Commission Decision

of 24 July 2002

relating to a proceeding pursuant to Article 81 of the EC Treaty

(Case COMP/E-3/36.700 - Industrial and medical gases)

(notified under document number C(2002) 2782)

(Only the English and Dutch texts are authentic)

(2003/207/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Community,

Having regard to Council Regulation No 17 of 6 February 1962, First Regulation implementing Articles 85 and 86 of the Treaty(1) as last amended by Regulation (EC) No 1216/1999(2), and in particular Articles 3 and 15(2) thereof,

Having regard to the Commission Decision of 9 July 2001 to open a proceeding in this case,

Having given the undertakings concerned the opportunity to make known their views on the objections raised by the Commission pursuant to Article 19(1) of Regulation No 17 and Commission Regulation (EC) No 2842/98 of 22 December 1998 on the hearing of parties in certain proceedings under Articles 85 and 86 of the EC Treaty(3),

Having regard to the final report of the hearing officer in this case(4),

After consulting the Advisory Committee on Restrictive Practices and Dominant Positions,

Whereas:

PART I - FACTS

A. SUMMARY OF THE INFRINGEMENT

1. INTRODUCTION

(1) This decision concerns the following undertakings:

- AGA AB,

- Air Liquide BV,

- Air Products Nederland BV,

- BOC Group Plc.,

- Messer Nederland BV,

- NV Hoek Loos,

- Westfalen Gassen Nederland BV.

(2) The infringements consist of the participation of those producers of gases for industrial and medical purposes in a continuous agreement and/or concerted practice contrary to Article 81(1) of the Treaty. The companies concerned took part in agreements/concerted practices regarding price increases for the products concerned, moratoria to implement these price increases, minimum prices and various other trading conditions concerning these products. The undertakings involved belong to some of the world's leading industrial gases groups. The infringements are limited to the industrial and medical gases market in the Netherlands.

(3) The Commission has evidence that the undertakings participated in the infringements from 1989 until 1991 and from 1993 until 1997 in the case of AGA Gas BV, Air Liquide BV, Air Products Europe Inc. and NV Hoek Loos, in 1990/91 and from 1993 until 1997 in the case of Messer Nederland BV, from 1994/95 to 1997 in the case of Westfalen Gassen Nederland BV and in 1994/95 in the case of BOC Group plc.

2. THE PRODUCTS

(4) Industrial gases, in some languages called technical gases, are either derived from air (atmospheric gases: oxygen, nitrogen, argon) in air separation "tonnage plants" or are produced in tonnage plants through a chemical process (carbon dioxide, hydrogen, acetylene), often as a by-product. The core of the industrial gases industry is formed by the three atmospheric gases oxygen, nitrogen and argon, which together are believed to account for some 60 % by value - and considerably more by volume - of the total European industrial gases markets. Some atmospheric and non-atmospheric gases are offered in extremely pure forms or in mixtures for medical or special purposes, for example medicinal oxygen.

(5) Industrial gases are used in most industries and manufacturing processes. Medical gases are used in hospitals, clinics and in home treatment. The largest volumes of industrial and medical gases are used for producing, cutting and welding metals and in the chemical industry. The food industry, electronics industry and health care are each believed to account for some 10 % of the gases market. Each gas serves specific purposes and therefore has a user's market of its own.

(6) There are three different types of gases markets based on delivery methods: tonnage sales are made to certain large customers who require very large quantities of, primarily, the atmospheric gases oxygen and nitrogen. These supplies are made through either dedicated "on-site" production plants or dedicated pipeline links. The contracts, which include the capital investment necessary for such plant or pipeline links, are tailor-made and, in view of the importance of those investments, last up to 15 years. The Netherlands and Belgium have very dense pipeline networks. Tonnage sales are a separate market, given that the few companies which need such large quantities would not consider bulk or cylinder supplies an alternative, save as a back-up system.

(7) In 1989, following a Commission investigation into the industrial gases sector and the initiation of proceedings under Community competition rules(5), the world's major producers of industrial gases, including Air Liquide SA, AGA AB, Union Carbide, Air Products Europe Inc., Linde AG and Messer Griesheim GmbH, committed themselves vis-à-vis the Commission to modifying their tonnage contracts. Supply and purchasing commitments under on-site and pipeline contracts would no longer be of an exclusive nature but would relate to quantities falling within a fixed minimum/maximum range(6).

(8) Air gases and other gases such as carbon dioxide are delivered to medium-sized customers in liquid form (bulk) at low temperatures. The gas is transported to customers by road or rail tankers; the customers are supplied with storage tanks and vaporisation equipment. Pipelines are used between air separation plants or large production units and liquefaction plants; liquefaction plants are often constructed at the same site as tonnage plants (piggyback plants), thus avoiding investment in a pipeline between the two.

(9) The commitments provided to the Commission in 1989 by the world's major producers of industrial gases referred to in recital 7 also covered sales of the liquid air gases nitrogen, oxygen and argon under bulk contracts. Here too, supply and purchase commitments should relate to quantities up to a fixed maximum. The Commission allowed a supplier to maintain the exclusive right to fill and to maintain storage tanks for reasons of safety. A customer wishing to use more than one supplier would need more than one storage tank. The duration of liquid air gas contracts was reduced to three years. Customers would continue to be free to purchase or lease cryogenic tanks from the gas supplier; they can stipulate that tank rental contracts should be separate from the gas supply contract. Tank rental contracts can be made for a maximum period of five years.

(10) Smaller customers of air gases, as well as buyers of welding gases, gas mixtures and special or very pure gases, are supplied by means of cylinders usually made of steel. Cylinders may be filled at, and distributed from, the supplier's production plant. Alternatively, liquid gases are transported in tankers to cylinder filling centres, where the transformation into compressed gas and the filling of cylinders takes place. From there cylinders in various sizes holding gas under pressure are either transported directly to the customer, or to depots, sometimes independent undertakings, which supply retail customers. Welding gases, such as acetylene, are only transported in cylinders and under low pressure.

(11) Although the volumes of cylinder gases sold are limited, their importance in revenue terms is quite important. This is so because of the higher prices and related charges that go with cylinder sales. In the cylinder business, large suppliers usually categorise customers on the basis of the quantities purchased in a given period. The more important cylinder customers will usually be served directly by the industrial gases undertaking, whereas smaller customers will deal with a depot holder. The commitments given to the Commission in 1989 by the world's major producers of industrial gases did not cover supplies of gases in cylinders.

(12) The industry generally views these three different distribution methods as separate product markets and the Commission took the same view in case IV/30.869 - Industrial Gases(7) and in the merger decisions Air Liquide/BOC(8) and Linde/AGA(9). The customer will generally choose the supply method on economic grounds within the possibilities available for a specific gas at a specific user's location. This does not mean that a given customer cannot buy from a single undertaking several gases supplied in different forms, for example oxygen by pipeline, carbon dioxide in liquid form and a specific argon mixture in cylinders.

(13) In all three forms of delivery the price of transport and packaging is very high compared with the value of the gases themselves. Usually both the tank and the cylinders remain the property of the supplier of the gases and are rented by the customer. Cylinders and tanks need to undergo regular safety checks by the owner.

(14) Because transportation is expensive and because few suppliers are able to produce all industrial gases themselves in every region, the industrial gases groups and their national subsidiaries tend to supply each other with large quantities of gases by pipeline or in liquid form. They do so by means of swap deals or under take-or-pay or other contracts. Such supplies between groups are often of a cross-border nature. Filling depots belonging to one supplier will sometimes also fill cylinders on behalf of competitors. In this way customers can obtain the different types of industrial gases they need from a single supplier.

3. THE SUPPLIERS

(a) Hoek Loos

(15) The largest industrial gas company in the Netherlands at the time of the investigation, was NV Hoek's Machine en Zuurstoffabriek, now named NV Hoek Loos, and hereinafter referred to as "Hoek Loos". It was founded in 1891 and is located in Schiedam. On 31 December 1996 Hoek Loos had 1798 employees, 826 of whom worked in the Netherlands. Hoek Loos's structure was modified in 1996, when the NV became a holding company for a number of working companies including Hoek Loos BV, Hoek Loos Medische Gassen BV, the Belgian company Hoek Loos NV and the company Holox Inc., United States of America.

(16) The ultimate parent company of Hoek Loos is Linde AG in Wiesbaden, Germany. The Linde group achieved a turnover of DEM 8,801 billion worldwide in 1996 with a staff of over 30000. Besides producing, marketing and selling industrial and medical gases in many countries of the world, Linde also engineers and produces various types of installations for the chemicals sector, transportation vehicles, hydraulic systems and refrigeration systems. Linde's gases activity accounted for a turnover of [...](10) in 1996.

(17) [...].

(18) In 2000 Hoek Loos became a 100 % subsidiary of Linde when Linde bought up all remaining Hoek Loos shares traded on the stock exchange.

(19) Hoek Loos is active in the Netherlands, Belgium and the south-east of the United States of America. Hoek Loos produces, markets and distributes industrial and medical gases as well as related equipment, systems and services. Until 1996 it also manufactured medical equipment. In the Netherlands, where it owns air separation units located in IJmuiden and Botlek/Rotterdam, Hoek Loos supplies gases in cylinders, in bulk and by pipeline and also offers gases through on-site installations. Hoek Loos is a founding member of the Dutch sector association VFIG. Being the largest member, Hoek Loos has always chaired the VFIG.

(b) AGA

(20) At the material time the second important industrial gases company in the Netherlands was AGA Gas BV, founded in 1971 and located in Amsterdam(11). At this time, AGA Gas BV was owned by AGA Invest BV, which in turn was owned by AGA AB of Lidingö, the ultimate Swedish parent of the AGA group. AGA AB achieved a turnover of SEK 12,860 billion worldwide in 1996 with a staff of over 10000.

(21) AGA Gas BV has undergone a change of corporate structure since the period under investigation and no longer exists as such. Following the Commission decision on the merger of Linde and AGA(12), AGA AB was acquired by Linde AG and one of the remedies offered in order for the Commission to reach its favourable decision, was the divestiture of AGA Gas BV's cylinder gas business in the Netherlands.

(22) In December 2000, AGA Gas BV was split by a legal demerger into AGA Gas BV (the remainder) and AGA Transfer BV, renamed AGA Amsterdam BV. AGA Gas BV basically retained the liquid business, the medical gases business, the speciality gases business and the Mison business. AGA Amsterdam took over the cylinder gases business.

(23) In 2001 AGA Gas BV (the remainder) was subsequently merged into AGA Invest B.V and the latter sold by AGA AB to Hoek Loos. AGA Amsterdam BV was sold to Air Products Holdings BV and Prodair Corporation.

(24) At the material time AGA Gas BV (hereinafter AGA) produced, marketed and sold industrial and medical gases as well as related equipment, systems and services. Until 1995 AGA and Hoek Loos had a joint production joint venture called Cryoton in the Rotterdam area. From that year on AGA retained a liquid CO2 production unit, whereas the air separation unit was allocated to Hoek Loos.

(25) AGA is a founding member of VFIG. As the second-largest member, AGA has traditionally supplied the treasurer of the VFIG.

(c) Air Products

(26) A third long established player in the Netherlands is Air Products Nederland BV (hereinafter Air Products), located in Waddinxveen. [...]. Air Products is a founder member of the VFIG.

(27) Incorporated in the State of Delaware (United States of America), Air Products Europe Inc. is in charge of the European operations of Air Products and has its headquarters in the United Kingdom.

(28) Air Products' ultimate parent is Air Products and Chemicals Inc., Allentown, Pennsylvania, United States of America. The group employed 16700 employees in 1998; [...].

(d) Air Liquide

(29) Air Liquide BV (hereinafter Air Liquide) was founded in 1988 and is today located in Eindhoven.

(30) Its ultimate parent is Air Liquide SA, France. Air Liquide markets and sells bulk and cylinder gases in the Netherlands. It also serves one large customer in Belgium. Tonnage contracts are dealt with by an intermediary company within the Air Liquide group called Air Liquide Nederland BV. Air Liquide is a founding member of the VFIG.

(31) The Air Liquide group employed some 27000 employees in 1996. The Air Liquide group holds a strong position in the industrial gases markets of France and Belgium.

(e) Messer

(32) The parent company of Messer Nederland BV, until 1997 called Messer Griesheim Nederland BV (hereinafter Messer), located in Moerdijk, is the Messer group in Frankfurt, Germany, with a turnover of DEM 2,300 billion in 1996 and some 7200 employees worldwide.

(33) At the material time the ultimate parent company was the Hoechst group, which held a two-thirds stake in the Messer group (the other third being owned by the Messer family) and which had about 120000 employees in 1996. Messer, which started operations in 1989, became a member of the VFIG in October 1991.

(34) At present the Messer Group is majority owned by Allianz and Goldman Sachs, which acquired a two-thirds stake in the Messer Group when they purchased Hoechst's shares.

(f) Westfalen

(35) Westfalen Gassen Nederland BV (hereinafter Westfalen) started operating in the Netherlands in 1989. Located in Deventer, its ultimate parent company is Westfalen Gase AG of Münster, Germany, which had approximately 1100 employees in 1997. Westfalen became a member of the VFIG in July 1994.

(g) BOC

(36) Based in Guildford, Surrey, United Kingdom, the BOC Group plc had about 40000 employees in 1996. Approximately 70 % of the group's turnover in 1996 came from the gases business. At the time it was also active in the semiconductor and vacuum technology, distribution and health-care sectors. The BOC Group has its Community stronghold in the United Kingdom.

(37) At the material time the BOC Group conducted its gases activities in the Benelux (operated out of Zaventem, Belgium) through four legal entities: BOC NV (the Belgian company responsible for the Zaventem headquarters function), BOC Gas BV (a Dutch company responsible for the tonnage and bulk business in Terneuzen, the Netherlands), BOC Cylinder Gas NV (responsible for the cylinder filling operation in Herenthout, Belgium) and BOC Gaz SA (a French company responsible for sales in France). These BOC companies, which together constitute the undertaking BOC Gases Benelux (hereinafter BOC), are responsible inter alia for marketing cylinder and bulk gases in Belgium, the Netherlands and neighbouring areas of northern France and western Germany. BOC Gas BV became a member of the VFIG in May 1991.

(38) The BOC Group sold its gases operations in the Benelux and Germany to the Air Liquide Group at the end of 1998 for a total cash consideration of GBP 112 million.

(h) NTG

(39) Nederlandse Technische Gasmaatschappij BV (hereinafter NTG) is located in Tilburg and was founded in 1985. NTG became a member of the VFIG in mid-1989. Until an air separation unit owned by its sister company BTG started operations in Belgium in late-1998, NTG purchased most of its bulk gases from other gas companies. NTG only markets and sells gases in bulk and in cylinders, it is not active in the tonnage markets.

(40) NTG's ultimate parent company is SOL SpA in Monza, Italy, founded in 1927, which is a multinational group engaged in the production, applied research and marketing of industrial, pure and medicinal gases. The SOL Group employed some 900 people in 1996.

4. OTHER ACTORS

(a) Hydrogas

(41) Hydrogas Holland BV (hereinafter Hydrogas) is located in Vlaardingen. It has access to several carbon dioxide production plants in Sluiskil and is very much specialised in the bulk supply of this particular gas to other gas companies and to end-users. Hydrogas realised a turnover on liquid gases of NLG 25,4 million in 1996, mostly in sales to other gas companies within the Norsk Hydro group and to competitors. Hydrogas became a member of the VFIG in May 1991.

(42) Hydrogas's ultimate parent company is Norsk Hydro ASA of Oslo, Norway, which is active in the fertilisers, industrial chemicals, oil and natural gas, aluminium, magnesium and petrochemicals sectors. The Norsk Hydro group achieved a turnover of some NOK 70 billion in 1996 with 32000 employees. 51 % of Norsk Hydro's share capital is held by the Norwegian government.

(43) The Commission notes that although Hydrogas will be mentioned as having attended some of the VFIG meetings below, no conclusion is drawn for this company as regards any infringement.

(b) UCC, Praxair, Indugas

(44) Union Carbide Corporation of Danbury, Connecticut, United States of America, manufactures, markets and sells various chemicals in many countries of the world. Until 1 July 1992 its product branches included industrial gases. Its subsidiary in the Netherlands and Belgium, Union Carbide Benelux NV (hereinafter Union Carbide), was also a supplier of industrial gases. Union Carbide is not and has never been a member of the VFIG.

(45) On 1 July 1992 Union Carbide Corporation hived off its industrial gases branch, which took the name Praxair Inc., as a Delaware, United States of America, corporation. Praxair Inc. achieved a turnover of USD 4,449 billion in 1996. In the Netherlands, Praxair operates as Praxair NV (hereinafter Praxair), located in Olen, Belgium. The Praxair Group owns and operates a number of facilities producing atmospheric gases in Belgium and the Netherlands. Most are on-site plants dedicated to serving the customer on whose site the facilities are located. Two such plants, located in Zwijndrecht and the Belgian town of Lommel, produce atmospheric gases that are sold on the market by pipeline and in liquid form. The Praxair Group does not operate any filling plants for atmospheric and medical gases in the Netherlands and does not sell gases in cylinders there. Praxair is not and has never been a member of the VFIG.

(46) Indugas NV (hereinafter Indugas), located in Schoten (Belgium), was founded as a reseller and distributor of industrial gases and welding products in 1979 by Union Carbide and the Belgian company Antwerpse Chemische Bedrijven LCB NV. Union Carbide (Praxair since 1 July 1992) and LCB each own 50 % of Indugas's capital stock. Indugas purchases bulk atmospheric gases from Praxair, most of which it then fills into cylinders. Since 1979 Indugas has been the sole distributor for Union Carbide/Praxair's atmospheric gases and mixtures of such gases. It also became sole reseller for Praxair's specialty gases in the Netherlands on 1 January 1995. In 1996 Indugas sold gases worth NLG 16 million in the Netherlands through its subsidiary Indugas BV. Indugas became a member of the VFIG in September 1993.

(47) The Commission notes that the statement of objections was not sent to the companies referred to in section A.4(b) and that therefore no conclusion will be drawn as regards any infringement, even though some of those companies are mentioned in certain documents described below.

(c) ACP and IJsfabriek Strombeek

(48) Two small, independent Belgian producers of industrial gases are, to a certain degree, also active on the Dutch market.

(49) Acide Carbonique Pur NV/SA (hereinafter ACP) is located in Heusden-Zolder in Belgium. This undertaking, which does not belong to one of the multinational industrial gases groups, sells cylinder gases on the Belgian market only. ACP also produces carbon dioxide in Geleen (Netherlands), which it sells in liquid form mainly in Belgium, the Netherlands, Germany and France. ACP's total turnover for industrial gases is BEF 526 million.

(50) Ijsfabriek Strombeek is another independent public limited company and is located in Meise in Belgium. In 1996 it sold cylinder gases in the Benelux, Germany and the United Kingdom, and liquid gases in Belgium, the Netherlands, Germany, France and Greece. The company realised a total turnover of BEF 567 million. In the Netherlands Ijsfabriek Strombeek's only significant market share is for nitrous oxide (laughing gas), which it sells both in cylinders and in bulk.

5. THE TRADE ASSOCIATION - VFIG

(51) The association "Vereniging van Fabrikanten van Industriële Gassen" (VFIG) was founded on 23 March 1989. There was no notarial deed, nor was the association included in the public register of associations (Verenigingenregister). According to Article 5 of its statutes, VFIG's members are undertakings which manufacture and sell industrial gases in the Netherlands. Article 4 of its statutes defines VFIG's objective as being to promote the interests of its members in technical matters and regarding safety issues of industrial gases within Community industry. The secretariat of VFIG is managed by Teppema BV, which is a daughter company of Moret Ernst & Young(13) Management Consultants.

(52)

>TABLE>

(53) Pursuant to Article 7 of the statutes, members meet at least once a year. At these meetings member companies are usually represented by their general manager and/or another manager. Since 1990 members have usually met two to four times a year, as shown in the list at recital 106. This list also shows that larger member companies attend all meetings, but smaller ones do not. Minutes of those meetings are drawn up by the secretariat and put on the agenda of the next meeting for approval. The members meeting can decide to set up commissions. A Technical Commission was thus created in 1991 and has met at least once a year ever since.

(54) Moret Ernst & Young produce quarterly statistics on the amounts of liquid and cylinder gases sold by members on the Dutch market. The data is presented in aggregated form, allowing each participant to assess its own market share only. Members of VFIG are not obliged to participate in the statistical system, but since 1993 most have.

6. THE INDUSTRIAL AND MEDICAL GASES MARKETS

(a) The relevant product markets

(55) This Decision only concerns supplies of gases in liquid form (bulk) and in cylinders. Tonnage contracts fall outside of the scope of this Decision. In bulk form, the most relevant gases for this Decision are the three atmospheric gases nitrogen, oxygen and argon as well as carbon dioxide (CO2). Supplied in cylinders, nitrogen, oxygen, argon, carbon dioxide, acetylene and argon mixtures are the most relevant gases. Every one of these gases has several fields of use.

(56) Nitrogen accounts for 78 % of our atmosphere; it has a liquefaction point of minus 196 °C. Its specific properties are its inertia and, in liquid form, its ability to absorb heat. In gaseous form it is used to protect liquids and solids from corrosion, microbiological attack, the formation of explosive mixtures and other effects which can arise from their being in contact with air. It is traditionally used in the steel and other metallurgical industries, in the oil and petrochemicals industries and, increasingly, in the foods (freezing and packaging) and electronics industries. Nitrogen is supplied by pipeline, in bulk or in cylinders.

(57) Oxygen accounts for 21 % of our atmosphere; it has a liquefaction point of minus 183 °C. Its oxidative property is used to improve the efficiency of combustion processes and chemical reactions. As technical or industrial oxygen it is mainly used for the production of steel, other metals, glass, ceramics, chemicals, pulp and paper; it is also used for cutting and welding; newer applications include water treatment and fish farming. Oxygen is supplied by pipeline, in bulk and in cylinders. Oxygen is also used for medical purposes in a purer and more expensive form, in which form it is supplied in cylinders or in bulk.

(58) Argon is a noble gas, which accounts for only 1 % of our atmosphere; it has a liquefaction point of minus 186 °C. It is even more inert than nitrogen and is therefore used in blanketing operations, including as a shielding gas in welding and in certain highly inert processes in electronics and metallurgy. Argon is not only produced in air separation units, but also as a by-product of the ammonia process. Argon is generally supplied in bulk or in cylinders.

(59) Carbon dioxide is mainly produced as a by-product of chemical processes, notably as a by-product of hydrogen. Industrial gases companies generally buy CO2 from chemical and petrochemical companies and sell it in bulk and in cylinders. CO2 is used as dry ice for freezing purposes; in gaseous form for fertilisation in greenhouses and carbonisation of soft drinks and beer; it is also used in fire extinguishers, as a protective gas for storage of flammable and explosive substances and for many other purposes. For some applications it is interchangeable with nitrogen.

(60) Argon mixtures are sold in cylinders only. They are used for welding and for calibration purposes.

(61) Acetylene is a fuel gas, based on carbide production, with a very high flame temperature. It is used for welding, cutting and other purposes. It is supplied in cylinders under low pressure.

(62) It is generally recognised in the industry that, for each gas, each method of distribution gives rise to a distinct product market(14). The cost to the producer, the main factors being labour, energy, depreciation and transport, varies considerably according to the method of distribution. Therefore, prices charged to the consumers of the gases differ enormously depending on the form of delivery used. Cylinder gases are far more expensive than the same gases in liquid form, which are in their turn more expensive than those supplied by pipeline in gaseous form. The cost charged to customers for transportation and rent, as well as possible safety and other charges, will therefore differ according to the method of delivery. Furthermore, the gases commercialised by the different methods are tailored to different customer requirements.

(63) One aim of the agreements concerned by this Decision was to fix the cost of delivery of cylinder gases in general. The Commission notes that those agreements applied to the delivery of all cylinder gases and not just the most important ones described above. The other gases concerned include helium, nitrous oxide, hydrogen, tetrene and various special gases and mixtures. Similarly, in the field of bulk gases, the supply conditions of other, less important gases, for instance nitrous oxide, were also affected by the agreements in question.

(b) The relevant geographic market

(64) The geographic market for supplying industrial gases is limited by the costly means of transport described under (a) above and can therefore be defined as local or regional in scope. In Case IV/M.926 Messer Griesheim/Hydrogas, in 1997, the Commission based its assessment on an effective transport range of 200 km.

(65) Back in 1989, in the context of a case(15) examining the conditions applied by suppliers of industrial gases to their customers, the Commission established that simple liquid gases, such as oxygen and nitrogen, have an economic distribution radius of 300 to 400 km and the more costly argon a radius of 600 to 800 km. Atmospheric gases in cylinders are not usually transported beyond a range of 100 km, with the exception of the more expensive argon.

(66) This estimation for cylinder gases was confirmed in the present case by Air Liquide, which, however, limited the effective radius for liquid oxygen and nitrogen to 150 km and for liquid argon to 400 km. Praxair and BOC, on the other hand, believe that the estimations of distances made in the 1980s still hold true. ACP puts the effective radius for liquid CO2 at 300 km.

(67) By transport over water the radius, at least for sales between industrial gases groups, can be much greater: references in the file indicate that liquid argon is shipped from the Netherlands to Greece and that liquid CO2 can be shipped from the Netherlands to Poland and Russia. For acetylene, which is only transported in cylinders, the effective radius is estimated at 300 to 400 km.

(68) In 1997, in Case IV/M.926 Messer Griesheim/Hydrogas, the Commission considered the relevant geographic market for the joint venture in question to be local or regional because transportation over longer distances was so costly.

(69) The fact that some gas companies, such as AGA for its liquid gases and BOC until December 1998, operate on a Benelux-wide level suggests that the relevant geographic market might be larger than the Netherlands. However, in reply to the Commission's queries, all suppliers of industrial gases in the Netherlands are of the opinion that the geographic market for cylinder gases is a national one. The main reason they mention is governmental regulation regarding cylinders, which makes it impossible to use "Belgian" cylinders for sales in the Netherlands and vice versa; Germany too has standards of its own(16). Cultural and language differences and the important service aspect involved in the supply of cylinder gases are also mentioned as arguments in favour of national markets.

(70) For liquid gases the situation is less obvious. There are differences in regulations between Member States regarding bulk tanks, but once these are installed cross-border supply would not seem to constitute a barrier. However, most of the companies stated to the Commission that they consider markets for liquid gases to be national too. AGA, Praxair and ACP differed in that they believed the geographic market to depend more on the effective radius.

(71) The Commission notes that the production and supply of industrial gases in the Community is dominated by a few large, multinational groups, which have national subsidiaries in most Member States. These subsidiaries supply bulk gases to local depot holders and to end-customers and cylinder gases to end-customers within that particular Member State only. These subsidiaries also set prices and other commercial conditions for supplies within that Member State.

(72) An end-customer in one Member State will find it difficult to obtain supplies from subsidiaries of the multinational groups located in other Member States. This is not only because of the limited effective radius but because of the internal division of geographic responsibilities within the groups(17). As a consequence, prices and conditions of sale for both bulk and cylinder gases differ between Member States, a fact borne out by several documents in the file(18).

(73) Finally, the Commission notes that the structure of supply is different between Member States: Air Liquide is the clear market leader in France and Belgium, Messer and Linde are strong in Germany and Hoek Loos is the market leader in the Netherlands, followed by AGA.

(74) The Commission therefore concludes that for the purposes of this Decision the relevant geographic markets for both cylinder gases and liquid gases is confined to the Netherlands(19).

(c) Market structure

(75) Table 1 shows the overall size of each addressee of this Decision in 2001 and gives an estimation of its relative importance on the Netherlands market for industrial and medical gases (cylinders and bulk only) in 1996. The figures provided are based on the companies' responses to request for information and estimates of the Commission(20).

Table 1

>TABLE>

(76) Total annual sales of the relevant industrial gases in the Netherlands in 1994 to 1996 are estimated as follows:

Table 2

>TABLE>

(77) Tables 3 and 4 provide an indication of the market shares of the companies involved for each gas(21), for cylinder deliveries and liquid deliveries, on the Netherlands market for 1996:

Table 3

Cylinder gases

>TABLE>

Table 4

Liquid gases

>TABLE>

(78) The Commission notes that since the late-1980s a number of newcomers have entered the Dutch industrial gases market: Air Liquide, Messer, BOC and Westfalen and, in the CO2 market, Hydrogas. In a mature market, where there is little prospect for growth over and above that of the economy as a whole, the arrival on the market of new players is likely to enhance competition. Newcomers will try to acquire a sufficient share of the market, whereas the established companies will defend their market shares. This enhanced competition for customers is likely to lead to lower average prices.

(79) Data supplied by Hoek Loos, Air Products and AGA confirm that there was indeed a negative development in the price level of all major industrial gases since 1989, whether supplied in bulk or in cylinders. This development took place for gases facing declining general demand (such as acetylene) as well as for gases in more stable markets.

(80) The Commission notes that, despite the entrance of newcomers the markets for cylinder gases in the Netherlands have remained highly concentrated. The Herfindahl-Hirschmann Index (HHI)(22) exceeded 1800 for each of the cylinder gases in Table 3 in every one of the years 1993 to 1997, and the combined market share of the five larger undertakings AGA, Air Liquide, Air Products, Hoek Loos and Messer was never lower than 80 %. Variations in the market shares of each individual company were small.

(81) The markets for the liquid gases oxygen, nitrogen, argon and carbon dioxide were also concentrated. With the exception of oxygen, the five leading companies together held a share of more than 80 % in each of the years 1993 to 1997. Their individual market shares were less stable than for cylinder gases, however. The HHI oscillated around 1800.

(82) It appears from the Commission's file that Air Liquide, Hoek Loos, Air Products and AGA tried to maintain their market shares by a policy of retaliation against each other or against third companies whenever one of their customers was taken over by a competitor(23).

(83) In this context it should be noted that gas suppliers are rather well informed about each other's clients. Because cylinders and gas tanks usually belong to the gas supplier and bear that company's markings, a salesman visiting a customer or a potential customer can easily see who the current supplier is. A supplier can therefore react immediately if a customer with which it has a contract starts buying from a competitor. The larger suppliers of industrial gases certainly maintain lists for each competitor detailing customers they have lost and won. These lists also indicate price concessions they had to accept because of competitive offers made by that particular competitor(24). This knowledge, together with lists of that competitor's potentially interesting clients, allows the supplier in question to set up "hit lists" for a retaliation campaign(25). In AGA documents this retaliation policy is referred to as the "balance of terror"(26).

(84) Retaliation campaigns need not be restricted to the same geographic market. Several documents in the Commission's file refer to cross-border retaliation, notably in order to hit an aggressive competitor on its home market, where suitable targets may be easier to find(27). Other documents refer to campaigns at a Benelux level. Cross-border retaliation campaigns are usually organised or at least coordinated by the group to which the gas supplier in question belongs(28).

(85) It is common in the sector for prices and other supply conditions for cylinder and bulk gases to differ according to the customer. New customers are won by offering low prices and favourable supply conditions. These prices and conditions are increased on a yearly basis, usually at the beginning of each calendar year. Although each gas is a homogenous product and customers can easily switch between suppliers, studies made by some undertakings in the industrial gases sector show that there is nevertheless a high degree of loyalty among customers to "their" supplier(29). This can be explained by the service aspect of the industrial gas business, which includes speedy and reliable supply as well as good advice to customers on the use of the product in question. Consequently, customers tend to stick to their supplier despite the regular price increases they have to pay. Only when the difference between what they are paying and the much more favourable prices and conditions offered by competitors exceeds a certain level will customers contemplate switching. The current supplier must then either match the price offered or lose the customer. In both cases it is likely to retaliate by offering favourable conditions to one of its competitor's customers with a similar offtake.

(86) Thus, two price levels can be distinguished for each supplier of industrial gases in cylinders, a variable level for existing customers and a minimum price used to attract new customers. A similar difference exists for prices of industrial gases in bulk.

B. PROCEDURE

1. THE INSPECTIONS

(87) On 11 and 12 December 1997 investigations pursuant to Article 14(3) of Regulation No 17 took place simultaneously and without prior warning at the premises of AGA, Air Liquide, Air Products and Hoek Loos.

(88) In the course of 1998 investigations pursuant to Article 14(2) of Regulation No 17 took place at BOC, Hydrogas, Messer and Westfalen.

2. REQUESTS FOR INFORMATION

(89) On 24 July 1998 the Commission addressed requests for information pursuant to Article 11 of Regulation No 17 to AGA, Air Liquide, Air Products, Hoek Loos, NTG and Praxair.

(90) Requests for information under Article 11 of Regulation No 17 were also addressed to ACP and IJsfabriek Strombeek on 14 September 1998, to Westfalen, BOC and Indugas on 12 October 1998, again to ACP on 13 October 1998, to Messer on 30 October 1998, to Hydrogas on 12 November 1998 and again to BOC on 22 December 1998.

(91) Further requests under Article 11 of Regulation No 17 were sent to AGA, Air Liquide, Air Products, Hoek Loos and Messer on 7 April 1999 and to Hydrogas on 12 April 1999.

(92) On 20 January 1998 a request for information pursuant to Article 11 of Regulation No 17 was addressed to the trade association VFIG.

(93) The last requests for information pursuant to Article 11 of Regulation No 17 were addressed to AGA, Air Liquide, Air Products, Hoek Loos, Messer, Westfalen, BOC and NTG on 22 February 2002 and on 5 June 2002 to AGA, Air Liquide, Air Products, Hoek Loos, Messer, Westfalen and BOC.

(94) In these requests for information, the undertakings were required to provide information on meetings with competitors, clarifications on documents found at their premises during inspections and data on their general increases in prices and in other supply conditions. They were also asked to give their views on the definition of the market, to estimate their market shares and the total value of the market and to provide additional data on their business activities.

3. THE ADMINISTRATIVE PROCEDURE

(95) On 9 July 2001 the Commission initiated proceedings in the present case and adopted a statement of objections against the following eight undertakings active in the industrial and medical gases sector in the Netherlands. The addressees of the statement of objections were: AGA Gas BV, Air Liquide BV, Air Products Europe Inc., BOC Group plc, NV W.A. Hoek's Machine- en Zuurstoffabriek, Messer Nederland BV, Nederlandse Technische Gasmaatschappij BV and Westfalen Gassen Nederland BV.

(96) All addressees of the statement of objections submitted written observations in response to the Commission's objections.

(97) The undertakings had access to the Commission's file via a CD-ROM copy of the Commission's file, which was sent to them shortly after proceedings were opened.

(98) An oral hearing was held on 10 January 2002. The following undertakings took part: AGA AB as successor of AGA Gas BV, Air Liquide BV, Air Products Europe Inc. on behalf of Air Products Nederland BV, BOC Group plc, NV Hoek Loos, Messer Nederland BV and Westfalen Gassen BV.

(99) As they had done in their written replies, two of the companies concerned, Air Liquide and Westfalen, contested the facts as set out in the statement of objections and four companies, AGA, Hoek Loos, Air Products and Messer, said they did not substantially contest the facts. BOC made only a few minor comments in view of its minimal presence on the market at the time, and NTG did not attend the hearing.

(100) Most of the undertakings present, whether contesting the facts or not, raised the issue of limitation. They alleged that there was a lack of documentary evidence in the Commission's file for the period 1992 to 1994, and that the alleged infringements before 1992 were therefore time-barred because the surprise inspections took place on 11 and 12 December 1997. This point will be addressed in Part II, section E.

C. DETAILS OF THE INFRINGEMENTS

1. INTRODUCTION

(101) The Commission has evidence in its file that in the period 1989 to 1997 the leading undertakings supplying industrial gases in the Netherlands met regularly. At these meetings they:

(a) discussed and fixed the percentage or the amount by which they intended to increase prices and other trading conditions for cylinder, and sometimes bulk, gases supplied to their existing customers in the following year;

(b) agreed not to deal with each other's existing customers for a period of two to five months every year in order to implement these price increases;

(c) agreed to respect minimum prices when offering gases in cylinders and in bulk to new customers; and

(d) agreed to respect other minimum trading conditions for supplies in cylinders and in bulk. These conditions notably concerned the rent and transportation cost charged to customers. They furthermore agreed to introduce a drop charge for supplies in bulk and a charge for safety and environment on supplies in cylinders.

(102) Although these points are linked and had the common purpose of raising, or at least avoiding a deterioration of, the price level for industrial gases in the Netherlands, they will be described and analysed separately.

(103) The Commission has evidence of regular meetings between the leading undertakings in the industrial gases sector in the Netherlands in the period 1989 to 1997. Some of these meetings were also attended by smaller competitors. At these meetings the participants discussed various issues of common interest. These meetings provided them with a regular opportunity to discuss and fix the setting and implementation of their price increases and trading conditions for bulk and cylinder gases. Bilateral contacts between various undertakings supplemented these anti-competitive meetings.

(104) In the early years of the cartel, from 1989 on, suppliers of industrial gases attended "safety meetings". Such meetings took place in restaurants several times every year. They were sometimes combined with lunches and were organised by one of the undertakings in question. A draft agenda was distributed, which did not carry items relating to prices or other trading conditions. As will be shown in the following reictals, items not mentioned on the agenda were nevertheless also discussed at these meetings. Union Carbide, Hoek Loos, AGA, Air Products and Air Liquide attended one or more safety meetings in the years 1989 to 1991. Air Products notes that its senior manager stopped participating in 1990 and that Union Carbide was not always present in the meetings he attended(30).

(105) Meetings of VFIG members later became the forum of choice for discussing and fixing prices and other supply conditions. The official VFIG meetings started in 1989 and usually took place in Utrecht, where the VFIG has its secretariat. The secretary invited the member companies to attend by sending them a draft agenda together with the draft minutes of the last meeting.

(106) Further to a request for information under Article 11 of Regulation No 17, the VFIG provided the reports of the meetings that had been organised. Attendance of VFIG meetings is shown in the table below:

Table 5

>TABLE>

* = cancelled, 0 = absent, X = present.

(107) From 1995 on, the larger undertakings in the sector, AGA, Air Liquide, Air Products, Hoek Loos and Messer, also started meeting informally outside the VFIG framework. These meetings were organised by each of the undertakings in turn at a restaurant in Breda and, in 1997, in Barendrecht too. There was no formal agenda for such meetings, nor were formal minutes taken. The meetings took place several times a year and they continued until at least the end of 1997(31). At these meetings the companies discussed and set prices and other supply conditions, as will be shown below.

(108) The attendance of meetings of AGA, Air Liquide, Air Products, Hoek Loos and Messer at Breda or Barendrecht is shown in the table below and based on replies received from the companies:

Table 6

>TABLE>

Note:

Air Liquide: no data on 1995 available, Messer: no data available, Hoek Loos: no data available.

X = dates which the Companies recal.

blanks = no reply from the Company.

(109) Throughout the period 1989 to 1997 there were also bilateral contacts in the form of letters, fax messages and meetings. These served to convey what had been agreed in meetings to competitors which had not participated and to discuss the implementation of those agreements. In many of those contacts the prices and other supply conditions charged to particular customers were discussed and in some instances agreed(32).

2. FIXING PRICE INCREASES

(a) Overview

(110) The Commission has evidence in its file that from 1989 on, competitors regularly discussed and agreed the price increases they would apply the following year for their existing customers for cylinder, and in some instances liquid, gases. At least the following companies took part in these illicit practices: Hoek Loos, Air Products and AGA in the periods 1989 to 1991 and 1993 to 1997, Air Liquide and Messer in the periods 1990 to 1991 and 1993 to 1997, Westfalen and BOC in the period 1994 to 1995.

(b) Cartel meetings and collusive contacts

(111) There was an agreement in force on 24 November 1989 between Hoek Loos, AGA and Air Products to raise the price level for their cylinder gases in 1990 by approximately 5 %.

(112) At AGA an internal memo dated 24 November 1989 was found concerning a "safety meeting". Written in English and marked "confidential", it reads:

"All participants agree upon price increase cylinder gases of +/- 5 %.

HL 4,9 %, UC 5 %, AGA 5 %, AP 5 %.

This information will be passed on to AL by [...] of HL.

We will ask AL for moratorium 4-5 months. Starting right from this moment. Same applies for HL, AGA, UC, AP. Meaning we should only deal with our own customers from now on.

All shall work out proposal for liquid price list.

Meeting is set for January 12th for final discussion and consensus on such a price list.

All will try to improve liquid prices at existing customers.

AFTER READING, PLEASE DESTROY."

(33)

(113) The joint agreement lifted the price increase for 1990 to a level higher than that AGA would have applied without the agreement. Only a month before the agreement AGA, according to an internal note dated 30 October 1989 (which was found at Messer), was contemplating increasing prices in 1990 by only 4 %(34).

(114) That AGA implemented the agreement to increase prices by 5 % is shown by internal instructions of 28 November 1989 to focus on implementing the 5 % price increase with existing customers(35), which read as follows:

"Re: price increase and filling addition

...

1. Prices cylinder gases/ rent and freight

These will be increased as from 1st January with 5 %.

This percentage also counts for freight. The rent tariff will be adjusted with 1 cent for loose cylinders and with 2 cents for cylinders in packages. The adjustment of the percentage is due to the new expectations concerning the developments in 1990.

2. ...".

(115) Representatives of Hoek Loos, Air Products, AGA and Air Liquide met again on 22 November 1990 and agreed on a price increase of 5 to 7 % from 1 January 1991:

(116) At Air Liquide were found internal notes dated 22 November 1990(36), in which "price increases" were one of the items discussed:

"1. Bulk - drop charge

2. Minimum prices - increase

3. Price increase 1.1.91 (5 to 7)

ad 1:

HL: all clients approached - starting 1.11.90. App. 30 reactions (few, therefore). DFL. 36,-

AP: letter sent 16.11. Integrally everyone starting 1.12. DFL. 36,-. Already oral/written reactions.

AGA: The large do not accept it (Nedstaal, AKZO), app. 50 % approached. Starting date 1.12.

AL: Queue charge introduced. Drop charge per 1.1. Arguments: legislation on driving hours, queues, fuel, higher insurance cost, stricter regulations, training cost.

Introduce as a rule in new contracts.

...".

(117) Air Liquide was unable to tell the Commission in what framework this meeting took place and who attended on behalf of Air Liquide, apart from the sales manager [...], whose handwriting they identified(37). In its reply to the statement of objections, Air Liquide stated that this document merely concerned personal notes made by [...] and was not proof of any binding commitment on its part(38).

(118) The Commission does not find this reply to be credible since the notes clearly sum up what competitors were planning to do, and it appears from the notes that they were taken at a discussion.

(119) There was an agreement in force in 1990/1991 between at least AGA, Air Liquide, Air Products, Hoek Loos and Messer about price increases of 6 % for gas and services that were implemented between November 1990 and February 1991:

(120) An AGA internal memo (in English) dated 27 November 1991(39) concerning Messer states:

"All gas companies incl. MG agreed on using bottom prices - rent and transport charges (see annex).

In reality MG uses prices that are far below these prices: 20-30 %. This results in a lot of price decreases and/or lost customers.

In the past years we created a service sensitive market.

Competitors like MG educate the market only to discuss pricing.

MG also agreed on price increases of 6 % on gas and services.

MG also agreed on a cease fire during November - December - January and February, in order to be able to have negotiations on price increases with customers.

All gas companies including AGA suffer a lot of the uncontrolled way MG is behaving in the market.

I have two suggestions:

Discuss this with Stephan Messer

Prepare for retaliation on short term in Germany."

(121) The above memo shows that Messer had now joined the group of undertakings holding anti-competitive meetings. The Commission notes that on one of the two copies of this document(40), a representative of AGA wrote next to "price increase of 6 %"", But Messer has limited this to when possible".

(122) In its reply to the statement of objections, Messer argued that the conclusion drawn regarding Messer's involvement in the agreements on the basis of the above AGA memo is too far-reaching. Messer argues that the internal memo only reflects the personal interpretation of AGA's view of Messer's attitude and shows that AGA was aware of the fact that Messer was following its own policy(41).

(123) The Commission notes, however, that Messer must have communicated with its competitors in order to discuss its intentions as to the agreed price rise as the comment of AGA's representative referred to in recital 120 indicates.

(124) In addition to the above, the Commission knows that, possibly at the beginning of 1991, representatives of Air Liquide, Air Products, Hoek Loos and AGA met and discussed the success of the recent implementation of the 6 % price increase for 1991:

(125) A handwritten memo (in Dutch) on that meeting found at Air Liquide(42) states amongst other things:

"Price increase

[...]: everything increased

transport costs

bulk BOC/Messer

cyl. Westf./Messer/AL

HL: about 6 % both bulk/cyl.

Index shows 6 % growth

AGA: only 20 % of the plan realised

index shows 6 % growth

...

Drop charge bulk introduced by most ...".

(126) In reply to the Commission's questions, Air Liquide dated the document to "around 1990" and called them "personal notes of [...], presumably made after a social contact"(43). The representative of Air Products in this meeting seems to have been the general manager [...].

(127) Also at Air Liquide a handwritten note was found which this company dates to early-1991(44). It reads: "AGA decreased level despite agreement to raise prices."(45)

(128) At the meeting of VFIG members on 16 December 1993, AGA, Air Liquide, Air Products, Hoek Loos and Messer agreed on a price increase as from 1 January 1994. Indugas, BOC and NTG were absent.

(129) A handwritten memo on that meeting in Dutch found at Air Liquide(46) states among other things:

"Price increase.

HL per 1/1' 94 up by 4,5 %. - Also MG and AP will increase prices. Apparently agreement on price increase per 1/1 but not on percentage or minimum level."

(130) This is confirmed in handwritten notes submitted by AGA(47):

"16.12.93 VFIG.

...

Price increase:

H-L: Letter to customers begin January."

(131) It is also confirmed by handwritten comments in English found in Air Products concerning that same meeting:

"AGA 15 Jan

H/L most of contracts 1 January

Longer period 1 February

Go negotiation

Already negotiating with customers

Major customers have been sold [told?]

All major customers + 4,5 %

Sometimes have to negotiate less

...

Moratorium until April 1"

(48).

(132) In reply to the statement of objections, Air Liquide argued that the handwritten Air Liquide memo on the VFIG meeting of 16 December 1993 shows that the author was only writing down what the others said (the word "apparently") and does not prove that any commitment was made on Air Liquide's part. Air Liquide further argues that the date of mid-December does not seem realistic either for a binding promise to be made for implementation of a price increase by 1 January 1994(49).

(133) The Commission notes that Air Liquide attended the above meeting and took careful notes of what its competitors said.

(134) In reply to the statement of objections Messer argued that taking part in a meeting is not in itself sufficient to prove involvement in an agreement. It claims that the handwritten note found at the premises of Air Liquide refers only to the fact that Messer was planning to increase its prices(50). Messer made no statement on the exact amount of the increase, and it is common practice to increase prices at that time of year to adjust them to inflation. Furthermore, the notes found at AGA and at Air Products do not mention Messer.

(135) The Commission notes, however, that Messer attended the above meeting and stated its intentions as regards an element of its commercial policy, namely price increases.

(136) A first discussion on price increases for cylinder gases regarding 1995 took place at the VFIG meeting held on 14 October 1994. This meeting was attended by AGA, Air Liquide, Air Products, BOC, Hoek Loos, Hydrogas, Messer, NTG and Westfalen:

(137) Handwritten notes referring to this meeting were found at AGA. They include the words:

"Prices + 6 %

Bulk Contracts 4,5 % (HL index)

Energy + 6-8 %"

(51).

(138) AGA also submitted handwritten notes dated 17 October 1994 made by another employee concerning that same meeting:

"VFIG

Price increase

...

Gas price cylinders + 6 % + rent and transp.

Bulk contracts + 4,5 %, Index formula?

...

Moratorium: 1 December + 3-4 months"

(52).

(139) These price increases for cylinder gases for 1995 were worked out in detail by, AGA, Air Liquide, Air Products, BOC, Hoek Loos, Messer and Westfalen at the VFIG meeting held on 18 November 1994:

(140) A handwritten table was submitted by AGA(53): The table was written by sales manager [...], who did not himself participate in the meeting. His notes were taken in an internal debriefing meeting on the agreements reached. The table refers to the VFIG meeting in question and lists for Hoek Loos, AGA, Messer, Air Liquide, Air Products, BOC and Westfalen the percentage of price increases for cylinder gases for 1995 as well as increases in rent and transportation charges. The table also indicates a moratorium period of two months in which those increases were to be implemented. There is furthermore a reference to price increases for liquid gases and tank rents.

(141) A second table, which was found in Air Products(54), seems to refer to the same meeting, although not all items in the two tables are identical. Air Products at first believed that the table had been drawn up in a meeting with competitors held in 1995, but later agreed that it could be the result of the VFIG meeting held in November 1994(55). This table again shows increases for prices, transportation cost and rent, as well as the moratorium period for implementing those increases, for Hoek Loos, AGA, Messer, Westfalen, BOC, Air Liquide and Air Products.

(142) The general manager of BOC for the Benelux, in the light of the evidence, voluntarily made the following statement, which was recorded in the investigation report and signed by him:

"Mr Celis recalled that at the end of two meetings (VFIG) - in late-1994 and 1995 - the subject of prices in the year ahead had been raised by others, to his surprise."

(56)

(143) In its reply to the statement of objections(57), BOC also emphasised that its general manager, Mr Celis, did not accept the 6 % figure proposed by the others at the meeting referred to in recital 139 but only indicated that its plans related to a 5 % increase.

(144) The Commission notes, however, that BOC was represented at the above meeting, its general manager volunteered information on BOC's planned price increases and at no time distanced himself from the discussions relating to an agreement on a price increase. The fact that Mr Celis was taken by surprise may highlight the fact that his role was not a very active one.

(145) In its reply to the statement of objections, Westfalen drew attention to the fact that it had never been an active participant in these meetings and that it had not been aware that such issues as price increases were being discussed as these topics were not mentioned on the agenda of the meetings(58).

(146) The Commission notes that Westfalen attended the meeting referred to above and gave an indication to its competitors as to its intentions regarding an element of its commercial policy, namely price increases(59).

(147) Handwritten comments found at Messer on the agenda of an internal meeting of directors held on 25 October 1994, i.e. before the VFIG meeting, state: "VFIG! Price increase 95"(60). Internal instructions were found at Messer regarding a moratorium in combination with price increases in January 1995(61), and the report on the first quarter of 1995 states that price increases were implemented without major difficulties as of 1 January 1995 and adds: "we have received more or less identical news from our competitors"(62).

(148) On 23 November 1995 AGA, Air Liquide, Air Products, Hoek Loos and Messer met and came to a collusive arrangement on price increases for the following year 1996.

(149) A handwritten note found at Hoek Loos(63) and dated 23 November indicates price increases by certain competitors from 1 January 1996:

"AP increases per 1/1/96 4,75 % gas

0,75 rent/month/cyl.

1,50 rent special gases cyl.

0,50 transport cylinder

AGA between 5 and 8 %

product rent?

freight?

MG large clients > 15000 7,2 %

0,90 freight

0,02 rent

4 turnover groups 7,2 % and 15 % small clients freight

freight 0,90 and 2,50 per cylinder rent

0,01 and 0,05/cyl.

1st half December letter with price increase 1/10

fl. 12,50 fl. 15,00 MVT mentioned on invoice

Up to ± fl. 5000 - minimum prices

AL 6-7,5 % product

freight interest

rent interest

...

BOC would [to increase] prices by 5 %

..."

(150) In reply to the Commission's questions Hoek Loos stated that it was unable to indicate the date, participants and framework of this meeting and even doubted whether it was a meeting report. It declared that it might concern information received from its own salesmen(64).

(151) The Commission does not find Hoek Loos' interpretation credible. The very detailed information on the future behaviour of competitors and the reference to a letter which had not yet been sent, warrant the conclusion that the report concerns a meeting of AGA, Air Liquide, Air Products, Hoek Loos and Messer. The date shows that it was not a meeting on the fringes of a VFIG meeting. The Commission believes that it was one of several meetings which took place in 1995 to 1997 between AGA, Air Liquide, Air Products, Hoek Loos and Messer in Breda and Barendrecht. The Commission notes in this context that 23 November 1995 is indeed listed by both Air Products and AGA as the date of such a meeting in Breda.

(152) Although BOC is mentioned briefly in the report, this company did not, to the Commission's knowledge, participate in those Breda/Barendrecht meetings.

(153) Hoek Loos, Air Products, Air Liquide, AGA and Messer met in late-1996, possibly on 2 October 1996, and came to a collusive arrangement on price increase for cylinder gases for 1997:

(154) An undated and handwritten document found at Air Products(65), which the company believes to have been written in late-1996, is another report on a meeting between competitors. After a discussion on the market between Hoek Loos, Air Products, Air Liquide and AGA, the note concludes that the VFIG will declare the following year (= 1997) the year of transportation and that transport will be included in the index: + 0,2 to 0,3 %. The Commission believes that this refers to the Hoek Loos index for bulk gases mentioned in previous documents(66). For cylinder gases prices would increase by 4,5 % between November and March. There is also a reference to a 6 % to 8 % increase for Air Liquide.

(155) Both the period November to March and the 6 % to 8 % general price increase referred to above are also mentioned in a "Proposal cylinder gases 1997" dated 28 September 1996 found at Hoek Loos(67). The proposal found at Hoek Loos matches in every respect the handwritten notes found at both Air Products(68) and Messer(69).

(156) In reply to the Commission's request for information, Hoek Loos claimed that this proposal, once adopted, was to be supplied to its own sales force and was therefore intended for internal use only(70).

(157) In view of what is set out above, this statement is not credible: the modified prices were indeed announced to staff at Hoek Loos on 7 October 1996(71) but there is very strong evidence that they were also discussed with competitors. The Commission believes that this discussion took place in Breda on 2 October 1996. That date was mentioned by Air Liquide, Air Products and AGA(72) and falls between the date on which Hoek Loos drafted its proposal and the date on which that proposal was announced to its own staff.

3. ANNUAL MORATORIA

(a) Overview

(158) The same companies which met regularly from 1989 on and which agreed on annual price increases for their existing customers, as set out in section C.2, also agreed at those meetings to respect annual cease-fires lasting several months for the purpose of implementing the agreed price increases. The Commission has evidence in its files that the following companies took part in collusive arrangements concerning moratorium periods: Hoek Loos, Air Products and AGA in the periods 1989 to 1991 and from 1993 to 1997, Air Liquide and Messer in the periods 1990 to 1991 and 1993 to 1997 and Westfalen and BOC in the period 1994 to 1995. The moratorium from 1 November 1996 to 1 March 1997 applied to both bulk and cylinder customers. The earlier moratoria applied to cylinder customers only.

(b) Cartel meetings and collusive contacts

(159) There was an agreement in force on 24 November 1989 between Hoek Loos, AGA and Air Products on price increases. In order to implement these increases they also agreed on a moratorium for four to five months.

(160) Recital 112 cites a "confidential" internal memo in English dated 24 November 1989 found at AGA concerning a "safety meeting". It reads:

"All participants agree upon price increase cylinder gases of +/- 5 %.

HL 4,9 %, UC 5 %, AGA 5 %, AP 5 %.

This information will be passed on to AL by [...] of HL.

We will ask AL for moratorium 4-5 months. Starting right from this moment.

Same applies for HL, AGA, UC, AP. Meaning we should only deal with our own customers from now on.

(...)

AFTER READING, PLEASE DESTROY."

(73).

(161) That AGA put the moratorium into effect is shown by the internal instructions it issued on 28 November 1989 (quoted in recital 114), to focus on implementing the 5 % price increase with existing customers and explaining that competitors could be expected to do the same. Were attacks by competitors nevertheless to lead to price concessions, such concessions should be reported to the management(74).

(162) An agreement was in force in 1990/1991 between at least AGA, Air Liquide, Air Products, Hoek Loos and Messer on a moratorium period for 1991 in combination with price increases:

(163) In recital 120 an AGA internal memo (in English) dated 27 November 1991(75) concerning Messer was quoted, which states:

"All gas companies incl. MG agreed on using bottom prices - rent and transport charges (see annex).

In reality MG uses prices that are far below these prices: 20-30 %.

This results in a lot of price decreases and/or lost customers.

In the past years we created a service sensitive market.

Competitors like MG educate the market only to discuss pricing.

MG also agreed on price increases of 6 % on gas and services.

MG also agreed on a cease-fire during November-December-January and February, in order to be able to have negotiations on price increases with customers.

All gas companies including AGA suffer a lot of the uncontrolled way MG is behaving in the market.

I have two suggestions:

1. Discuss this with Stephan Messer

2. Prepare for retaliation on short term in Germany."

(164) In its reply to the statement of objections Messer argued that the AGA memo of 27 November 1991 shows that AGA thought Messer did not live by the "agreements" and strongly denied having been part in any agreement at all(76).

(165) The Commission notes however that it must have been Messer's stated intention at the time to implement the moratorium, even if it might not have implemented it.

(166) There was an agreement between AGA, Air Liquide, Air Products, Hoek Loos, and Messer on a moratorium period in December 1993 until 1 April 1994 in connection with price increases:

(167) Handwritten comments in English already quoted in recital 131 found in Air Products state:

"AGA 15 Jan

H/L most of contracts 1 January

Longer period 1 February

Go negotiation

Already negotiating with customers

Major customers have been sold [told?]

All major customers + 4,5 %

Sometimes have to negotiate less

...

Moratorium until April 1"

(77).

(168) At the VFIG meetings of October and November 1994 price increases for 1995 were discussed and agreed between AGA, Hoek Loos, Air Liquide, Air Products, Messer, BOC and Westfalen in combination with a moratorium from 1 December 1994 to 31 January 1995:

(169) AGA submitted handwritten notes dated 17 October1994 (already quoted in recital 138) made by another employee concerning the October meeting:

"VFIG

Price increase

...

Gas price cylinders + 6 % + rent and transp.

Bulk contracts + 4,5 %, Index formula?

...

Moratorium: 1 December + 3-4 months"

(78).

(170) AGA submitted a handwritten table concerning the VFIG meeting on 18 November 1994 (already quoted in recital 140)(79): the table was written by sales manager [...], who did not himself participate in the meeting. His notes were taken at an internal debriefing meeting on the agreements reached. The table refers to the VFIG meeting in question and lists for Hoek Loos, AGA, Messer, Air Liquide, Air Products, BOC, and Westfalen the percentage price increases for cylinder gases and increases in rent and transportation charges. The table also indicates a moratorium period of two months from 1 December 1994 to 31 January 1995 in which those increases were to be implemented.

(171) A second table (quoted in recital 141)(80) found at Air Products seems to refer to the same meeting, although not all items in the two tables are identical. Air Products at first believed that the table had been drawn up in a meeting with competitors in 1995 but later agreed that it could be the result of the VFIG meeting held in November 1994(81). This table shows increases for prices, transportation cost and rent, as well as the moratorium period for implementing those increases, for Hoek Loos, AGA, Messer, Westfalen, BOC, Air Liquide and Air Products.

(172) In its reply to the statement of objections, Westfalen argues that the Commission did not show that Westfalen by its own action entered into an agreement with its competitors on a moratorium period at the end of 1994 at the two VFIG meetings. Westfalen adds that there is no evidence of any behaviour that can be qualified as an agreement or a concerted practice(82).

(173) The Commission, however, notes that Westfalen was present at the said meeting with competitors and took part in the discussion on price increases and the moratorium.

(174) Hoek Loos did in fact implement the moratorium period from 1 December 1994 until 31 January 1995:

(175) The annual moratorium is also referred to in an internal meeting report of 15 December 1994 found at Hoek Loos, which records the following in reply to a question:

"According to rumours a cease-fire will take place per 1.12.1994 between the various suppliers of industrial gases. HL will increase its prices. In December and January we will not approach customers of other suppliers. If someone attacks us, we will of course strike back."

(83)

(176) Messer also implemented the moratorium period from 1 December 1994 until 31 January 1995:

(177) Internal instructions were found in Messer regarding a moratorium in combination with price increases in January 1995:

"Important information: Price increase market leader: 6 %.

Moratorium December 1994 and January 1995."

(84)

(178) A number of documents found at Messer also contain references to price increases, the VFIG and a moratorium. These documents include a handwritten report on the directors' meeting of 22 November, which reads "VFIG - ΔP, moratorium, 'pressure'"(85), and a note dated 26 January, which mentions "moratorium" +/-?(86). Messer's report for the first quarter of 1995 states that price increases were implemented without major difficulties as from 1 January 1995 and adds: "we have received more or less identical news from our competitors"(87).

(179) Air Liquide also implemented the moratorium period from 1 December 1994 to 31 January 1995:

(180) Air Liquide submitted an internal note regarding the price increases for 1995 which instructs salesmen to focus on their own clients (with the effect of respecting the moratorium): "In the period 1 December till 31 January we will focus on the yearly agreements" (gericht bezig houden met de jaarafspraken)(88).

(181) A moratorium was agreed from November 1996 to March 1997 between AGA, Air Liquide, Air Products, Hoek Loos and Messer. This agreement applies not only to cylinder customers but to bulk customers too:

(182) References to a moratorium to implement the 1997 price increase were found in Messer: "mort. 1 Nov-1 March"(89).

(183) In different handwritten notes found in Messer(90) and dating from the same period(91) reference is made to Hoek Loos's proposal to increase prices, as well as to the period from 1 November till 1 March. This note also contains the words "bulk customers: stay away!", which would seem to indicate that the moratorium period 1996/1997 would not only apply to cylinder customers but to bulk customers as well.

(184) The Commission takes note of Messer's claim that this reference had nothing to do with a moratorium period and that the note was written in a meeting with Hoek Loos only(92).

(185) However, handwritten notes found at Air Products and made in a meeting with competitors which Air Products dates to the end of 1996 also state:

"- stay away from each others' customers - bulk

1 Nov-1 March"

(93).

(186) In Air Liquide the minutes of an internal meeting of 8 November 1996 state with regard to price increases: "focus on higher prices with existing customers"(94).

(187) In its reply to the statement of objections, Air Liquide argues that the statement in the minutes of an internal Air Liquide meeting that Air Liquide would "focus on higher prices with existing customers" is no more than an example of the behaviour of a supplier in a saturated market, weighing the advantages and disadvantages of "price level" versus "market share". This internal memo shows no more than autonomous behaviour(95).

(188) The Commission notes, however, that it is clear the different documents referred to at recitals 182 to 185 above and found at the premises of the above companies regarding the agreement on a moratorium refer to the same period of time.

4. FIXING MINIMUM PRICES

(a) Overview

(189) Successive lists of minimum prices for cylinder gases were agreed between competitors. In 1989/1990 a list of minimum prices for liquid gases was agreed upon between Air Liquide, AGA, Hoek Loos and Air Products. In 1990/1991 and 1994 to 1997 lists of minimum prices for cylinder gases were agreed between Hoek Loos, Air Liquide, Air Products and AGA. Messer joined them in the period 1994 to 1997 and Westfalen in 1994/1995. The main purpose of the lists was to set thresholds when competing for the same client.

(b) Cartel meetings and collusive contacts

(190) Minimum prices for liquid gases were the object of collusive contacts from end 1989 or beginning 1990 between Hoek Loos, AGA, Air Products and Air Liquide.

(191) A "confidential" AGA internal memo of 24 November 1989 concerning a "safety meeting"(96) has already been quoted in recitals 112 and 160. It includes the sentence:

"All shall work out proposal for liquid price list.

Meeting is set for January 12th for final discussion and consensus on such a price list."

(192) This price list was found in the investigation at Air Liquide(97), printed on AGA headed paper and entitled "Bulkgassen - prijsstaffel gegevens" (bulk gases - price scales). For two items the list contains not a price but the words (in Dutch) "Proposal Hoek Loos will follow".

The list concerns the following gases: nitrogen, oxygen, argon and carbon dioxide, with different prices depending on the sector of use. The list also contains a price mechanism for the rent of tanks (see section C.6(e)).

(193) An AGA internal memo dated 26 June 1990 also mentioned the possibility of applying bottom prices for liquid gases. Such bottom prices would "only be applicable in those cases where only the 'old 5' compete"(98).

(194) In October 1990 Hoek Loos, Air Liquide, AGA and Air Products came to an agreement on a system of bottom prices for cylinder gases:

(195) At Hoek Loos a letter was found addressed to Messer Griesheim in Frankfurt, written in English, signed by the chief executive officer and dated and sent by fax on 18 October 1990, it reads:

"Dear Mr. Willheim,

As per telephone conversation I herewith send you our pricing system for the coming six month's [sic].

All parties in our country accept [sic, should presumably be 'except'] MG have confirmed that they will stick absolutely to the bottom prices as mentioned in the attached list.

For liquid supplies we will introduce a drop charge as explained in the pricelist. We should appreciate it if you would discuss this price system with Mr. Messer and let us know if MG is prepared to follow this quide line [sic 'guideline'].

If there are any questions don't hesitate to contact me. Kind regards,

J.P. Jager Bruining

(99)"

(196) Attached is an untitled and undated document in Dutch, as well as a list entitled (in Dutch) "Price list per 1.10.1990 for cylinder gases." It contains prices for varying quantities of the following gases (about 10 prices for every gas): acetylene, argon, oxygen, tetrene(100), and nitrogen. It also contains prices of supply conditions: rent of cylinders and transport cost.

(197) The untitled and undated document reads as follows:

"From today on certain agreements are in force.

1. No prices and conditions below the attached minimum price list will be agreed with customers.

2. In the course of 1990 customers' prices and conditions which are below this level will be raised to this level or higher if the percentage in point 4 supersedes this level.

3. Per 1 January 1991 no prices and conditions below the attached minimum prices are possible.

4. Per 1 January 1991 customers' prices and conditions which are higher than the bottom price level will be raised by 5-7 %.

5. Running offers which do not respect the [conditions] above are no longer valid.

6. For supply of bulk gases and from today on: for new customers a drop charge of fl. 34,00 - 36,00. For existing customers this drop charge will be introduced in October 1990. This drop charge does not apply to so-called horticultural carbon dioxide. ...

Motivation drop charge: queues, energy, driving time legislation. Motivation price level: enormous erosion of prices has become unacceptable, especially in view of developments of cost.

For shared clients the first [supplier who is] confronted will take the initiative for contact.

Attached: price list."

(198) Copies of the same price list were found at the premises of AGA(101), Air Liquide(102) and Air Products(103). At the latter two companies it was found with the untitled and undated covering document quoted in recital 197.

(199) The Commission also has evidence that AGA used the agreed minimum prices for cylinder gases in 1991 to measure the behaviour of competitors quoting prices to AGA customers(104). In a confidential fax from AGA to Air Liquide dated 31 October 1990 AGA listed a number of cases where salesmen from Air Liquide had allegedly offered AGA clients prices below the minimum(105).

(200) Representatives of Hoek Loos, Air Products, AGA and Air Liquide met on 22 November 1990 and discussed, among other things, an increase in minimum prices:

(201) Recital 116 quotes internal notes dated 22 November 1990 found at Air Liquide(106). Among other items they discuss "minimum prices":

"1. Bulk - drop charge

2. Minimum prices - increase

3. Price increase 1.1.91 (5 to 7)

...".

(202) Confirmation that an agreement about the use of bottom prices was in force in 1990/91 between at least AGA, Air Liquide, Air Products, Hoek Loos, Messer can be found in an internal memo (in English) concerning Messer dated 27 November 1991(107). This internal memo, two copies of which were found at AGA, has already been quoted in recital 120. It states that:

"All gascompanies incl. MG agreed on using bottom prices - rent and transportcharges (see annex).

In reality MG uses prices that are far below these prices: 20-30 %.

This results in a lot of price decreases and/or lost customers.

In the past years we created a service sensitive market.

Competitors like MG educate the market only to discuss pricing.

...

All gascompanies including AGA suffer a lot of the uncontrolled way MG is behaving in the market.

I have two suggestions:

Discuss this with Stephan Messer

Prepare for retaliation on short term in Germany."

(203) Handwritten comments on one of the copies of this memo state:

"1) Talk to Messer [general manager of MG] to respect bottom prices. 2) If no joy talk to Wielands with [...] [AGA Gas GmbH]. Warn of our impending attack. 3) After 2 weeks max attack."

(204) This document also shows that failure to comply with the agreements concerning bottom prices could lead to retaliation and retaliatory measures were not necessarily confined to the Netherlands.

(205) At the VFIG meetings of March and October 1994 "price scales" and "minimum prices" for cylinder gases for small customers were discussed with a view to an agreement at least between AGA, Air Liquide, Hoek Loos, Air Products, Westfalen and Messer.

(206) Handwritten notes found at AGA(108) mention that "price scales" were again discussed in the VFIG meetings of March and October 1994 and that in the latter meeting Hoek Loos presented a price scale for cylinder gases. Handwritten notes dated 17 October 1994 made by a different person in AGA and submitted by that company confirm that "min. prices" were discussed at the October meeting(109).

(207) According to explanations provided by AGA(110) the list of price scales for small cylinder customers was presented by Hoek Loos at the fringes of the VFIG meeting held in October 1994 referred to above. In its reply to the statement of objections, AGA emphasises that this list of price scales for 1994 "is not asserted, let alone substantiated to have been agreed upon"(111). The Commission notes, however, that the list proposed by Hoek Loos was also found at the premises of three companies.

(208) One copy was found at Westfalen(112) in a file marked VFIG 1995. Another copy was found at Air Liquide(113) in a file marked VFIG 1994. A third copy was found at Messer(114). All three feature an identical printed minimum price list dated October 1994 and entitled "price list for small cylinder customers". The list found at Messer also features a handwritten price list that was added in 1996 (see recital 234). The fact that these companies kept this proposal in their files for a number of years means that the list was important to them.

(209) That there was an agreement in 1995 is also confirmed by the fact that the internal list of minimum prices found at Air Liquide dated 10 March 1995(115) matches the minimum prices implemented by AGA on 1 July 1995(116).

(210) In its reply to the statement of objections, Air Liquide points to the fact that the objectives for 1995 mentioned on its internal list are lower than the minimum prices also mentioned on that list. In this regard, Air Liquide also claims that the fact that its competitors wanted to inform it of their intentions cannot be held against it(117).

(211) AGA points out, in its reply to its statement of objections(118), that the small customers initiative relates to one segment of the cylinder gases market only and therefore differs from other attempts to set bottom prices. Since small customers were only a limited part of AGA's business, this considerably reduces the scope of the infringement. AGA acknowledges(119) nevertheless that it introduced the agreed minimum prices for small customers as from 1 July 1995.

(212) In its reply to the statement of objections, Westfalen states that it does not know how the list came into its possession. It claims that it is extremely likely that it was handed out to Westfalen at the VFIG meeting of 14 October 1994 but that this fact does not imply Westfalen actually agreed on the prices mentioned on the list. Westfalen also claims that it believes that its uncooperative attitude in the context of the VFIG meetings led the larger undertakings to meet outside the VFIG circuit(120).

(213) The Commission has evidence that meetings were indeed organised outside the VFIG circuit later on and that collusive arrangements on minimum prices for cylinder gases for small customers were made at Breda and Barendrecht from early-1995 until 1997 between AGA, Air Liquide, Air Products, Hoek Loos and Messer.

(214) In reply to the Commission's questions AGA stated the following:

"For early in 1995 a meeting was called, outside the VFIG, for the purpose of approving minimum prices. [...a senior representative of AGA] attended, and the meeting became his first of several meetings, in a more restricted group, at Breda. Present were Hoek Loos, Air Liquide, Air Products and Messer [and AGA]. Indugas may have been invited, but not been there. At that meeting, minimum prices for small customers were in fact agreed."

(121)

(215) AGA adds that there were two to three meetings a year in Breda, later in Barendrecht, depending on the year. There was no agenda and there were few notes. AGA believes that Indugas or Praxair (which they view as one company) participated once only, but that Indugas was always invited by the company organising the meetings. AGA also adds that its overall impression was that the agreed minimum prices were not accepted in the market and therefore did not work. At the Commission's request, AGA provided a list of meeting dates based on agendas, expense accounts and other available data(122).

(216) Air Products confirmed to the Commission that discussions took place on other dates than VFIG meetings, which could involve preparation or follow-up of VFIG meetings:

"To the best of AP recollection, informal meetings where discussions of the last kind occurred took place two to three times a year. Attending these meetings, on a more or less regular basis, were, at least in the most recent years, representatives of AP, Hoek Loos, AGA, Messer Griesheim and Air Liquide. There was no formal agenda, matters discussed reflected the issues with which the industry was confronted and included topics like general evolution of the market, prices development and costs in the industry."

According to Air Products, such meetings took place in Breda in the period 1995 to 1997. A list of meeting dates was provided(123).

(217) Indugas was also questioned on the meetings held in Breda and Barendrecht. Indugas confirmed that its representative in VFIG meetings had been orally invited to attend such meetings, but that he had never done so. Indugas also stated that it had been aware that minimum prices were being discussed, but that it had never been present at such discussions and hence did not know whether such minimum prices had indeed been decided(124).

(218) Hoek Loos was unable to confirm its participation in meetings with competitors held at Breda or Barendrecht. Neither the agendas nor the expense accounts of the responsible managers contained any useful information.

(219) Messer did confirm its participation in meetings with competitors at the "Mirabelle" restaurant in Breda in 1995 to 1997. Messer also provided the names of the senior managers of AGA, Air Liquide, Air Products, Hoek Loos and Messer who regularly participated in those meetings. According to Messer, trends in cost and prices of gases were discussed in those meetings, but Messer claimed that it had not participated in agreements on prices. Messer was unable to provide a list of meeting dates(125).

(220) Air Liquide confirmed that it had been invited to participate in meetings at Breda and Barendrecht in 1995 to 1997. Air Liquide itself never organised such meetings. Air Liquide provided names of its senior managers who participated in such meetings in 1996 and 1997, as well as the dates of those meetings. No data was available on 1995 because the manager then responsible had left the company. Air Liquide stated that the meetings in question were informal, without an agenda or minutes. According to Air Liquide, general questions were discussed regarding developments on the market and in the economy(126).

(221) Table 6 in recital 108 lists the dates of meetings of AGA, Air Liquide, Air Products, Hoek Loos and Messer based on the data and recollections of those companies. The differences between some of the dates indicated may be explained by the fact that the "Mirabelle" in Breda is a popular place for all kinds of meetings and well situated for Dutch businessmen on their way to or from Belgium. Dates mentioned by two or three companies are 23 November 1995, 5 June 1996, 2 October 1996, 19 March 1997, 20 June 1997 and 8 July 1997.

(222) Most of the companies that participated in those meetings stated that only general discussions took place. AGA and Air Products, however, acknowledge that minimum prices were a topic. Evidence shows that lists of minimum prices were indeed discussed and agreed upon between AGA, Air Liquide, Air Products, Hoek Loos and Messer.

(223) There were also a number of bilateral contacts between suppliers of industrial gases, in which price levels of companies were compared. One example is a meeting on 16 June 1995, at which representatives of AGA and Messer, compared and exchanged lists of standard prices(127).

(224) The Commission has evidence that minimum prices for cylinder gases for small customers were agreed upon between AGA, Hoek Loos, Air Products, Air Liquide and Messer for 1996 and 1997.

(225) Identical lists of minimum prices for 1996 and 1997 were found at Air Products(128), AGA(129) and Messer(130). The lists indicate printed minimum prices for cylinder gases applicable in 1996, as well as handwritten minimum prices for 1997; the handwriting is different, the updated prices are identical.

(226) The Commission draws the conclusion that this updating of agreed price lists took place in a meeting between competitors. The Commission notes in this context that someone has written on the Air Products list "AL no demolishers" (geen slopers) and "HL nothing on paper" (niets op papier). This would seem to indicate that Air Liquide warned against undercutting these bottom prices, and Hoek Loos was anxious about not leaving written traces of the agreement.

(227) According to AGA, the list was handed out in the autumn of 1996 at a meeting with Hoek Loos, Air Products, Air Liquide and Messer "with a view to raising the minimum prices for small customers for the following year"(131).

(228) The Commission notes that a meeting of the companies in question took place on 2 October 1996, as depicted in Table 6 at recital 108.

(229) Air Products told the Commission that it had received the list from AGA probably at the end of 1996 "in the framework of a discussion concerning price increases"(132). Air Products believes that handwritten notes in the Commission's file were made at the same meeting(133), and the Commission is of the opinion that handwritten notes found in Messer were also made at that meeting, which took place at the "Mirabelle" restaurant in Breda(134), presumably on 2 October 1996 as referred to at recital 228.

(230) AGA itself included the minimum prices for 1996 and 1997 in its internal pricing policy note dated 30 October 1996(135).

(231) Air Liquide also implemented the minimum prices for 1997. At Air Liquide the minimum prices for 1997 referred to above were included as plans for 1997 in the minutes of its cylinder group meeting of 8 November 1996; only for CO2 did Air Liquide plan to apply a higher price(136).

(232) The Commission has further evidence in its files of the existence of agreements on minimum prices for small customers between AGA, Hoek Loos, Air Products, Air Liquide and Messer for 1996 and 1997 and which was communicated to Westfalen in 1997.

(233) The same minimum prices listed for 1996 were found in Hoek Loos on a printed proposal entitled "Proposal Cylinder Gases 1997"(137). The list also carries the proposal to raise the minimum charge for the cost of freight from NLG 10,00 to NLG 11,25. This proposal was in fact adopted according to the handwritten notes found in Air Products, AGA and Messer referred to above at recital 225. Hoek Loos' explanation that this was just an internal document(138) is therefore not credible. Its internal use furthermore shows that the bottom prices agreed with competitors were in fact passed on to the salesmen of this company.

(234) The printed list of minimum prices for 1996 found in Hoek Loos(139) was also found in Messer in handwritten form on the printed "price list for small cylinder customers" dated October 1994 already referred to in recital 208(140).

(235) At Air Products(141) an undated list of minimum prices found printed on a small card is identical to a list found on a card at Hoek Loos(142). Air Products stated that the document was a Hoek Loos price list and that the list took the form of a plastic wallet card to be used by the sales force of Hoek Loos. Air Products had obtained this card from Hoek Loos during a meeting with competitors. Air Products dates the card to late-1996 or early-1997(143).

(236) Some of the minimum prices agreed between Hoek Loos, AGA, Air Liquide, Air Products and Messer were communicated to Westfalen during a bilateral meeting.

(237) In a report on a meeting between Hoek Loos, Westfalen and Westfalen's mother company Westfalen Gase AG held on 27 March 1997, it is noted that "for small customers one should for O2 not go below fl. 2,25 p/m3 and for acetylene not below fl. 12,00. Rent fl. 0,25"(144).

(238) In its reply to the statement of objections, Westfalen argued that the report on the visit by [...] and especially heading 3 of the document (quoted in recital 237) mentions prices, but they are not the prices Westfalen implemented or was supposed to implement. They merely refer to Hoek Loos' prices(145).

(239) The Commission takes the view, however, that the language used in the report seems to imply that both parties are concerned by the discussion and does not just refer to Hoek Loos' policy. Furthermore it would be odd for Hoek Loos' director to take it upon himself to visit Westfalen's headquarters simply to expose his own company's pricing policy, especially as Hoek Loos had on several occasions been the company behind the proposals on minimum prices made to the other competitors (see recitals 195, 198, 206 and 207 above for example). It therefore seems more likely that Hoek Loos went to Westfalen's headquarters with a view to inform that company of the agreement reached between the other competitors. Nevertheless, the Commission will not draw any conclusions about Westfalen's behaviour on this point.

5. FIXING OTHER TRADING CONDITIONS

(a) Cylinder transport charges

(i) Overview

(240) Minimum transport charges for cylinder gases were first agreed in 1990 between Hoek Loos, Air Products, Air Liquide and AGA. In 1994 Air Products, Air Liquide, AGA, Hoek Loos and BOC agreed to apply a minimum transport charge of NLG 10,00. Messer joined this agreement in 1996. An agreement on minimum transport charges was still in force in 1997 between AGA, Hoek Loos, Air Products, Air Liquide and Messer.

(ii) Cartel meetings and collusive contacts

(241) An agreement on transport charges for cylinder gases was in force on 18 October 1990 between Hoek Loos, Air Liquide, AGA and Air Products.

(242) The 1990 list of minimum prices for cylinder gases described in recitals 196 and 197(146) included a minimum transportation cost of NLG 10,00 for direct deliveries by the gas company and NLG 15,00 for deliveries through a retailing depot.

(243) The minimum charge for transportation came up at a bilateral meeting between Messer and AGA on 15 March 1993. According to a Messer document, Messer's strategy is to increase its market shares. In doing so it would, however, in its tactics, respect certain minimum conditions, such as not supplying rent-free or without transportation cost(147). This document also mentions a minimum daily rent of NLG 0,25 and a minimum transportation cost of NLG 10,00.

(244) Minimum transportation charges for cylinder gases were agreed on 23 June 1994 between AGA, Air Products, Air Liquide, Hoek Loos and BOC:

(245) According to handwritten notes found in AGA(148) it was decided at the VFIG meeting held on 23 June 1994 to fix the minimum transportation cost at NLG 10,00 for cylinder gases. According to these notes Messer did not accept this.

(246) Other handwritten notes submitted by AGA(149), which concern the same meeting, mention that the minimum transportation price applies regardless of the means of transport and that: "MG has reserved to apply lower transport prices because of wish for increased market share. All others have accepted, also WF and BOC."

(247) Concerning Westfalen the Commission notes that the handwritten minutes concerning the VFIG meeting of 23 June 1994 submitted by AGA, referred to above do mention that Westfalen had accepted the NLG 10,00. However, Westfalen was not present at that meeting. According to handwritten notes made by the same person concerning the following VFIG meeting held on 14 October 1994, which was attended by Westfalen, the latter company claimed to be unaware of the agreement on transportation cost: "WF was not informed"? Not accepted??(150). This is also reflected in other internal notes found at AGA concerning the same meeting(151).

(248) In its reply to the statement of objections, BOC argued that the meeting on 23 June 1994 (all others have accepted, also WF and BOC) was its first ever VFIG meeting. At that meeting its representative confirmed that BOC was charging NLG 10,00 per cylinder at the time, not realising that the matter was being raised in the context of possible minimum charges for the future. This confirmation may have been subjectively interpreted by the AGA representative as an "agreement" to apply this amount as a minimum(152).

(249) Air Liquide, Hoek Loos and AGA implemented this agreement. The minimum price to be charged for transportation was included in Air Liquide's internal list of minimum prices for 1995(153). Hoek Loos also included the agreed minimum freight cost of NLG 10,00 in its commercial programme for 1994/1995(154).

(250) AGA too included the minimum freight charge of NLG 10,00 in an internal note dated 29 June 1995(155) and in its instructions to sales staff, in a paragraph concerning new customers, dated 5 July 1995(156). The minimum charge is also referred to in handwritten notes made concerning meetings on 19 August and 13 October 1994(157). AGA points out that the report of the