Commission Decision

of 5 December 2001

relating to a proceeding pursuant to Article 81 of the EC Treaty and Article 53 of the EEA Agreement

(Case No COMP/E-1/36 604 - Citric acid

(notified under document number C(2001) 3923)

(Only the German, English and Dutch texts are authentic)

(Text with EEA relevance)

(2002/742/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Community,

Having regard to the Agreement on the European Economic Area,

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 28 March 2000 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 consulted the Advisory Committee on Restrictive Practices and Dominant Positions,

Having regard to the final report of the Hearing Officer in this case,

Whereas:

PART I - FACTS

A. SUMMARY OF THE INFRINGEMENT

(1) This Decision is addressed to the following undertakings:

- Archer Daniels Midland Company Inc.,

- Cerestar Bioproducts BV,

- F. Hoffmann-La Roche AG,

- Haarmann & Reimer Corporation,

- Jungbunzlauer AG.

(2) The infringement consists in the participation of those producers of citric acid in a continuing agreement and/or concerted action contrary to Article 81(1) of the Treaty and Article 53 of the EEA Agreement (from 1 January 1994) covering the whole of the EEA, by which they fixed market shares for citric acid, agreed on price targets for the product, agreed on price lists for the product, agreed to eliminate discounts for all but the five largest customers, and set up machinery to monitor and enforce their agreements.

(3) The undertakings participated in the infringement from March 1991 until May 1995 in the case of Archer Daniels Midland Company Inc, Haarmann & Reimer Corporation, F. Hoffmann-La Roche AG and Jungbunzlauer AG, and from May 1992 until May 1995 in the case of Cerestar Bioproducts BV.

B. THE CITRIC ACID INDUSTRY

1. THE PRODUCT

(4) Citric acid is widely distributed throughout nature, occurring in both plants and animals. It is used primarily in the food and beverage industry, where its high solubility, tart flavour, acidity and buffering capabilities make it the most widely adopted acidulent/preservative worldwide.

(5) Citric acid was originally obtained by the physical extraction of the acid from lemon juice. Nowadays, the commercial production of citric acid is mostly accomplished by fermentation processes using either dextrose or beet molasses as raw material and Aspergillus niger mould as the fermenting organism. Fermentation can be carried out in deep tanks (submerged fermentation, which is the most commonly preferred method) or shallow pans (surface fermentation). Fermentation produces liquid citric acid. This is then purified, concentrated and crystallised.

(6) There are various types of citric acid, and their moisture content varies. Citric acid monohydrate (CAH), with a moisture content of approximately 8 %, and citric acid anhydrous (CAA), with a moisture content of approximately 0,5 %, are mainly used in food and beverages. Citric acid solution with a moisture content of approximately 50 %, and tri-sodium citrate (a citric acid salt obtained through the neutralisation of citric acid by caustic soda), are used in detergents and other industrial sectors.

(7) The applications of citric acid are varied and can be divided into four main groups.

(8) Food and Beverages. This segment accounted for the largest share of citric acid consumption representing almost 60 % of the total Community market in 1994. The main application is in non-alcoholic beverages. Citric acid accounts for almost three quarters of total acidulent consumption in the Community (measured in volume). Other acidulents include malic acid and fumaric acid, but citric acid remains the overwhelming choice for this application, mainly because of its high solubility rate.

(9) During the 1990s, the strong growth in the soft drink market in Western Europe led to increased consumption of citric acid. In the food sector, citric acid is used in jams, jellies, gelatine desserts, canned fruits and vegetables. It is used for improving the taste of ice cream, cake fillings and fruit creams. It also has certain uses in the meat and bakery industries (flour processing and as a baking additive).

(10) Household detergents and cleansers. Citric acid and citrates were extensively introduced in detergents at the beginning of the 1990s to replace phosphates which were deemed to be environmentally damaging. They are used as non-phosphate co-builders, usually together with a builder such as zeolite, in heavy-duty powder laundry detergents. In the light-duty powders, builder concentrations are usually low and there is no need for the addition of a co-builder such as citrate. Citric acid and citrates are also used in surface-cleaning products.

(11) The key advantages of citrates in detergent formulations are its biodegradability and the ease of its processing, particularly in formulations containing zeolite. To contain costs, large detergent companies usually buy citric acid and convert it on site to the required citrate.

(12) Detergent use of citric acid in 1994 represented over 23 % of total citric acid consumption in Western Europe. The sector has a high price elasticity, and therefore the presence of citric acid very much depends on its being competitively priced.

(13) Pharmaceuticals and cosmetics. The Western European market for citric acid used in this sector accounted for over 8 % of total citric acid consumption (1994). Pharmaceutical applications include both human and veterinary preparations. For human use, effervescent tablets and powders are the largest segment, followed by syrups and anticoagulants.

(14) Industrial and other uses. In 1994 this sector represented over 9 % of total citric acid consumption in Western Europe. The main industrial use of citric acid is in coal power stations where it is used for the cleaning and de-sedimentation of furnace walls. Other technical applications for citric acid include its use in metal surface pre-treatment prior to coating and in industrial cleaning. For all these applications its substitution by other organic or mineral acids is possible.

2. THE PRODUCERS

(a) Archer Daniels Midland Company Inc.

(15) Archer Daniels Midland Company Inc. (ADM) is the ultimate parent company of a group of companies processing corn, soybeans and wheat. ADM's corn by-products include syrups, sweeteners, citric and lactic acids, and ethanol. The company processes soybeans and other oilseeds into vegetable oils and by-products ranging from salad oils and margarine to industrial chemicals and pulp. ADM also produces wheat and durum flour for bakeries and pasta makers.

(16) ADM owns or leases over 350 processing plants worldwide, including the world's largest soya bean processing facility in Europoort, Netherlands, the world's largest multiseed complex in Hamburg, Germany, and the world's largest softseed crushing plant in Erith, United Kingdom. ADM employs approximately 23000 people worldwide and had a global turnover of EUR 13935,95 million (USD 12876,82 million) in 2000.

(17) ADM entered the citric acid market in 1991 as a result of its acquisition of Pfizer Chemical Corporation's production facilities in this market, taking over its plant at Ringaskiddy, Ireland.

(b) Cerestar Bioproducts BV

(18) Cerestar Bioproducts BV (Cerestar Bioproducts) is a wholly owned subsidiary of Cerestar SA, the European leader of starch-based products. The latter was listed on the Paris stock exchange on 2 July 2001, following the division of the Eridania Béghin-Say group (EBS) into four independent entities and its subsequent dissolution. Cerestar S.A, which has 17 production sites and around 3900 employees worldwide, had pro forma sales of EUR 1693,20 million in 2000. The Italian-based Montedison group currently holds approximately 54 % of its shares.

(19) Until its break-up, EBS was one of the world's largest agro-industrial groups, active in the following market areas: sugar and derivatives, starch and derivatives, oilseed processing and marketing, animal nutrition, and olive oil, herbs and spices. In 2000, EBS had a turnover of EUR 9805,3 million and employed approximately 21700 people in over 30 countries at 165 production sites.

(20) Before the demerger was carried out, Cerestar Bioproducts was a wholly-owned subsidiary of Cerestar Holding BV. The latter was a subsidiary of Eridania Béghin-Say SA, the ultimate parent company of EBS.

(21) Cerestar Bioproducts BV became responsible for the production, sale and marketing of citric acid following the acquisition by EBS, on 31 December 1991, of Biacor's citric acid plant in Italy. In 2000, Cerestar Bioproducts BV reported sales of EUR 17,51 million.

(c) Haarmann & Reimer Corporation

(22) Haarmann & Reimer Corporation (Haarmann & Reimer) is a wholly-owned subsidiary of the Bayer Corporation (USA) which itself is a wholly-owned subsidiary of the German-based company Bayer AG.

(23) Bayer AG is the ultimate parent company of a chemical and healthcare group comprising about 350 individual companies in 150 countries. The Bayer group employs over 120000 people worldwide, and reported turnover of EUR 30791 million in 2000.

(24) Between 1991 and 1995 the worldwide citric acid manufacturing facilities of the Bayer group were managed by Haarmann & Reimer through its Food Ingredients Division (Haarmann & Reimer FID) which itself was headquartered (until 1996) in Indiana, USA. Haarmann & Reimer directed the global sales of citric acid and was responsible for worldwide pricing throughout this period. Haarmann & Reimer FID had global sales of USD 293 million during 1996 and employed around 1300 people.

(25) In April 1996 responsibility for the business of Haarmann & Reimer FID was transferred to Bayer plc, a British subsidiary of Bayer AG, and subsequently sold in June 1998 to the Tate & Lyle group.

(26) In 1999, Haarmann & Reimer reported sales of USD 200 million (EUR 187,62 million). Haarmann & Reimer [Corporation] is now a holding company controlling 51 % of the Haarmann & Reimer partnership. In 2000 the partnership itself achieved a turnover of USD 187,73 million (EUR 203,17 million).

(d) F. Hoffmann-La Roche AG

(27) F. Hoffmann-La Roche AG (Hoffmann-La Roche) is a leading international company in its three main areas of operation: pharmaceuticals, diagnostics, and vitamins and fine chemicals.

(28) The Hoffmann-La Roche group employs almost 65000 people worldwide. Its overall turnover amounted to EUR 18403 million in 2000. Sales by region in 2000 were 38 % in Europe, 37 % in North America, 10 % in Latin America, 12 % in Asia and 3 % in Africa, Australia and Oceania.

(29) Citric acid sales are part of the Vitamins and Fine Chemicals division of the Group which achieved sales of EUR 2314 million in 2000, representing 13 % of the Group's overall sales. Hoffmann-La Roche's citric acid manufacturing facilities are located in Tienen, Belgium, and are managed by its subsidiary, SA Citrique Belge NV (Citrique Belge).

(e) Jungbunzlauer AG

(30) Jungbunzlauer AG (Jungbunzlauer) is a Swiss-based group of companies currently headquartered in Basel. The group is ultimately controlled by the holding Jungbunzlauer Holding AG, all the shares of which are held by a family through the holding Montana AG. The headquarters of the group are located in the premises of Jungbunzlauer AG, the management company which, since 1993, has run the business owned by Jungbunzlauer Holding AG. Before 1993, the whole group was directed by Jungbunzlauer Ges.m.b.H, Vienna, Austria.

(31) The Jungbunzlauer group is engaged in the manufacture and marketing of ingredients used in the food and beverages industry, and the pharmaceutical and cosmetics industry, as well as for various other industrial applications. It is one of the leading manufacturers of citric acid, xantham gum, citrates, gluconates and glucose.

(32) The group employs approximately 500 people and has subsidiaries in five European countries (France, Germany, the Netherlands, Austria and Hungary) as well as in the United States of America, Singapore and Indonesia. Total turnover in 2000 was in the order of EUR 314 million. Jungbunzlauer's citric acid production facilities are currently located in Austria, Germany and France and Indonesia. A new citric acid plant is being built in Canada.

(33) Over the period considered in the present Decision, all citric acid production was handled by Jungbunzlauer Ges.m.b.H. The latter also handled the distribution of the product until 1993, when this responsibility passed to another legal entity, namely Jungbunzlauer International AG.

(34) The executives from the Jungbunzlauer group who were involved in the facts material to the present Decision were employed either by Jungbunzlauer Ges.m.b.H or by Jungbunzlauer AG. For the sake of clarity, and taking into account the fact that Jungbunzlauer Ges.m.b.H and Jungbunzlauer AG successively directed the whole group's operations, both entities will be referred to as "Jungbunzlauer" unless otherwise indicated.

(f) Other producers

(i) Chinese

(35) The Chinese citric acid industry grew very substantially at the end of the 1980s and experienced a threefold increase in its annual production levels between 1990 and 1994, peaking at over 200000 mt(4)/year. The industry is heavily orientated towards the export market with domestic consumption accounting for around 20 % to 25 % of total production. All Chinese production is channelled through distributor companies and agents. There are very few large citric acid producers in the country and the total number of producers was estimated at 120 in 1994. Producers rely on potatoes from nearby farms for raw materials and the majority of fermentation processes are carried out in reduced facilities that can be operated with a low level of investment. The Chinese citric acid industry is very sensitive to export prices and external demand.

(ii) Others

(36) The European market is also supplied by smaller producers such as the Israeli based company Gadot Biochemical Industries, the US multinational, Cargill Inc., and a variety of minor companies based in Eastern Europe and Russia.

3. TRADE ASSOCIATION - ECAMA

(37) The European Citric Acid Manufacturers' Association (ECAMA) is a sector group of the European Chemical Industry Council (CEFIC under its French acronym) based in Brussels, Belgium. It represents the interests of the European citric acid industry and holds a general meeting twice a year. Working parties study technical, regulatory and commercial questions. ECAMA also monitors world market developments by collecting monthly sales data. The data are rendered unidentifiable and cannot be traced to individual companies thereafter. In that anonymous state, the sales figures reported are audited by the Schweizerische Treuhandgesellschaft, Coopers & Lybrand, which delivers a regular report on its findings.

4. THE MARKET FOR CITRIC ACID

(a) Supply

(38) The citric acid business is essentially a global one and is characterised by an oligopolistic structure with relatively low transport costs, representing on average between 5 % and 7 % of the final purchasing price for most large producers. Standard customs duties for non-EEA citric acid stood at 11,1 % in the Community in 1996 and have decreased since. The various applications for citric acid in most cases only require standard know-how, making technological barriers non-appreciable.

(39) The major producers of citric acid are, by and large, multinational corporations, the exception being Jungbunzlauer, a family-owned, medium-sized business which in 1996 was nevertheless the largest citric acid producer in the Community.

(40) Whilst sales and production tend to be compartmentalised in three major geographical areas, North America, Europe and Asia, significant amounts of product are traded between these zones. In the case of the Community, imports from China alone account for almost 20 % of total Community consumption although those imports are made by dozens of small companies.

(41) In order to evaluate the size of the market for citric acid over the relevant period, the Commission takes into consideration various estimates, including notably those provided by the main producers of citric acid in their respective replies to the requests for information sent in August 1997. In 1996, ECAMA estimated the worldwide citric acid market at 785000 mt and the European market for the product at 303000 mt(5). According to the Commission's best estimates, over the period 1994-1997, the worldwide production capacity was at least in the region of 900000 mt(6) and the actual worldwide demand for the product can be estimated as being at least 750000 mt.

(42) In its reply to the Statement of Objections, Haarmann & Reimer submits that according to its market intelligence, the annual Community market volume was approximately 200000 mt in the relevant period. Taking into account an average sales price of EUR 1,25 the Community market value in the relevant period would be EUR 250 million, not EUR 350 million as mentioned in the Statement of Objections.

(43) The application of the average price charged for citric acid by Haarmann & Reimer in 1995(7) to the minimum figure of 750000 mt accepted by the Commission gives a worldwide market value superior to ECU 1000 million. Similarly, the application of the average price of ECU 1,25/mt (proposed by Haarmann & Reimer in its reply to the Statement of Objections) to ECAMA's estimate of 303000 mt gives an estimated market value for Europe of ECU 375 million.

(44) On 27 July 2001, the Commission sent to the addressees of the present Decision a request for information asking them to provide their worldwide and EEA-wide sales figures for citric acid in 1995. The figures obtained from the undertakings are the following:

Table 1

>TABLE>

(45) The estimated market shares of the market players in 1996 were as follows(8):

Table 2

>TABLE>

(46) In 1996, according to those figures, the total market shares of the addressees of the present Decision represented approximately 60 % of the worldwide citric acid market and 67 % of the EEA-wide citric acid market(9). The combination of these figures with the sales figures set out in Table 1 in recital 44 gives an estimated size of EUR 894,72 million for the total worldwide citric acid market in 1995, and of EUR 323,69 million for the total EEA-wide citric acid market in the same year(10).

(47) In this respect, the Commission estimates that over the period considered in the present Decision, the worldwide citric acid market value was in any case around EUR 900 million, and that the EEA-wide market value was in the region of EUR 320 million.

(48) In its reply to the Statement of Objections, Haarmann & Reimer maintains that the strength of its market share in the worldwide market is mainly due to its strong position as a local producer in duty-protected markets in South America. As far as the European market is concerned, Haarmann & Reimer also points out that prior to its take over of Rhône-Poulenc's activities at Selby, it had a capacity of only 10000 tonnes and that the new plant it erected there initially ran well below its designed capacity of 20000 tonnes.

(49) As for Hoffmann-La Roche, it argues in its reply to the Statement of Objections that the Commission, by focusing on the undertaking's market share in Europe in 1996, overestimates Hoffmann-La Roche's average market share over the duration of the cartel. Indeed, Hoffmann-La Roche contends that owing to the quota system in place, it was unable to take advantage of the growth on the Community market and its market share fell. Hoffmann-La Roche says it started building up its Community market share again in 1995.

(50) The following table gives an overview of the current size of the main producers of citric acid over the period 1991 to 1995, as well as of the size of the groups to which those undertakings belong.

Table 3

Current size of the main producers of citric acid over the period 1991-1995

(Year 2000)

>TABLE>

b) Demand

(51) Customers for citric acid range from large food processing multinationals dealing directly with producers to small and medium-sized companies supplied by distributors. The food and beverages sector accounts for the largest share of consumption, followed by producers of detergents and cleaners.

c) Community inter-State trade

(52) Citric acid is produced in five Member States of the Community (Austria, Belgium, Ireland, Italy and the United Kingdom) and marketed throughout the Community. The five addressees of the present Decision had production facilities in the Community (in certain cases via subsidiaries). The following table shows the annual sales in the Community of companies with production facilities in the Community and the share which sales outside the Member State represented each year. Additional sales of citric acid in the Community came from third countries.

Table 4

Data for the five companies with production sites in the Community ((Source:

ADM Article 11 reply of 5 December 1997 [83]; Jungbunzlauer Article 11 reply of 22 September 1997 [32]; Citrique Belge (Hoffmann-La Roche) Article 11 reply of 30 September 1997 [64]; Haarmann & Reimer (Bayer AG) Article 11 reply of 23 September 1997 [53]; Cerestar Bioproducts Article 11 reply of 8 June 1999 [6714].))

>TABLE>

(53) There is accordingly a very substantial amount of trade between Member States in the citric acid market.

C. PROCEDURE

(54) In August 1995, the Commission was notified by the US Department of Justice of a Grand Jury investigation into the citric acid market. In April 1997, the Commission was informed of the plea-bargain agreements reached by Hoffmann-La Roche and Jungbunzlauer in the USA (see recital 64).

(55) In August 1997, the Commission sent requests for information under Article 11 of Regulation No 17(11) to the four largest producers of citric acid in the EC. In January 1998, requests for information were sent to the main consumers of citric acid in the EC market. In June 1998 and July 1998 further requests for information were sent to the main producers of citric acid in the EC.

(56) Following receipt of the first Article 11 request for information addressed to Cerestar Bioproducts in July 1998, the company's legal representatives requested a meeting with the Commission on 29 October 1998. At that meeting, the company expressed its wish to cooperate with the Commission pursuant to the Notice on the non-imposition or reduction of fines in cartel cases(12) (the Leniency Notice) and gave an oral description of the cartel activity in which it had been involved. A written statement confirming that account was sent to the Commission on 25 March 1999.

(57) Following a preliminary contact in September 1998, ADM met the Commission on 11 December 1998, after expressing its willingness to cooperate with the Commission under the terms of the Leniency Notice. At this meeting it provided an oral account of the anti-competitive activity in which it had been involved. A written statement confirming this account was provided on 15 January 1999.

(58) On 3 March 1999 additional requests for information were sent to Bayer plc, Hoffmann-La Roche, Jungbunzlauer and Cerestar Bioproducts.

(59) On 28 April 1999 Bayer plc made, on behalf of Haarmann & Reimer, an application under the Leniency Notice and provided a Statement supplementing its reply to the request for information.

(60) In a letter dated 21 May 1999 and following a meeting held with the Commission on 23 April, Jungbunzlauer confirmed its intention to cooperate fully under the conditions of the Leniency Notice and provided a written Statement supplementing its previous reply to the Article 11 request for information.

(61) By letter of 28 July 1999, Hoffmann-La Roche confirmed its participation in the cartel and the purpose of the meetings related to it.

(62) On 28 March 2000 the Commission initiated a proceeding in the present case and adopted a Statement of Objections against the undertakings to which this Decision is addressed. All parties submitted written observations in response to the Commission's objections. None of them requested an oral hearing; nor did they substantially contest the facts as set out in the Statement of Objections.

(63) On 27 July 2001 additional requests for information were sent to ADM, Cerestar Bioproducts, Haarmann & Reimer, Hoffmann-La Roche and Jungbunzlauer, in order to collect additional turnover figures.

D. PROCEEDINGS IN THE UNITED STATES OF AMERICA AND IN CANADA

(64) In the United States of America, following investigations conducted by the Department of Justice and the Federal Bureau of Investigation, criminal charges of conspiracy to fix prices contrary to Section 1 of the Sherman Act, were filed against five producers: ADM, Haarmann & Reimer, Hoffmann-La Roche, Jungbunzlauer and Cerestar Bioproducts. In addition, a senior executive at Haarmann & Reimer, a former Managing Director of Hoffmann-La Roche's affiliate Citrique Belge, the Chairman and President of Jungbunzlauer International AG and the Managing Director of Cerestar Bioproducts were charged personally with conspiracy.

(65) Between October 1996 and June 1998, all the accused pleaded guilty to the charges and agreed to pay fines which were set at USD 30 million for ADM; USD 50 million for Haarmann & Reimer; USD 14 million for Hoffmann-La Roche; USD 11 million for Jungbunzlauer and USD 400000 for Cerestar Bioproducts.

(66) In addition to the fines on the undertakings, all individuals charged were personally fined USD 150000 each, except for the Managing Director of Cerestar Bioproducts who paid a criminal fine of USD 40000.

(67) Civil proceedings were also filed in a United States District Court on behalf of a class of purchasers claiming triple damages against ADM, Haarmann & Reimer, Jungbunzlauer, Hoffmann-La Roche and Cerestar Bioproducts.

(68) In Canada, following a criminal investigation conducted by the Competition Bureau, ADM, Haarmann & Reimer, Jungbunzlauer, and Hoffmann-La Roche pleaded guilty, between May 1998 and September 1999, of participation in a conspiracy to fix prices and share markets for citric acid and were fined CAD 2 million, CAD 4,7 million, CAD 1,9 million and CAD 2,9 million respectively.

E. DESCRIPTION OF EVENTS

1. PARTICIPANTS AND ORGANISATION

(69) The structure, organisation and operation of the cartel was based upon a shared assessment of the market. ADM and Haarmann & Reimer had more frequent contacts because, although they both had production facilities in the EC, they considered themselves to be North American rather than European producers and in terms of logistics and coordination it was simpler for them to hold more frequent bilateral meetings.

(70) The usual representatives of the undertakings in meetings were:

- for ADM: the President of the Corn Processing Division and the Vice-President of Sales and Marketing,

- for Haarmann & Reimer: a Senior Vice President of the company, a member of the Board of Haarmann & Reimer USA; the Vice President of Sales and Marketing and the Sales and Marketing Manager,

- for Hoffmann-La Roche: the World Head of Marketing Vitamins and Fine Chemicals; the Head of the Unites States Feed Business - Vitamin Division; two successive General Managers of Citrique Belge; a product manager of Citrique Belge,

- for Jungbunzlauer: the Chief Executive Officer; the Head of Jungbunzlauer Austria and a product manager,

- for Cerestar Bioproducts: the General Manager and a salesperson.

(71) The cartel meetings were established at different levels:

- periodic top level or "Masters" meetings between Presidents, CEOs, General Managers etc. would take place on average twice a year,

- at a later stage, from 1993 onwards, more technically orientated meetings would take place between the Sales Managers, the so-called "Sherpa" meetings,

- bilateral contacts between undertakings.

2. BACKGROUND AND INITIAL CONTACTS

(72) The average price of citric acid in Europe declined steadily between 1985 and 1990, falling by around 45 %(13). Prices at the end of this period were atypically low, a fact attributed in some quarters to the waging of a price war in Germany and the United Kingdom (for which Jungbunzlauer was held mainly responsible) with the objective of capturing extra market share. Jungbunzlauer's conduct on the market place was perceived to be one of the reasons for this decline in prices. In the same period, Jungbunzlauer virtually tripled its production capacity of citric acid (from [...] mt to [...] mt) mainly through its acquisition of Boehringer Ingelheim's citric acid manufacturing business in 1985 and Benckiser's organic acid division in 1988(14).

(73) A certain amount of rationalisation of the citric acid industry took place at the end of this period. In 1990, Cargill's entry to the market with a new plant in the United States of America had a negative impact on worldwide prices. In December of the same year, Pfizer's citric acid business was acquired by ADM, making it a new entrant to the market. A smaller European producer, Ebro Spain, stopped production and closed down in 1991, and the Biacor plant in Italy was bought by Cerestar Bioproducts at the end of that year(15).

(74) A few weeks after its purchase of Pfizer's citric acid business, ADM arranged several bilateral meetings with other citric acid manufacturers, ostensibly for the purpose of introducing itself to its competitors.

(75) On 14 January 1991 the President for Corn Processing and the Vice-President of Sales and Marketing of ADM met the Senior Vice President and the Vice-President for Sales and Marketing of Haarmann & Reimer in Chicago, United States of America. On 23 January 1991 they met the head of Hoffmann-La Roche's vitamins and fine chemicals business, who at the time was also Chairman of ECAMA, in Basel, Switzerland. On the following day, the same representatives of ADM met two high ranking representatives of Jungbunzlauer at its offices in Vienna. Finally, on 25 January 1991 the ADM representatives met a member of the Board of Haarmann & Reimer USA at Hanover, Germany(16).

(76) All of these meetings have been characterised by ADM as being of a purely "introductory" nature, although whatever the description used, the fact remains that ADM took steps very soon after its entry into the market to contact its most important competitors.

(77) Prior to those events, there had already been moves in the industry to fix prices. Jungbunzlauer states that in 1990 it had been approached by a member of the Management Board of Haarmann & Reimer with a view to establishing a coordinated approach to pricing on the part of citric acid manufacturers(17).

3. THE BASIC PRINCIPLES OF THE CARTEL

(78) The first meeting at which all initial participants in the cartel met was organised by Hoffmann La Roche's World Head of Marketing Vitamins and Fine Chemicals and took place on 6 March 1991(18) at the Hotel Plaza, Basel, Switzerland. The meeting was organised and chaired by a representative of Hoffmann-La Roche(19). It was attended by two high-ranking representatives of ADM, Haarmann & Reimer, Hoffmann-La Roche and Jungbunzlauer respectively.

(79) It was at this meeting that the basic principles of the cartel were agreed, providing the blueprint for subsequent actions by the participating undertakings. The following essential features of the arrangement were set out and agreed. They can be identified throughout the whole duration of the cartel and draw a clear picture of the way it functioned.

(a) Objectives

(80) The cartel pursued four main objectives, namely the allocation of specific sales quotas to each member and their adherence to those quotas; the fixing of target and/or "floor" prices; the elimination of price discounts; and the exchange of specific customer information.

1. Sales quotas

(81) Sales quotas were allocated to each undertaking and fixed on a worldwide basis, as all producers considered the market to be global. Following a suggestion made by ADM, it was decided that the basis of the quota would be the average of the last three years' sales of each undertaking (i.e. 1988-90). Haarmann & Reimer initially reserved its position on the figure assigned to it, which was settled soon afterwards, but accepted in principle the concept of a quota system. As early as the March 1991 meeting, a fixed tonnage figure for the sales quota was assigned to each undertaking. Two months later, at a cartel meeting in Vienna in May 1991, this was converted into a market share figure.

2. "Target" and "floor" prices

(82) Cartel members agreed on "floor" and "target" prices to be implemented. Prices were established in both USD and DEM terms. In the European market the DEM was used as the benchmark currency and converted into the appropriate national currency when quoting and charging prices to national customers.

3. No price discounts

(83) It was further agreed that no customers would be granted discounts and all would be expected to pay the list price. This was designed to prevent any participant from selling below the agreed prices. An exception was made for the five major consumers of citric acid since it was unrealistic to expect them to pay the published list price. It was accepted that these customers could be offered a discount of up to 3 % off the list price(20).

4. Customer information exchange

(84) Detailed information on specific customers was exchanged during meetings, in particular those of a more technical nature, known as "Sherpa" meetings. The coordinated targeting of certain customers of the Chinese manufacturers was discussed and carried out, as was concerted bidding for certain very large individual accounts.

(b) Implementation

1. A monitoring system

(85) A monitoring system was established to verify that undertakings were strictly adhering to the quota allocated to each of them. At the suggestion of Hoffmann-La Roche's World Head of Marketing Vitamins and Fine Chemicals, the group agreed at the meeting of 6 March 1991 to establish a monitoring system whereby each company would report its monthly sales figures to his secretary in Basel, who would then contact the companies and provide each company's sale figures for the corresponding month. Although the sales quota was set at a worldwide level, the monitoring of sales was reported with a regional break-up (Europe, North America and Rest of the World). These figures were never audited independently, but since the sales of the four companies made up a significant part of total ECAMA sales, the regular report of which provided aggregate sale figures, this could be used to identify any company that gave incorrect data.

2. Regular multilateral meetings

(86) The holding of regular and frequent meetings between the participants was a hallmark of the cartel's organisation. Between March 1991 and May 1995 around 20 multilateral meetings were held between the companies on matters directly related to the cartel. In addition, individuals from ADM and Haarmann & Reimer met on at least ten separate occasions during this period to prepare positions prior to multilateral meetings, review the cartel's situation or deal with compensation matters. After 1993, the cartel decided to hold more technically orientated meetings, known as "Sherpa" meetings, in order to resolve certain grievances and market "difficulties".

(87) The timing of the cartel meetings was usually set to coincide with those of the general assembly of the trade association ECAMA since all cartel participants were members of this association. The companies would typically meet the evening prior to the official ECAMA meeting(21).

3. Compensation scheme

(88) A compensation scheme was agreed to as a corollary to the quota agreement and in order to penalise those companies selling above their assigned sales quota and at the same time compensate those that did not reach it. If a company went over its assigned quota in any one year, it would be obliged to purchase product from the company or companies with sales below their quota during the following year.

4. IMPLEMENTATION OF THE CARTEL AGREEMENT

(89) The result of the 6 March 1991 meeting "was that there was a clear agreement to implement a volume quota, reporting and compensation mechanism and increase the price of citric acid"(22). Some participants were surprised at the level of formality and organisation to which the other participants had gone to arrive at this arrangement. Already at this initial stage, the leading representative of Hoffmann-La Roche may have warned participants not to keep any written records of the meetings and the need to be as discreet as possible as far as the existence and content of those meetings was concerned(23).

(90) The cartel went through two distinct periods. The first period extended from March 1991 to mid-1993, during which time the overall agreement was implemented quite smoothly, with prices following a steep upward trend and a new member joining the cartel, although the issue of compensation between companies was becoming problematic.

(91) During the second period, from mid-1993 until the ending of the cartel in May 1995, it became increasingly difficult for the participating companies to sustain the price levels, in no small measure due to a dramatic increase of citric acid imports from China, particularly into the European market. Accusations of cheating on the agreement, especially against Jungbunzlauer, became rife and the level of trust between the cartel members deteriorated.

(a) Price increases

(92) Following a five-year period of declining prices(24) it was evident that one of the primary aims of the cartel was to reverse this trend and increase the price of citric acid. Demand for citric acid underwent a substantial increase in the years 1991 and 1992 (9 % or more each year)(25). By 1991 new sources of demand for citric acid were emerging. In particular, the use of the product as a more environmentally-friendly substitute for polyphosphates in the detergent industry served to boost demand. The cartel members discussed this source of growing demand at the next meeting(26) of the cartel at Jungbunzlauer's offices in Vienna, Austria, on 16 May 1991(27). Overall, they "saw this as a situation which could be exploited for a coordinated price increase"(28). The aim of the producers was to raise prices by a much larger extent than would otherwise have been acceptable to consumers under normal market conditions. The prices thus agreed were subsequently announced to customers and extensively implemented, particularly during the early years of the cartel (see recitals 82 to 84, 95 and 96 and 116 to 118).

(93) Given the global character of the citric acid market and the use of the DEM and USD as benchmark currencies, the value of the exchange rate between the two was critical to the establishment of sustainable and competitive prices, particularly to avoid trans-shipments between the two areas. Pricing decisions were taken by the cartel members in the light of this important consideration. The relative strength of the DEM vis-à-vis the USD between mid-1991 and mid-1992 (it appreciated by almost 20 %)(29) meant that citric acid price increases for areas with prices quoted in USD were more frequent and of a higher aggregated amount than in DEM denominated markets, essentially to compensate for the DEM's revaluation.

(94) As already mentioned, citric acid is produced in several forms and specific prices are applicable to each of these. Citric acid monohydrate (CAH) and citric acid anhydrous (CAA) are the two most common forms, CAA being the main product in the North American market and CAH enjoying higher sales in the European one. When discussing prices, the cartel members would almost exclusively refer to CAA prices, which is sold at a somewhat higher price than CAH (around 4-5 % above), as a matter of convenience. Since prices of all forms of the product were related to each other, fixing the price on one form automatically affected the others. In any case, prices for forms other than CAA were also discussed on certain occasions.

(95) One of the first results of the meeting of March 1991 was the concerted implementation of a citric acid price increase to DEM 2,25/kg (CAA) by April 1991. There was little difficulty in introducing this price rise, in part owing to favourable market conditions. At the same time agreement on price increases for the North American market was reached. By July 1991, the European price was lagging behind the USD price and by means of telephone calls exclusively, the cartel members agreed to increase further the price in the European market to DEM 2,70/kg (CAA) with effect from August 1991. This price increase was also successfully implemented. At the following cartel meeting in November 1991 the participants made an explicit commitment not to allow North American and European prices to diverge substantially(30). By this time, an agreed increase of the USD price was not paralleled in the European market due to the growing weakness of the USD vis-à-vis the DEM. A final increase to DEM 2,80/kg (CAA) was agreed at the May 1992 meeting with the companies implementing this by June 1992(31). After this date no further increase in prices was agreed but rather talks on price issues at the meeting would focus on the need to maintain these prices in the face of remaining competitive pressures.

(96) In the space of 14 months the European price for citric acid had risen by 40 %. The cartel members were achieving one of the main goals they had set at their initial meeting in March 1991.

(b) Market sharing and monitoring system

(97) The sales quotas established at the meeting of 6 March 1991 were instrumental to the sustained upward pressure on citric acid prices which followed. Each producer was assigned a worldwide market share expressed as a percentage of total sales by ECAMA members (in 1991), not of total world market volume(32). Quotas were initially set in terms of total tonnage. Haarmann & Reimer was unhappy with its allocation and there was some dispute over Jungbunzlauer's share as well(33). These matters were clarified at the subsequent meeting in Vienna on 16 May 1991. At the same meeting it was decided to express the quotas in terms of market share figures, rather than total tonnage. Final market share quotas for each company were as follows: Haarmann & Reimer 32 %, ADM 26,3 %; Jungbunzlauer 23 %; Hoffmann-La Roche 13,7 % and Cerestar Bioproducts 5 %(34).

(98) ADM, Haarmann & Reimer and Jungbunzlauer have provided slightly different figures for the exact percentage of each quota. The precise allocation, however, can be calculated from the tables provided by Jungbunzlauer which show the same figures for the assigned sales quotas for each year in the 1991-94 period.

Table 5

World market sales quotas (metric tonnes and market shares)

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(99) Cerestar Bioproducts was not present at the meeting in Basel but, being a member of ECAMA, it was included in the aggregate data provided by that association. The other four cartel participants used the ECAMA data to cross-check the data reported and apparently allocated a 5 % share(35) to Cerestar Bioproducts, in all likelihood without its knowledge. This is reflected in the tables provided by Jungbunzlauer(36).

(100) In order to monitor the correct implementation of these quotas and avoid, as far as possible, the need for compensation at the end of each year, a regular exchange of monthly sales information was established from March 1991(37). As Jungbunzlauer declares, "each of the participants reported the tonnage they had sold in each region (Europe, North America, and the rest of the world) to the secretariat of the ECAMA President by the seventh (day) of each month. In the secretariat these sales figures were assembled and then reported back to the members by telephone, broken down by firm and by region. This made it possible to monitor the relative market shares continuously. The information also formed the basis of the market analysis carried out at the meetings"(38). Although companies reported sales for various regions, only the worldwide sales figure had to be complied with.

(101) The tables provided by Jungbunzlauer(39) were drawn up on the basis of the data supplied through those monthly telephone calls and contain detailed figures and calculations of the monthly sales of each participant in the cartel. They show a constant monitoring of each individual undertaking's level of compliance with its sales quota. As to the interpretation of the tables themselves, Jungbunzlauer explains: "The five rows 1 to 5 arranged one below the other show Haarmann & Reimer, ADM, Jungbunzlauer, Hoffmann-La Roche and Cerestar (respectively). The twelve columns arranged side by side show these firms" reported monthly sales volumes. For each firm there are four separate rows showing the volume of citric acid sold in Europe, North America, and the rest of the world, and the total for the three regions together. The row marked "total" also shows the percentage difference from the agreed sales volumes. The last row shows the difference for Europe as a whole(40). Two separate tables exist for each year in the period 1991-94. One provides the information on a cumulative monthly basis and the other on a simple monthly basis.

(c) Compensation system

(102) At the meeting on 14 November 1991 in Brussels(41), the first at which sufficient data had been gathered on the progress of sales, it became clear that ADM was falling far short of its sales quota whilst Haarmann & Reimer was ahead of its quota by a similar quantity: "By the end of 1991, Haarmann & Reimer needed to buy 7000 tons of citric acid from ADM"(42). The other two producers were broadly in line with their quotas. At the meeting concern was expressed on this divergence because it had been agreed that one of the aims of the meticulous monitoring of sales was precisely to avoid the need for any compensation at the end of the year. It had been agreed earlier that imbalances of this kind were not to be allowed. At a subsequent meeting on 2 January 1992 in Germany(43) this question of compensation, as well as pricing and the state of the market, was further discussed.

(103) The issue of compensation surfaced early on in the life of the cartel, particularly following these large, and roughly equivalent, divergences by Haarmann & Reimer and ADM (see Table 6). An enhanced compensation system may have been discussed at the meeting in Jerusalem on 19 May 1992(44), but eventually it was decided that "individual compensation arrangements were to be sought between the firms that departed furthest from the volumes laid down"(45). At the meeting in Jerusalem, ADM's compensation was the main topic of discussion. Haarmann & Reimer was reluctant to compensate ADM. Hoffmann-La Roche's World Head of Marketing Vitamins and Fines Chemicals, as Chairman, intervened in the dispute, making it clear that this was an essential part of the agreement and that non-compliance on this point would undermine the trust necessary to maintain the cartel and would therefore be harmful to all participants. Accordingly, he urged Haarmann & Reimer to fulfil its agreement. The representatives of ADM and Haarmann & Reimer were told to work out a solution to this dispute and they discussed the subject at a subsequent bilateral meeting.

(104) This was only one meeting in a series which would continue until April 1995. ADM confirms that "it was not unusual for (a representative of ADM) and (a representative of Haarmann & Reimer) to meet to discuss the North American position prior to ECAMA meetings"(46). In fact, other members of Haarmann & Reimer were present at certain of these meetings, thirteen of which have been identified. The compensation dispute figured prominently in many of these discussions, at least until the bulk of the transaction was concluded during the second half of 1992.

(105) The following table shows the divergence of each company with respect to its allocated quota for each year from 1991 to 1994. ADM was the company with the largest deficit in terms of volume throughout this period and Haarmann & Reimer had the largest surplus.

(106) Actual sales of citric acid between the companies do not correspond precisely with the figures given in the following table for two reasons. First, citric acid was traded between companies for legitimate purposes unconnected with the compensation measures (as part of swap agreements or on an ad hoc basis). Second, owing to the fact that there was an element of flexibility in the actual level of compensation made between the companies, disputes and negotiations on the actual compensation volumes were intense and not every single tonne of citric acid oversold was subject to compensation.

Table 6

World market: Divergence on sales quotas((The figures in this Table are based on the data contained in the tables under Jungbunzlauer's Article 11 reply of 29 April 1999, annex 3.1 [5637-5644]. The sales allocated row corresponds to the sales volume using the quota figure assigned to each company (see Table 1).)) (metric tonnes)

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(107) Nevertheless, volumes purchased under the scheme were significant. ADM's sales to Haarmann & Reimer represented the most significant part of the compensation and, in ADM's own calculation, reached almost 7200 mt between 1992 and 1995(47). Cerestar Bioproducts admits to selling 702 mt of CAA plus 126 mt of tri-sodium citrate to Haarmann & Reimer in 1994-95 in addition to 96 mt to Jungbunzlauer in 1994 (this was the remainder of a consignment of 900 mt, most of which was rejected by Jungbunzlauer due to the allegedly substandard quality of the product)(48).

(108) In its reply to the Statement of Objections, Jungbunzlauer says that the Commission conveyed the incorrect overall impression that there was a detailed system of penalties to enforce the quota agreements. Jungbunzlauer adds that the statement of ADM quoted by the Commission(49) is not quite correct, in so far as no compensation system was ever introduced, though it may well have been the intention of some participants at the cartel meetings to do so(50). According to Jungbunzlauer, the agreement reached on 6 March 1991 concerned only the reporting of sales and not the compensation mechanism. While it is true that the possibility of a compensation mechanism was discussed at the Jerusalem meeting in May 1992, it was only agreed that separate compensation arrangements were to be made between the firms which had departed furthest from the agreed volumes.

(109) Since the Commission confirms that, as already reported in the Statement of Objections, the meeting in Jerusalem in May 1992 led to the conclusion that individual compensation arrangements should be sought between the undertakings concerned, it can only reject Jungbunzlauer's contention that no compensation agreement was in place over the period of infringement.

(110) From the outset, in March 1991, the principle that overselling participants would have to compensate those who undersold played a central role in the cartel arrangement. Whatever form, multi or bilateral, the implementation of the compensation scheme may have taken, it had the object and the effect of introducing disciplined compliance with the quotas, as all participants knew that they would lose any benefit obtained from a lack of respect of the market sharing agreement. This is confirmed by the statement made by Haarmann & Reimer to the effect that as early as November 1991 it knew it had to buy 7000 tonnes from ADM. As explained in recital 107, purchases of citric acid between cartel participants in compliance with quota agreements took place throughout the period of infringement.

(111) Whilst accepting that it bought 7200 mt from ADM during the years 1992 to 1994, Haarmann & Reimer contends that it is going too far to say that the volumes purchased under the compensation scheme were significant, since they represented less than 2 % of its average worldwide annual sales. The Commission cannot share this view. Taken as a whole, the purchases were in no way minor, and in any event, even if their importance were regarded as limited, their relevance is obvious, as they shed a great deal of light on the efforts deployed by the cartel members to maintain the agreed quotas.

5. CERESTAR BIOPRODUCTS JOINS THE CARTEL

(112) Cerestar Bioproducts first established contact with the members of the cartel at the ECAMA general meeting of 15 November 1991 to which, as a new member of this trade association, it had been invited. The General Manager of Cerestar Bioproducts was approached on that occasion by Hoffmann-La Roche's World Head of Marketing Vitamins and Fine Chemicals, whom he subsequently met on 12 February 1992 in Basel where he was "explained the basic mechanisms of the cartel"(51) which Cerestar Bioproducts eventually joined.

(113) There is some discrepancy in the accounts given by the various participants as to the actual date on which Cerestar Bioproducts attended its first cartel meeting. Hoffmann-La Roche has stated that "representatives of Cerestar did not attend meetings before the year 1992"(52). ADM believes that Cerestar Bioproducts only joined the cartel at its meeting of 18 November 1992 in Brussels(53), whilst Jungbunzlauer puts it at 1 June 1993(54), although Jungbunzlauer admits that it is unsure of this. Cerestar Bioproducts, for its part, is adamant that it was present at the meeting in Jerusalem in May 1992(55) and it is this date which must be accepted as being the most accurate, mainly because Cerestar Bioproducts was the smallest player in the cartel and its participation at meetings was not systematically recorded by the other participants.

(114) At the meeting of November 1992, which took place on the afternoon prior to the official ECAMA meeting, the cartel members agreed to establish Cerestar Bioproducts' quota formally at 5 % of the cartel members' total worldwide sales(56), as had informally been agreed amongst the other members previously. At the same time it was decided that no compensation between companies was necessary for sales in 1992 since the differences between actual and assigned sales were small enough to be acceptable to all(57).

6. CONCERTED ACTION AGAINST CHINESE MANUFACTURERS

(115) From the end of the 1980s, Chinese manufacturers of citric acid had begun to increase their presence on the world market and in particular in Europe. Chinese product was generally perceived to be below the quality criteria of most established suppliers, by far the greater volume of production being in the form of CAH since the resources and technology to produce CAA were generally not available to the Chinese producers. They therefore had to compete almost exclusively on the basis of price and systematically sold at prices below those of the established manufacturers(58).

(116) The important rise in prices at the beginning of the 1990s was partially responsible for a new influx of citric acid imports from China. These more than doubled between 1991 and 1992, reaching 32500 mt in 1992, that is to say, 14,2 % of the Community market volume. In 1994 they would rise to 59448 mt, that is to say, 23,6 % of the Community market volume that year(59). This had an important impact on the cartel's ability to maintain the agreed prices and became an increasingly serious problem, although various means of counteracting the price-depressing effect of Chinese imports were devised and implemented. Under cover of their ECAMA membership, the undertakings composing the cartel studied the possibility of causing an anti-dumping proceeding to be initiated against the Chinese importers by the European Commission. They continued to apply this type of pressure by sending representatives of Jungbunzlauer and ADM to China, on behalf of ECAMA, to inform the local manufacturers that anti-dumping proceedings would be initiated if their price-cutting practices were not terminated. This had no perceivable effect on prices. In the meantime, the cartel members had been targeting individual customers of the Chinese producers in order to undermine their market position. The mechanics of this practice is explained below.

(117) One result of this was that by 1993 difficulties between some of the cartel members were beginning to surface. In the first quarter of 1993, Jungbunzlauer was seen to be "causing problems" in the group because it did not strictly adhere to the agreement at all times and was perceived to be "badly disciplined" by the other participants(60). By the following meeting of the cartel on 1 June 1993 at the Kildare Country Club in Ireland(61), the main point of discussion was the lack of discipline on the part of certain members vis-à-vis adherence to the agreement that all customers (except the five largest) were to pay the list price. In particular, ADM and Haarmann & Reimer expressly accused Jungbunzlauer of this lack of discipline. In order to remedy this perceived flaw, it was decided that "junior" members of the group should meet separately to identify the various "exceptions" made in order to clarify the situation. These rather technical meetings would later be referred to as "Sherpa" meetings, as opposed to the main "Masters" meetings.

(118) At the cartel meeting on 27 October 1993 at Bruges, Belgium(62), the difficulties due to lack of discipline on pricing continued. "The fundamental agreement was still in place but there was an increasing number of exceptions for which the group saw Jungbunzlauer as being primarily responsible"(63). The falling market share of the cartel members was also a matter of concern. From 1991 to 1993 the cartel members' world market share in terms of total sales had fallen from around 70 % to less than 60 % and continued to fall to 52 % in 1994(64). This continuous decline meant that the size of the "pie" being shared out between the companies in the cartel was steadily decreasing, a factor which led to increased tension between them(65).

(119) A "Sherpa" meeting was held in London on 14 January 1994(66) with the remit of reviewing the citric acid market situation and finding ways to encourage a growth of sales by cartel members. The increasing availability of Chinese production in the European market and the need for a more forceful stance by the cartel members to maintain their level of sales in the light of this were subjects of discussion at the meeting. Participants "accepted that there would have to be a price war against the competition from China"(67) and that they had to "try and regain particular accounts [lost to the Chinese producers] at whatever price was necessary with the blessing of the others"(68)."These customers were identified by name, and were allocated to individual participants, who were to make the necessary offers"(69). This catalogue of undertakings came to be known as the "Serbia List" and was the subject of regular monitoring and discussion at subsequent "Sherpa" meetings, the first of which were held in London from 23 to 25 March 1994(70).

(120) The next "Masters" meeting was held on 18 May 1994 at the Savoy Hotel in London(71). The issue of Chinese producers was raised including an initial discussion on the possibility of bringing an anti-dumping complaint before the European Commission. Further accusations were levelled against Jungbunzlauer for its perceived breaking of the agreement as far as prices were concerned. Jungbunzlauer's CEO took over the chairmanship of the cartel meetings at this time, following his election to the Chairmanship of ECAMA and the retirement of Hoffmann-La Roche's World Head of Vitamins and Fine Chemicals, and, accordingly, all monthly price information was subsequently reported to his secretary.

(121) A further "routine" "Sherpa" meeting was held on 7 July 1994 in Zurich(72), followed by a Masters meeting there on 31 August 1994(73), at which Jungbunzlauer continued to be blamed for undermining the pricing agreements. The possibility of causing an anti-dumping proceeding to be initiated against the Chinese producers was once again discussed. Following its chairmanship of the group, Jungbunzlauer was now responsible for the logistical organisation of the meetings.

(122) At the meeting on 2 November 1994(74) at the Hotel Amigo in Brussels, the "Serbia List" was reviewed and further discussed. It was agreed that on forthcoming trips by representatives of Jungbunzlauer and ADM to China, the local producers were to be threatened with an anti-dumping complaint. In addition, individual large accounts were partitioned between the undertakings, with the "Masters" entrusting the "Sherpas" "with arriving at some commonality of price between those bidding for the [1995] [...] business (...) After the cartel meeting the sherpas stayed behind and established a broad commonality of price for the[...]bid"(75).

(123) Further agreements on quotations to single customers were discussed at "Sherpa meetings" on 16 November 1994(76) at the Mariott Hotel in Slough, United Kingdom, and on 18 November 1994(77) at the Hotel Concorde Lafayette, Paris. At the first of these meetings, a bid to (...) was one of the main topics (if not the only one). Notes taken by ADM's representative at the meeting show that each undertaking was assigned a bidding price for orders in individual countries(78). Discussions on (...) and other multinational companies were held at both meetings. The main theme of discussion at the Paris meeting was how to follow through with the implementation of the "Serbia List".

(124) By the beginning of 1995 the impact of the Chinese imports, particularly on the European market, together with the perception that Jungbunzlauer was not keeping to the agreement on prices and was therefore undercutting the other cartel members were having a clear effect on the cohesiveness and effectiveness of the cartel. Prices in Europe were falling from the last agreed price of DEM 2,80/kg (CAA).

7. THE END OF THE CARTEL

(125) The following three meetings on 6 January 1995(79) at the Hotel Hilton O'Hare in Chicago, on 2 February 1995(80) at the Hotel Hilton at Heathrow, London, and on 21 February 1995(81) at the Hotel Sheraton in Toronto, Canada, did not fundamentally change any previous pattern of behaviour. The other undertakings attacked Jungbunzlauer for its "almost total lack of adherence to the agreed prices which Jungbunzlauer had reduced, particularly though not exclusively in Europe"(82). Monitoring of the implementation of the "Serbia List" continued and whilst the atmosphere was "much less friendly" and the group was starting to fall apart, monthly sales data continued to be regularly exchanged and all parties were still very much in contact with each other. Given the state of relations between the companies, particularly with Jungbunzlauer, three companies (Hoffmann-La Roche, ADM and Haarmann & Reimer) discussed "the possibility of forming other arrangements in the citric acid market, not including Jungbunzlauer"(83), although these did not ultimately result in any concrete action.

(126) The meeting held on 1 May 1995(84) at the Hilton Airport Hotel in Zurich was the last cartel meeting to be prearranged. As ADM states "the cartel was coming to an end", but not quite. Accusations continued to be levelled against Jungbunzlauer, and the other companies held bilateral and side discussions on other possible arrangements. It was not until the last, unplanned, meeting on 22 May 1995(85) at the Schweiz Park Hotel in Vitznau, Switzerland, that it became clear that "the cartel was in total disarray and was not working. (The CEO of Jungbunzlauer) was told that unless JBL was seen to do something to repair the damage that they had done the agreement was at an end"(86).

(127) Notwithstanding this turn of events the parties continued to exchange the monthly sales data until May 1995. After this date ADM, Hoffmann-La Roche and Haarmann & Reimer continued to discuss the possible continuation of the agreement in a modified form. The American firm Cargill was deemed to be a possible new addition to this group, although it does not appear that concrete steps to this effect were taken.

(128) In any case, the raid conducted by the United States of America Federal Bureau of Investigation (FBI) on the premises of ADM in the United States of America in June 1995 brought an end to this company's involvement in the cartel and according to the information available to the Commission, all remaining contacts between the parties in relation to the anti-competitive practices were drawn to a close.

PART II - LEGAL ASSESSMENT

A. JURISDICTION

(129) The arrangements described applied to all countries in the EEA which were consumers of citric acid.

(130) The EEA Agreement, which contains provisions on competition analogous to those of the Treaty, came into force on 1 January 1994. The present Decision therefore includes the application as from that date of the rules on competition of the EEA Agreement (in particular Article 53(1)) to the arrangements to which objection is taken(87).

(131) In so far as the arrangements affected competition in the Common market and trade between EU Member States, Article 81 of the Treaty is applicable. In so far as the cartel operations had an effect on trade between the EC and EFTA countries or between EFTA countries which were part of the EEA, Article 53 of the EEA Agreement is applicable.

(132) If an agreement or practice affects only trade between Member States of the EC, the Commission retains competence and applies Article 81 of the Treaty. On the other hand, if an agreement affects only trade between EFTA States, then the EFTA Surveillance Authority ("ESA") is alone competent and will apply the EEA competition rules in Article 53 of the EEA Agreement(88).

(133) In the present case, the Commission is the competent authority to apply both Article 81(1) of the Treaty and Article 53(1) of the EEA Agreement on the basis of Article 56 of that Agreement since the cartel had an appreciable effect on trade between the EC Member States(89).

B. APPLICATION OF ARTICLE 81 OF THE TREATY AND ARTICLE 53 OF THE EEA AGREEMENT

1. ARTICLE 81(1) OF THE TREATY AND ARTICLE 53(1) OF THE EEA AGREEMENT

(134) Article 81(1) of the Treaty prohibits as incompatible with the common market all agreements between undertakings, decisions by associations of undertakings or concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the common market, and in particular those which directly or indirectly fix purchase or selling prices or any other trading conditions, limit or control production and markets, or share markets or sources of supply.

(135) Article 53(1) of the EEA Agreement (which is modelled on Article 81(1) of the Treaty) contains a similar prohibition, although the reference in Article 81(1) to trade "between Member States" is replaced by a reference to trade "between contracting parties" and the reference to competition "within the common market" is replaced by a reference to competition "within the territory covered by ... (the EEA) Agreement".

2. AGREEMENTS AND CONCERTED PRACTICES

(136) Article 81(1) of the Treaty and Article 53 of the EEA Agreement prohibit agreements, decisions of associations and concerted practices.

(137) An agreement can be said to exist when the parties adhere to a common plan which limits or is likely to limit their individual commercial conduct by determining the lines of their mutual action or abstention from action in the market. It does not have to be made in writing; no formalities are necessary, and no contractual sanctions or enforcement measures are required. The fact of agreement may be express or implicit in the behaviour of the parties.

(138) In its judgment in Joined Cases T-305/94 etc. Limburgse Vinyl Maatschappij NV and Others v Commission (PVC II)(90), the Court of First Instance stated that "it is well established in the case-law that for there to be an agreement within the meaning of Article [81(1)] of the Treaty it is sufficient for the undertakings to have expressed their joint intention to behave on the market in a certain way".

(139) Article 81 of the EC Treaty(91) draws a distinction between the concept of "concerted practices" and that of "agreements between undertakings" or of "decisions by associations of undertakings"; the object is to bring within the prohibition laid down in that provision a form of coordination between undertakings which, without having reached the stage where an agreement properly so-called has been concluded, knowingly substitutes practical cooperation between them for the risks of competition(92).

(140) The criteria of coordination and cooperation laid down by the case-law of the Court, far from requiring the elaboration of an actual plan, must be understood in the light of the concept inherent in the provisions of the Treaty relating to competition, according to which each economic operator must determine independently the commercial policy which he intends to adopt in the common market. Although that requirement of independence does not deprive undertakings of the right to adapt themselves intelligently to the existing or anticipated conduct of their competitors, it strictly precludes any direct or indirect contact between such operators the object or effect whereof is either to influence the conduct on the market of an actual or potential competitor or to disclose to such a competitor the course of conduct which they themselves have decided to adopt or contemplate adopting on the market(93).

(141) Thus conduct may fall within the scope of Article 81(1) of the Treaty as a concerted practice even where the parties have not explicitly subscribed to a common plan defining their action in the market, if they nevertheless knowingly adopt or adhere to collusive devices which facilitate the coordination of their commercial behaviour(94).

(142) Although in terms of Article 81(1) of the Treaty the concept of a concerted practice requires not only concertation but also conduct on the market resulting from the concertation and having a causal connection with it, it may be presumed, subject to proof to the contrary, that undertakings taking part in such a concertation and remaining active in the market will take account of the information exchanged with competitors in determining their own conduct on the market, all the more so when the concertation occurs on a regular basis and over a long period(95).

(143) It is not necessary, particularly in the case of a complex infringement of long duration, that the Commission characterise it as exclusively one or other of these forms of illegal behaviour. The concepts of agreement and concerted practice are fluid and may overlap. Indeed, it may not even be possible realistically to make any such distinction, as an infringement may present simultaneously the characteristics of each form of prohibited conduct, while considered in isolation some of its manifestations could accurately be described as one rather than the other. It would however be artificial analytically to subdivide what is clearly a continuing common enterprise having one and the same overall objective into several discrete forms of infringement. A cartel may therefore be an agreement and a concerted practice at the same time. Article 81 lays down no specific category for a complex infringement of that type(96).

(144) In PVC II, the Court of First Instance stated that "(i) in the context of a complex infringement which involves many producers seeking over a number of years to regulate the market between them, the Commission cannot be expected to classify the infringement precisely, for each undertaking and for any given moment, as in any event both those forms of infringement are covered by Article (81) of the Treaty"(97).

(145) An "agreement" for the purposes of Article 81(1) of the Treaty does not require the same certainty as would be necessary for the enforcement of a commercial contract at civil law. Moreover, in the case of a complex cartel of long duration, the term "agreement" can properly be applied not only to any overall plan or to the terms expressly agreed but also to the implementation of what has been agreed on the basis of the same mechanisms and in pursuance of the same common purpose.

(146) Although a cartel is a joint enterprise, each participant in the agreement may play its own particular role. One or more may exercise a dominant role as ringleader(s). Internal conflicts and rivalries, or even cheating may occur, but will not prevent the arrangement from constituting an agreement/concerted practice for the purposes of Article 81(1) of the Treaty and Article 53(1) of the EEA Agreement where there is a single common and continuing objective. A complex cartel may properly be viewed as a single continuing infringement for the time frame in which it existed. The agreement may well be varied from time to time, or its mechanisms adapted or strengthened to take account of new developments.

(147) Indeed, in a complex cartel of long duration, where the various concerted practices followed and agreements concluded form part of a series of efforts made by the undertakings in pursuit of a common objective of preventing or distorting competition, the Commission is entitled to find that they constitute a single continuous infringement. As the Court of First Instance observed on this point in Case T-7/89 Hercules v Commission(98), it would be artificial to split up such continuous conduct, characterised by a single purpose, by treating it as a number of separate infringements: "the fact is that the (undertakings) took part - over a period of years - in an integrated set of schemes constituting a single infringement, which progressively manifested itself in both unlawful agreements and unlawful concerted practices."

(148) The mere fact that each participant in a cartel may play the role which is appropriate to its own specific circumstances does not preclude its responsibility for the infringement as a whole, including acts committed by other participants but which share the same unlawful purpose and the same anti-competitive effect. An undertaking which takes part in the common unlawful enterprise by actions which contribute to the realisation of the shared objective is equally responsible, for the whole period of its adherence to the common scheme, for the acts of the other participants pursuant to the same infringement. This is certainly the case where it is established that the undertaking in question was aware of the unlawful behaviour of the other participants or could have reasonably foreseen or been aware of them and was prepared to take the risk(99).

3. SINGLE, CONTINUOUS INFRINGEMENT

(149) At their first meeting of 6 March 1991 in Basel, Switzerland, the major producers, Haarmann & Reimer, ADM, Jungbunzlauer and Hoffmann-La Roche, agreed the basic principles by which they would cartelise the world market for citric acid(100).

(150) This plan, to which they all subscribed, as did Cerestar Bioproducts at a later stage, was implemented over a period of four years employing the same mechanisms and pursuing the same common purpose of eliminating competition.

(151) The working out of the plan in regular meetings did not give rise to discrete "agreements" but constituted the implementation of the same overall and illegal scheme.

(152) Given the common design and common objective which the producers steadily pursued of eliminating competition in the citric acid industry, the Commission considers that the conduct in question constituted a single continuing infringement of Article 81(1) of the Treaty and Article 53(1) of the EEA Agreement.

(153) Although the arrangements between the producers could correctly be considered as presenting all the characteristics of a full "agreement", some factual elements of the illicit conduct could aptly be described as constituting a concerted practice were it appropriate to do so.

(154) In its reply to the Statement of Objections, Jungbunzlauer alleges that the Commission is not correct in saying that an agreement was reached on 6 March 1991 and that a commonly agreed plan to restrict competition was implemented over a long period, employing the same mechanisms.

(155) According to Jungbunzlauer, not only did the parties fail to reach agreement in March 1991, but from 1993 onwards, Jungbunzlauer participated only partly in the implementation of the principles in question, and from the second half of 1994 it played no further part at all.

(156) In the light of recitals 136 to 148, the argument according to which there was no agreement over the period considered in the present Decision must be dismissed. The question whether the agreements and/or concerted practices were actually implemented is addressed in recitals 212 to 218.

4. RESTRICTION OF COMPETITION

(157) Article 81(1) of the Treaty and Article 53(1) of the EEA Agreement expressly mention as restrictive of competition agreements which:

- directly or indirectly fix selling prices or any other trading conditions,

- limit, or control production,

- share markets or sources of supply.

(158) In the complex of agreements and arrangements considered in the present case, the following elements can be identified as relevant in order to find an infringement of Article 81(1) of the Treaty and Article 53(1) of the EEA Agreement:

- allocating markets and market shares quotas,

- freezing/restricting/closing down production capacity,

- agreeing concerted price increases,

- designating the producer which was to "lead" price increases in each national market,

- circulating lists of current and future target prices in order to coordinate price increases,

- devising and applying a reporting and monitoring system to ensure the implementation of their restrictive agreements,

- sharing out, or allocating customers,

- participating in regular meetings and having other contacts in order to agree on those restrictions and to implement and/or modify them as required.

(159) These kind of arrangements have as their object the restriction of competition within the meaning of Article 81(1) of the Treaty and Article 53(1) of the EEA Agreement. Price being the main instrument of competition, the various collusive arrangements and mechanisms adopted by the producers were all ultimately aimed at an inflation of the price to their benefit and above the level which would be determined by conditions of free competition.

(160) In order to conclude that Articles 81(1) of the Treaty and 53(1) of the EEA Agreement apply, there is no need to consider the actual effects upon competition of an agreement once it is established that the agreements had the object of restricting competition.

(161) However, the cartel also had a restrictive effect on competition. Indeed the price rises which were the primary objective of the cartel were agreed, announced to customers and extensively implemented, particularly during the course of the early years of the cartel, throughout the EEA. Moreover, the maintenance of each company's market share, agreed in order to make the price agreements work, was largely achieved; the divergence between overall actual and allocated sales was above 3 % only for some companies in the first year of the cartel and remained below this figure for the later period (see Table 6). The restrictive effect of the arrangements in question are established in more detail in recitals 205 to 218.

(162) In its reply to the Statement of Objections, Jungbunzlauer declares that the Commission has wrongly given the impression that improper pressure was brought to bear on the Chinese producers. Jungbunzlauer goes on to say that cheap imports from China were distorting competition to a considerable extent and that there is nothing reprehensible in threatening to take a legitimate step. Jungbunzlauer states that the anti-dumping complaint contemplated by ECAMA can in no way be regarded as an abuse. This is also demonstrated by the facts that Turkey imposed anti-dumping duties on imports of Chinese citric acid between May 1995 and May 2000.

(163) It is not the Commission's intention to maintain that filing or planning to file an anti-dumping complaint, or even informing third parties of an intention to file such a complaint may constitute, as such, an infringement of Article 81(1) of the Treaty.

(164) However, it is clearly established in the present case that the increases in the price of citric acid that were successfully brought about by the cartel members through their competition-restricting agreements, had the effect of strongly increasing Chinese exports of citric acid to Europe.

(165) In this context, the various joint efforts made by the cartel members to convince the Chinese producers that they should limit their price-cutting exports to Europe can aptly be described as a strategy aimed at protecting the cartel from an unexpected competitive threat, irrespective of the question of the lawfulness, under EC anti-dumping law, of the prices charged by the Chinese producers.

(166) Whilst it is perfectly legitimate for an industry to discuss whether an anti-dumping complaint should be filed with the Commission, it is certainly not for the main players of a given market segment to take concerted actions regarding the prices they charge to their respective customers in order to evict third parties from this market. The facts described in recitals 115 to 124 illustrate very clearly the illegal character of the practices used by the cartel participants in order to discipline the Chinese producers. The counter-offers targeted at specific companies, identified in a catalogue known as the "Serbia list" and individually allocated to each of the cartel participants, clearly formed part of an overall strategy to eliminate competition in the citric acid market in the EEA.

(167) In this respect, the Commission is well founded in considering that the conduct of the cartel members vis-à-vis the Chinese producers amounted to a concerted practice falling under Article 81(1) of the Treaty and Article 53(1) of the EEA Agreement.

5. EFFECT UPON TRADE BETWEEN EU MEMBER STATES AND BETWEEN EEA CONTRACTING PARTIES

(168) The continuing agreement between the producers had an appreciable effect upon trade between Member States of the EU and between contracting parties to the EEA agreement.

(169) Article 81(1) of the Treaty is aimed at agreements which might harm the attainment of a single market between the EU Member States, whether by partitioning national markets or by affecting the structure of competition within the common market. Similarly, Article 53(1) of the EEA Agreement is directed at agreements which undermine the realisation of a homogeneous European Economic Area.

(170) As demonstrated in the section "Inter-State trade" (recitals 52 and 53), the citric acid market is one which is characterised by a substantial volume of trade between EC Member States. There was also a considerable volume of trade between the EU and EFTA countries party to the EEA. All EFTA countries party to the EEA import 100 % of their requirements. Prior to the accession of Austria, Finland and Sweden to the Community, Austria exported a substantial quantity and the other two countries imported the totality of their requirements of citric acid.

(171) The application of Articles 81(1) of the Treaty and 53(1) of the EEA Agreement to a cartel is not, however, limited to that part of the members' sales which actually involve the transfer of goods from one State to another. Nor is it necessary, in order for these provisions to apply, to show that the individual conduct of each participant, as opposed to the cartel as a whole, affected trade between Member States(101).

(172) In the present case, the cartel arrangements covered virtually all trade throughout the EC and EEA in this important industrial sector. The existence of price-fixing and quota mechanisms must have resulted, or was likely to result, in the automatic diversion of trade patterns from the course they would otherwise have followed(102).

6. PROVISIONS OF COMPETITION RULES APPLICABLE TO AUSTRIA, FINLAND, ICELAND, LIECHTENSTEIN, NORWAY AND SWEDEN

(173) The EEA Agreement entered into force on 1 January 1994. For the period prior to that date during which the cartel operated, the only provision applicable to the present proceedings is Article 81 of the Treaty; in so far as the cartel arrangements within that period restricted competition in Austria, Finland, Iceland, Liechtenstein, Norway and Sweden (then EFTA Member States) they were not caught by that provision.

(174) In the period 1 January to 31 December 1994, the provisions of the EEA agreement applied to the six EFTA Member States; the cartel thus constituted an infringement of Article 53(1) of the EEA Agreement as well as of Article 81(1) of the Treaty, and the Commission is competent to apply both provisions. The restriction of competition in these six EFTA States during this one-year period falls under Article 53(1) of the EEA Agreement.

(175) After the accession of Austria, Finland and Sweden to the EC on 1 January 1995, Article 81(1) of the Treaty became applicable to the cartel in so far as it affected competition in those markets. The operation of the cartel in Norway, Iceland and Liechtenstein remained contrary to Article 53(1) of the EEA Agreement.

(176) In practice, it follows that in so far as the cartel operated in Austria, Finland, Norway, Sweden, Iceland and Liechtenstein it constituted a breach of the EEA and/or EC competition rules as from 1 January 1994.

C. ADDRESSEES

1. PRINCIPLES APPLICABLE

(177) In order to identify the addressees of the present Decision, it is necessary to determine the legal entities responsible for the infringement.

(178) In this regard, in order to determine whether a parent company should be held responsible for the unlawful conduct of a subsidiary, it is necessary to establish that the subsidiary "does not decide independently upon its own conduct on the market, but carries out, in all material respects, the instructions given to it by the parent company"(103).

(179) When an infringement of Article 81(1) the Treaty and/or Article 53(1) of the EEA Agreement is found to have been committed over a given period of time, it is necessary to identify the natural or legal person who was responsible for the operation of the undertaking at the time of the infringement.

(180) When an undertaking commits an infringement of Article 81(1) of the Treaty and/or Article 53(1) of the EEA Agreement and later disposes of the assets that served as the vehicle for the infringement and withdraws from the market concerned, the undertaking in question will continue, if it is still in existence, to be held responsible for the infringement over the period considered(104).

2. ADDRESSEES OF THE DECISION

(181) ADM directly and autonomously participated in the cartel. Consequently the group as a whole bears responsibility for the infringement and is therefore an addressee of the present Decision.

(182) Hoffmann-La Roche, together with its subsidiary Citrique Belge, was also directly involved in the cartel. Consequently Hoffmann-La Roche bears direct responsibility for the infringement and is an addressee of the present Decision.

(183) In April 1996, responsibility for the business of Haarmann & Reimer FID was transferred to Bayer plc, and subsequently sold in June 1998 to the Tate & Lyle group. The sale of Haarmann & Reimer FID to Tate & Lyle occurred after the end of the infringement considered in the present Decision. As Haarmann & Reimer is still in existence, it bears responsibility for the infringement. Haarmann & Reimer is therefore an addressee of the present Decision.

(184) Cerestar Bioproducts is a wholly-owned subsidiary of Cerestar Holding BV Over the period of infringement, the latter was controlled by Eridania Béghin-Say SA, a company ultimately controlled by the Montedison Group. Cerestar Bioproducts was directly involved in the cartel and is therefore an addressee of the present decision.

(185) Jungbunzlauer Ges.m.b.H is now a wholly-owned subsidiary of Jungbunzlauer Holding AG, but the business controlled by the latter is effectively managed by Jungbunzlauer AG, where the headquarters of the whole group are also located. This is confirmed in the reply to the Statement of Objections, where Jungbunzlauer says that since 1993, responsibility for the management of the group has lain with Jungbunzlauer AG. Before that date, the whole group was directed by Jungbunzlauer Ges.m.b.H(105).

(186) In its reply to the Statement of Objections, Jungbunzlauer AG and Jungbunzlauer Ges.m.b.H have jointly replied that Jungbunzlauer Ges.m.b.H should be the addressee of any decision relating to the facts in question. In support of this assertion, they argue that those who took part in the conduct described in the Statement of Objections were for the most part representatives of Jungbunzlauer Ges.m.b.H, that the Commission initially sent a request for information to that undertaking and that all submissions on the part of the Jungbunzlauer group in the present case were made on behalf of Jungbunzlauer Ges.m.b.H.

(187) The Commission must dismiss these arguments. First, until the second half of 1993, Jungbunzlauer Ges.m.b.H was not solely a subsidiary in charge of the production and distribution of citric acid, but also the legal entity responsible for the management of the whole Jungbunzlauer group. In 1993, that responsibility passed to Jungbunzlauer AG, which can be regarded as the successor to Jungbunzlauer Ges.m.b.H with respect to the management of the Jungbunzlauer group. Since that date, Jungbunzlauer Ges.m.b.H became a wholly-owned subsidiary within the group, which did not decide independently upon its own conduct on the market, but carried out, in all material respects, the instructions issued by Jungbunzlauer AG, the company responsible for management of the group.

(188) For a certain part of the period considered in the present Decision, Jungbunzlauer AG took part directly in cartel meetings, notably in the person of its CEO. It must therefore be concluded that at any period of time considered in the present Decision, the legal entity responsible for the management of the whole Jungbunzlauer group was actively and directly involved in the cartel. Since the legal entity in question is currently Jungbunzlauer AG, the latter must be an addressee of the present Decision.

D. DURATION OF THE INFRINGEMENT

(189) Although bilateral contacts between certain citric acid producers took place before the initial multilateral meeting, and although ADM has alleged the existence of agreements(106) prior to those concerned by the present proceedings, the Commission will in the present case limit its assessment under Article 81 of the Treaty and Article 53 of the EEA Agreement, as well as the application of any fines, to the period from 6 March 1991 onwards.

(190) That was the date of the first multilateral cartel meeting in Basel, Switzerland, when the basic principles for the cartelisation of the market were agreed. (It should of course be noted that in so far as the cartel affected Austria, Finland, Norway, Sweden, Iceland and Liechtenstein, that does not constitute an infringement of the competition rules before 1 January 1994 when the EEA Agreement came into effect.)

(191) The participation in the infringement of Haarmann & Reimer, ADM, Jungbunzlauer and Hoffmann-La Roche from that date is established by the participation at that meeting of their respective Presidents/General Managers.

(192) Cerestar Bioproducts only entered the citric acid market in 1992 and by its own admission became a participant at the meetings from 19 May 1992.

(193) The cartel continued until May 1995. Two meetings were held in this month, the first a regular, planned meeting on 1 May, and the second an impromptu one on 22 May. It was during the course of the latter that Jungbunzlauer was issued an ultimatum to demonstrate its continued willingness to keep to the agreement, in light of its previous practice. Since this was not forthcoming, Jungbunzlauer was deemed to have left the group and ADM, Hoffmann-La Roche and Haarmann & Reimer discussed the possibility of continuing with the agreement under a modified form (see recitals 125 to 127). According to the information available to the Commission, the raid conducted by the FBI on ADM's premises in the United States of America in June 1995 put an end to all remaining contacts between the parties involved in the anti-competitive practices.

E. REMEDIES

1. ARTICLE 3 OF REGULATION No 17

(194) Where the Commission finds an infringement of Article 81(1) of the Treaty or Article 53(1) of the EEA Agreement it may require the undertakings concerned to bring such infringement to an end in accordance with Article 3 of Regulation No 17(107).

(195) In the present case the participants in the cartel went to considerable lengths to conceal their unlawful conduct. In these circumstances, the Commission maintained in its Statement of Objections that it was not possible to declare with absolute certainty that the infringement had ceased.

(196) In its reply to the Statement of Objections, Cerestar Bioproducts claimed that it put an end to its participation in May 1995. Haarmann & Reimer pointed out for its part that it sold the activities in question in 1998 and that "with respect to Haarmann & Reimer/Bayer plc it would be pointless to include such a requirement in the operative part of the decision"(108).

(197) Notwithstanding these observations, and for the avoidance of doubt, it is necessary to require the addressee undertakings that remain active in the citric acid market to bring the infringement to an end, if they have not already done so, and henceforth to refrain from any agreement, concerted practice or decision of an association which, in object or effect, is the same or similar.

2. ARTICLE 15(2) OF REGULATION No 17

(a) General considerations

(198) Under Article 15(2) of Regulation No 17, the Commission may by decision impose upon undertakings fines from EUR 1000 to EUR 1 million, or a sum in excess thereof not exceeding 10 % of the turnover in the preceding business year of each of the undertakings participating in the infringement where, either intentionally or negligently, they infringe Article 81(1) of the Treaty and/or Article 53(1) of the EEA Agreement.

(199) In fixing the amount of any fine the Commission must have regard to all relevant circumstances and particularly to the gravity and duration of the infringement, which are the two criteria explicitly referred to in Article 15(2) of Regulation 17.

(200) The role played by each undertaking party to the infringement will be assessed on an individual basis. In particular, the Commission will reflect in the fine imposed any aggravating or mitigating circumstances and will apply, as appropriate, the Notice on the non-imposition or reduction of fines in cartel cases(109).

(201) In assessing the gravity of the infringement, the Commission will take account of its nature, its actual impact on the market, where this can be measured, and the size of the relevant geographic market. The role played by each undertaking party to the infringement will be assessed on an individual basis.

(b) The amount of the fine

(202) The cartel constituted a deliberate infringement of Articles 81(1) of the Treaty and 53(1) of the EEA Agreement. With full knowledge of the restrictive character of their actions and, moreover, of their illegality, the leading producers combined to set up a secret and institutionalised system designed to restrict competition in a significant industrial sector.

1. The basic amount

(203) The basic amount is determined according to the gravity and duration of the infringement.

Gravity

(204) In its assessment of the gravity of the infringement, the Commission takes account of its nature, its actual impact on the market, where this can be measured, and the size of the relevant geographic market.

Nature of the infringement

(205) It follows from the facts described that the present infringement consisted in market-sharing and price-fixing practices, which are by their very nature the worst kind of infringements of Article 81(1) of the Treaty and 53(1) of the EEA Agreement.

(206) The cartel arrangements involved all major operators in the EEA and were conceived, directed and encouraged at high levels in each participating company(110). By its very nature, the implementation of a cartel agreement of the type described leads automatically to a significant distortion of competition, which is of exclusive benefit to producers participating in the cartel and is highly detrimental to customers and, ultimately, to the general public.

(207) The Commission therefore considers that the present infringement constituted by its nature a very serious infringement of Article 81(1) of the Treaty and Article 53(1) of the EEA Agreement.

(208) ADM argues that in the present case, the infringement should be considered, with regard to its nature, as "serious" instead of "very serious". According to ADM, the infringement did not jeopardise the proper functioning of the market as there was no partitioning of national markets. In ADM's view, the Commission's documents show that the quotas were worldwide and that the European target prices were primarily set in DEM and then converted in local currency equivalents.

(209) The Commission rejects this approach. It is clear that price and market sharing cartels by nature jeopardise the proper functioning of the single market. It would be erroneous to conclude from the mere fact that the quotas and prices made no distinction between individual Member States that this infringement is serious rather than very serious. What matters is that the normal competitive pattern that would have governed the single market for citric acid was replaced by a collusive regime relating to quantities and prices, the essential components of competition.

The actual impact of the infringement on the citric acid market in the EEA

(210) The infringement was committed by undertakings, which during the material period covered on average over 60 % of the world market and around 70 % of the European market for citric acid. Moreover, the arrangements were specifically aimed at restricting sales quantities, and raising prices higher than they would otherwise have been and restricting sales to certain customers. Given that these arrangements were implemented, they had an actual impact