OPINION OF MR ADVOCATE GENERAL REISCHL

DELIVERED ON 3 JULY 1980 ( 1 )

Mr President,

Members of the Court,

The subject-matter of the eight cases, in which I am giving my opinion today and which were joined by order of the Court of 26 October 1978 for the purposes of the proceedings and judgment, is the Commission Decision of 20 July 1978 adopted pursuant to Article 85 of the EEC Treaty. It concerns measures which were and still are applicable to the Belgian market in tobacco products.

In listing the relevant measures a distinction must be made between those prior to 1 December 1975 and those subsequent thereto.

Into the first said period fell measures, which according to the particulars in the Commission decision, were concerned with the following:

— The recognition of wholesalers and retailers of tobacco products by the Fédération Belgo-Luxembourgeoise des Industries du Tabac (“FEDETAB”, a federation set up in 1946 to which almost all Belgian and Luxembourg tobacco manufacturers belong), the division of traders into various categories and the allocation of various profit margins to the traders;

— The maintenance of resale prices set by the manufacturers for wholesalers and retailers as determined by certain agreements made between FEDETAB and the Fédération Nationale du Commerce de Gros en Produits Manufacturés de Tabac (hereinafter referred to as “FNCG”);

— The restrictions imposed by FEDETAB on the approval of certain categories of wholesalers;

— The ban on resales by wholesalers to other wholesalers and certain retailers;

— The application to wholesalers and retailers of standard terms of payment; and

— The obligation on retailers to stock a minimum number of brands.

On 1 December 1975, and here I come to the period mentioned in the second place, a recommendation made by the governing body of FEDETAB for the sale of cigarettes on the Belgian market entered into force and the seven manufacturers of tobacco products, who are now plaintiffs, announced that they would follow it. It is concerned with:

— The division of the Belgian wholesalers and retailers into categories and the allocation to the latter of different maximum profit margins;

— The application to wholesalers and retailers of standard terms of payment; and

— The granting to wholesalers and retailers of end-of-year rebates.

As early as the beginning of 1971 the Commission was fully informed of the first group of measures — I will in future call them the “earlier measures” to distinguish them from the recommendation I have just mentioned — after it had sent a request for information to FEDETAB as a result of a complaint by a Belgian undertaking.

On 2 April 1974 GB Entreprises SA (later to become GB-Inno-BM), which operates supermarkets and is already known from Case 13/77 NV GB-Inno-BM v Vereniging van de Kleinhandelaars in Tabak [1977] ECR 2115, complained to the Commission about the earlier measures and asked that proceedings be commenced for a declaration that there was an infringement of Articles 85 and 86 of the EEC Treaty. The Commission did so by a decision of 29 July 1974. In the course of those proceedings objections were raised on 18 July 1975 in accordance with Article 2 of Commission Regulation No 99/63 against FEDETAB and its members which includes all the applicants in the present proceedings.

By letters of 10 and 13 October 1975 two further Belgian undertakings, Mestdagh Frères & Cie., which sells foodstuffs in a number of supermarkets and subsidiaries, and the firm of Eugène Huyghebaert, which supplies retailers, announced to the Commission their intention to be associated with the complaints made by GB-Inno-BM. This was done by a formal complaint dated 17 October 1975, which was apparently received by the Commission on 21 October 1975. On 22 October 1975 there was a hearing at the Commission of the proceedings commenced by decision of 29 July 1974; FEDETAB, various of its members and GB-Inno-BM took part. The representative of the firm of Huyghebaert who had also been invited to the hearing was excluded from it at the applicants' wish. Subsequently, on 13 November 1975, the complaints made by Mestdagh and Huyghebaert were forwarded to the applicants for their comments. Their comments were received by the Commission towards the end of 1975 and beginning of 1976 and then there were further comments in July 1976 by the applicants on the reply lodged by Mestdagh and Huyghebaert.

The recommendation made by FEDETAB was notified to the Commission on 1 December 1975. In this connexion all the applicants declared that they intended to comply with the recommendation. After the proceedings which were already pending before the Commission were extended to the recommendation by decision of 10 May 1976, further objections were notified on 17 May 1976 and on 22 September 1976 there was a second hearing of the applicants.

All this led on 20 July 1978 to the adoption of the aforementioned Commission decision which was delivered to FEDETAB and the undertakings manufacturing tobacco products, Cinta SA, Éts. Gösset SA, Jubilé SA, Vander Elst SA, Weitab SA, and BAT Benelux SA, all of Belgium, and Heintz van Landewyck Sari, a manufacturer of Luxembourg.

Article 1 of the decision found that the earlier measures concerning the organization of the distribution and sale of tobacco products in Belgium represented decisions by the association of undertakings, FEDETAB, and agreements between seven manufacturing undertakings, the applicants in the present proceedings, and constituted from 13 March 1962, when Regulation No 17 entered into force, to 1 December 1975 infringements of Article 85 (1) of the EEC Treaty.

Article 2 of the decision found that the recommendation notified by FEDETAB and the seven manufacturing undertakings to the Commission and taking effect on 1 December 1975 constituted an infringement of Article 85 (1) of the EEC Treaty. Further it did not qualify for exemption under Article 85 (3) thereof.

Finally Article 3 of the decision ordered the addressees to terminate without delay the infringement referred to in Article 2 and in future to abstain from all acts whatsoever having the same object as the FEDETAB recommendation of 1 December 1975.

On 28 and 29 September 1978 the addressees appealed to this Court against that decision.

It is claimed in Case 209/78 that Articles 1, 2 and 3 (1) of the decision should be declared void and in the other cases it is claimed that the decision should be declared void as a whole.

In Case 124/78 there is an additional claim in the alternative to refer the case back to the Commission with an order to consider the applications for exemption under Article 85 (3) of the earlier measures and the recommendation.

Further Case 215/78 seeks in the alternative that Article 2 of the decision be declared void in so far as it provides that application of Article 85 (3) to the FEDETAB recommendation is not justified and that accordingly Article 3 (1) of the decision be declared void.

Finally it is claimed in the alternative in Case 218/78 that Articles 2 and 3 (1) of the decision should be declared void and that in the alternative a declaration should be made as formulated in the alternative in Case 215/78.

Before I can deal with those claims, which the Commission contends should be dismissed, I should mention that several bodies have been allowed to intervene in the proceedings.

They are, in support of the applicants:

— The Association des Détaillants en Tabac Asbl (hereinafter referred to as “ATAB”), an association founded in 1966 and now comprising 360 retailers;

— The Association Nationale des Grossistes en Produits Manufacturés du Tabac (hereinafter referred to as “AGROTAB”), an association created in 1976 to replace the Association Nationale des Grossistes Itinérants en Produits Manufacturés du Tabac (hereinafter referred to as “ANGIPMT”), which was dissolved in 1976 and which in turn together with the Nationale Vereniging van Familiale Tabakgroothandelsondernemingen (hereinafter referred to as “NVFG”) replaced in 1974 the Fédération Nationale du Commerce de Gros en Produits Manufacturés du Tabac (hereinafter referred to as “FNCG”), which had been founded in 1957; and

— The Fédération Nationale des Négociants en Journaux, Publications, Librairie et Articles Connexes (hereinafter referred to as “FNJ”).

Moreover the following intervened in support of the Commission:

— The aforementioned undertakings GB-Inno-BM, Mestdagh and Huyghebaert, who had made complaints to the Commission; and

— The Federation Belge du Commerce Alimentaire (hereinafter referred to as “FBCA”).

In considering the quite extensive material I shall proceed as follows:

First I shall consider the grounds of complaint relating to the course of the administrative proceedings before the Commission. Then I shall consider whether the Commission was right in finding that the measures on the organization of the sale and distribution of manufactured tobacco in Belgium fell within Article 85 (1) of the EEC Treaty, that is to say, were agreements between undertakings, decisions by associations of undertakings and concerted practices which might affect trade between Member States and which had as their object or effect the restriction of competition within the common market. Then if necessary the question must be considered whether exemption under Article 85 (3) was rightly refused.

I — The administrative proceedings conducted by the Commission

In the view of the applicants the administrative proceedings before the Commission were not conducted correctly in various respects. Thus their rights of defence were infringed inasmuch as they were not given sufficient opportunity to inspect the administrative documents drawn up by the Commission. Further, the Commission wrongly refused to hear certain associations of undertakings. Moreover it based its decision on complaints by Mestdagh and Huy-ghebaert without conducting in regard thereto proper proceedings in relation to competition and informing those concerned of the joinder of those proceedings with the others. The Commission was also wrong in publishing business secrets of the applicants. Further not all the officials of the Commission dealing with the matter were continuously present at the hearing. Finally exception must be taken to the fact that in notifying the objections only one of the four conditions laid down in Article 85 (3) was referred to in rejecting the possibility of exemption, whereas in the contested decision mention was made of other conditions for exemption without the applicants' having had an opportunity of giving their opinion thereon. All this must be regarded as infringement of Article 6 of the Convention for the Protection of Human Rights.

1. Alleged insufficient inspection of the administrative documents kept by the Commission

Various aspects must be distinguished here.

(a) In so far as in three actions (Cases 209, 210 and 218/78) there is mention of the fact that the Commission did not grant the request of the applicants made in August 1978, that is after the contested decision was adopted, to inspect the administrative documents, the statements of claim in Cases 209 and 218 themselves show that that obligation is not to be regarded as a ground for voidance but as a ground for discovery (Case 218/78) or (as in Case 209/78) as grounds for reserving the right to supplement the statement of claim if necessary. The same was made clear in Case 210/78, albeit only in the reply, that that was not intended to be the ground' for declaring the contested decision void. It is not necessary to say anything further on the correctness of that view. In fact it relates to the conduct of the Commission after the conclusion of the administrative proceedings leading to the contested decision and thus conduct which could have had no influence on the nature of the decision. Therefore it is not necessary now to consider the quite extensively discussed question whether the Commission's reaction to the said requests — in the proceedings there was talk of oral and written procedure — was sufficient and proper. Our inquiry can be confined to other aspects of that ground of complaint.

(b) As regards the requests made by the applicants during the administrative proceedings, the Commission explained that the presumptuous demand had never been made to it to make all the administrative documents available to the applicants. No such request, as the Commission rightly pointed out, is to be discerned in certain phraseology used on pages 18 and 19 of the minutes of the second hearing in September 1976. On the other hand the Commission has convincingly shown that it sufficiently met the request to inspect certain documents. When at the first hearing objection was made, which can be regarded as the relevant request, that the applicants were not acquainted with the complaints of Mestdagh and Huy-ghebaert, those complaints were immediately made available to the applicants. Also the letter from the Association Nationale des Grossistes Itinérants en Produits Manufacturés du Tabac of 2 March 1976 (not, as wrongly stated, 13 February 1976) asked for mainly in a letter from FEDETAB of 21 May 1976 (cited at page 27 of the rejoinder) was in fact forwarded to FEDETAB. As regards the reference in the letter from FEDETAB of 21 May 1976 to the forwarding of all other documents, the context should not be overlooked in which that request was made. It related in fact to documents to which the Commission might refer at the hearing. It was said without denial that none were sent because the Commission did not refer to any documents at the hearing. Moreover it is relevant in this respect that apparently before the contested decision was adopted the applicants did not react clearly to the, in their view, insufficient discovery of documents.

(c) Further the applicants claim that because those concerned could not know the exact composition of the administrative documents, the Commission, without regard to whether applications had been made, should be required to disclose all documents containing facts taken into account by it — since it should rely only on facts on which those concerned had been able to comment — and that it is open to objection that the opinion of the Advisory Committee on Restrictive Practices and Dominant Positions was not disclosed to the applicants. As to this the following observations in my opinion should be made: — As regards the last issue the Commission has no doubt rightly pointed out that the opinion of the Advisory Committee pursuant to Article 10 of Regulation No 17 is not published; it is moreover intended only for the Commission and not for those affected. Accordingly, without special reasons being shown, its production cannot be demanded even in court proceedings simply on the ground that only in such way is it possible for the Court to check whether the Advisory Committee was properly involved. — As regards the other matters put forward by the applicants I refer to the fact that in the older case-law (Joined Cases 56 and 58/64 Consten Sàri & Grtindig-Verkaufs-GmbH v Commission [1966] ECR 299, at p. 338) it is expressly stressed that it is not necessary that “the entire content of the file should be communicated” to parties to proceedings relating to cartels; all that is necessary (cf. Case 49/69 Badiscbe Anilin- und Soda-Fabrik AG v Commission [1972] ECR 713, at p. 729 [paragraph 8]) is that “the undertakings concerned must be informed of the essential elements of fact on which the Commission bases its objections against them”. In that respect the applicants were not able successfully to challenge the Commission's allegation that all the facts upon which the contested decision was based were communicated to them and they were not able to cite any important fact or circumstance upon which they were not able to comment in the administrative proceedings. The applicants referred to the judgment in Case 85/76 Hoffmann-La Roche & Co AG v Commission [1979] ECR 461, at p. 512 [paragraph 11], which states that in order to respect the principle of the right to be heard the undertakings concerned must have been afforded the opportunity during the administrative procedure to make known their views on the truth and relevance of the facts and circumstances alleged and on the documents used by the Commission to support its allegation that there has been an infringement of Article 86 of the Treaty. That judgment can hardly be regarded as laying down any new principles as suggested by the applicants. The Court's statement cited means in my view that inspection of documents is to be afforded for the purpose of comment on particular facts only in so far as it is indispensable (where for example the evidential value of a document is challenged) for reasonable comment on the facts contained in the document. That however can hardly be said of the documents referred to in paragraphs (101), (102), (127) and (130) of the contested decision to which much reference was made at the hearing. Here it is a question of information from producers on the application of the credit terms and trade margins, of the allegation that the criteria for grading various categories of traders were criticized not only by the complainants but also by the most important association of wholesalers and the alleged impossibility for traders to choose brands of cigarettes, which they wished to sell and to limit the number of brands in accordance with demand. In that respect I refer only to the observation of the Commission that the answers of the producers on the application of the recommendation had no decisive significance on the decision and the fact that in the Commission's decision the principle of agreement and not the manner of determining the criteria for grading is stressed. Likewise it is difficult to understand why it is only-after they have inspected the documents used by the Commission that the applicants can comment on the trend in cigarette sales in Belgium, the peculiarity of the Belgian revenue system and its effects, the number of retailers in other Member States and the comparison of the services which the various traders afford in distribution, in so far as it really is a question, which cannot be said of all those matters, of views upon which the decision depends.

(d) The administrative proceedings cannot therefore be criticized on the grounds that the applicants were refused inspection of documents which was necessary for proper comment on the objections raised against them and which, had it been allowed, could have substantially influenced the course and outcome of the proceedings.

2. The failure to hear certain associations in the administrative proceedings allegedly resulting in the inadequate establishment of the facts

There are two matters to be distinguished.

On the one hand there are the requests originating from the associations themselves to take part in the hearing in relation to the recommendation. Those requests were made:

— On 9 June 1976 by the Association des Grossistes Itinérants en Produits Manufacturés du Tabac, an association founded after the dissolution of the FNCG and in turn superseded in 1977 by AGROTAB;

— On 1 July 1976 by ATAB; and

— On 17 September 1976 by the Association des Grossistes “Groupe Tabac”, a de facto association composed of the most important wholesalers who were formerly members of ANGIPMT and are now members of AGROTAB.

On the other hand there is the request by FEDETAB on 30 June 1976 to hear two associations namely the aforesaid “Groupe Tabac” and NVFG, mentioned at the beginning, one of two associations founded de facto after the dissolution of ANGIPMT in 1976.

(a) First as regards the requests made by the associations themselves, Article 19 (2) of Regulation No 17 provides: “If the Commission or the competent authorities of the Member States consider it necessary, they may also hear other natural or legal persons. Applications to be heard on the part of such persons shall, where they show a sufficient interest, be granted.” Further, Article 5 of Regulation No 99/63 of the Commission states: “If natural or legal persons showing a sufficient interest apply to be heard pursuant to Article 19 (2) of Regulation No 17, the Commission shall afford them the opportunity of making known their views in writing within such time-limit as it shall fix.” Article 7 of the same regulation provides: “1. The Commission shall afford persons who have so requested in their written comments the opportunity to put forward their arguments orally, if those persons show a sufficient interest or if the Commission proposes to impose on them a fine or periodic penalty payment. 2. The Commission may likewise afford to any other person the opportunity of orally expressing his views.” Finally, Article 9 (3) of Regulation No 99/63 states as regards the hearings which the Commission has to arrange: “Hearings shall not be public. Persons shall be heard separately or in the presence of other persons summoned to attend...” It follows from these provisions that the Commission has a discretion with regard to the hearing. There is a right to a hearing only if sufficient interest is shown and even then it is basically only a written procedure. Oral hearings are to be arranged only where sufficient interest is shown or where the Commission proposes to impose a fine or periodic penalty payment on those concerned. It is moreover clear, and Article 9 of Regulation No 99/63 must be so understood, that contentious proceedings are not the rule. I cannot moreover see any doubt as to the compatibility of Regulation No 99/63 with Regulation No 17 of the Council as mentioned by the applicants at the hearing with regard to the requirement of contentious proceedings. Nevertheless it may be inferred from the judgment in Case 8/71 Deutscher Komponistenverband eVv Commission [1971] ECR 705 that as regards applications by third parties to be heard it is sufficient if the opportunity is given to submit written comments under Article 5 of Regulation No 99/63. In the present administrative proceedings, according to the unchallenged statement of the Commission, written comments were submitted by ATAB on 21 October 1974 and 10 September 1976 and by the “Groupe Tabac” on 17 September 1976 and they related to the complaints by GB-Inno-BM and the objections of May 1976. Further, written comments were sent in on 5 March 1975, 7 October 1975 and 2 March 1976 by ANGIPMT, which was a member of the “Groupe Tabac”. Apart from that there were official talks between officials of the Commission and representatives of ATAB on 13 November 1974 and 18 March 1976, of ANGIPMT on 23 September 1974 and 26 February 1976 and of NVFG on 29 October 1974. Furthermore mention should be made of written comments by the Europäischer Tabakwaren-Groíshandelsverband (hereinafter referred to as “ETV”) on 21 February 1975 and 7 October 1975 and by the Confédération Européenne des Détaillants en Tabac (hereinafter referred to as “CEDT”) on 11 December 1974 and 4 November 1976 and further of talks said to have been held with the representatives of CEDT on 13 November 1974 and of ETV on 18 February 1975. From this there can scarcely be said to be disregard of the right of these associations to be heard and for the special interest of the trade to be asserted and moreover as regards the refusal by the Commission to allow representatives of those associations to take part at the oral hearing, it must be borne in mind that ATAB did not by any means represent all specialized retailers but only some hundred of them. It is also significant that apparently no association according to the concluding answer by the Commission and the subsequent letters from the Commission such as those of October 1976 has maintained the allegation that it was not heard. Moreover according to the relevant case-law it seems quite right to hold that there was not sufficient interest for an additional oral hearing because the traders had not associated themselves with the recommendation and that is why the objections in that respect had not been served on them. Let me cite again the judgment in Joined Cases 56 and 58/64 Consten GmbH and Grundig-Verkaufs-GmbH v Commission [1966] ECR 299 where it is expressly indicated [at p. 346] that undertakings which are not parties to an agreement have no right to be heard in proceedings brought by the Commission with regard thereto.

(b) On the other hand as far as concerns in this connexion the application by FEDETAB for the hearing of certain associations, Article 3 (3) of Regulation No 99/63 is decidedly in point; it states: “They” (that is to say, the undertakings and associations of undertakings upon whom as those concerned objections have been served) “may attach any relevant documents in proof of the facts set out. They may also propose that the Commission hear persons who may corroborate those facts.” Article 7 (2) of that regulation must also be borne in mind as allowing the Commission likewise in other cases to afford any other person the opportunity of expressing his view orally. Since Article 7 (2), where there is a discretion, can obviously be left out of account, an obligation to accede to applications to be heard can at most be based on Article 3 (3) and presumably then only in cases in which particular persons are cited to corroborate particular facts. When all relevant circumstances are considered, then it is apparent that that is not the case here according to the letter from FEDETAB of 30 June 1976 (cf. Annex 3 of the Commission's pleading on the observations by AGROTAB). In that letter it is explained in response to a query by the Commission that FEDETAB had no objection to representatives of the Association Nationale des Grossistes Itinérants taking part at the hearing. Then following on it simply stated: “La FEDETAB souhaite cependant pour que la Commission soit complètement éclairée de convoquer également les associations suivantes” (namely NVFG and the “Groupe Tabac”). That certainly did not adequately show that there was interest in hearing the said associations, nor was it moreover so shown at the hearing itself, not only because there was no reference to Article 3 of Regulation No 99/63 but also because the facts which were to be corroborated were not stated. Further in support of the view that the failure to afford the hearing requested is not to be regarded as a curtailment of the rights of defence, it is significant that not only FEDETAB itself described NVFG as an unimportant association, which nowhere makes its presence felt, but that after the rejection of the application there was obviously no special reaction either from FEDETAB or from the said associations.

(c) The administrative proceedings can therefore certainly not be regarded as irregular on the grounds that they disregarded the provisions in Regulations Nos 17 and 99/63 on the hearing of third parties.

3. The complaints made by Mestdagh and Huyghebaert and the proceedings resulting therefrom

In October 1975 the Belgian undertakings, Mestdagh Frères & Cie and Huyghebaert associated themselves with the complaints by GB-Inno-BM, and that step was registered with a separate file number. As a result of the last-mentioned circumstance the applicants were of the opinion that separate additional proceedings had been started. On that basis they complained that they had never received a decision joining those proceedings with others pending before the Commission and relating to the system of distribution of tobacco products and that in consequence they had not been able to comment on the relevant grounds therefor. They complained also that as regards the proceedings brought by Mestdagh and Huyghebaert and whose independence they had to assume, they were never sent objections after the formal opening of the proceedings, which incidentally did not take place, and that there was no hearing. This leads to the conclusion that the complaints of Mestdagh and Huyghebaert ought not to have been taken into account in the Commission's decision and thus it was improper to terminate three proceedings with one single decision.

(a) As regards this group of objections the Commission to my mind rightly pointed out that the nature of its administrative proceedings was not such as the applicants assumed it to be. Not every complaint of conduct allegedly distorting competition which for administrative purposes receives a separate file number necessarily introduces independent proceedings even if it relates to matters which as a result of a similar complaint are already the subject of proceedings in relation to competition. In such circumstances it is not a question of starting new proceedings but of extending the proceedings which are already pending to the additional complaints as was done in the present case by the decision of the Commission of 10 May 1976. It was therefore not necessary to have any formal decision joining the proceedings for which reasons would have had to have been given and sent to those concerned for comment. It needed only to be sufficiently clear that the additional complaint would be considered by the Commission in relation to the proceedings already pending and those concerned be given opportunity to comment on the additional complaints. In the present case it is however clear and not open to dispute that the complaints by Mestdagh and Huy-ghebaert associated with the complaints by GB-Inno-BM dealt at least in part with the same subject-matter — they likewise related to the so-called earlier measures in relation to the distribution of tobacco products in Belgium and their restrictive effects upon competition — and that essentially the same reasons were given for them. Even if then the complaint of unjustified preference of certain traders is the main ground of contention, Mestdagh and Huyghebaert in fact attack the whole system of the collective fixing of trading conditions by members of FEDETAB as unlawful. Further it is significant that not only was FEDETAB's advocate made aware of the position as early as September 1975 as the advocate for Mestdagh and Huyghebaert pointed out at the hearing in 1975 but that also in a letter from the Commission to FEDETAB of 20 October 1975, intended to be brought to the knowledge of the members of FEDETAB, mention was made of the joining of the three complaints and of the fact that Mestdagh ought to be brought into the hearing. Further, there is still various other evidence that the close connexion between those complaints was quite clear to the applicants. Thus FEDETAB's advocate declared at the hearing in 1975 that it was desirable not to bring fresh proceedings in relation to the complaints by Mestdagh and Huyghebaert but to deal with the matter as a whole. In addition the answers by FEDETAB, Jubilé and Vander Elst to the compaints by Mestdagh and Huyghebaert and the second lot of comments by FEDETAB on those complaints clearly referred to the proceedings commenced as a result of the complaints by GB-Inno-BM. Further in the letters from the advocate for the two applicants to the Commission of 9 June 1976 stress was laid upon the close connexion of the complaints by Mestdagh and Huyghebaert with the problems dealt with in the FEDETAB recommendation and it was emphasized that this would be taken into account in the answer to the second objections. Finally it must not be forgotten that other applicants too stated that the complaints by Mestdagh and Huyghebaert would be taken into account in the comments on the second objections and thereby recognized the connexion which to that extent existed with the FEDETAB recommendation. I therefore do not see how it is possible to criticize as a procedural irregularity the fact that the Commission did not declare in a formal decision with reasons stated and after specific comment by the applicants in relation thereto that the Mestdagh and Huyghebaert proceedings were to be joined with the GB-Inno-BM proceedings.

(b) If moreover consideration is given to the question whether as a result of what the Commission did the rights of defence of those concerned were disregarded and therefore it is to be regarded as inadmissible to have dealt with the Mestdagh and Huyghebaert proceedings in the contested decision, then in my opinion the answer cannot be as mooted by the applicants. First it is necessary to bear in mind that according to the case-law (Joined Cases40/73 and related cases Coöperatieve vereniging, “Suiker Unie” UA and Others v Commission [1975] ECR 1663, at p. 1930) it is quite possible to deal with several infringements in a single decision concerning competition; it is necessary only for care to be taken that in the decision no objections are considered upon which those concerned have not been able to comment. It therefore seems to me irrelevant that no particular objections taken from the complaints by Mestdagh and Huyghebaert were forwarded to the applicants. What is decisive is that those complaints were served on all applicants (even on the applicant in Case 209/78 as it admits in its reply) and that they commented on them in letters dated 17 December 1975, 22 December 1975, 5 January 1976, 7 January 1976, 20 January 1976 and 21 January 1976. It is significant too that there were further answers by Mestdagh and Huyghebaert thereto relating moreover also to the recommendation and that they in turn provoked reactions from the applicants in letters dated 27 July 1976, 28 July 1976, 29 July 1976 and 30 July 1976. In addition the objections from the year 1976 on which the applicants were able to comment dealt with the problem of the alleged discriminatory treatment of traders which was raised particularly by Mestdagh and Huyghebaert. As regards however the question of the oral hearing of the complaints by Mestdagh and Huyghebaert, it may be pointed out that it could have taken place as early as 20 October 1975, as the Commission intended, if the applicants had not objected to the participation therein of Huyghebaert's representative, who could have explained his complaints, which had not yet been served upon the applicants. Moreover there was a second hearing on 22 September 1976 in relation to the FEDETAB recommendation. Since it was preceded by comments from Mestdagh and Huyghebaert dealing also with the recommendation, it may well be assumed that the applicants had sufficient opportunity to deal with the views of Mestdagh and Huyghebaert.

(c) The complaints by Mestdagh and Huyghebaert were not dealt with in the administrative proceedings in a manner to limit the applicants' right of defence as set out in Regulations Nos 17 and 99/63, which would have given cause to declare void the Commission's decision in so far as it concluded the proceedings introduced by the complaints from Mestdagh and Huyghebaert.

4. Breach of business secrets

As we heard in the proceedings the comments of FEDETAB of 22 September 1975 together with annexes were served on the complainant GB-Inno-BM. Those comments and annexes set out market trends of 160 brands of cigarettes in Belgium during the previous five years, the cigarette purchases handled by the main specialized itinerant wholesalers and the credit terms to which the 25 important customers of the largest Belgian cigarette manufacturers kept. In the applicants' view that infringed Article 20 of Regulation No 17 because it naturally related to business secrets and was clearly so shown by being marked “confidential”. Because the complainant was thus enabled to comment on facts not normally available to it, the proceedings were vitiated with the necessary consequence that the resulting Commission decision should be declared void.

The Commission took the view that in truth the contents of the said annexes, of which moreover only two, and not the one concerned with the sale of 160 brands of cigarettes, were marked “confidential”, could not be regarded as secret. Even if however that were the case the interest in keeping secrets had to yield before the Commission's interest in full information and establishment of the facts. In any event the proceedings were not so vitiated as to call in question the contested decision.

(a) The question first arises whether the content of the said annexes has in fact to be treated as secret. It is certainly not decisive that some of the annexes were expressly marked “confidential” and some not. Even from Article 20 (3) of Regulation No 17, which states: “The provisions of paragraphs (1) and (2) shall not prevent publication of general information or surveys which do not contain information relating to particular undertakings or associations of undertakings.” it does not necessarily follow that everything else must be treated as secret and may not be revealed. Futher in this connexion, and this is directed against the Commission, it is not possible to rely on the Belgian Arrêté Royal [Royal Decree] of 8 October 1976 according to which undertakings are obliged to publish their turnover. Apart from the fact that that provision has existed only since 1976 and can thus not cover matters in 1975, it is clear that it does not necessarily make particulars of the kind relevant here available to the public. In the same way I cannot accept the Commission's observation that the figures were supplied by FEDETAB and thus could not be regarded as secret among the manufacturers, since all the manufacturers had access to the FEDETAB material either through their representatives on the administrative board or through the check they had on terms of payment and end-of-year rebates as provided in the sales system. Even if something is known or easily accessible to manufacturers, this does not mean that there is no interest in keeping it secret from purchasers from the manufacturers. If however the content of the annexes in question is considered, then without its being necessary to have recourse to Article 214 of the EEC Treaty, it is not possible to avoid the impression that it was a question of matters which ought not to have been brought in full detail to the knowledge of customers of the manufacturers. In my opinion the applicants' view may be accepted that the Commission was in principle bound not to make the annexes in question available to other circles.

(b) On that basis it is further necessary to consider whether the Commission's desire to establish the facts as comprehensively as possible can justify so proceeding. In that respect the Commission relies on Article 20 (2) of Regulation No 17 which states:“Without prejudice to the provisions of Articles 19 and 21, the Commission and the competent authorities of the Member States, their officials and other servants shall not disclose information acquired by them as a result of the application of this regulation and of the kind covered by the obligation of professional secrecy.” Article 21 is irrelevant and the fact that the above-quoted provision is without prejudice to Article 19 can only mean that the Commission when hearing other persons, which it may consider necessary to do pursuant to Article 19 (2), may escape the obligation to respect secrets. In my opinion we do not need now conclusively to determine how it is necessary to proceed in detail in balancing the interest in keeping secrets against the interest in completely establishing the facts as the Commission indeed is required to do under Regulation No 17; inter alia the matter is discussed in the judgment of 13 February 1979 in the aforementioned Case 85/76 Hoffmann-La Roche v Commission 1979 ECR 461, at p. 512 [paragraph 13], where it is stated that the obligation under Article 20 (2) must be reconciled with the right to be heard. It has not been convincingly shown that the complainant GB-Inno-BM could usefully have commented on the applicants' answers to the objections put by the Commission only if the applicants had been provided with a full copy of the aforementioned statement by FEDETAB together with all its annexes. In so far as the provision of such copies seemed proper at all, which may be doubted in regard to the sale trends of 160 brands of cigarettes in Belgium, it would certainly have sufficed to proceed so as not to reveal all the details such as the individual terms of payment and in particular the identity of the undertakings concerned. It can therefore be taken that in the present case the Commission cannot justify the disregard of its obligation to respect secrets by referring to its endeavour with the assistance of the complainant to establish the facts as thoroughly as possible.

(c) That certainly does not mean, as the applicants think, that it necessarily follows that the Commission's decision must be declared void. It depends rather, and authority for this is the judgment of 14 February 1978 in Case 27/76 United Brands Company and United Brands Continental BV v Commission 1978 ECR 207, at pp. 305 and 306 [paragraphs 284 to 288], whether the infringement of which the Commission is guilty decisively influences the course of the proceedings and whether it may be assumed that had there been no irregularity there would have been a different outcome. That however cannot be imagined in view of the nature of the facts known and the comments thereon by the complainant. On the other hand in my view the applicants are wrong in referring to the judgment in the aforementioned Case 85/76 Hoffmann-La Roche v Commission 1979 ECR 461, at pp. 512 and 513 [paragraph 14], where it is said that the Commission cannot use facts, circumstances or documents which it cannot in its view disclose to the undertakings concerned. In that respect it must simply be said that the documents in question in the present case were rightly required from FEDETAB and that the Commission considered itself entitled to forward them to the complainant, as was certainly correct as regards the basic contents. Thus the disregard of the obligation to respect business secrets, which was rightly criticized, has ultimately no significance for the present proceedings. Whether it can possibly lead to liability on the part of the Community, for which as is known, other conditions must be satisfied, need not be further considered here.

5. Alleged irregular conduct of the oral hearing

The applicants further consider that there are grounds for criticism because for a certain time during the hearing on 22 October 1975, as appears from the minutes of the hearing at p. 58, not all of the officials of the Commission concerned with the case of FEDETAB were present. That infringes Article 9 (1) of Regulation No 99/63 which states: “Hearings shall be conducted by the persons appointed by the Commission for that purpose”. Indeed it must be regarded as necessary in the interest of the correct establishment of the facts that the officials concerned with the case and responsible for the preparation of the decision should receive their impressions directly from the hearing if at that time an important issue, namely the determination of the terms of payment, was being discussed, and that they should not be content with reports of the oral statement.

The only person however so appointed within the meaning of Article 9 (1) was Mr Thompson, a director, who presented himself as such and was also noted in the minutes in that capacity. It was moreover mentioned in a note sent to the parties before the hearing; accordingly the only person appointed was the official who presided and it was to be assumed that the other officials of the Commission simply assisted him. Since however it is not disputed that Mr Thompson, who signed the minutes of the hearing was continuously present, the conduct of the hearing must be regarded as correct and in any event there can be no serious defect in the fact that the officials who assisted him were temporarily absent even if they asked questions at the hearing and were entrusted with the preparation of the Commission decision as rapporteurs.

It is not possible in my opinion to meet this by reference to the Belgian law cited by the applicants, where the rule apparently obtains that in the case of adoption of a decision by an administrative committee all the members thereof must have been present at all the discussions. On the other hand it is much more significant that all the observations made at the hearing were reported and made available to the officials taking part. It also seems to me significant that in the case-law, such as in the judgment of 15 July 1970 in Case 44/69 Buchler &Co v Commission 1970 ECR 733, it has already been held that in proceedings relating to competition it is sufficient if members of the Commission are given information by the person appointed to conduct the hearing and have available to them the minutes and recordings and the administrative documents. If this suffices in the case of persons responsible for a decision, a different position can hardly be held to obtain in the case of officials who only prepare a decision, the draft of which is nevertheless the responsibility of their superior officer, who in the present case was continuously present at the hearing.

The decision cannot therefore be declared void on the ground of alleged irregular conduct of the hearing, a complaint moreover which relates only to the decisions in respect of the earlier measures.

6. The alleged incompleteness of the objections made known in respect of the recommendation ofl December 1975

The applicants further object that in the notice of objections to the recommendation which entered into force on 1 December 1975 refusal of exemption under Article 85 (3) of the EEC Treaty is mentioned only in reference to one of the conditions referred to there, namely “which contributes to improving the production or distribution of goods or to promoting technical or economic progress”. That is the reason why they had made written observations and oral observations at the hearing before the Commission only in relation to that matter. In the contested decision however it is mentioned that exemption does not come into consideration because other conditions in Article 85 (3) are also not satisfied. The decision thus relies on objections upon which the applicants were not able to comment; that infringes their rights under Articles 2 and 4 of Regulation No 99/63.

The Commission counters that in its first objections in 1975 relating to the earlier measures mention is made of allowing consumers a fair share of the resulting benefit. The second objections were only supplemental thereto, because the Commission did not abandon the observations it had made earlier. Moreover it was significant that the applicants had made observations on the said condition at the hearing conducted in 1976; further most of the applicants had given their views on all the conditions in Article 85 (3) in their comments on the first objection and also at the hearing in 1975 and in their observations when the recommendation was notified. There can thus be no question of curtailing their right to be heard.

After this discussion the question arises whether it is indeed necessary in giving notice of the objections to make observations on Article 85 (3), and again whether it is sufficient that a further condition of Article 85 (3) was dealt with only in the first notice of the objections and finally whether it suffices that the applicants made comprehensive observations on Article 85 (3) of their own accord at the beginning of the proceedings and when the recommendation was notified.

Since it is not disputed that the question of improving the production or distribution of goods, which is material to the decision, was dealt with in the second notice of objections, those questions will be relevant only if it appears that the part of the decision concerning Article 85 (3) has to be considered at all and if the rejection of the exemption on the ground of the said condition is not sustainable, the other conditions of Article 85 (3), which were passed over in the second objections, are in fact of importance. In these circumstances and in view of the anyhow exceptionally voluminous material in the action, it seems to me proper provisionally not to deal with the relevant complaint and to consider it if necessary in the event of its being necessary to say anything at all about the rejection of the exemptions.

7. Infringement of Article 6 of the Convention for the Protection of Human Rights

In their replies certain applicants have put forward in addition the argument that all the infringements dealt with so far relating to the alleged irregular course of the administrative proceedings are to be regarded as disregard of the rights of defence as given by Article 6 of the Convention for the Protection of Human Rights. According to the case-law of the European Court of Human Rights that provision applies when there is a dispute about rights or duties arising under civil law. Application of Article 85 of the EEC Treaty comes within it. Article 6 of the Convention for the Protection of Human Rights requires, and this did not happen in the present case, that cases should be defended at all stages and it must be accordingly regarded as an infringement if, and this relates particularly to the rejection of the hearing of the associations named by the applicants, a claim to hear defence witnesses is not granted.

The immediate question arises whether that objection has not been raised too late and must be disregarded pursuant to Article 42 of the Rules of Procedure. I wish to leave that matter aside for the moment because it may be doubted whether it is in fact a completely new and independent issue — in truth a legal tag is simply put upon matters already contained in the statements of claim — but also because the case-law shows, and this takes some of the significance from Article 42 of the Rules of Procedure, that particularly important issues may be raised by the Court of its own motion.

As regards consideration of the complaint in other respects, the observations previously made suffice as regards the question of the incompleteness of the objections in relation to exemption under Article 85 (3). As regards the failure to hear the associations named by FEDETAB, it suffices to recall that according to the relevant letter of FEDETAB already mentioned there is considerable doubt whether it was really a question of citing defence witnesses for particular facts, even assuming, as the Commission itself considers proper, that the Community institutions are bound to respect common principles of justice and the Convention for the Protection of Human Rights, it must not be overlooked that Article 6 of the Convention for the Protection of Human Rights merely provides that everyone is entitled to a fair and public hearing by an independent tribunal. That is no basis for claims in respect to administrative proceedings conducted by the Commission; nor does it seem to me possible, as was attempted at the hearing, to justify the claim that because the Commission is not an independent and unbiased court, such proceedings require all the more respect for Article 6 of the Convention for the Protection of Human Rights. Since however it has been shown that the Commission did not infringe the rules of Community law as contained in Regulations Nos 17 and 99/63, and since it could not be shown that those provisions were not in accord with the Convention for the Protection of Human Rights or that apart from that the Commission had infringed the Convention for the Protection of Human Rights, it must ultimately be concluded here too that such considerations cannot lead to voidance of the contested decision.

II — Application of Article 85 (1) of the EEC Treaty

I now come to the question whether the organization of the distribution of tobacco products in Belgium by means of certain agreements and resolutions of FEDETAB between 13 March 1962 and 1 December 1975 and the recommendation which entered into force on 1 December 1975 relating to the sale of cigarettes on the Belgian market infringed Article 85 (1) of the Treaty.

The numerous arguments put forward in that respect call for an attempt to deal with them in some sort of order. Thus I will first deal with the arguments relating in particular to the earlier measures. Then it is necessary to deal with particular objections relating to the recommendation. Finally arguments must be considered which apply to both more or less equally.

A — The particular submissions against the decision in respect of the earlier measures

1. Of interest here in the first place is the observation made by the applicant Heintz van Landewyck that it had signed only the letter of 23 December 1971 laying down the maximum credit terms and no other agreement or measure. In consequence only that letter could be attributed to it; further as regards itself there could not be said to be agreements on competition or concerted practices for in relation to the other measures dealt with in the decision it had merely fitted in with the conduct of other manufacturers because it was compelled so to do by market forces. Here it is proper to mention the general argument put forward by FEDETAB that its members were responsible only for measures and decisions to which they had expressly agreed. Moreover it is necessary to deal in this connexion with the allegation by AGROTAB in the application to intervene that the letter of 23 December 1971 just mentioned was not signed by the applicant Weitab whilst three other companies who had signed it had not been joined by the Commission in the proceedings. (a) First as regards the allegations to the applicant Heintz van Landewyck, there are good reasons for doubting whether, apart from the letter of 23 December 1971, it applied all the earlier measures only because it was compelled so to do by market forces and that it is therefore wrong to speak in that respect of collective action and concerted practices. On this point the Commission said, and the applicant denied this only in a general way without giving more specific grounds, that some importers active in the Belgian market had certainly marketed tobacco products without observing the rules on distribution objected to by the Commission. Moreover it was not shown in detail how it was the applicant Heintz van Landewyck who was compelled by market forces to act in line with the Belgian manufacturers. To say that it had a market share of 3 % — according to the Commission's estimates it was nevertheless between 5 % and 6 % — is hardly enough. It is not necessary to go into that further. The firm of Heintz van Landewyck has been a member of FEDETAB since 1947 and so participated in the adoption of the earlier measures. According to Article 9 of the FEDETAB statutes all members are bound to adhere to decisions adopted pursuant to the statutes and to fulfil obligations arising therefrom. Further the agreements relevant in this connexion were made by FEDETAB in the name of the manufacturers and it is apparent from the wording chosen that the obligations were meant to be those of the undertakings. In those circumstances there can be no objection in fact to the Commission's assuming that the manufacturers were bound by the agreements and decisions made by FEDETAB and that it therefore accused the applicant Heintz van Landewyck of conduct distorting competition not only in relation to laying down maximum credit terms but also with regard to the other earlier measures. (b) That substantially deals with the general argument put forward by FEDETAB that manufacturers can be held responsible only for those FEDETAB measures to which they have expressly agreed. Further it is significant here, and this confirms the correctness of the Commission's assumption that it is proper to speak of collective action and concerted practices in relation to all the earlier measures, that the undertakings in no way distanced themselves from the FEDETAB measures or gave notice of rejection by their conduct, but that, at least on the whole, they put them into practice. (c) As regards the particular matters put forward by AGROTAB it must moreover be observed that FEDETAB itself declared in relation to the letter of 23 December 1971 concerning the maximum credit terms that it was a collective measure and that the largest manufacturers had appended their signatures to the letter merely to lend extra weight to the measure, although, as must be inferred, it was not absolutely necessary. In addition the Commission said, and this was not challenged, that the applicant Weitab had signed the said letter and the fact that the signature of BAT was missing was only because it had not at the time obtained control of the undertaking Odon Warland. As regards the fact which does not really matter now that the Commission's decision was not served on the companies Laurens, Odon Warland and' Tabalux, who had signed the letter of 23 December 1971, the explanation must suffice that those undertakings had come under the control of the groups to which the applicants belong.

2. A number of other objections to be dealt with in connexion with the earlier measures relate then to the questions whether in fact an agreement may be assumed, whether the letter from FEDETAB of 21 December 1970 (Politique de distribution cigarettes — tabac à partir du 1. 1. 1971) contained mandatory rules and how that is to be reconciled with the fact that certain agreements are said not to have been applied. Moreover some letters mentioned in the decision are said to have been sent by the Association of Wholesalers, FNCG, that is to say, the manufacturers cannot be held responsible for them. (a) First of interest here is the claim that the model agreement made on 22 May 1967 by FEDETAB and FNCG for a year and relating to the adherence by wholesalers to the prices laid down by manufacturers was never applied and was superseded by a FEDETAB decision of January 1968. Further this is the place to consider the allegation that the additional agreement of 5 October 1967, whereby retailers who did not observe the prices on the labels would not receive further supplies from wholesalers, never had any practical consequences. Mention should also be made here of the allegation that the standard agreement made by FEDETAB with most of the wholesalers on 30 June 1972, which provided an obligation on wholesalers to observe prices fixed by the manufacturers and a prohibition on supplying certain traders, was never applied and was already terminated in 1973. In order to confirm that the agreement was never put into practice AGROTAB said that the association FNCG was already more or less moribund in 1972. Against that and against the important reference in that connexion by AGROTAB to a letter by FNCG of 8 May 1970 as showing, because it recalled earlier agreements, that they were not applied, the Commission rightly pointed out that Article 85 (1) is not dependent upon whether an agreement is applied. It is sufficient for the purposes of Article 85 (1) if the object is a restriction on competition and there can be no doubt about that if the content of the agreements in question is considered. For the same reasons it is not decisive whether sanctions were applied or not to enforce the agreements. In that respect, quite apart from the fact that a threat of sanctions by powerful associations can be effective, the Commission was able to refer to a letter by FEDETAB of 3 October 1967 in which the wholesalers were asked not to supply certain traders who had not observed the prices and trade margins. Further it could point out that in a supplemental agreement of 29 December 1970 between FEDETAB and FNCG it was agreed strictly to review the application of the agreements and pay the end-of-year rebates only to wholesalers who had observed the obligations under the agreement of 22 May 1967. Moreover the Commission rightly stresses that the period of validity of the agreements in the present case is irrelevant. This is because the decision is limited to the finding that Article 85 (1) was disregarded and imposes no sanctions for which the duration and the effects of the restriction on competition are relevant. (b) Then it is necessary to consider the allegation that certain letters referred to in the decision originated from the FNCG and cannot therefore be attributed to FEDETAB and its members. First there is a letter of 26 October 1967 in which it was stated that the cigarette manufacturers would no longer supply-wholesalers doing business with traders who gave rebates based on quantity. Further there is a letter of 8 May 1970 in which a reminder was issued of the obligation to observe the prices fixed by the manufacturers, only to allow the terms prescribed for them to the retailers recognized by FEDETÀB and not to sell to other wholesalers. Thirdly there is the letter of 22 March 1972 in which there was mention of the prohibition on supplying manufactured tobacco to certain wholesalers. Here too however it is possible to agree with the Commission that those matters had no significance in reaching the decision especially because the said letters were not considered in the decision as independent documents and relevant for the purposes of the law on competition. Indeed it should not be overlooked that the first mentioned letter refers to action contemplated by the manufacturers. It was connected with the prohibition for which the manufacturers were responsible on granting rebates and was intended to ensure that the prohibition was observed. Of interest too is the letter from FEDETAB of 3 October 1967 in which the wholesalers were asked not to supply certain traders who were not observing the fixed prices and profit margins. The second letter refers to obligations under an agreement to which the manufacturers were parties at least through FEDETAB. As regards the third letter which has already been mentioned, it is significant that there is mention in it of the additional agreement made with FEDETAB on 29 December 1970 according to which, the food trade was to be prevented from strengthening its position in the tobacco market. Secondly the connexion with the standard agreement made by FEDETAB on 30 June 1972 with almost all wholesalers should not be overlooked for that agreement contains the prohibition on supplying certain traders and may altogether be regarded as a consequence of the letter from FNCG. If the matter is so considered it is indeed not possible to say that documents, which in fact originated from the association of wholesalers, were wrongly attributed to the manufacturers. (c) As regards the argument put forward by AGROTAB in its application to intervene to the effect that the letter from FNCG of 26 October 1967 refers to the lack of agreement on the matter, it must be admitted that it shows that certain retailers did not observe the prohibition on granting rebates and that certain wholesalers did not observe the prohibition on supplying such retailers. Nevertheless it certainly does not show that the distribution rules did not largely function. Moreover the contested decision which was addressed only to the manufacturers and their association deals only with their practices. It cannot be inferred that they were abandoned because the rules were not always observed lower down the line; it may even be assumed from the reference in the said letter to the manufacturers' intention to impose sanctions that the intention existed to make the distribution system fully effective. That however makes the said letter in truth evidence for the assessment which the Commission put on the matter. (d) Finally in this connexion there is the allegation by the applicant FEDETAB to the effect that its document of 21 December 1970 on “Politique de distribution cigarettes — tabac à partir du 1. 1. 1971” was not to be regarded as a mandatory working instrument and that each manufacturer used it according to his own sales policy. That calls for the following observations: The wording obviously contradicts any such view. The first sentence of the document to the effect: “Les fabricants de cigarettes, membres de FEDETAB, se sont engagés vis-à-vis des grossistes spécialisés en produits manufacturés en tabac à respecter les règles ci-après”, means that the rules set out were intended to be the main guidelines. In support of that reference may be made to the arrangements for checking referred to in the decision and the sanctions which are therein criticized. Moreover since it is not disputed that the document substantially influenced the practices of the manufacturers and that they observed those rules on the whole, there can hardly be objection to the fact that the Commission referred to a decision by an association of undertakings and to concerted practices which basically fall within Article 85 (1).

3. A further group of objections which needs special mention relates in substance to the part of the decision concerned with the earlier measures and has as subject-matter the judgment therein on the prohibition of rebates, the laying-down of standard terms of payment, the requirement of a minimum range and the prohibition on certain wholesalers being supplied by other wholesalers. (a) As regards the prohibition on the granting of rebates it was said that such practices were possible only with large profit-margins which did not exist in trade in manufactured tobacco. Moreover the prohibition was necessary to protect specialized traders whose existence would otherwise be in jeopardy. I share however the Commission's view that such reasons do not show that Article 85 (1) of the EEC Treaty was wrongly applied to measures whose substantial nature as restricting competition — they relate to price competition between traders — can scarcely be denied. It must indeed not be forgotten that it is not a question of prohibiting large rebates which might be described as unfair and ruinous competition, but excluding any kind of rebate. Further it was not shown that the profit-margins were so squeezed at the time that they did not allow even small rebates. It is not so much a question of the trade practices of large distributors such as GB-Inno-BM, of which there was extensive talk in the proceedings and which, because they combine the functions of wholesalers and retailers, can aggregate the relevant margins. Of greater interest is the unchallenged evidence of the intervener, the Fédération Nationale des Négociants en Journaux, Publications, Librairie et Articles Connexes, to the effect that there are apparently stjll wholesalers who supply such retailers and compete by marking price reductions. That moreover shows that such a practice, at least if it is kept within proper proportions, in no way involves the danger of the disappearance of specialized traders. (b) As regards laying down standard terms of payment for purchasers from manufacturers (cf. the letter of 23 December 1971) it was stated that it was justified on grounds of self-protection. There was action by large distributors to obtain longer credit terms and when other purchasers sought similar advantages the danger arose that there would be such considerable effects upon the price that it would be damaging to the market. Moreover something similar was said concerning the keeping of minimum ranges by certain traders. It is of interest in this connexion that as retaliation against the refusal to grant longer credit terms, the larger distributors had limited their ranges to less than 60 brands and had done so by boycotting the applicants Weitab and Jubilé, who were regarded as the most vulnerable. That was countered, and must also be regarded as self-preservation, by a refusal of supplies which was aimed at securing the lifting of the boycott and not observance of the obligation in respect of certain ranges. (aa) In regard to those matters it must be observed first of all that it seems highly questionable whether it is admissible in the law on competition to counter allegedly inadmissible pressure by powerful purchasers with a breach of the rules on competition. That could at most be contemplated if no other means could be considered and of this no proof was given. Further it is of interest, as the Commission rightly pointed out, that the letter cited by FEDETAB on page 30 of its application can scarcely, be regarded as evidence that there was common action by several large distributors in relation to the boycott of two manufacturers which could be met only by common action by all the manufacturers. It must also generally be regarded as unlikely that all the manufacturers involved in the action found themselves in a weak position vis-à-vis the said distributors. A number of them belong to strong international groups whereas on the other hand GB-Inno-BM, for example, the largest of the distributors involved here, has a share of only 6 % of the cigarette market. What the applicants did can therefore scarcely be justified as self-preservation. (bb) As regards keeping a certain minimum range of cigarettes it is necessary moreover to point out that it was in no way simply a question of reaction to the partial boycott by large distributors. If I understand the FEDETAB document “Politique de distribution cigarettes — tabac à partir du 1. 1. 1971” correctly, keeping a minimum range was rather of general significance as being a condition for being allowed certain terms of purchase. As such it was on the whole rightly regarded in the decision as a restriction on competition because it can restrict the traders' freedom of choice and also involves tying up capital in so far as less popular brands are involved. It cannot be so easily justified on the ground that in that way competition between brands is encouraged, for to set off restrictions on competition by traders against the stimulation of competition by manufacturers can scarcely be approved. It can at most be questionable whether having regard to such trade practices which exist in any event there can be said to be an appreciable restriction on trade. I shall return to that in a subsequent connexion. (c) Finally as regards the prohibition on supplying certain wholesalers through other wholesalers as dealt with in the decision, certain applicants have said that such a rule must be regarded as absurd. A wholesaler would not in any event buy from another wholesaler because in such a case he would receive too small a profit-margin. Moreover, apart from the fact that department stores and similar distributors cannot be regarded as wholesalers, a difficulty is that demand from food wholesalers and non-specialized wholesalers is too comprehensive for it to be satisfied by specialized wholesalers without serious financial risks. On that issue too I cannot agree with the applicants. Quite apart from the fact that as regards the application of Article 85, as already stated, in cases which have as their object restrictions on competition the question of the effects upon the market can remain open, it must be recalled that the clauses in question were obviously laid down in regard to wholesalers who are not supplied by manufacturers or as regards traders who received only limited quantities. If such wholesalers wished to continue doing sufficient business, they had only other wholesalers as their sources of supply. Obviously there were such supplies from time to time as is apparent from the statement of FNCG of 22 March 1972. Moreover, it must be remembered that there were certain effective embargoes on supplies to large distributors who as economic entities, and that is why the said clause was important, combined the functions of wholesale and retail trade. I refer in that respect to the measures of October 1967, May 1970 and March 1971 mentioned on page 6 of the pleadings of GB-Inno-BM. (d) The interim result is that none of the particular objections dealt with so far could justify declaring void that part of the decision which relates to the earlier measures.

B — After that I come to certain special objections applying to Article 2 of the contested decision, that is the FEDETAB recommendation on the sale of cigarettes in Belgium.

1. In this respect certain applicants have complained that the decision characterizes the recommendation as an agreement between undertakings who have approved it and said that they would adhere to it. Properly interpreted however, agreements within the meaning of Article 85 (1) of the EEC Treaty are but contracts under national law. The present case is not concerned with such arrangements for there is no binding effect and nothing is provided to ensure that it is adhered to. As authority they cite inter alia the judgment in Case 48/69 Imperial Chemical Industries Limited v Commission [1972] ECR 619 at p. 655 [paragraph 64], where it is stated: “Article 85 draws a distinction between the concept of ‘concerted practices’ and that of ‘agreements between undertakings’ or of ‘decisions by associations of undertakings’; the object is to bring within the prohibition of that article a form of co-ordination between undertakings which, without having reached the stage where an agreement properly so-called has been concluded, knowingly substitutes practical co-operation between them for the risks of competition.” I nevertheless have the impression that that judgment in particular shows that the issue with which we are concerned here is basically an unimportant argument of classification. That may be said because the proceedings have shown that in any event a concerted practice within the meaning of Article 85 (1) may be assumed, that is to say, a “co-ordination which becomes apparent from the behaviour of the participants”. It is quite beyond dispute that the directives on distribution were not only worked out in common but that they were and are applied. In that respect I refer to the admission by FEDETAB which nevertheless speaks of flexible application. Reference may also be made to the statements of almost all the applicants at the hearing to the effect that they observed the margins laid down in the recommendation. Further the view may be taken that the concept “agreement” within the meaning of Article 85 (1) is wider than that of contract in civil law. Of relevance in this respect is the judgment on the so-called gentlemen's agreements in Case 44/69 Buckler & Co v Commission [1970] ECR 733, at p. 754. They were in fact treated as agreements because in the view of the Court it suffices for such purposes if various undertakings mutually declare themselves willing to abide by the gentlemen's agreement and the joint intention of several undertakings with regard to their conduct in the common market is faithfully expressed. That can easily be applied to the present case in which as already stated, representatives of the applicants co-operated in drafting the recommendation on distribution. If then they yet expressly declare their agreement and express their intention of implementing the recommendation then that can be regarded as a mutual agreement within the meaning of the said judgment and thus as an agreement within the meaning of Article 85 (1).

2. It is further objected that the recommendation was treated in the contested decision as a decision by an association of undertakings within the meaning of Article 85 (1). In that respect the intervener AGROTAB pointed out that FEDETAB was a non-profit-making association and as such did not engage in business. Here too I agree with the Commission's view that that factor is unimportant. First it is significant that FEDETAB has legal personality, that is it can sue and be sued in its own name. Secondly there is the fact already mentioned that decisions of FEDETAB, as appears from Articles 8 and 9 of its statutes, are binding on the members. However, it should be made clear that on any other interpretation Article 85 could appear to have lacunae: in order to escape application of Article 85 undertakings, instead of mutually agreeing could arrange an appropriate decision by an association having largely similar effect. Thus it was expressly stressed in the case-law (Case 71/74 Nederlandse Vereniging voor Fruit en Groentenimporthandel and Nederlandse Bond van Grossiers in Zuidvruchten en ander Geïmporteerd Fruit v Commission [1975] ECR 563, at p. 583 [paragraph 30]) that Article 85 (1) applies to associations in so far as their own activities or those of the undertakings belonging to them are calculated to produce the results to which it refers. The FEDETAB decision as such, the effects of which were intended to be increased by the fact that certain manufacturers expressly stated that they agreed to it, is thus quite relevant to the rules on competition, that is to say, it can as such, as was the view of the Commission, be caught by Article 85.

3. On the other hand it cannot be objected that the recommendation is not binding and that paragraph 61 of the contested decision wrongly speaks of the recommendation giving rise to a genuine mandatory rule of conduct for all firms in the industry. In this connexion the Commission rightly reminded us that according to the case-law (Case 8/72 Vereniging van Cementhandelaren v Commission [1972] ECR 977, at p. 990 [paragraph 21]) the fixing of a target price affects competition because it enables all the participants to predict with a reasonable degree of certainty what the pricing policy pursued by their competitors will be. It moreover cited Case 73/74 (Groupement des fabricants de papiers peints de Belgique and Others v Commission [1975] ECR 1491) as authority for the rule that the same applied to clauses containing other terms if principal elements in the price are laid down as target figures, which in the present case is so as regards the allowances granted by the manufacturers to their purchasers. Moreover, it should not be forgotten that a number of manufacturers agreed to the recommendation and that manner of agreement gave rise at least to a certain obligation. When paragraph 61 of the decision speaks of a mandatory rule for third parties it obviously does not mean a legal obligation upon other firms in the industry but only economic compulsion. This may scarcely be doubted when it is borne in mind that the seven firms who approved the recommendation control some 80 % of the cigarette sales in Belgium and thus have considerable influence upon what happens in the market.

4. Finally in this connexion it is necessary to deal with the objection that the Commission wrongly saw in the recommendation a simple continuation of the distribution system which previously applied. It is said that there were in fact quite clear differences in the effects. The recommendation does not expressly and particularly classify dealers or place any restriction on the class recognized as wholesalers. There are no prohibitions on selling to others in the same class and no collective measures to enforce the terms of payment. Further it confines itself to laying down maximum margins and leaves the manufacturers every freedom as regards other allowances. It is also significant that it applies only between the manufacturer and his immediate buyer; no terms of resale are placed on dealers and therefore it is incorrect to speak of restrictions on competition down the line. Since the Commission did not take account of those matters it must be held that the decision wrongly judged the recommendation on the false facts. As regards this objection it must first be said that it does not appear valid in so far as it argues that the recommendation applies only between manufacturers and their immediate customers. In my view the Commission has convincingly shown on pages 80 to 90 of its rejoinder that that is not so and that it is intended to apply as between wholesalers and retailers. In support of that it may be pointed out, and this is not meant to be exhaustive, that the notification of the recommendation speaks of maximum rates for intermediary allowances. It is significant that margins are laid down for retailers who in number (several tens of thousands) represent the largest class of customers and at the same time it is stressed that almost all would receive supplies direct from wholesalers. Reference may also be made to the answer by FEDETAB of 29 July 1976 to the observations of Mestdagh and Huy-ghebaert; in that answer it is said that when food shops are supplied by wholesalers the normal rate of 7.25% for non-specialized retailers will be allowed. On the other hand it must be admitted that the recommendation does not have such powerful effects between wholesalers and retailers as the earlier system in which there were strict agreements between manufacturers and wholesalers. That also explains why wholesalers do not apparently always keep to the recommendation. In any event it may not be doubted, and the representative of the Fédération Nationale des Négociants en Journaux, Publications, Librairie et Articles Connexes explained this, that wholesalers compete when fixing their sale prices. I have, however, the impression that the Commission recognized that the recommendation differed in that and other ways from the earlier measures. It must in fact be observed that the decision describes separately on the one hand the earlier measures with all their details and on the other hand the content of the recommendation. In the same way the legal position is considered separately. If in this respect there is reference on one or other issue to the assessment of the earlier measures that is hardly ground for objection. In this respect it is significant that the applicants when giving notice of the recommendation, which was worked out after objections were made to the earlier measures, declared that the recommendation was intended to replace the earlier measures. It is also probably beyond dispute that the subject-matter of the measures is largely of the same kind and that, because the essential elements were retained and the applicants applied on the whole both the earlier measures and the recommendation, the measures had similar effects on the market and on competition. Pertinent criticism of the decision in relation to the FEDETAB recommendation can therefore scarcely be based upon the ground that the recommendation was inappropriately assessed in its relationship to the earlier measures.

C — Now that I have dealt with the objections which relate specially to Article 2 of the decision and shown that they are not valid I must turn to the criticism which in relation to Article 85 (1) concerns the decision as a whole, that is to say, applies basically both to the part which deals with the earlier measures and to the part in which the recommendation is judged.

1. Of importance here in the first place is the applicants' allegation that it is necessary to have regard to the fact that the aim of the measures which are objected to is the maintenance of the traditional marketing with a fine network giving a chance also to the small and little-known brands which contribute to increasing competition. For this specialized wholesalers are indispensable and if their services were not specially rewarded by the maintenance of a certain price-level they would not be able to stand up to competition from other wholesalers whose turnover is tending to increase. As authority for such an aim Case 26/76 {Metro SB-Großmärkte GmbH & Co KGv Commission [1977] ECR 1875 at p. 1897 et seq.) is cited. According to that decision price competition has no absolute priority. In particular separation of the functions on the one hand of the wholesale trade and on the other of the retail trade accords with the right of competition if it is done on the basis of objective criteria. Further the judgment stresses not only that a selective distribution system may be compatible with Article 85 (1) but also that the desire to maintain a certain price level for the specialist trade and the continued existence of that channel of distribution does not necessarily infringe Article 85 (1). The Commission did not properly take that into account in considering the distribution system applying in Belgium to manufactured tobacco. In my opinion those observations call in the first place for the comment that the Commission has nothing against the classification of dealers into various categories if it is done according to objective criteria applied equally to all nor does it object to different margins being laid down for them. It is therefore not true that it insists on competition on equal terms between specialized wholesalers and other wholesalers which must lead to the disappearance of the specialized wholesaler trade, that is to say, of a traditional channel of distribution, upon which the smaller manufacturers are particularly dependent. The decision is primarily concerned with the fact that the most important manufacturers pursue this policy as cartels and exclude competition in this respect among themselves. It is therefore clear to me that in the present case and particularly as regards the last-mentioned point of view the judgment in the aforesaid Case 26/76 (Metro) does not support the applicants' argument. Although it must be admitted that it contains observations on the compatibility of a selective distribution system with Article 85 (1), it is however of significance that it was concerned with a selective distribution system relating to highly developed consumer goods and to the selection of certain dealers according to their qualifications. To that extent it may rightly be asked whether it may freely be applied to the distribution of manufactured tobacco where those kinds of special features are lacking and moreover there is no selection on the basis of qualifications. Further it is significant that the said Case 26/76 was concerned with an individual distribution system of one manufacturer. There were no horizontal arrangements but on the contrary competition with other forms of distribution by other manufacturers remained. Contrary to the present case the freedom of the dealers to negotiate was untouched, that is to say, there was no uniformity of price-fixing within the selective distribution network but competition remained in that sector. Further it should not be overlooked that the Commission decision in question in that judgment was largely based on Article 85 (3) of the EEC Treaty which allows certain restrictions on competition if they appear necessary in the interests of achieving certain aims considered worthy of protection. The Commission was expressly required in the judgment to ensure that the “structural rigidity is not re-enforced, as might happen if there were an increase in the number of selective distribution networks for marketing the same product”. That obviously refers to making the terms of competition between the various manufacturers uniform as is doubtless so in the present case. In view of the special nature of the present case it thus certainly does not seem possible to cite the Metro judgment as authority for the view that the Commission wrongly held that competition was affected within the meaning of Article 85 (1).

2. The further question then arises whether the Commission in assessing the distribution system for manufactured tobacco in Belgium in fact sufficiently and correctly took account of all the essential circumstances and accordingly rightly found a perceptible restriction on competition within the meaning of Article 85 (1). In that respect the applicants, as is well known, referred to the special circumstances of competition characterizing the market for manufactured tobacco. For them the determining feature is the levying of a high proportional tax based on the retail sale price fixed by the manufacturer or importer and that means that competition by undercutting prices is limited by a minimum tax. Further the rules applicable in Belgium concerning price review did not necessarily allow price increases and as regards manufactured tobacco the fixed price rule of Article 58 of the Belgian Law of 3 July 1969 applied there. That rule has already played a part in Case 13/77 GB-Inno-BM v Vereniging van de Kleinhandelaars in Tabak [1977] ECR 2115. Moreover it must be borne in mind that according to Belgian law it is not possible to acquire various tax labels for one brand of cigarettes and that health provisions also influence competition. In the applicants' view the Commission did not or did not properly take that into account. In its assessment of the perceptibility of the restriction on competition it took no account in particular of the fact that the scope for competition was already substantially restricted by the said rules — some were even of the opinion that competition was practically excluded — and that distortion of competition caused by the government which prevented workable competition must be countered by measures governing the market on the part of the firms concerned. (a) In my view it is expedient to begin the inquiry into this dispute with a short exposition of the assessment by the Commission of the measures governing the distribution of manufactured tobacco from the point of view of the law on competition as set out in the decision. Although the inquiry will cover all such measures, nevertheless it will be necessary to conclude with some special observations on the earlier measures.

(aa) The earlier measures

— First the Commission sees in the classification of dealers into categories and the determination of certain profit margins for them a restriction on competition between manufacturers in relation to the profit margins granted by them. Further it also considers that there is a restriction on the scope of competition for wholesalers. This is because, since the criteria for classification did not take account of the other services and efforts on the part of individual dealers, there was accordingly no competition as regards the services rendered for manufacturers and because the wholesalers did not compete with one another in fixing their resale prices.

— The Commission regards the adherence to the sale prices for wholesalers laid down by the manufacturers and to the resale prices for retail traders so laid down as a further restriction on price competition which would have been possible for one and the same brand.

— The Commission further regards the restriction placed on the number of wholesalers eligible for approval as constituting a barrier to market entry for those who were not approved.

— The Commission regards the fact that approved wholesalers were prohibited from supplying other wholesalers and certain retailers as preventing intermediaries from making certain sales and improving their position on the market; further their customers were prevented from obtaining larger quantities on more favourable terms.

— The Commission points out that the fixing of maximum credit terms for wholesalers has effects on the profit margins of manufacturers and dealers.

— Finally the Commission criticizes the requirement that retailers should stock a minimum range of brands inasmuch as this prevented them from pushing a particular brand and forced them to tie up their working capital in stocks of various slow-moving brands.

(bb) The Commission considers in the same way the similar type of measures adopted by the recommendation.

— As regards the classification of dealers into categories and the fixing of profit-margins the Commission also speaks of manufacturers and dealers being subject to restraints on competition. In so far as the number of brands sold is significant for classification, that is to say, a certain requirement to sell a range of brands, this is said, just as in the case of the earlier measures, to constitute restriction on competition for those dealers.

— The Commission takes the view that the end-of-year rebates system effectively stifled all competition in this field between manufacturers. It moreover stresses that because the rebate is based on the total turnover with all manufacturers there is no incentive for intermediaries to make greater competitive efforts with a view to obtaining improved benefits from manufacturers or to take their custom exclusively to one manufacturer quite apart from the fact that such a system imposes a financial burden on any manufacturer wishing to enter the market and thus makes market entry more difficult.

— Finally it is observed that the uniform determination of terms of payment has the effect of preventing competition in this area just as did the corresponding measures of the earlier system.

(b) Since in the applicants' view — and the Commission did not basically challenge this — any judgment in relation to the restrictions on competition depends on certain governmental rules and practices influencing the market — the manufacturers in this respect speak of compulsion to which traders are subject — it seems useful first of all to set them forth in detail and on the basis of the factors which came to light in the proceedings to attempt an assessment of their effects.

(aa) The Belgian tax system

The tobacco trade is characterized by a high proportional tax which is calculated on the retail price fixed by the manufacturer or importer, who is the taxpayer. As we learned at the hearing, this was always so. Nothing changed in that respect after the adoption of the Council Directive of 19 December 1972 on taxes other than turnover taxes which affect the consumption of manufactured tobacco (Official Journal, English Special Edition 1972 (31 December), p. 3). According to that, for the first stage of harmonization the specific excise duty might not be lower than 5% to which Belgium has kept; the same rate applied to the second stage albeit value added tax was then included. Furthermore it does not seem that in the foreseeable future there will be any greater shifting in the relationship between proportional excise duty and specific excise duty in favour of the latter. In that respect I refer to Directive No 77/805 with which the second stage of harmonization began on 1 July 1978 and to the observations at the hearing on the foreseeable further development as regards this issue.

The decisive effect of such a system of taxation is that any change in the cost factors other than the excise duty and value added tax, which is also proportional, has a multiplicative effect upon the retail price; in this way, as the applicants explain, the significance of any competitive dealing is multiplied. In this respect it is common to speak of a “multiplier”. As regards the Belgian system it falls between a factor of 4 and 5 and, as was shown, between 1972 and 1978 it showed no tendency to diminish, as would accord with the aim of harmonization, but rather did it increase. The applicants, and the Commission too at the hearing, impressively demonstrated in detail with the aid of illustrative figures what that meant in real terms economically. Thus the increase in one cost factor such as the manufacturers' share or the dealers' margin leads to a disproportionately sharp increase in the retail price which in the case of different profit margins and a correspondingly different breakdown of the retail price would lead to a very great competitive advantage for the forms of distribution which are less cost intensive. On the other hand a reduction in the cost factors would lead to a disproportionately sharp reduction in the retail price, because any concession by the manufacturers or dealers would be multiplied by a reduction in excise duty. This justifies speaking of an effect distorting competition to the disadvantage of cost-intensive products, such as new brands, small brands, brands of small manufacturers, and to the disadvantage of cost-intensive forms of distribution. This is moreover expressly recognized in the recitals in the preamble to Directive No 72/464; it was said there that the taxes affecting consumption existing at the time on tobacco goods were not neutral from the point of view of competition but were likely to distort the conditions of competition whether at national level or at Community level. The Economic and Social Committee discusses that in its opinion on the proposal for the Fifth Council Directive on taxes other than turnover taxes which affect the consumption of manufactured tobacco (Official Journal C 204 of 30 August 1976, p. 1). The distortion of competition is to a certain extent increased by the fact that Article 10 of Directive No 72/464 provides for the introduction of a minimum excise duty, as has happened in Belgium, the amount of which may not be higher than 90% of the aggregate amount of the proportional excise duty and the specific excise duty on the most popular brands of cigarettes. That obviously prevents the multiplier effect applying downwards in favour of cheaper products.

In such circumstances the manufacturers are in practice prevented from making price reductions having regard to trade stocks. Because dealers will not forego their margins, trade stocks would have to be disproportionately — that is to say many times what the manufacturers are prepared to forego — relieved of burdens at the expense of the manufacturers or the latter would have to take the goods back for the purpose of tax allowance and for fresh price labels to be attached, which is excluded on the ground of costs.

In such circumstances in which products burdened with high costs have only considerably reduced chances in the market because of the multiplier effect in increasing the price, there is obviously another consequence, namely a levelling of squeezing effect in the field of the manufacturers' share and the distribution costs. This is shown by the fact that 80% of the cigarettes sold in Belgium fall within or below the most popular price range; this was at one time BFR 41 whilst the cheapest cigarettes cost BFR 38. Reference may also be made in that respect to the table to be found on page 81 of the Commission's rejoinder according to which the part of the sale price of cigarettes for which the industry and the trade are responsible is lowest in Belgium of all Member States with the exception of Luxembourg. Moreover reference in this respect may be made to extracts from a report of the English Price Commission to be found on page 18 of the reply in Case 215/78 according to which the multiplier effect of a high proportional excise duty — the report mentions one of 30% — involves the necessity of keeping the costs as low as possible.

Accordingly it may be assumed that a system of excise duty with a very high proportional component considerably restricts the scope of competition by traders and is associated with distortions of competition which cannot be overlooked in applying Article 85 (1).

(bb) The Belgian price review provisions

According to the Arrêté Ministériel [Ministerial Order] of 22 December 1971 price increases must be notified to the Minister for Economic Affairs two months before they are to take effect. The Minister makes a recommendation which has the effect that the price increase must be postponed if it exceeds the scope laid down in the recommendation. Having regard to that rule the slowing-down effect of which cannot be denied and having regard to the assessment of what it does, two circumstances are particularly significant in the tobacco sector. The rules are obviously scrupulously and strictly applied because they influence the price index which plays an important part in many sectors. The Finance Minister is also involved in the