, in the exercise of its unlimited jurisdiction, the Court considers that the findings relating to the effects of the infringement do not justify any reduction in the general level of fines set by the Commission.
The significance to be attributed to the effects of an infringement on the market when assessing the gravity of the infringement
94. A first finding is called for: it is indisputably clear from the contested judgment that the Court of First Instance answered in a detailed and qualified manner all the appellant's arguments claiming cancellation or reduction of the fine.
95. Second, I also consider that in the course of its reasoning the Court of First Instance did not err in law as regards the interpretation to be given to the notion of effects of the infringement on the market or the importance to be attributed to it when assessing the gravity of an infringement, where that infringement, as in the present case, has been committed deliberately and has the characteristics described by the Court.
96. Article 15 of Regulation No 17 refers to the duration and gravity of the infringement but does not specify that the infringement has to be assessed by reference to the actual results which occur on the market, that is to say, by reference to the harm caused to purchasers of the relevant products.
97. Next, it must be pointed out that Cascades is wrong in submitting that it follows from a multitude of cases ... that the gravity of an infringement is determined according to a certain number of factors and in particular to the effects of that infringement on the market.
98. The decisive judgments, also cited by the Court of First Instance, indicate the contrary. Already in 1983, in Musique Diffusion Française and Others v Commission the Court of Justice had stated that in assessing the gravity of an infringement for the purpose of fixing the amount of the fine, the Commission must take into consideration not only the particular circumstances of the case but also the context in which the infringement occurs and must ensure that its action has the necessary deterrent effect, especially as regards those types of infringement which are particularly harmful to the attainment of the objectives of the Community.
99. In the order in SPO and Others v Commission, cited by the Court of First Instance, and the judgment in Ferriere Nord v Commission, cited above, the Court of Justice clarified that formula by stating that the gravity of infringements must be determined by reference to numerous factors, such as, in particular, the particular circumstances of the case, its context and the dissuasive element of fines; moreover, no binding or exhaustive list of the criteria which must be applied has been drawn up.
100. Those decisions not only do not place any particular stress on the effects of the infringements on the market, but do not even expressly mention them. It is true, as MoDo points out, that in another paragraph of the judgment in Musique Diffusion Française and Others v Commission, cited above (paragraph 129), the Court of Justice mentions amongst all the factors capable of affecting the assessment of the gravity of the infringements also the profit which [the undertakings] were able to derive from those practices.
101. The effects on the market may therefore be taken into account amongst the numerous factors, but they are crucial only when one is dealing with agreements, decisions or concerted practices which do not directly have as their object the prevention, restriction or distortion of competition and which are not therefore liable to fall within the scope of application of Article 85 of the Treaty except as a result of their actual effects. Moreover, the actual effects on the market also play a major role when it is a question of evaluating the abusive nature of conduct by an undertaking in a dominant position.
102. However, in the present case, the anti-competitive object of the agreement is indisputable and the Court of First Instance found definitively that the undertakings actually announced the agreed price increases and that the announced prices served as a basis for fixing individual transaction prices. The undertakings therefore did all that they could to give concrete effect to their intentions. What then happened at the level of the market prices actually obtained was liable to be influenced by other factors outside the control of the members of the cartel, such as the evolution of the economy in general, changes in demand in that particular sector, supply from non-member countries or customer resistance.
103. Thus, even though the Court of First Instance finds, on the basis of the report of London Economics (the LE Report), that the second type of effect, namely a close linear relationship between the announced price increase and the market prices existed only for part of the period covered by the infringement, it adds that the temporal price variations were closely linked to variations in demand (see paragraph 301 of the contested judgment).
104. As regards customer resistance, the decision itself refers to a specific case where one of the price increases had to be postponed on some markets with respect to major customers who had objected to the timetable for applying those increases (point 20 in fine of the decision).
105. In that context, it is important also to bear in mind that the Commission's investigation and the resultant decision were triggered by an informal complaint from the British Printing Industries Federation (together with a press release) and by the Fédération Française de Cartonnage (see points 22 and 23 of the decision).
106. I cannot therefore accept MoDo's contention, in paragraph 64 of its appeal, that price levels raised by infringing activity are the key market effects which laws prohibiting cartels are directed against. I also disagree with the statement made by Cascades in paragraph 47 of its appeal that the gravity of the infringement refers to its harmfulness to customers of members of the cartel, and ultimately to consumers. The harmfulness of a concerted practice, from the point of view of its effects, does not depend on the attitude of the undertakings which took part in it (and whether they implemented the collusion), but rather the specific effect of that collusion on market conditions.
107. The members of the cartel cannot therefore benefit from external factors which counteracted their own efforts, by turning them into factors justifying a reduction in the fine.
108. Some of the applicants also submit that in order to determine the gravity of the infringement only the third type of effects cited by the Court, namely the difference between the actual prices and those which would have been obtained in the absence of collusion, should be taken into consideration (see, for example, paragraph 45 of the appeal of Cascades).
109. However, that would amount to making hypothetical calculations based on economic models, whose infallibility is in no way proved, as the decisive factor in order to decide whether or not a fine should be imposed in respect of a cartel.
110. I would like to point out in passing that the line of argument adopted by the Court of First Instance in that regard is somewhat ambiguous. While it rejected the Commission's assertion that the level of transaction prices would have been lower if there had been no collusion between the producers, the Court stated that the analysis in the LE report does not justify a finding that the concerted price initiatives did not enable the producers to achieve a level of transaction prices above that which would have resulted from the free play of competition. As the Commission pointed out at the hearing, it is possible that the factors taken into account in that analysis were influenced by the existence of collusion (paragraph 304 of the contested judgment).
111. Lastly, Cascades also submits that in finding that the fact that the undertakings actually announced the agreed price increases and that the prices so announced served as a basis for fixing individual transaction prices suffices in itself for a finding that the collusion on prices had both as its object and effect a serious restriction of competition, the Court of First Instance confused the effect of the infringement on the market, the only relevant concept for assessing the gravity of the infringement, and the question whether the agreement had, besides an anti-competitive object, a restrictive effect on competition.
112. I consider, on the contrary, that in that passage the Court of First Instance merely wished to state that, as regards the effects of a cartel, it is necessary to accord prime importance to the actual conduct adopted by the members of the cartel in their negotiations with the purchasers of their products.
113. Lastly, as regards the judgments cited by the applicants in support of their contention, I consider that they are not of such a nature as to prove that in circumstances such as those of the present case decisive weight should be attributed to the fact that the cartel did not broadly but only partially succeed in achieving its objectives in regard to prices.
114. The judgment in Hasselblad v Commission concerned an exclusive distribution agreement the anti-competitive effect of which therefore had to be proved. The Commission's decision was, in essence, upheld by the Court of Justice. The fine was reduced for three reasons. One article of the decision was annulled on one point concerning a particular period, because the clause in question was not contained in agreements concluded before a particular date (paragraph 40 of that judgment). A clause which extended the guarantee on Hasselblad cameras from one year to two years and by which Hasselblad undertook to repair the cameras within 24 hours was not regarded as restricting the supply of parallel imports of cameras (paragraph 34). Lastly, the Court took into consideration the fact that the applicant was not a large undertaking (paragraph 57).
115. Those factors therefore concerned only certain specific provisions of the distribution agreements in question, not the general problem of the importance to be attributed to the effects of the agreements on market conditions, in particular on prices.
116. On the contrary, the Court of Justice confirmed that a clause prohibiting resellers' from advertising prices which defied any competition or were unbeatable was unlawful (paragraph 49 of the judgment in Hasselblad v Commission, cited above). It also confirmed that a prohibition on sales between authorised dealers was a restriction of their economic freedom and, consequently, a restriction of competition, and that the fact that the applicant had never impeded exports by its dealers was not sufficient to preclude the existence of a clear prohibition of exports (paragraph 46 of that judgment).
117. Metsä-Serla Sales Oy and Cascades also cite the judgment of the Court of Justice in AKZO v Commission and MoDo cites the judgment in Michelin v Commission. However, the decisions in question in those cases were adopted by the Commission on the basis of Article 86 of the EC Treaty (now Article 82 EC).
118. As I have already pointed out, where abuse of a dominant position is concerned, the effects of the undertaking's conduct on its competitor's market shares are of crucial importance. Unlike in the case of an agreement with an anti-competitive object it is necessary to prove that there is in fact an abuse, since the dominant position itself does not constitute an infringement.
119. MoDo also relies on the judgment of the Court of First Instance in SIV and Others v Commission.
120. However, in that case, the very existence of a cartel was in doubt (see paragraph 315 of the judgment). The Court found that the Commission had not proved to the requisite legal standard the objection that there was a general agreement between the three producers resulting in uniform prices and discount scales (see, for example, paragraphs 324 and 334 of that judgment).
121. On the other hand, when the Court of First Instance held that the Commission has proved to the requisite legal standard the existence of agreements between FP and SIV on the sharing-out of supplies and on the prices to be charged to the Piaggio Group only for the years 1983 and 1984, and that only the agreements for 1983 were implemented, it immediately added as follows: Those agreements, the purpose of which was price-fixing and market-sharing, are caught by Article 85(1)(a) and (c), without it being necessary to examine whether they actually affected competition. The Court cannot accept the argument advanced by the applicants FP and SIV that those agreements should be regarded as de minimis. Accordingly, Article 1(d) of the decision, in so far as it concerns a period subsequent to 31 December 1984, must be annulled ratione temporis only (paragraphs 336 and 337 of the judgment in SIV and Others v Commission, cited above).
122. MoDo also cites part of paragraph 621 of the judgment in Suiker Unie and Others v Commission, but fails to take account of the fact that in that case the Commission itself had not alleged that the parties concerned had made a concerted or abusive increase in the prices charged.
123. As regards the judgments of the Court of First Instance in the Polypropylene cases, and in particular Petrofina v Commission, it is not, in my opinion, possible to conclude from them that the Court there implicitly accepted that if the Commission had not already taken account of the fact that the cartel had not fully achieved its objectives when fixing the resultant fine, the Court would have taken the view that a reduction in the fine would have been justified on that ground. I take the view, rather, that the Court wished to state that the problem raised by the applicant did not arise and not that, if it had arisen, the Court would have decided on it in the sense advocated by the applicant.
124. I therefore suggest that the Court of Justice should find that the Court of First Instance did not misinterpret the concept of effects of the infringement on the market and that it did not err in law as regards the importance which should have been attached to those effects when assessing the gravity of the infringement.
Has there been an infringement of the principle of proportionality?
125. Those same reasons lead me also to suggest that the Court of Justice should not uphold the plea, submitted by several appellants, of infringement of the principle of proportionality.
126. In that part of its appeal, Cascades states that the amount of the fines imposed must be in proportion to the impact which the infringement has on the pursuit of the Community's objectives.
127. Like the Commission, I accept that this statement is correct. However, it in no way follows from it that the amount of the fines should have a quasi-mathematical relationship with the price increase actually achieved under the contracts concluded by the members of the cartel with their customers.
128. The Community's objectives, so far as concerns competition, are to ensure that the single market is not partitioned and that the price of goods can be determined by the free play of competition.
129. Already in its judgment in Bayer v Commission, the Court of Justice stated as follows in that regard:
Although every producer is free to change his prices, taking into account in so doing the present or foreseeable conduct of his competitors, nevertheless it is contrary to the rules on competition contained in the Treaty for a producer to cooperate with his competitors, in any way whatsoever, in order to determine a coordinated course of action relating to a price increase and to ensure its success by prior elimination of all uncertainty as to each other's conduct regarding the essential elements of that action, such as the amount, subject-matter, date and place of the increases.
130. Let me repeat once again, where it is a question of an agreement which indisputably has as its object the prevention of competition, the amount of the fines must be proportional to the efforts made by the undertakings to that end and not proportional to the price increase actually extracted from customers.
131. Even if, despite that, the Commission has taken into consideration, inter alia, but at a subsidiary level, the effects of the agreement or the concerted action on the market when it fixed the fines, the Court of First Instance is entitled, by virtue of its unlimited jurisdiction, to take the view that a reduction in the fine is not justified, even where it reaches the conclusion that those effects were not as extensive as the Commission thought. It may take the view that the other characteristics of the infringement are of such a nature as to prove the existence of a serious restriction of competition which in themselves justify the fines imposed.
132. Already in 1983, in the judgment in AEG v Commission, the Court of Justice adopted a basic policy to that effect. It stated in paragraph 136 of that judgment as follows:
It is clear from the foregoing considerations that AEG's systematic conduct in the improper application of the selective distribution system must be regarded as having been sufficiently proved in law. The fact that the Commission has not succeeded in proving a number of individual cases does not call in question the systematic nature of AEG's improper conduct and does not affect the scope of the infringement as determined by the Commission in its decision of 6 January 1982.
133. That stance seems to me to be wholly warranted. On the basis of its powers in regard to actions for annulment, the Court of First Instance may already in any event decide:
- that the decision is valid: in which case the fine will remain as it is;
- that the decision is invalid: in which case the fine will be extinguished ipso facto.
134. If unlimited jurisdiction is to have any meaning, it must therefore mean that apart from those two cases the Court may itself fix the amount of the fine which, in its opinion, is merited by the facts which it considers to have been proved. That means that it must also be entitled to assess whether the matters which it has found are still sufficiently serious to justify the fine imposed by the Commission.
135. The Court of First Instance must, of course, give reasons to the requisite legal standard for that finding, which it has in the present case.
136. What powers does the Court of Justice now have in that respect in the course of an appeal?
137. It is apparent from the judgment in Baustahlgewebe v Commission that the Court of First Instance alone has jurisdiction to examine how in each particular case the Commission appraised the gravity of unlawful conduct. In any appeal, the purpose of review by the Court of Justice is, first, to examine to what extent the Court of First Instance took into consideration, in a legally correct manner, all the essential factors to assess gravity of particular conduct in the light of Article 85 of the Treaty and Article 15 of Regulation No 17 and, second, to consider whether the Court of First Instance responded to a sufficient legal standard to all the arguments raised by the appellant with a view to having the fine cancelled or reduced (see, on the latter point, Case C-219/95 P Ferriere Nord v Commission [1997] ECR I-4411, paragraph 31).
138. I consider that it follows from all the foregoing arguments that the contested judgment fulfils those conditions.
139. Let us also remember that in Baustahlgewebe v Commission the Court of Justice also added as follows:
As regards the allegedly disproportionate nature of the fine, it must be borne in mind that it is not for the Court of Justice, when ruling on questions of law in the context of an appeal, to substitute, on grounds of fairness, its own assessment for that of the Court of First Instance exercising its unlimited jurisdiction to rule on the amount of fines imposed on undertakings for infringements of Community law.
140. Lastly, MoDo's argument that the Court of First Instance chose to take upon itself the Commission's policy-making role and impose what is in practice a higher penalty for a lesser infringement seems to me to be wholly unreasonable for at least two reasons.
141. First, the Court of First Instance in no way increased the fine. It merely gave slightly different weight than the Commission to the various factors which together determine the gravity of the infringement.
142. Second, such a complaint reflects a restricted, and therefore incorrect, notion of what is covered by competition policy. Although the fixing of the amount of fines to be imposed on the members of the cartel falls, to a certain extent, within that definition, it does so only at a very low level.
143. Defining a competition policy is above all fixing a desirable level of competition, on the basis of which an assessment will be made of, for example, merger plans, identifying the types of agreements which are to benefit from a block exemption, fixing the priorities by reference to which complaints will be examined, laying the foundation for effective cooperation between the Community authorities and the national authorities with competence in matters of competition, laying down criteria for the admissibility of State aid, fixing the thresholds below which a de minimis rule may be applied.
144. The Court of First Instance also has a presence in those various areas, but it carries out only a review of pure legality, precisely because it is a matter of defining a policy and that is not its task.
145. So far as concerns the fixing of the amount of the fines, one is more at the level of giving specific enunciation to a policy than of its elaboration, even though an overall policy may in fact be established in small touches by an accumulation of individual decisions revealing a coherent approach, which explains why the Court of First Instance, through the attribution of unlimited jurisdiction, has been given a more extensive power to intervene. The fact that it uses that power cannot be characterised as an encroachment on the area of competence reserved to the political authorities.
146. Contrary to MoDo's submissions, the Court of First Instance did not have any duty to indicate that it was adopting an exceptional measure and to set out the reasons which justified it.
147. The second plea must, therefore, be rejected in its entirety.
Conclusion
148. For all those reasons, I propose that the Court should:
(1) declare the appeal of Mo och Domsjö AB inadmissible in so far as it seeks annulment of the judgment of the Court of First Instance of 14 May 1998 in Case T-352/94 Mo och Domsjö v Commission in its entirety;
(2) declare it unfounded in so far as it seeks annulment in part of the judgment of the Court of First Instance in Mo och Domsjö v Commission;
(3) order the appellant to pay the costs.