COMMISSION DECISION

of 30 November 1994

relating to a proceeding under Article 85 of the EC Treaty

(Cases IV/33.126 and 33.322 - Cement)

(94/815/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Community,

Having regard to Council Regulation No 17 of 6 February 1962, First Regulation implementing Articles 85 and 86 of the Treaty (1), as last amended by the Act of Accession of Spain and Portugal, and in particular Articles 3 and 15 thereof,

Having regard to the decision taken by the Commission on 12 November 1991 to start own-initiative proceedings,

Having given the undertakings concerned the opportunity of being heard on the matters to which the Commission has taken objection, in accordance with the provisions of Article 19(1) of Regulation No 17 and Commission Regulation No 99/63/EEC of 25 July 1963 on the hearings provided for in Article 19(1) and (2) of Council Regulation No 17 (2),

Having consulted the Advisory Committee on Restrictive Practices and Dominant Positions,

Whereas:

PART I

THE FACTS

SECTION I

THE PROCEEDINGS

CHAPTER 1

The inquiry and the proceedings after the statement of objections

1. Introduction

This Decision follows on from investigations carried out from April 1989 to July 1990, pursuant to Article 14(2) and (3) of Regulation No 17, into European cement producers and trade associations and from requests for information sent to them pursuant to Article 11 of Regulation No 17.

2. The initiation of proceedings, the statement of objections and the appeals to the Court of First Instance

(1) On 12 November 1991 the Commission initiated proceedings in the cement cases and adopted its statement of objections.

By letter dated 25 November 1991, the statement of objections was sent to the undertakings. The statement of objections draws a basic distinction between two types of objectionable practices, namely practices at international level and practices at national level.

(2) The full text of the statement of objections, which is contained in a single document, was not sent to each of the 76 undertakings and associations of undertakings involved in the proceeding. Only the chapters relating to practices engaged in at international level were sent to 61 undertakings and associations of undertakings, while 15 Italian undertakings did not receive that part since they do not participate in any international body. The chapters relating to practices at national level were sent only to the undertakings and associations of undertakings established in the Member State in question. By letter dated 20 May 1992, the statement of objections comprising the international section and the relevant national section was also sent to a further Spanish undertaking.

With the chapters relating to them, the addressees of the statement of objections received the full index of the statement of objections and the list of all the files, specifying the documents which were accessible to them.

Each addressee had access to the file on the basis of the document list received and of the specifications contained in the list.

(3) However, by letter dated 9 July 1992, the Commission sent all the undertakings and associations of undertakings to whom the international section of the statement of objections was addressed a document (the record of the meeting of the European Task Force held on 19 August 1986) which had come to its knowledge through the replies to the statement of objections, and asked the undertakings concerned to make known any comments they might have on the document.

(4) After having received the statement of objections and after having had access to the file, a number of undertakings and associations of undertakings, relying on the judgment of the Court of First Instance of 17 December 1991 in Case 7/89 Hercules Chemicals v Commission (3), asked the Commission to let them have the chapters that were omitted from the statement of objections sent to each of them and, without specifying any details, requested access to the whole of the file, except for internal or confidential documents.

Since the Commission refused to send the chapters omitted from the statement of objections sent to each of the addressees or to give them access to any documents in the file other than those which they had already been able to consult, S.A. Cimenteries CBR, Blue Circle Industries , the Syndicat National des Fabricants de Ciments et de Chaux, ENCI N.V., the Vereniging Nederlandse Cementindustrie and the Fédération de l'Industrie Cimentière lodged appeals with the Court of First Instance asking for annulment of the Commission decision to refuse to send them the documents and requesting interim measures aimed at bringing about the suspension of the proceedings (Cases T-10 to 12, 14 and 15/92).

(5) By order of 23 March 1992, the President of the Court of First Instance rejected the applications for interim measures and set 27 and 31 March 1992 as the deadlines for the plaintiffs to reply to the statement of objections.

By order of 11 September 1992, Case T-14/92 ENCI and Vereniging Nederlandse Cementindustrie (4) was deleted from the register of the Court following the withdrawal of the parties.

Pending the judgment by the Court of First Instance on the substance of the appeals, the Commission suspended the oral hearing to be held after receipt of the replies to the statement of objections.

By judgment of 18 December 1992, in Joined Cases T-10 to 12 and 15/92 (5), the Court of First Instance rejected as inadmissible the appeals lodged by S.A. Cimenteries CBR, Blue Circle Industries Plc, the Syndicat National des Fabricants de Ciments et de Chaux and the Fédération de l'Industrie Cimentière.

3. Hearing

(1) By letter dated 5 February 1993, the Hearing Officer invited the undertakings and associations of undertakings to which the statement of objection had been sent to attend the hearing to be held from 1 March to 1 April 1993.

The hearing was divided into three series of sessions: one series of sessions on the cement market, which all the undertakings and associations of undertakings were able to attend; a second series of sessions on the international part of the statement of objections, which only those undertakings and associations of undertakings which received that part of the statement of objections were able to attend; and a third series of sessions on each of the national chapters, which the undertakings and associations of undertakings of the relevant Member State were able to attend separately.

In the notice of summons, it was stipulated that if an undertaking wished to put forward its arguments privately, it should indicate precisely the relevant parts of the statement of objections and the relevant business secrets within the meaning of Articles 19, 20 and 21 of Regulation No 17.

(2) By letters dated 17, 18 and 26 February 1993, ECMEC-CDICT, ECEC and Blue Circle Industries Plc respectively informed the Commission that they did not wish to avail themselves of the opportunity of putting forward their arguments orally on the objections raised against them.

Cedest similarly did not attend the hearing: it had asked for a separate hearing, though without indicating any specific reasons for such request.

4. Termination of the proceeding against certain undertakings

(1) Following examination of the written replies to the statement of objections and the explanations put forward orally at the hearings in March 1993, the Commission decided on 23 September 1993:

(a) to drop the objections relating to the international part, Chapters 2, 10, 11 and 12 of the statement of objections, and, consequently, to terminate the proceeding initiated on 12 November 1991 against the twelve German and six Spanish undertakings specified;

(b) to drop the objections relating to the national agreements, decisions and concerted practices, Chapters 3 to 9 and 13 to 19, and, consequently, to terminate the proceeding initiated on 12 November 1991 in respect of those chapters in the statement of objections.

(2) All the undertakings and associations of undertakings were informed, by letter dated 27 September 1993, of the Commission's decision. In the same letter, the Commission informed the undertakings and associations of undertakings concerned that, as a consequence of its decision, the 'indications contained under letter c) in Part II (Applicability of Article 15(2) of Regulation No 17/62) in point 93(b) of the statement of objections regarding 'the fact that it is impossible to separate the national agreements, decisions and concerted practices from the European ones, since both form an inseparable whole' are now purposeless and will not be taken into consideration during the procedure which will follow its usual course for all remaining chapters of the statement of objections addressed to you`.

5. The undertakings and associations of undertakings involved in this Decision

(1) (a) International associations

Cembureau (The European Cement Association), whose activities will be fully described in Chapter 3.

(2) (b) Groups having their registered offices in non-member countries

- Holderbank Financière Glaris S.A. (Holderbank), whose registered office is in Switzerland, is the largest cement producer in the world. It controls several companies throughout the world. Within the Community, it controls the following companies, whose activities will be taken into consideration in this Decision: in Germany: Alsen-Breitenburg Zement- und Kalkwerke GmbH (Alsen); Nordcement AG (Nordcement); in Belgium: S.A. Obourg (Obourg), a holding company which controls the cement activities of the Holderbank group through the companies S.A. Ciments de Haccourt and S.A. Ciments d'Obourg; in Spain: Hornos Ibéricos Alba S.A. (Hornos Ibéricos), a cement company, and UMAR - Union Maritima Internacional S.A. (UMAR), a company engaged in the international clinker and cement trade; in France: Ciments d'Origny S.A. (Origny). It also has a 31% stake in the capital of the Dutch producer ENCI N.V.

- Aker a.s. (Aker), a Norwegian holding company which controls inter alia the Norwegian cement producer Norcem a.s. (Norcem).

- EUROC AB (EUROC) is a Swedish holding company which controls inter alia the Swedish cement producer Cementa AB (Cementa).

In 1986, Aker and EUROC, each of which has holdings in the other, decided to merge their international activities and set up a 50/50 joint subsidiary Scancem Group Limited (Scancem), which is a holding company controlling inter alia Scancem International, a company engaged in the international clinker and cement trade, and the British cement producer Castle Cement Limited (Castle) and has an indirect 26% holding in the Spanish cement producer Compañia Valenciana de Cementos Portland S.A.

Castle has existed since 5 April 1988. On that date, Scancem purchased the cement business of Rio Tinto Zinc Cement and merged in Castle the companies Tunnel Cement Ltd, Castle Cement (Ribblesdale) Ltd, Castle Cement (Ketton) Ltd., Castle Cement (Clyde) Ltd and Castle Cement (Padeswood) Ltd and Castle Cement (Pitstone) Ltd.

(3) (c) Germany

- The Bundesverband der Deutschen Zementindustrie e.V. (BDZ) is the association which represents the German cement producers, its object being to protect and promote the common economic interests of the German cement industry in Germany and abroad.

- Heidelberger Zement AG (Heidelberger) is one of the major German cement producers. It has a number of holdings in other German cement producers and in the French producer Vicat. In 1993, it took control of the Belgian group S.A. des Cimenteries CBR.

- Dyckerhoff AG (Dyckerhoff) is the other major German producer. It also has a number of holdings in German cement producers, controls the Spanish producer S.A. Española de Cementos Portland and has a 33% holding in the Luxembourg company Intermoselle S.a.r.l., a joint subsidiary of Dyckerhoff, Société des Ciments Français and S.A. des Ciments Luxembourgeois.

- Nordcement and Alsen (of the Holderbank group).

(4) (d) Belgium

- The Fédération de l'Industrie Cimentière, a.s.b.l. (FIC) is the association representing the Belgian cement producers. It covers all activities relating directly or indirectly to the cement industry, excluding all industrial and commercial operations, and its object is to promote understanding and coordination between the undertakings, to defend and promote the interests of the trade and to represent them in dealings with the public authorities.

- S.A. Cimenteries CBR (CBR) is the largest Belgian cement producer. It has a 68% stake in the Dutch cement producer Eerste Nederlandse Cement Industrie N.V. (ENCI), 31% of which is held by the Holderbank group. In 1993, Heidelberger purchased from the Société Générale de Belgique the controlling interest which it held in CBR.

- S.A. Obourg (of the Holderbank group)

- S.A. Compagnie des Ciments Belges (CCB), the third largest Belgian producer after CBR and Obourg. CCB is a family firm which was purchased in 1990 by Société des Ciments Français.

(5) (e) Denmark

- Aalborg Portland A/S (Aalborg), the sole Danish cement producer, in which Blue Circle took a 50% stake in 1989.

(6) (f) Spain

- The AgrupacÍon de Fabricantes de Cementos de España - Oficemen (Oficemen) is the association of Spanish cement producers, whose task is to represent and defend the legitimate interests of the Spanish cement industry.

- Compñía Valenciana de Cementos Portland S.A. (Valenciana), one of the largest Spanish producers. At the time when the statement of objections was sent, Valenciana held 50% of the capital of Cementos del Mar S.A., 25% of the capital being held by Banco Bilbao Vizcaya and 25% by Banco Central. At that time too, Valenciana held 50% of the capital of Cementos del AltantÍco S.A., the rest of the capital being held by Cementos del Mar. Since October 1990, Valenciana has had a majority of the seats on the board of directors of Cementos del Mar. Since April 1992, Valenciana has owned 99.95% of the capital of the two companies.

- Asland S.A. (Asland), which controls Cementos Asland S.A. and Asland Catalunya y del Mediterráneo S.A.. In 1990, Lafarge Coppée took control of Asland.

- Corporación Uniland S.A. (Uniland), which controls Uniland Cementera S.A.

- Hornos Ibéricos Alba S.A. (of the Holderbank group)

- Hispacement S.A. is a joint venture for exports set up between the Catalan cement producers Asland, Uniland, Cementos Molins S.A., Auxiliar de la Construcción S.A. and CompañÍa Catalana de Cementos Portland.

(7) (g) France

- The Syndicat Français de l'Industrie Cimentière (SFIC), which until 1992 was known as the Syndicat National des Fabricants de Ciments et de Chaux, is the association of French cement producers. Its aims are fairly wide-ranging and include the bringing together of all the members of the trade in order to coordinate their activities, carry out studies, develop the training of skilled labour, pass on any useful documentation to members and represent the trade in dealings with the public authorities and the trade and intertrade groups.

- Lafarge Coppée S.A. (Lafarge) is a holding company controlling a number of companies worldwide: in France, it controls Ciments Lafarge and Lafarge Overseas, and it holds 25% of the capital of Cedest; in Germany, it controls Woessinger Zement (in which Cedest has a 17% holding); in Spain, it has since 1990 control led Asland S.A.

- Société des Ciments Français S.A. (Ciments Français) is a cement group with widespread interests. In France, it controls Ciments de Loire and Ciment de l'Adour and had a 33% stake in Intermoselle S.A., a 50/50 joint venture between Ciments Français, S.A. des Ciments Luxembourgeois and Dyckerhoff.

In 1990, it took control of the Belgian producer CCB and of the Spanish producers Sociedad Financera y Minera S.A. and Cementos Rezola S.A.

In 1992, control of Ciments Français was acquired by the Italian producer Italcementi-S.p.A.

- Vicat S.A. (Vicat), 65% of which is owned by the Vicat family and 35% by Heidelberger.

- Cedest S.A. (Cedest), which belongs to Groupe CGIP and in which Lafarge has a 25% holding.

(8) (h) Greece

- The Association of the Greek Cement Industry is the association representing the Greek cement producers. Its object is to develop, protect and promote the Greek cement industry in Greece and abroad.

- Titan Cement Company S.A. (Titan).

- Heracles General Cement Company (Heracles), a State-controlled company which was purchased in 1992 by Calcestruzzi S.p.A. of the Ferruzzi group.

- Halkis Cement Company S.A. (Halkis).

(9) (i) Ireland

- Irish Cement Ltd (Irish Cement), which is the only cement producer in Ireland.

(10) (k) Italy

- Italcementi - Fabbriche Riunite Cemento S.p.A. (Italcementi), which controls a number of cement and concrete-producing companies in Italy. In 1992, it acquired control of the cement group Ciments Français.

- Unicem S.p.A. (Unicem), belonging to the Agnelli holding company IFI, which controls several cement-producing companies in Italy and the United States.

- Cementir - Cementerie del Tirreno S.p.A. (Cementir), a company belonging to the public holding company IRI and sold to the Caltagirone group in 1992.

- Fratelli Buzzi S.p.A. (Buzzi).

(11) (l) Luxembourg

- S.A. des Ciments Luxembourgeois (Ciments Luxembourgeois), which has a 33% stake in Intermoselle S.A., a 50/50 joint venture between Ciments Luxembourgeois, Ciments Français and Dyckerhoff.

(12) (m) Netherlands

- The Vereniging Nederlandse Cement-Industrie (VNC) is the association of Dutch cement producers (there is now only one remaining producer), whose aim is to protect the joint, non-competing interests of its members and to promote market development and research.

- ENCI N.V. (controlled by CBR)

- NCH - Nederlandse Cement Handelmaatschappij B.V. (NCH) is a cement marketing and distribution joint venture between the following German producers: Dyckerhoff, Montanzement Marketing GmbH, Heidelberger, Anneliese Zementwerke AG, E. Schwenk Zement- und Steinwerke (Schwenk), Wuelfrather Zement GmbH, Hermann Milke KG GmbH und Co., Pheonix Zementwerke Krogbeumker KG, Teutonia Zementwerk AG (Teutonia), Gebr. Groene GmbH und Co. KG, Alsen, Hannoversche Portland-Cementfabrik AG and Nordcement.

(13) (n) Portugal

- ATIC - Associação Tecnica da Industria do Cimento (ATIC) is the association of Portuguese cement producers. Its object is to carry out activities of a scientific and technical nature, and it is active in the fields of research, information and promotion of the utilization of cement.

- Cimpor - Cimentos de Portugal S.A. (Cimpor) is an undertaking belonging to the Portuguese State.

- SECIL - Companhia Geral de Cal e Cimento S.A. (SECIL) is an undertaking, 59% of whose capital is held by the Portuguese State and 41% by foreign shareholders.

(14) (o) United Kingdom

- The British Cement Association (BCA) is the association of British cement producers. Its main object is to promote and represent the interests of its members, to develop the use of cement, and to provide a number of mainly technical services.

Before it changed its name on 1 June 1988, BCA was known as the Cement and Concrete Association, having purely technical tasks, the representation of the cement producers' interests being entrusted to another association, the Cement Makers' Federation. On 1 June 1988, the Cement Makers' Federation was dissolved, and representation of the British producers' interests was entrusted to the Cement and Concrete Association, which changed its articles and renamed itself the British Cement Association, grouping together the activities of the two previous associations. The last chairman of the Cement Makers' Federation became the chairman of the British Cement Association; the members of the Cement Makers' Federation, who were also members of the Cement and Concrete Association, became the members of the British Cement Association.

- Blue Circle Industries Plc (Blue Circle) is a group which controls a number of companies throughout the world engaged in the production of cement and ready-to-use concrete and the marketing and transport of cement and clinker.

- The Rugby Group Plc (Rugby) is a group which is involved in the cement industry in the United Kingdom and Australia, the transport industry, the wood and glass industry and the steel industry.

- Castle (belonging to the Aker/EUROC group).

SECTION II

CHAPTER 2

The cement market

6. Grey cement

(1) Cement consists of various binding materials which, when mixed with water, set to a hard mass.

The properties of cement vary considerably depending on the quantities of raw materials used and the production methods chosen. However, all the various types of cement derive from a single intermediate product known as clinker.

(2) Clinker is obtained by burning a mixture of calcareous materials containing chalk and lime, with argillaceous products such as shales, slate and sand.

(3) There are two basic processes for manufacturing clinker: the 'wet` process and the 'dry` process, the first being the traditional one. The basic difference between the two processes is that, whereas in the 'wet` process the raw materials (calcareous and argillaceous products) are ground and mixed with water, thus producing a slurry, before being burned in the kiln, in the 'dry` process the mixture is obtained by making use of the humidity present in the raw materials by means of pre-heating systems, applied during and after grinding and before the burning of the mixture.

The 'wet` process requires a high level of energy consumption, since the water that has been added has to be eliminated during burning in the kiln.

The two main variants of the 'dry` and 'wet` processes are the 'semi-dry` and 'semi-wet` processes, which are largely based on the same principles as the dry process (pre-heating before burning in the kiln), but with some water being added.

Using the dry, semi-dry or semi-wet processes instead of the wet process allows considerable savings to be made in water and energy and has appreciable ecological benefits.

(4) Since it is an intermediate product, clinker cannot be used as such as an hydraulic binding material, since it requires subsequent transformation. However, it can be and is traded between cement producers, who may, for various reasons, buy or sell from or to other producers. When clinker is traded in this way, it constitutes a specific cement product and, consequently, a product with its own market.

(5) In order to obtain cement, the clinker must be ground and mixed with other substances, such as gypsum, natural pozzolanas, fly ash or slag.

(6) Cement may be divided into different types on the basis of the percentage of clinker contained in the final product. There are thus two basic types of cement: Portland cement, which may contain 95% clinker, and cements containing secondary raw materials (such as pozzolanas, slag, etc.), which may contain as little as 20% clinker.

The use of secondary raw materials, which is of course dependent on the availability and price of supplies of such materials, allows considerable energy savings to be made.

(7) Depending on its composition, cement may be divided into the following main categories:

(a) ordinary and special Portland cement, which is the cement normally used in the building and civil engineering industry;

(b) pozzolanic cement - clinker + pozzolana or fly ash;

(c) blast-furnace cement - clinker + slag;

(d) high alumina cement, obtained from special clinker, which hardens rapidly and has a high resistance to aggressive substances (e.g. sea water).

(8) The most widely used cements are divided, by class of resistance, into normal cements and high-resistance cements: normal cement has, as from the 28th day of its use, a minimum compression resistance ranging from 300 to 350 kg/cm²; high-resistance cement has a compression resistance ranging from 425 to 450 kg/cm² and beyond.

(9) Grey cement is a homogeneous product, and inter-brand competition is not of major importance. Although the raw materials used may differ from one plant to another or from one country to another, the final product must possess standards that correspond to physical, chemical and mechanical characteristics which, even before being imposed by the public authorities, were universally recognized by the producers. Whatever the type of cement produced (ordinary or special, normal-hardening or rapid-hardening etc.), therefore, it must always possess the standard characteristics required, and most of the producers are able to supply all types of cement.

7. White cement

(1) The production of white cement requires a very particular quality of chalk for the production of white clinker, and thus one which is rarer than the chalk used to make clinker for grey cement, and special production facilities.

Like grey cement, white cement is obtained from the grinding of white clinker and the addition of gypsum. Its whiteness entails highly specific measures and monitoring so that it can meet the requirements of demand, which are in most cases aesthetic requirements.

White cement is normally a Portland cement and, like grey cement, must meet certain physical, chemical and mechanical specifications, and it is divided by classes of resistance.

(2) Because of the uses to which it is put and the rarity of the raw materials required, white cement is produced by a fairly limited number of manufacturers, its consumption is equivalent to about 1% of the consumption of grey cement, its cost price is higher than that of grey cement and its selling price is twice that of grey cement.

White cement has a different market from the grey cement market.

8. Characteristics of the industry

(1) The cement industry is a heavy, capital-intensive industry requiring large-scale investment. Average plant life is long, amounting to between 20 and 30 years.

(2) The cement industry is geographically widely dispersed: cement is manufactured throughout virtually the whole world. This is due in large part to the fact that the technical process can be used even in the least developed countries, and to the easy availability and relatively low cost of local raw materials. Cement plants are generally close to their raw material sources because the raw materials are heavy and costly to transport. The proximity of cement plants to consumers is another important aspect.

(3) Supply is rigid, since in the short term it is linked to specific production capacities, which require large-scale investment if they are to be increased.

(4) Demand is also relatively rigid even when alternative prices are available. Consequently, the traditional solution of cutting prices when sales are falling is not a very viable one for producers, since the cement industry in itself can have only a very small influence on the factors determining demand, which are a reflection of the general state of the economy. Such factors are, essentially, interest rates, the policy on lending, the development of real purchasing power, the level of public investment and the profitability of business and of industry in general. Trends in the cement industry thus reflect the trend of economic cycles in the relevant country.

(5) The cement industry offers ideal conditions for achieving economies of scale: the basic process is simple, the final product is homogeneous, and the technology is accessible to everyone. Economies of scale have a major influence on fixed costs and on labour. They may also influence the cost of energy, comparing cases in which the same manufacturing process (wet or dry) is used, since larger-scale energy consumption in a large production unit entails a decrease in the unit price, as will be seen below. An attempt has been made to quantify economies of scale so as to establish the optimum size of a cement production factory (6), and although there are differences of opinion between economists as to the economies achieved in a factory of optimum size as compared with another that is not of optimum size (different economists put such economies at between 10% and 26%), it is accepted that such economies are of major importance to the cement industry.

This has led the cement industry to reduce the number of factories and to increase their average size, as shown by Table 6b presented at the hearing on 2 March 1993 by the Italian industry.

9. Production costs

(1) In their replies to the statement of objections and at the hearing, the undertakings stated that, in substance, the curve of unit production costs was appreciably the same in all countries. Judging from the data published in the documents referred to in the footnotes concerning paragraphs 4 and 5, the statements put forward by the undertakings do not seem to correspond to the facts.

(2) It would seem firstly that, in the cost prices of cement, fixed and variable costs are more or less equal, with each accounting for about 50% of cost price.

(3) As regards fixed costs, mention should be made of financial costs, which differ from one country to another, since they are linked to interest rates, which were markedly different in the various Community countries throughout the 1980s. Depreciation rates also, although less directly than financial costs, reflect the influence of differing interest rates.

(4) The situation regarding the cost of labour, which affects a small proportion of fixed costs (servicing and maintenance) and the bulk of variable costs, was as follows in the Community countries in 1987, taking average costs per hour (Germany: index 100) (7):

>TABLE>

(5) Industrial electricity prices (8) also vary from one country to another and are in all cases degressive in line with the quantities used. Eurostat applies seven consumption categories, ranging from 30 000 KWH to 24 000 000 KWH. A look at the data relating to 2 000 000 KWH (analysis of the other consumption categories leads to similar conclusions) shows that in 1985 and 1990 (referring to other years produces similar conclusions) energy prices differed appreciably from one country to another (ECU/100 KHW):

>TABLE>

(6) Different production costs mean different prices from one country to another, and even from one region to another within one and the same country, where selling prices are not fixed or controlled by the public authorities.

Thus, Tables 7, presented at the hearing on 2 March 1993 by the Italian industry and drawn up on the basis of Cembureau figures (see Annex 9), which show the trend of prices in the Community countries from 1981 to 1991, indicate that, as between United Kingdom prices and German, French and Belgian prices, there was in 1981 a difference of some ECU 30 a tonne (the British price being around ECU 70) and of ECU 15 to 20 a tonne in 1991, that the price difference between France, Belgium and Germany, which was almost zero in 1981, gradually widened as from 1982 to reach some ECU 12 a tonne in 1986, falling back to some ECU 7 a tonne in 1991, that the price difference between Italy and the United Kingdom always remained enormous at some ECU 30, and that Italian prices always remained at least 20% lower than French prices and at least 35% below German prices.

These price differences between the various countries were confirmed at the Cembureau Head Delegates meetings (see recital 19).

In the countries in which there was no control of prices or in which such control was lifted, the producers publish prices for each factory that may differ from one another, as is shown by the fact that, for such countries (Germany, France and Spain, for example), the national associations notify price averages to Cembureau.

10. Cost of transport

(1) The cost of transport is an important element in determining the final price to the cement consumer, since cement is a heavy product having a low value in relation to its weight.

A first point to be noted is that the unit cost of road transport per tonne decreases as the distance to be covered increases. Taking an index of 100 for distances between 450 and 499 km, the index would be around 80 for distances between 500 and 1 499 km and about 65 for distances in excess of 1 500 km. In absolute terms, one can calculate, for 1989, a minimum of ECU 0.06 per t-km and a maximum of ECU 0.08 per t-km for the first category of distances, a minimum of ECU 0.05 per t-km and a maximum of ECU 0.07 per t-km for the second category and a minimum of ECU 0.04 per t-km and a maximum of ECU 0.06 per t-km for the third (9).

A second point to be made is that, in the period 1982 to 1988, the trend of the price index differed from one country to another (10). If one takes an index of 100 for 1982 (such index corresponds to different absolute values from one country to another), the index had, by 1988, reached 122 for Germany, 109.8 for France, 115 for Italy, 108.7 for the Netherlands and 117.8 for Belgium-Luxembourg.

The unit costs of sea transport are much lower than for road transport; however, to the lower unit costs as compared with road transport costs must be added the cost of establishing silos at the point of unloading.

(2) The three main methods used for adding transport costs to the cost of production in determining the price which the consumer must pay are as follows (11).

(3) (a) The basing-point system

'Sale from a basing point implies a delivered price equal to a base price plus the cost of carriage to the place of delivery calculated from a predetermined basing point, which need not necessarily be the place where the seller's factory is located` (Phlips, p. 10) (12). When there are several basing points, the system is called a 'multiple basing point system`.

Outlawed in the United States since the forties, the basing point system was officially adopted by Article 60 of the ECSC Treaty (Phlips, p. 15).

'This system requires an agreement between producers on the method of calculating transport costs, the manner of fixing and altering ex-works prices (for example, the average of production costs or through the recognition of price-leaders) and the locations selected as basing points. The zone covered by the agreement is represented by concentric circles around each basing point so that, if the distance between the basing point and the purchaser and the ex-works price are known, everyone is able to know the final price to each purchaser . . . This system consequently allows each producer to determine immediately the size of his market by looking at the map graduated in relation to the agreed basing points. It also allows a division of markets between producers since it allows determination of the maximum distance each producer can reach without having to absorb a part of the transport costs and the maximum distance beyond which the absorption of transport costs wipes out the profit margin` (Bianchi, p. 30) (13).

(4) (b) The zone price method

'A uniform delivered price is applied throughout a given territory. When the unit transport cost is fairly high, and demand is concentrated at different places, a number of separate areas can be demarcated. Within each such area, a single delivered price applies to all points of delivery. . . . Between the areas, a rigid price difference is maintained, which means that buyers (dealers or the ultimate consumer) are prohibited from buying or reselling in any area other than that in which they are located (or which is allotted to them). There is thus a need for strict control of shipments. The simplest way of exercising this control is to ban buyers from handling their own carriage. Yet this is not essential: it may suffice to require payment of the delivered price (. . .) applying in the buyer's area even when he obtains supplies in another area. In such cases, price gaps between areas must not exceed the cost of freight to each of the main centres of consumption, to exclude the possibility of arbitrage. Within each area, a ban on taking delivery at the factory itself ensures that the system will operate smoothly. Once again, however, more flexible arrangements may be possible: it is possible to go so far as to allow reimbursement (sometimes in part only) of freight charges where delivery is taken at the factory, but this presupposes a highly disciplined trade, strict control of destination and tariffs reflecting genuine freight costs` (Phlips, pp. 9-10) (14).

'In a system where prices are set by area, the situation is clear and little discussion seems called for: the system is possible only if a geographical market is broken up by tacit or explicit market-sharing agreements. The logic of the system from the price competition angle is obvious: firstly, there can be no competition either at the production or at the wholesale stage; secondly, buyers have no incentive to obtain their supplies from manufacturers nearer by` (Phlips, p. 14) (15).

(5) (c) The factory price method (F.O.B.)

Under this method, 'the producers publish a factory price at which buyers may buy goods for carriage at their own expense; alternatively, if they prefer the producer to look after carriage, the actual cost can be added to the factory price. In any event, the net producer price (after deduction of freight) is the same whatever the destination since, at any point of delivery, the delivered price is equal to the factory price plus carriage costs. In a system such as this, the delivered price rises with the distance of the place of delivery from the factory or the centre of production. Each centre thus has a 'natural` market where the delivered price of its goods is lower than that of competing centres of production` (Phlips, p. 12) (16).

There are two possible variants of this method.

The first variant is that the factory price is uniform for all producers. 'Uniform F.O.B. prices are found both where there is an organized cartel and where there is tacit collusion, as is the basing point system. Although price information is less perfect as regards delivered prices, since buyers are using their own means of transport, it is perfect as regards factory prices. While the exclusion of alignment confines each centre of production to its own natural market, tacit price-fixing is fostered. The choice between the two formulae will depend, among other things, on the geographical stability of demand. If demand develops along parallel lines on the various regional submarkets, the F.O.B. system is the simplest. Each natural market develops at the same rate, and market shares . . . can be safeguarded simply by maintaining each operator's natural market. If undesirable shifts in natural demarcation lines were to arise, for instance, through the development of new means of transport, corrections can still be made by adjusting differences between factory prices. On the other hand, if regional demand shifts are frequent and on a large scale, alignment becomes necessary and basing points with it. A centre for which demand is falling can then maintain its market share by supplying growth regions without endangering the structure of prices` (Phlips, pp. 17-18) (17).

The other variant of the method is to have a factory price that is not uniform for a given number of producers, but specific to each of them. In this case, each producer has a 'natural market`; however, the extent of such market is not defined by the uniformity of the factory prices of the other producers, but depends solely on factors that are independent of any collusion. If the producer lowers his factory price because he has managed to reduce production costs through better use of plant or through innovations that improve output, his 'natural market` becomes larger and he is able to encroach on the 'natural markets` of other producers. Similarly, if the factory is more favourably located than those of competitors and if technological innovations are applied to means of transport, the natural market may be extended (see Bianchi, p. 29).

11. The relevant market

(1) In terms of the relevant product market, grey cement, white cement and clinker constitute separate markets, since each product meets different requirements.

However, it must be borne in mind that clinker may influence the other two markets, since it is the essential intermediate product used in manufacturing grey cement and white cement.

(2) In terms of the relevant geographic market, the cement market may be seen as a set of markets, centred around the various factories, overlapping one another and covering the whole of Europe.

(3) The size of each market, and the extent of market overlap, are determined by the distance, from the factory, at which cement may be sold. The producers are not in agreement on what this distance is, since at the hearing some producers cited a maximum of 100 km (the Italian association AITEC, Table 4; Oficemen, Chart 2), while others went as far as 150 or 200 km (SFIC, Transparency 14).

If the producers cannot agree on the distance at which cement can be sold economically, the Commission for its part is not in a position to determine such distance, since it must confine itself to factual findings.

In the light of what has been stated above regarding economies of scale, production costs, freight costs and the methods for adding freight costs to the cost price, it may be said generally that, in a competitive system, the distance at which cement may be sold depends on a number of factors such as the size of the production plant, the degree of utilization of production capacity, production costs, the means of transport used and the cost of each means of transport, and the prices charged on the various markets.

(4) The Commission notes the following factual findings: Schwenk, which has its production plants at Ulm and Karlstadt, supplies cement through NCH, covering more than 500 km to the Dutch frontier, to which must be added the kilometres covered in the Netherlands to supply the cement to the purchasers; Teutonia delivers cement by road through NCH from its Hanover plant to the Netherlands, covering a distance to the Dutch frontier of between 224 and 264 km (depending on whether the cement is supplied to the north or south of the Netherlands), to which must be added the kilometres covered within the Netherlands to deliver the cement to the purchasers; producers in northern France have, through Norcim, supplied cement to the Netherlands and from the Netherlands to Belgium covering more than 250 km by road (see Vicat internal memo of 1 September 1982, Obourg handwritten note of 1985, Vicat telex of 4 April 1986, Norcim minutes of 27 November 1985: documents 33126/6042-6043, 309-310, 6040, 5747-5748); the Belgian producers have referred to the great difficulties involved in supplying cement to France because of the costs of waiting times at customs, the different weights allowed in the two countries, the different standards, etc. (see record of the hearing of 8 March 1983, Annex VII/B, pp. 7-8 and Annex VIII), while the Belgian financial newspaper 'L'Echo de la Bourse` reported on 18 November 1992 that, since Ciments Français had purchased CCB, 'a million additional tonnes will be manufactured this year to meet French demand (as far away as the Paris area), following the recent closure of three production units situated in the north of France, which were also owned by Ciments Français. The cement supplied to France is transported from a station established at the CCB site, where the company has eight storage silos of 5 000 tonnes each`: (18) this shows that it is possible to bear the costs involved in crossing the frontier, cover more than 200 km and also bear the additional costs of storage.

(5) Natural obstacles such as mountains do not form any impediment to cement supplies. For example, Buzzi is able to transport cement across the Alps from its factory near Cuneo and deliver it in France, although Italcementi, which has a factory near Cuneo, and the French producers on the other side of the frontier claim that they are unable to supply cement profitably across the frontier. The notes of the Head Delegates meetings (see recital 19) show that cement supplies are possible from Germany and Spain to the United Kingdom and Ireland, and that the Italian producers are able to carry out supplies across the Alps in Switzerland.

The supplies by Greek producers in the United Kingdom and Italy and the threat of supplies to other European markets gave rise to what was known as the 'Greek problem`; Titan was able to set up a terminal for regular cement supplies to the United Kingdom, while Titan and the other Greek producers were able to set up supply points in Italy and France.

(6) With regard to these factual observations and with regard to the low level of intra-Community trade compared with consumption, which Blue Circle claims is also due to the fact that exports do not have any guarantee of long-term profit, it may be observed that the low level of such exports is not sufficient to demonstrate that it is not possible to have a higher level of exports.

Whilst it is true that cement, which is a heavy product of low added value, is by its very nature difficult to transport over long distances, nonetheless no general rule to the effect that transportation of this product is subject to an economic limit can be accepted.

The economically acceptable transport distances depend, in fact, on the production costs of each plant, on the economies of scale achieved as a result of concentrations and on the means of transport used (road, rail, inland waterways or sea).

Moreover, since it is a commonplace product, which is inter-changeable regardless of its provenance, any offer to supply it, even if only a small quantity, at a price even only slightly lower than that indicated by a lcoal producer has an effect by virtue of the signal it gives, which is capable of being regarded as a factor which upsets price levels or commercial transactions to the extent that numerous purchasers either defer their purchases as far as possible or put pressure on the local producers to adjust their price conditions, in such a way as to achieve the effects described in paragraph 7 below.

The comments relating to the low level of exports do not make sense, since, for there to be a sizeable and steady flow of exports, the exporter must establish that the price achievable on the export market is always higher than the price achievable on his own market. Thus, as stated in recital 9, there have since 1981 been differences ranging from 10% to 15 or 20% (between France and Germany, between Germany, the Netherlands and Belgium, between France and Italy, and between Germany and the United Kingdom), 30% (between Germany and Italy, and between Spain, Portugal and Germany), 50% (between Italy and the United Kingdom, and between Spain, Portugal and the United Kingdom) and even 100% (between Greece and the United Kingdom) (see in this connection Tables 7 presented by the Italian industry at the hearing on 2 March 1993). Such price differences recorded over a long period are sufficient to meet the exporters' desire for long-term profitability. The last comment concerns the existence of oligopolies in the various markets, and consequently, the fact that each operator must, before deciding to enter the market of another, take account of the reactions of competitors and of the retaliatory measures which they might take. Without wishing to enter into game theory and the 'prisoner's dilemma`, it might be pointed out that it is not certain that each operator gains more by remaining on his own market, since game theory also shows that each operator decides to enter the others' market and risk retaliation when he considers that his long-term advantages are greater if he is present on several markets rather than only one. In addition, games between oligopolists are not simple to resolve, since there are many elements of uncertainty involved, and not just the possible retaliation of one operator or another.

The existence of geographically separate markets does not pose any decisive obstacle to competition between producers on neighbouring markets.

(7) All the overlapping markets are interdependent on one another, and any action taken on one market may have an impact on the most distant markets. This is demonstrated by the following facts. The meetings of the Cembureau Head Delegates (see recital 19), which brought together the whole of the European industry, including that not directly concerned at the time, took place to ensure that the phenomenon of intra-Community trade did not spread in volume and gravity and to advise a reduction in price differences between markets so as to limit export temptations. The agreements between Greek and Spanish producers within the Cement Marketing Association were viewed as being fundamental to equilibrium within Europe. The reaction to Greek exports to the United Kingdom and Italy was a collective reaction by the European industry, because it was considered that cooperation between the entire European industry was essential to safeguard its stability and not just that of the industry in the countries threatened.

It is evident from the above that Europe is the relevant market, consisting of a set of juxtaposed and interdependent markets.

12. Supply

(1) The Community is the largest cement producer in the world. Its production capacity amounts to some 220 million tonnes, while its consumption in the peak year was less than 180 million tonnes (19). The Community suffers from structural overcapacity and indeed from overproduction: such overcapacity exists in all the countries except the Netherlands, being cyclical in the United Kingdom. Exports have always been greater than imports: the Community is thus a net exporter.

(2) The annual growth rate of the cement industry in Europe was 3.6% from 1965 to 1981. After 1981, the European cement industry began to suffer from the adverse economic situation and, in particular, the crisis in the building and construction industry. Cement producers adopted fairly similar industrial strategies to deal with market difficulties: they adjusted production factors, by reducing both surplus production capacities and labour; they adjusted the production process by, on the one hand, converting kilns to cheaper fuels and, on the other, by making greater use of dry, semi-dry or semi-wet processes; they endeavoured to make greater use of secondary raw materials in the manufacture of cement; and they tried to diversify markets geographically both by increasing exports, notably to non-member countries, and by acquiring cement undertakings in North America.

After 1987, the economy was more buoyant, and cement production grew at an annual rate of more than 3%, only to fall again as from 1991.

(3) Although the cement industry must be considered to be a heavy industry, it is nevertheless fairly concentrated, regionally and indeed at world level. The tendencies towards concentration are strong, in large part because of the high level of capital costs, and they continued up to 1993 (on the control of the various undertakings, see recital 5).

The world's leading cement groups are European. Holderbank, Lafarge, Ciments Français, Italcementi, Blue Circle and Heidelberger alone control some 20% of world cement supplies.

In the Community as a whole, the six abovementioned groups (five groups as from 1992, following the purchase of Ciments Français by Italcementi) control some 45% of cement supplies. If one looks at supply at Member State level, the oligopoly becomes tighter. Denmark, Ireland, Luxembourg and the Netherlands each have only one producer; in Belgium, CBR (since 1993, Heidelberger) and Holderbank control 80% of supply; in France, Lafarge and Ciments Français (Italcementi since 1992) control 77% of supply; in Germany, Heidelberger, Dyckerhoff and Schwenk control around 60% of supply; in Italy, Italcementi, Unicem and Cementir hold more than 60% of the market; in the United Kingdom, the three producers present (Blue Circle, Rugby and Castle) share virtually the whole of the market; in Portugal, the two producers present (Cimpor and SECIL) control virtually the whole of supply; in Spain, four groups, namely Valenciana, Asland (since 1990 Lafarge), Holderbank and Uniland control between 50% and 60% of supply.

(4) Most of the European cement companies have endeavoured to diversify their operating risk by establishing themselves outside Europe, and recently in the countries of Eastern Europe: in the United States, the bulk of supply is controlled by European groups.

(5) Most of the producers are vertically integrated. In addition to controlling raw material sources upstream, they own downstream many ready-mix concrete producers and firms producing precast concrete products, who are all cement users, and they often control, directly or indirectly, cement transport firms: all of this enables them to influence behaviour on the demand side.

(6) Some of the large companies (Holderbank, Blue Circle, Titan, Heracles, Aker/EUROC, Lafarge, Asland-Uniland-LACSA-Molins), alone or in association with one another, are in addition active in international trade in cement, mostly with non-member countries.

13. Demand

(1) The trend of cement consumption depends, on the one hand, on the level of activity in the building and construction industry and, on the other, on the proportion of both cement and cement products (ready-mix concrete and precast concrete products) used as raw materials in building and construction.

Despite the greater use of precast concrete products, cement accounts for a very small proportion of the cost of building and construction works.

(2) As has been stated, because of the low impact of cement prices on the cost of building and construction works, demand shows little sensitivity to price changes.

(3) As a result of the development of building and construction techniques, the direct use of cement has declined. The main customers of the cement companies are at present the ready-mix concrete industries, which account for some 45% of cement consumption in the Community. The other main consumers are the manufacturers of precast concrete products and other building components, who account for some 30% of Community cement consumption. The final consumer is normally the building and construction industry, which the cement industry is increasingly trying to persuade to use cement in new applications, such as the building of motorways, and precast concrete products instead of natural products such as marble, stone, steel and wood.

14. Trade flows

As already stated, the Community is a net exporter. Most exports go to various third countries, notably countries in North America, the Middle East and Africa. All the Member States' industries participate in differing degrees in such exports, including the industry in the Netherlands, although the Netherlands is a net cement importer, through the export committees set up between the major exporters and between all the countries. The prices charged in overseas exports are normally lower than the prices applicable in the various Community countries, as may be seen from the documents of the export committees (see Chapter 6 below).

Intra-Community trade flows, which were at a very low level before 1985, have tended to increase, and they more than doubled in the early 1990s as compared with the mid-1980s, despite the fact that some countries, in which norms governing the use of cement had existed for some time, began in 1986 to introduce administrative obstacles such as approval procedures.

SECTION III

THE INTERNATIONAL CEMENT ORGANIZATIONS

CHAPTER 3

Cembureau

15. The objects and structure of Cembureau

(1) Cembureau - The European Cement Association - is an association set up in 1947 whose head office is in Malmoe, Sweden, and whose administrative offices, previously in Paris, have since 1 October 1988 been in Brussels.

Under paragraph 3 of its Articles, in force until 6 June 1989, 'the main objects of the Association are to arrange for:

1. the exchange of information between Members

2. the collection of statistical and other data

3. the study of economic questions

4. cooperation in market development (promotion)

5. cooperation in technical and related industrial fields

6. the provision of an information centre about the cement industry (20)`.

The Articles adopted on 6 June 1989 amended points 3 and 5 of paragraph 3 in the following manner and added subparagraph (b) after point 6:

'3. the study of factors concerning the cement industry's development`

'5. the representation of its Members at European and international level`

'(b) The activities of Cembureau can be carried out either directly by the Association itself or by any subsidiary in which Cembureau has full control` (21).

(2) Paragraph 4 of the old Articles, retained with slight amendments in the new Articles, provides as follows: 'Cement manufacturers (in the new Articles: 'Cement industries`) in different countries, individually or through national organizations, who have declared their interest to partake (in the new articles: 'take part') in the activities of the Association and to pursue the aims as set forth in Article 3 (in the new articles: 'paragraph 3`) above, may become Members of the Association. New Members may be adopted by unanimous approval by the General Assembly` (22).

The members of Cembureau were at the time of the facts and still are:

- for Belgium: FIC;

- for Denmark: Aalborg;

- for France: SFIC (former name: Syndicat National des Fabricants de Ciments et de Chaux);

- for Germany: BDZ;

- for Greece: Association of the Greek Cement Industry;

- for Ireland: Irish Cement;

- for Italy: Italcementi, Unicem and Cementir;

- for Luxembourg: Ciments Luxembourgeois;

- for the Netherlands: VNC;

- for Portugal: ATIC;

- for Spain: Oficemen;

- for the United Kingdom: as from 1988, BCA, which took over the activities of the two former associations, the Cement and Concrete Association and the Cement Makers Federation, the latter having been a member of Cembureau until it was disolved on 1 June 1988.

The associations or cement industries of seven non-member countries (Austria, Finland, Iceland, Norway, Sweden, Switzerland and Turkey) were and are also members of Cembureau.

(3) Under the old Articles, the Association's structure is as follows: the General Assembly, the Executive Committee, the Coordinating Group for promotion and technical activities, the Committee for Economic Questions, the Liaison Committee of the Cement Industries of the EC, Standing Committees appointed in accordance with Paragraph 11, and the Secretariat.

The new Articles provide for the following bodies: the General Assembly, the Supervisory Council, the Executive Board, the Liaison Committee of the Cement Industries in the EC, Standing Committees appointed in accordance with paragraph 12, and the Secretariat.

(4) According to the first subparagraph of paragraph 6 of the old and new Articles, 'Members' privileges to decide on the activities of the Association are exercised in the General Assembly, which is constituted by representatives appointed by Members. Before each Meeting of the General Assembly, Members shall nominate the representative of the country who shall cast the votes according to paragraph 8`.

The Members' representatives who cast the votes at the General Assembly are called 'Head Delegates`. The term Head Delegate does not appear in the old Articles, but appears in paragraph 9 of the new Articles: 'There shall be a Supervisory Council of the Association, consisting of the President and the 19 Head Delegates of member countries`. However, the Cembureau Members Directory dating from July 1988, and thus published when the old Articles were in force, lists from p. 53 to p. 65 the following 'Committees`: Executive Committee, Head Delegates, Coordinating Group, Liaison Committee of the Cement Industries in the EEC, Committee for Economic Questions, Market Committee, Technical Committee and Information Delegates.

On page 7 of its reply to the statement of objections, Cembureau states: 'I. 2 . . . The 'Head Delegates' are not referred to or given any powers in the Articles. Cembureau is essentially a trade association which groups together national associations`.

'I. 3 The 'Head Delegates`.

'As is the case with government representatives on international bodies, and despite the fact that the title 'Head Delegates` is not provided for in the Articles (V.I.2), a person was appointed 'Head Delegate` in order to cast votes in the General Assembly. Cembureau kept an up-to-date list of such 'Head Delegates`.`

'From 1983 to 1985, the Cembureau staff lent their assistance by providing secretarial services when they were asked to organize the meetings of persons who at that time had the title of 'Head Delegate`.

'Cembureau is not in a position to comment on the meetings after 1985, since it no longer had anything whatsoever to do with such meetings` (23).

(5) Paragraph 12 of the old Articles and paragraph 13 of the new Articles, entitled 'Secretariat`, provide that if no Director is domiciled in Sweden, a person who is a Swedish citizen domiciled in Sweden shall be appointed to be Deputy Director to act as managing director of Cembureau, in order that the Association may be considered to have a Board of Directors qualified under Swedish law.

(6) Members' contributions are based on their production, according to the old Articles, and on their sales, according to the new Articles, of all kinds of cement, except white cement.

Cembureau's activities are wide-ranging and complex, comprising technical, economic, financial and statistical aspects.

16. The circulation of price information between Cembureau members

(1) To the Commission's knowledge, Cembureau began taking an interest in cement prices at least as from 1978. Initially, at least according to the circular EC 1/1981 (doc. 33126/3241-3242), which makes reference to the circular EC 7/78, Cembureau carried out and distributed studies on price differences between bagged cement and bulk cement in the member countries. Subsequently, Cembureau's field of activity widened so that, on the basis of the documents available, a distinction could be drawn between the circulation of specific information for meetings and the circulation of periodical information.

(a) Circulation of information for meetings

(2) A handwritten preparatory note for the Head Delegates meeting on 14 January 1993 (doc. 33126/11590; see also doc. 33126/11561-11562) states:

'1. Imports from Eastern Europe

(M) 1.1 Send a table to all Members requesting - 1982 estimates corrections - addition

(HD) 1.2 Request information on CIF prices at points of entry

2. Intra-European Trade

2.1 Secretariat compiles existing data 1979-1981

(M) 2.2 Members requested estimates for remaining months 1982

2.3 Secretariat compiles list of official prices, - ex works, (actual or estimated) for Ordinary Portland and/or Principal Cement

3. World Cement markets

(HD) 3.1 Request information on Members export price

3.2 Request information on CIF prices in countries close to Europe` (24).

(3) Another handwritten note (doc. 33126/11592) included amongst the documents referring to the Head Delegates meeting on 14 January 1983 states:

'(A) Ex-works. Actual - Calculated (Cembureau) -

(i) Pure Portland - (problem of France)

(ii) Major Cement

(iii) No information rebates. For rebates special enquiry needed

(Different types - Clauses)

(B) Export Prices. No official information. Poss. by Group Exportations

(C) World Prices. Selection of Prices available - We can update

(D) European Intra-Trade Prices - Some informal prices but could be obtained with authority of Executive Committee` (25).

(4) Another handwritten note (doc. 33126/11614), contained amongst the documents referring to the Head Delegates meeting of 14 January 1983, states:

>TABLE>

(5) - At the Head Delegates meeting on 30 May 1983, a table setting out the domestic prices (exclusive of tax) of the Cembureau member countries was distributed. The table contains the following types of data (doc. 33126/11599):

>TABLE>

Rates: 4.1.83 and 12.1.83 for Greece

(a) New cement, replaces P. 30. Monthly average July-December 1982.

Ex-works price estimated by Cembureau

(b) Average for the whole country. Average South: 300 - Average North: 270 (excl. rebates)

(c) Athens area. x: incl. taxes

(d) max. price: 305 - min.: 250` (27).

(6) A diagram indicating the price situation in Europe at the end of 1983 was sent for discussion at the Head Delegates meeting held on 19 March 1984 (see doc. 33126/11714 and 11718-11720). The diagram is accompanied by an explanatory note in English and French (doc. 33126/11715 and 11717), which states:

'Cement price level in Member countries

on 31/12/83

As last year, this information is given in the attached diagram, which calls for the following explanations:

- In the left hand half of the diagram, those countries where the major part of cement sales consists of pure Portland cement have been included under the abbreviation P, whereas those countries producing essentially Portland composite cements (P.Co), i.e. cements containing 75-85% of clinker and 15-25% of secondary constituents, are shown on the right hand side.

- The figure shown on the left hand or right hand side of each square gives in million tonnes the production of the countries included in this square.

- Prices are quoted in US$ at the rate of 31/12/83. In order to take into account possible variations and discounts within countries, these prices are shown as a range in the form of an ellipse whose area has been determined approximately in relation to the production of the country concerned and whose centre corresponds as near as possible to the average price.

- The range of prices has been subdivided by 10-dollar intervals.

- For comparison purposes, two further ellipses are shown on the far left side of the diagram indicating the range of prices being applied on the US and Japanese markets` (28).

(7) The memorandum to the President (doc. 33126/11728-1729) and the session notes (doc. 33126/11733-11737) also contain comments summarizing the price situation: those comments will be cited in point (b) of recital 19.

(b) Circulation of periodical information

(8) From 1980 at least, Cembureau has been receiving from and communicating to its members information on the prices applicable in the various countries. The system for circulating such information is as follows:

(i) each member sends to Cembureau the new price-list or changes to the price-list, with the date on which it takes effect. According to the documents supplied by Cembureau (doc. 33126/15096-15305), most of the members send their price-lists after they have entered into force, though some send them before they enter into force, namely: Belgium (doc. 33126/15100-15109); Denmark on three occasions for the price-lists which entered into force on 1 March 1984, 1 March 1985 and 1 September 1986 (doc. 33126/15188, 15187 and 15185); the Netherlands (doc. 33126/15136-15155); and the United Kingdom in the case of the only example of a price-list change provided by Cembureau (doc. 33126/15115-15121);

(ii) after receiving the communications from each member and after the entry into force of the price-lists communicated, Cembureau sends its members three documents:

- a 'form letter` summarizing the price-list changes in the member countries concerned and the dates on which they took effect;

- a 'Cement Price Reference File` per member country containing the new prices for each type of cement and the conditions of sale;

- a 'Price Development for Cement` per member country concerned containing the dates of price changes over a given number of years (normally since 1979/80) and the ex-works prices and the percentages of increase of each price-list change.

(9) In its reply to the statement of objections, Cembureau states on several occasions (see for example page 6): 'The price figures compiled by Cembureau are thus overall figures, country by country, exclusive of VAT and without any indication of rebates. They are always passed on by Cembureau to its members in overall terms, without any individualization whatsoever` (29).

It is necessary to check, on the basis of examination of the figures sent to Cembureau and passed on by it to its members, what is meant by 'overall figures` and 'without any individualization whatsoever`. Such checking will be carried out on the basis of the documents sent by Cembureau in response to a request for information ('Please find attached, in Annex 3, all the documents which we have been able to find concerning the information on domestic cement prices, received from our associates and passed on to our associates from 1984 to the end of 1989` (30): doc. 33126/15066) and on the basis of the replies by Cembureau and its associates to the statement of objections.

(10) Belgium

According to the Ministerial Decrees of 20 December 1950, 22 December 1971, 6 November 1986 and 24 June 1988, cement prices are subject in Belgium to a price control system under which any price increase must be notified in advance to the Ministry for Economic Affairs and authorized by it.

It is FIC, as the trade organization representing the Belgian cement manufacturers, and not each producer individually which notifies the price increase and which, once the increase has been authorized, publishes the list of prices entitled 'Cement prices in Belgium applicable as from . . .`. The price-lists published by FIC thus represent the price-list of the Belgian producers.

These price-lists contain (doc. 33126/15099, 15101-15102, 15104-15105, 15107 and 15109), for each category and quality of cement, in bulk and bagged, the prices in Belgian francs per tonne delivered at quayside by water (by 251 t boat) and delivered at station by rail (by 20-tonne wagon); in the case of cement delivered by lorry (per full load of a minimum of 20 t), which accounts for the bulk of sales by producers, the lists do not specify any price, but simply state 'Prices varying in accordance with destination`.

In its reply to the statement of objections, FIC states (page 16), like the Belgian producers, that the same figures sent to Cembureau are at the same time sent to the Fédération de l'Industrie du Béton, to the SNCB, to the Fédération des Négociants en Matériaux de Construction, to the Association du Béton prêt à l'Emploi and to the Confédération de la Construction. Neither FIC nor the producers produced any document to show that the figures sent to the various trade associations are the same as those sent to Cembureau.

The covering letters (doc. 33126/15100, 15106) by which the FIC sends the price-list to Cembureau end with a paragraph which states the following: 'In view of this increase (or of the changes referred to above), the prices for delivery by lorry of pozzolana Portland cement 'PPZ 30` (reference prices) become:

>TABLE>

An initial page of the 'Cement Price Reference File` (doc. 33126/15111) contains a minimum price and a maximum price for deliveries by lorry and, in the footnote, the increases per tonne for cement delivered by water and by rail and the percentage of increase of the cost of transport of cement supplied by lorry. A second page of the 'Cement Price Reference File` (doc. 33126/15112) contains, for cement delivered by water and by rail, the same figures as the price-list sent by FIC; for cement delivered by lorry, it contains a minimum price ('lowest price`) (0 to 10 km) for each type of cement.

It is evident from the above outline that the figures sent by FIC to Cembureau and passed on by Cembureau to its members apply to each Belgian producer, since requests for authorization of price increases by the relevant Ministry are submitted by FIC and not by the producers individually. In addition, while the Ministry authorizes maximum prices, FIC communicates to Cembureau and Cembureau passes on for cement supplied by lorry, which, as has been stated, accounts for the bulk of sales by cement producers, minimum prices which, according to the author of the communication, are to be regarded as minimum prices for the whole of the trade and hence for each producer.

Lastly, according to FIC, 'the passage in the document cited by the Commission which indicates that there was 'confirmation of prices by telephone once a year' (doc. 33126/15096) merely refers to the fact that, since 1986, there had not been any general price increase authorized by the Ministry of Economic Affairs. The FIC was thus confirming that the price-lists communicated in 1986 were still valid` (reply to the statement of objections, p. 38) (32).

(11) Denmark

In Denmark, where there is only one producer, 'the prices of Aalborg have until 1989 been subject to advance approval by the Monopoly Control Authorities, and revised price-lists have been sent to Cembureau after approval and publication in Denmark` (33) (Aalborg's reply to the statement of objections, p. 13, footnote 2).

Aalborg communicates the ex-works prices to Cembureau (doc. 33126/15183-15188 and 15244-15249); Cembureau reproduces these prices in the 'Cement Price Reference File` (see Annex 2/b to Cembureau's reply to the statement of objections) (34).

(12) France

The Cembureau note accompanying the document sent to the Commission on the circulation of price information states: 'Photocopies of the prices from 1984 to 1986 - plus copies of two information notes on the average of prices in France for my personal information. System of prices (control up to 1986). The prices communicated are average prices for France. Prices for two types of cement. As from 1987, France no longer wants to see these prices published in the Cembureau documents. They may be communicated by telephone to the Members` (doc. 33126/15096) (35).

After a period of liberalization, cement prices in France were made subject from 1982 to 1986 to the system involving counter-inflationary measures and were subsequently liberalized.

According to the documents provided by Cembureau (doc. 33126/15170-15182 and 15230-15243), the Syndicat National des Fabricants de Ciments et Chaux sent Cembureau, following the price increases in France, the average prices for four categories of products: CPA 55R, CPA 55, CPJ 45R and CPJ 45. The covering letters contain the following sentence: 'Since these are approximate average figures, any comparisons with the previously published prices cannot beregarded as strict, and the price differences between categories are not significant` (36). This sentence is included in the 'Cement Price Reference File`.

For the years 1987 and 1988, the Syndicat sent Cembureau the cement prices in France, without any other indication, for the categories CPJ 45 and CPA 55R: the letter of 2 March 1988 communicating cement prices in France as at 31 December 1987 ends: 'Following our telephone conversation of 1 March 1988, for your personal guidance` (37).

(13) Germany

The abovementioned Cembureau note accompanying the documents on prices sent to the Commission (doc. 33126/15096) states: 'Photocopies of the prices from 1984 to 1989. System of prices (free setting of prices). The price average supplied to Cembureau by the German Associationis the price average calculated by the German National Statistical Office` (38). This latter particular is confirmed by BDZ (reply to the statement of objections, pp. 812) and by most of the legible examples supplied by Cembureau (doc. 33126/15161-15167). The information contained in the telex sent on 28 May 1985 by BDZ to Cembureau seems to have been passed on by Cembureau to the Cement Makers Federation: the telex contains the following handwritten note: 'Att. Mr. Pinnock. Ref. today's Tx. West Germany (encircled prices) Greetings` (39) (doc. 33126/15166).

(14) Greece

Prices in Greece were subject to government authorization up to May 1989 (see Titan's reply to the statement of objections, p. 14). Titan notified Cembureau, on behalf of the Greek producers as a whole, of all the price changes for three types of cement ('average ex-works prices`) (doc. 33126/15291-15305).

(15) Ireland

Prices in Ireland were subject to control until July 1985. Irish Cement, the only Irish producer, 'has supplied price data to Cembureau since the commencement of collation of price data statistics by Cembureau` (40) (reply to the statement of objections, p. 10). Judging from the example supplied by Cembureau, Irish Cement provided price data for: ordinary Portland cement 0/10 miles in bulk, ordinary Portland cement in bulk ex-works and the supplements for rapid-setting cement and sulphate-resistant cement; bagged ordinary Portland cement from . . . (minimum) to . . . (maximum), bagged ordinary Portland cement ex-works and the supplement for rapid-setting cement (doc. 33126/15122).

(16) Italy

Up to 30 November 1985, cement prices were subject to public authority control. The association AITEC, acting on behalf of the Italian members of Cembureau, notified to Cembureau the maximum prices as authorized for the entire country by the public authority and officially published (doc. 33126/15130-15135). As from December 1985, prices were made subject to supervisory arrangements, under which each undertaking, on the basis of the cost trend survey carried out by the CIP amongst a number of producers, submits to the relevant Ministry the price-list which it intends to apply, on which the Ministry must reach a decision within 30 days. Following the introduction of this new procedure, AITEC communicates to Cembureau (doc. 33126/15129) the maximum prices authorized: AITEC's letter seems to imply that these are maximum prices valid for the entire trade, since no reference is made to a price average. This interpretation seems to be borne out by the fact that, after stating that the prices are no longer officially published and that each producer makes his prices public, the letter continues: 'An AITEC announcement is published in the specialized press` ('Un annuncio, come AITEC, appare sulla stampa specializzata`). It is evident from the above that the prices communicated by AITEC to Cembureau are the ex-works maximum prices valid for all the producers.

(17) Luxembourg

In Luxembourg, the prices are subject to State control. The sole Luxembourg producer, Ciments Luxembourgeois, informs Cembureau of its public price-lists without any apparent indication of conditions of sale and rebates (doc. 33126/15126-15127, 15158-15160). The 'Cement Price Reference File` and 'Price Development for Cement` sent by Cembureau to its members contain the following statements: 'The cement prices (or tabled prices) per tonne of the S.A. des Ciments Luxembourgeois are ex-works, naked, rebates included, exclusive of VAT` (41). The 'Cement Price Reference File` continues: 'For deliveries of bulk cement which are made in the company's own lorries, transport costs according to distance are charged separately` (42) (see Annex 2/a to Cembureau's reply to the statement of objections) (43).

(18) Netherlands

In the Netherlands, there were from 1982 to 1988 two producers: ENCI and Cemij. Cemij was taken over the ENCI group in 1989. ENCI and Cemij were linked by mutual supply agreements, agreements on the sharing of the Dutch cement market and cooperation agreements on sales and distribution. According to the documents provided by Cembureau (doc. 33126/15136-15157), ENCI informs Cembureau of the official price-lists before they enter into force. The documents also include a communication from VNC to Cembureau on 12 December 1984 (doc. 33126/15152), which states: 'With reference to our telcon of last week we inform you that the prices for different types of cement will be changed as per 2 January 1985. The price for blastfurnace cement (HD-A) delivered by barge will be Dfl 199,05/ton whilst the price for Portland Cement class A will be Dfl 128,50/ton. I have been informed by Mr. Kuijt that since a couple of years he has sent you a copy of the official letter to customers about changes in prices. In your statistics you only mention blastfurnace cement and Portland cement without reference to the trade marks` (44).

In view of the abovementioned cooperation agreements and the fact that the VNC refers in its letter to price changes without any indication of producers, it must be supposed that the information supplied to Cembureau relates to the prices of the two producers. The price-lists communicated to Cembureau comprise a uniform price for all destinations by water (up to 1984 a uniform price by rail), a minimum price and a maximum price for deliveries by lorry. The 'Cement Price Reference File` (doc. 33126/15149) gives the same figures as those contained in the price-lists.

(19) Portugal

Prices in Portugal were subject to the declared prices system up to 1987; since then, they have been subject to the price agreement system (doc. 33126/15201).

Each change to the price-list of ex-works prices is communicated to Cembureau by the trade association ATIC and included in the 'Cement Price Reference File` and 'Price development for cement` (doc. 33126/15192-15229 and 15253-15290). Since ATIC's covering memos refer to cement prices in Portugal, it must be supposed that such prices represent the prices contained in the price-lists of the two Portuguese producers.

(20) Spain

The Cembureau note accompanying the document sent to the Commission on the circulation of price information (doc. 33126/15096) states: 'Spain - Photocopies of the prices from 1987 to 1988. System of prices (free setting of prices). We stopped publishing cement prices in 1984, a price average is communicated to us once a year, for information, by telephone` (45).

Cembureau supplied only three documents to the Commission: the 'Cement Price Reference File` (doc. 33126/15191 and 15252) on prices at 1 January 1984, which, in addition to the average prices, contains the following information: 'Since that date (14.10.1980) the prices have followed a different trend from region to region. It is thus difficult to establish an average price for the whole of the country` (46); a handwritten table, sent by fax to Cembureau on 7 July 1987, containing the average prices from January 1985 to December 1986 and the following footnote: 'These prices were communicated to Mrs Lacroux on 22 May 1987 for passing on to the Cembureau General Assembly that same month` (47) (doc. 33126/15190 and 15251); a table communicated to Cembureau on 2 March 1989 containing the average ex-works and delivered prices in December 1988 (doc. 33126/15189 and 15250).

(21) United Kingdom

Up to February 1987, a 'Common Price and Marketing Arrangement` existed between the British producers: prices and terms of sale were decided on jointly and notified to the British authorities (the Restrictive Practices Court ruled on two occasions that the arrangement was not contrary to the public interest). The prices were those communicated by the Cement Makers Federation to Cembureau (doc. 33126/15115-15116) and included by it in the 'Cement Price Reference File` (doc. 33126/15117). Cembureau provided only one notification from the Cement Makers Federation, namely that concerning the price-list change of 1 June 1985. According to Cembureau, which did not mention the changes prior to 1985, 'We have not received any official communication of prices since 85. We obtain prices from different sources (i.e. builders) which we communicate as an approximate estimate by telephone. System of prices (free setting of prices since 1987)` (48) (doc. 33126/15096).

(22) Cembureau's note accompanying the documents sent to the Commission on the circulation of price information concludes on p. 2 (doc. 33126/15097): 'We generally communicate prices only to our members. External requests always originate from companies or consultants offices wishing to carry out price comparisons. Unfortunately, the price structures and cement types chosen as references by each country are so different that all the comparisons which have been carried out have proved erroneous. A cement producer who is familiar with the standards and with the costs of transport can of course make use of such prices. However, we never carry out this work for our members` (49).

17. The discussions on 'fair or healthy or correct` competition

(1) Three documents or groups of documents make reference to discussions that took place on this subject in the course of meetings held by Cembureau bodies.

(a) Cimpor note

(2) According to a handwritten Cimpor note at the top of a page, a five-page document was distributed (doc. 33322/308-312) at the Executive Committee meeting on 25 March 1983.

The document comprises three points, the first two being broken down into subheadings: 1. Eastern bloc imports; 2. Inter-European trade; 3. World market conditions.

The heading '2. Inter-European trade` is broken down into the following subheadings '(a) General`, '(b) Price comparisons` and '(c) EEC position`, which states: 'Articles 85 and 86 concerning competition policy are clear, and no actions which contravene these Articles can be envisaged.

The tendency within the EEC is to take an economic viewpoint of the position of individual industries, and the current aim is to find a pricing system for homogeneous products which is compatible with Article 85.

The basing-points system under investigation is aimed to avoid ruinous competition and would be appropriate for cement.

Suggestions have also been made that would have the effect of ensuring fair competition` (50).

(3) This document is the same as the document, in English and French versions, found amongst the documents relating to the Head Delegates meeting held on 14 January 1983 (doc. 33126/11617-11629) and is most of a document in English found amongst the document relating to the Head Delegates meeting held on 14 January 1983 (doc. 33126/11630-11633) entitled ,Meeting of Head Delegates, Paris, 14 January 1983 - Notes for the President`, dated 18.1.83-HC/no, which contains a five-point outline, with points 1, 2, 4 and 5 being subdivided into subheadings: '1. Eastern bloc imports`; '2. Inter-European trade`; '3. World market conditions`; '4. Questions for consideration by Executive Committee`; '5. General observations`. The heading '2. Inter-European trade` comprises a subheading '(a) Price comparisons` and a subheading '(b) EEC position`, which corresponds to point '2.(c) EEC position` of the document distributed at the Executive Committee heading held on 25 March 1983 and contains the following addition: '(cf. Mr. Van Hove's notes)`. Mr Van Hove's notes are in the form of slides (doc. 33126/11602-11613):

- slides 4, 5, 6 and 7 explain the applicability of Articles 85 and 86, the conditions for obtaining negative clearance and exemption, and the Commission's powers of investigation;

- slide 8 states: 'EEC intends 'letter of comfort' to tolerate:

- Basing-point system - Price transparency in order to avoid ruinous competition.

Arguments: - Heavy and homogeneous product

- Industry dependent on regional raw materials

- Low specific value

- Inelasticity of demand

- Oligopolistic structure

- Highly 'mature` industry

- High capital intensive industry

Bases: - Studies University of Tubigen

- Studies University of Louvain` (51).

- slides 9A, 9B and 9C illustrate the basing points in two frontier regions and the point where the delivered price as between the two relevant markets meets;

- slide 10 contains suggestions for fair competition by reference to the illustrations given in slides 9A, 9B and 9C:

'1. If possible

- list of delivered prices

- and ex-works prices available.

2. These price-lists to be calculated assuming for a price leader company identical basing-point prices ex-works, for all destinations, even for sales beyond the national borders.

3. Within a relevant market, alignment on the price-leader

4. Outside of the relevant market, application of 2 or occasional alignment` (52).

(4) According to what most of the undertakings state in the replies to the statement of objections, 'the suggestions put forward with the aim of ensuring fair competition` were none other than the suggestions put forward to the Commission under the notification procedure carried out by the Belgian and Dutch cement producers on 16 July 1981, suggestions which, according to the undertakings, the Commission planned at that time to exempt.

It must be noted firstly that Mr Van Hove's notes form part of the documents relating to the Head Delegates meeting of 14 January 1983 (see paragraph (3) above) and are the remarks given in reference to item 2.B on the agenda for that meeting 'Possible means of maintaining fair trade . . . Price formation system - Theories applicable - Rules on fair competition` (see recital 19, paragraph (3)). Towards the end of the 'draft introductory statement by the chairman` it is stated that 'it is hardly necessary to tell you that there will be no record of our discussions` (see recital 19, paragraph (5)). If, as the undertakings claim, 'the suggestions put forward with the aim of ensuring fair competition` were no different from the suggestions notified to the Commission on 16 July 1981, it is difficult to see why there had to be no record of the Head Delegates meeting held on 14 January 1983.

Even if it were true that the suggestions discussed at the Cembureau Head Delegates and Executive Committee meetings largely corresponded to the contents of the notification made on 16 July 1981 and even if it is true that the Commission did, on 21 April 1982, send CBR the draft of a notice to be published in the Official Journal pursuant to Article 19(3) of Regulation No 17, it is no less true that, at the time of the Head Delegates meeting on 14 January 1983 and the Executive Committee meeting on 25 March 1983, the Commission had not yet adopted its official position, and, furthermore, the notice pursuant to Article 19(3) of Regulation No 17 was never published in the Official Journal. In addition, as CBR points out in its reply to the statement of objections (p. 44), the Commission informed the notifying parties, on 1 August 1983, that it was holding in abeyance its formal assessment of the notification and that it was considering the possibility that the publication of the delivered prices alongside the ex-works prices could give rise to anti-competitive situations (53). It should be borne in mind in this respect that the basing-point system also makes it possible to share markets between producers (see point (a) of recital 10).

It should also be added that the implementation of the system notified had been made subject by the notifying parties to two conditions: removal of price control by the public authorities, and removal of uniform or ceiling regional delivered prices by competitors on the markets concerned by the notified system. The aim of the fair competition suggestions put forward by Mr Van Hove at the abovementioned meetings was to get the system accepted by competitors: this is acknowledged by CBR in its reply to the statement of objections, p. 42-43: 'In view of the Commission's favourable reaction, the Belgian and Dutch cement producers endeavoured to promote the system amongst the cement producers from the other Member States, since it appeared to them to be an acceptable compromise between the requirements of competition law and the need to avoid ruinous competition. Convincing the cement producers in the other Member States to adopt a similar system would also have allowed the second condition for the implementation of the system to be met (removal of competition in uniform or ceiling regional delivered prices) and would have greatly facilitated any action aimed at removing or adjusting state controls on cement prices`.

(b) Executive Committee meeting held on 9 November 1983

(5) The draft record of the Executive Committee meeting held on 9 November 1983 (doc. 33322/286-294), point 2. 'Current activities`, letter (b) 'Other questions currently being pursued by the Committee - Cooperation on exports`, after having noted Mr Canellopoulos's finding that export prices had deteriorated, states: 'Mr Bertran stated that he was personally optimistic as regards the maintenance of the volume of the overseas markets, but that the problem of price weakness nevertheless remained critical. He felt that it was time to re-examine the scope for improving cooperation, not only between the large exporting countries, but between all the Members of Cembureau. One of Cembureau's roles had to be to contribute to the establishment of healthy but realistic competition` (54) . The record then noted Mr Heiberg's statement on voluntary restraints on exports by the Japanese and South Korean cement industries, and the statement of Sir J. Milne on the need to establish closer relations between the Export Policy Committee, set up outside Cembureau, and the Executive Committee after Mr Van Hove had expressed the opinion 'that no EEC rules opposed consultations and cooperation in overseas markets` (55).

(6) Cembureau and its members assert that the statement 'one of Cembureau's roles had to be to contribute to the establishment of healthy but realistic competition` refers to exports outside the EEC. Cembureau asserts in this respect (p. 15 of the reply to the statement of objections): 'Page No 12 is page 4 of the same document which confirms that the Export Policy Committee is a committee operating outside the sphere of influence of Cembureau. The record indicates under the heading 'Cooperation on exports` (page 11) that what is involved is cooperation in overseas markets 'since no EEC rules oppose such consultation`. The first paragraph of that page indicating that 'one of Cembureau's roles had to be to contribute to the establishment of healthy but realistic competition between all the members of Cembureau` must be read in that light` (56).

(7) Apart from the fact that the assertion that 'no EEC rules oppose consultations and cooperation in overseas markets` is merely a statement of opinion, the problem remains the question of how Cembureau can 'contribute to the establishment of healthy but realistic competition` between its members, whereas it states that the problems of exports outside the EEC do not fall within its realm. It states on page 15 of the reply to the statement of objections that 'the Export Policy Committee is a committee operating outside the sphere of influence of Cembureau` (57). Commenting on the Blue Circle internal memo of 9 April 1981 (doc. 33126/11338-11340), according to which Cembureau abandoned the Export Committee that had been set up within it and that since then export committees had been formed outside Cembureau, Cembureau states on page 10 of the reply to the statement of objections: 'Pages Nos 1 to 3: These documents emanate from Blue Circle. They explain that since 1958 [according to the Blue Circle memo, since 1972], the date of entry into force of the EEC Treaty, Cembureau has no longer included a Committee responsible for any coordination of exports. This also means that Cembureau has nothing to do either with the London Club or with the ECEC (European Cement Export Committee)` (58).

(8) There are a number of contradictions in the statements quoted above. On the one hand, Cembureau asserts that, since the entry into force of the EEC Treaty, it has no longer included any committee responsible for any coordination whatsoever of exports, and the abovementioned Blue Circle memo of 9 April 1981 states that, because of the common market's distaste for cartels of any sort, Cembureau abandoned its unwanted child, i.e. the European Export Committee (59), while on the other the draft record of the Executive Committee meeting on 9 November 1983 reports the opinion 'that no EEC rules opposed consultations and cooperation in overseas markets`. In addition, on the one hand, Cembureau asserts that it 'no longer includes a committee responsible for any coordination whatsoever of exports`, while on the other the abovementioned draft record of the Executive Committee meeting states that: 'He felt that it was time to re-examine the scope for improving cooperation, not only between the large exporting countries, but between all the Members of Cembureau. One of Cembureau's roles had to be to contribute to the establishment of healthy but realistic competition`.

The Commission takes the view that Cembureau encouraged cooperation between its members in respect of activities within the EEC and in non-member countries.

(c) Italcementi note

(9) The handwritten Italcementi note on the Executive Committee meeting held in Paris on 14 April 1986 (doc. 33126/3185) states:

'3.1 Van Hove - internal regulation - Collaboration with Cembureau.

(a) Air pollution problem - EEC: agreement to have the cement industry withdraw from large (illegible word) installations. There will be a special name for cement, with a Greek consultant.The CLC will be able to participate in the working group - no news so far.

(b) Dumping in imports. Difficult situation, the damage is limited, it is difficult to get admission of damage, to measure - over time the threat has not increased - low imports. The Commission will not hold any meetings before the end of May, and the only positive result will perhaps be to avoid having the matter shelved.

Bertrand - we must establish rules of the game amongst ourselves to avoid improper competition.

Collis - There is a limit to dumping (illegible word)

V.H. - (1) There has to be dumping and (2) there has to be damage - on this second point we stopped.

3.2 Laplace - (half a page of the handwritten note deals with internal Cembureau problems, such as expenditure and organization)` (60).

(10) According to the parties, the Commission misinterpreted the phrase 'we must establish rules of the game amongst ourselves so as to avoid improper competition`, since the phrase is claimed to refer to dumping problems, with some of the parties going so far as to say that the improper competition referred to is that from foreign producers carrying out dumping.

The phrase in question was included by the author of the handwritten note after letter (b), which refers to dumping problems, and before the statements by Mr Collis and Mr Van Hove, which also refer to dumping problems. However, it is clear that the phrase has nothing to do with dumping problems, since it is stated that rules must be established 'amongst ourselves` and not amongst the foreign producers suspected of carrying out dumping.

18. 'The Cembureau agreement or Cembureau principle of not transhipping to internal

European markets`

(1) The Commission first learnt of the 'agreement` or 'principle` from two documents found in the course of an inspection visit to Blue Circle.

1. Internal memo dated 1 December 1983 and entitled 'Strategy against imports and the future of the cement industry` (doc. 33126/11332-11334)

(2) After examining the imports situation in the United Kingdom and demand in Europe and elsewhere, the memo states: 'At the moment 22 million tonnes of the West European surplus is able to be channelled to overseas markets in need of the product but there is every likelihood that this figure will collapse dramatically to 15 million tonnes or less by early 1985 and under that strain it is probable that the Cembureau principle of not transhipping to internal European markets will break down.

The counter measures against imports we have taken so far are as follows:

1. A