OPINION OF ADVOCATE GENERAL

DARMON

delivered on 7 July 1992 ( *1 )

Summary

The market for wood pulp The product The producers The customers Announced prices and transaction prices Trends on the pulp market Procedure and decision I — Procedural submissions A — The decision embodies complaints which are not referred to in the Statement of Objections (1) The Statement of Objections did not refer to concertation on transaction prices (2) Duration of concertation (a) Duration of the infringement until the date of the Statement of Objections (b) Duration of the infringement established for certain producers (3) Identity of the producers involved in the concerted practice (4) St Anne's participation in Fides B — The evidence on which the decision is based (1) Transaction prices (2) The documents relating to Fides C — The refusal to organize a joint administrative hearing D — The failure to consult the Advisory Committee on Restrictive Practices and Monopolies Conclusion II — ‘General’ concertation on announced prices A — The concept of concerted practices B — Evidence of a concerted practice on announced prices for wood pulp (1) Parallel conduct of the producers 1.1. Parallelism of announced prices 1.2. The system of price announcements 1.2.1. The system of price announcements created artificial transparency on the pulp market and constituted a system for exchanging information between producers (a) The role of customers in the dissemination of information on announced prices a.1 Integrated producers a.2 The role of important customers a.3 Common customers a.4 Horizontal communication between purchasers (b) Common agents (c) The trade press 1.2.2. The system of quarterly announcements (a) The quarterly announcements mechanism is said not to be necessitated by objective market conditions a.1 Quarterly basis of price announcements a.2 The use of the US dollar by non-United States producers (b) Simultaneous price announcements 1.3. Parallelism of announced prices: evidence of concertation on the pulp market? 1.3.1. The Commission's analysis 1.3.2. The expert's report ordered by the Court (a) The expert's report is said to oversimplify the Commission's reasoning (b) The economic model used by the experts (c) The alleged failure to examine the level of prices (d) The period from 1975 to 1977 (e) The different aspects of price uniformity e.1 Uniform prices for the same grade of pulp e.2 Uniform prices for different qualities of pulp e.3 Uniform prices for different customers buying differing quantities e.4 Uniform prices in US dollars for customers in different countries (f) Concertation or market conditions? f.1 Undertakings that were not involved in the procedure f.2 Changes in market shares (g) The pulp market before 1975 and after 1981 g.1 The market before 1975 g.2 The market after 1981 Conclusion 1.4. The statement of reasons in the decision (2) Direct and indirect exchange of information III — Concertation within KEA IV — Concertation within Fides V — The clauses prohibiting export and resale VI — Effect on trade between Member States VII — The alleagation of discrimination VIII — The undertaking IX — The fines (1) Discrimination (2) The amount of the fines X — Costs

Mr President,

Members of the Court,

1. Last but not least... For several reasons, that is the expression which most readily comes to mind when delivering my Opinion in this, the ‘wood pulp’ case. First of all, because it is the last competition case brought by undertakings to be decided by the Court at first and last instance: the criterion adopted for the allocation of cases pending before the Court of Justice at the time of the establishment of the Court of First Instance meant, in view of the stage of the proceedings reached at the time, that this case would be heard by the Court of Justice. Secondly, because this Opinion and the Court's judgment will constitute the last stage of a long drawn-out procedure whose salient features were, in particular, a hearing in January 1988, an initial judgment of the full Court on 27 September 1988 rejecting the submission relating to the extraterritorial scope of Community competition law, the hearing in 1990 of the first ‘accountancy’ experts followed, in November 1991, by the hearing at which every aspect raised in the applications was considered and in which the ‘economics’ experts were heard. However, neither this case nor this last stage are by any means of little account. The quite vast dimensions of this case, in terms of both the complexity and the sheer volume of the arguments put forward, as well as the number of applicants, make it anything but ordinary.

2. Inevitably, I have had to resign myself, in order to take account of manifold objective constraints and of the concern to keep this Opinion within reasonable limits, to neglecting certain aspects of those arguments where the reasons for the solution which I shall propose to the Court would seem not to be affected thereby.

3. Before I proceed to examine a case which has itself helped to stimulate demand for wood pulp in the Community as a result of the sheer volume of documents produced, it is necessary to recall the characteristics of the market for wood pulp, followed by the main features of the procedure and of the contested decision.

The market for wood pulp

The product

4. The contested decision is concerned with bleached sulphate pulp used in paper manufacturing and offered on the open market (‘market pulp’). There are other processes for the production of pulp (chemical or mechanical) but sulphate pulp is best in quality. It is obtained by the chemical processing of cellulose in a two-stage process. To begin with, the first stage leads to the production of unbleached (brown) sulphate pulp which is used in the manufacture of packaging material (bags, boxes etc). Next, in order to be used in the manufacture of finer papers, (newsprint, writing paper) requiring, in particular, a high degree of brightness, the pulp is bleached chemically. That process has the advantage of consuming less energy and causing less pollution than other processes. In addition, practically all types of wood can be used in the manufacture of bleached sulphate pulp. Consumption of such pulp has grown in recent years and, according to the decision, accounted for approximately one-third of the market in 1980.

5. There are several types of bleached sulphate pulp whose classification depends on the type of tree from which it comes. The main distinction is between softwood pulp and hardwood pulp. The two categories have different properties: softwood pulp has longer and more resistant fibres. Hardwood pulp, which has shorter fibres, is used for the manufacture of soft paper, which is not so strong. Softwood pulp is considered to be of better quality than hardwood pulp. Within each category, moreover, there is a difference according to whether the pulp was produced in northern or southern latitudes. Generally speaking, hardwood and softwood from northern latitudes are considered better in quality than those from southern latitudes. Since 1978 there have been four price levels for those products, the highest prices being paid for- northern softwood and the lowest for southern hardwood.

6. In view of the properties of the different categories of pulp, paper manufacturers generally use a mixture of types in order to obtain paper of the specific grade required.

7. Within any pulp category, pulp is very largely interchangeable. In contrast, there is less interchangeability between the different categories in the short term. A switch in category is likely to be very costly for the paper manufacturer; it is a relatively long process requiring trials and possibly even conversion of equipment.

The producers

8. Bleached sulphate pulp is produced by some 800 producers scattered in over 30 countries. A major part of the pulp is used by the producers (or their subsidiaries). The pulp which they sell on the market is known as ‘market’ pulp, it should be recalled, and it is this which forms the subject-matter of the contested decision. According to the decision, total output of bleached market pulp amounted to approximately 18 million tonnes in 1981. Canada was the leading producer (with more than 6 million tonnes), followed by the United States (with more than 4 million tonnes), Sweden (with 2.5 million tonnes) and Finland (with 1.6 million tonnes).

9. According to the decision, there are more than 50 firms which sell market pulp in the Community. For their part, some of the applicants emphasize that pulp is sold in the Community by 115 firms and that it comes from 18 countries.

10. As far as total turnover is concerned, the United States and Canadian producers are larger than the Swedish and Finnish producers, who are the traditional suppliers of the European market to which they sell twothirds of their output. The market was penetrated by Canadian and United States producers in the 1950s. Exports from the United States grew substantially in the 1970s. The Community market does not have the same importance for the North American producers as it has for the Swedish and Finnish producers. The main outlet for Canadian and United States producers is the United States domestic market. From their point of view, therefore, the Community market is used primarily to offset cyclical fluctuations on the United States market.

11. The tendency towards vertical integration is particularly marked in the pulp industry: many pulp producers also manufacture paper or hold sizeable shares in paper mills. ( 1 )

12. The cost structure ( 2 ) varies according to the areas in which production is located. Generally speaking, wood costs are substantially higher in Finland and Sweden than in the United States and Canada. However, transport costs are said to be higher for pulp from the latter countries than they are for pulp from Scandinavia. Furthermore, the Commission and some of the applicants consider that fixed costs are high whereas the second group of experts, relying on the figures set out in the decision, ( 3 ) have instead concluded that the percentage of those costs is relatively small in relation to variable costs.

13. The construction of a new pulp mill requires very large capital investments and a long period for its completion. Pulp mills are installed in the vicinity of forestry resources.

14. The decision emphasizes that between 1975 and 1981 the capacity utilization ratio and level of stocks differed widely not only betwen different countries but also between the producers of one country.

15. The Finnish producers are members of Finncell, ( 4 ) an association founded in 1918 whose object is to sell in its own name the wood pulp manufactured by its members. Finncell fixes the export prices and divides orders amongst its members.

16. During the period covered by the decision, all the United States applicants, ( 5 ) with the exception of Bowater, were members of the Pulp, Paper and Paperboard Export Association, commonly known as the ‘KEA’, corresponding to the initials of its former name (Kraft Export Association). It was established under the Webb Pomerené Act, a United States statute which permits the formation of associations for the promotion of exports without infringing United States antitrust legislation. The Act authorizes producers, in particular, to exchange information on the marketing of their products abroad and to agree on export prices.

17. As a rule, a single producer supplies some 50 customers in the Community. Finncell is said to have the largest number of customers (290).

18. The producers market the pulp in the Community through their subsidiaries, sales offices, branches or agents. Some agents represent several producers.

The customers

19. In the first place, it should be noted that the price of the pulp accounts for approximately 50% to 70% of the cost of paper. According to the decision, the Community market is the most important market for bleached sulphate pulp and in 1981 it accounted for one-third of global sales. In the same year Community pulp production amounted to approximately 700000 tonnes, whilst total sales in the Community amounted to some 6 million tonnes. The main purchasers were Germany (approximately 2 million tonnes), France (approximately 1.3 million tonnes) and the United Kingdom (approximately 1.1 million tonnes).

20. Bleached sulphate pulp is bought by more than 800 paper manufacturers operating in the Community. According to the figures given by some of the applicants, ( 6 ) which have not been contradicted by the Commission, in the mid 1970's just 17 purchasers accounted for 50% of pulp purchases and 41 of them accounted for 80%. Purchasers of pulp are often linked with pulp producers whose headquarters are located outside the Community.

21. The majority of pulp sales are made on the basis of long-term supply contracts which are concluded for periods ranging from three to five years and frequently contain an automatic renewal clause (known as ‘evergreen renewal provisions’). Those contracts generally provide that the seller is to reserve a particular tonnage of pulp for the purchaser on a quarterly basis at a price which is not to exceed the price announced in the period prior to the commencement of the quarter. It is common ground that the customer does not necessarily purchase the entire quantity reserved for him.

22. The pulp sold on the spot market accounts for a negligible proportion of consumption.

23. In order to obtain the desired mixture and to ensure availability of supplies, purchasers place their orders with several producers, who may be located in different areas. Furthermore, purchasers of pulp linked to a producer are led to purchase certain types of pulp from other suppliers.

Announced prices and transaction prices

24. According to a well-established practice, a few weeks or, at times, a few days before the beginning of a quarter the producers communicate the prices which they wish to obtain for the types of pulp marketed by them. Those prices, which include the cost of transportation to European ports, are generally fixed in different ways according to whether they are for deliveries to ports in North-West Europe (zone 1) or to Mediterranean ports (zone 2). Those announcements are made to the producers' customers, potential customers, agents and sales offices. For the entire period covered by the decision after 1976, those prices have been quoted in United States dollars by all the producers concerned. The prices are published forthwith in the specialist press.

25. Announced prices are to be distinguished from transaction prices, that is to say the prices actually invoiced to customers. Transaction prices may be identical to announced prices or may differ (where rebates, payment concessions or other discounts are granted).

Trends on the pulp market

26. The pulp market is largely dependent on demand for paper and board, which in turn is influenced by changes in the general economic situation.

27. The table set out below ( 7 ) shows changing patterns of consumption and importation of bleached sulphate pulp in the Community. TABLE 2 Consumption and importation of bleached sulphate pulp in the EEC (1 000 tonnes) Year consumption IMPORTATION Total EEC From Canada % of Total From the USA % of Total From Sweden % of Total From Finland % of Total 1974 4571, 7 4767, 5 1394, 0 29, 24 644, 0 13, 51 1718, 6 36, 05 466, 8 9, 79 1975 3850, 8 3371, 6 971, 6 28, 82 587, 0 17, 41 1180, 1 35, 00 282, 7 8, 38 1976 4408, 8 4708, 0 1359, 2 28, 87 718, 8 15, 27 1568, 7 33, 32 393, 0 8, 35 1977 4439, 1 4636, 8 1395, 8 30, 10 696, 2 15, 01 1406, 3 30, 33 437, 4 9, 43 1978 6136, 0 5546, 7 1664, 7 30, 01 781, 9 14, 10 1523, 5 27, 47 669, 9 12, 08 1979 6540, 8 5929, 3 1565, 9 26, 41 934, 9 15, 77 1571, 2 26, 50 836, 3 14, 10 1980 6774, 0 6178, 8 1721, 3 27, 86 1090, 3 17, 65 1340, 3 21, 69 838, 8 13, 57 1981 6598, 5 6140, 9 1568, 6 25, 54 1085, 0 17, 67 1371, 0 22, 33 804, 8 13, 11 1982 6406, 5 5872, 9 1427, 8 24, 31 1127, 6 19, 20 1143, 5 19, 47 700, 3 11, 92

28. The very strong demand for paper pulp in 1973 — when there were shortages — began to fall at the end of 1974 and slumped in 1975. During that year the capacity utilization ratios of the United States, Swedish and Finnish producers declined significantly. The same was true in the case of those Canadian producers whose production was affected by strikes. Still in 1975, the Swedish Government introduced a stock incentive scheme as a result of which Swedish producers' stocks grew to colossal proportions. In 1976 demand for pulp in the Community recovered to almost the 1974 level.

29. During 1977 consumption stagnated (+0.7%) and there was a very slight decline in imports (-1.5%). In 1978 consumption and imports began to rise appreciably, a trend which continued throughout 1979 and peaked in 1980. In 1981 there was a slight fall in demand which continued into 1982.

30. According to the decision, the trend with regard to announced prices on the Community market may be summarized as follows: 1975 ( 8 ) and 1976 were characterized by complete stability until the third quarter of 1977 ( 9 ) which witnessed the beginnings of a decline that became more pronounced in the following quarter and the first two quarters of 1978. That was when announced prices fell to their lowest level during the period covered by the decision. In the third quarter of 1978 announced prices recovered slightly, and rose steadily in the fourth quarter. Subsequently, in each of the following quarters until the second quarter of 1980, announced prices continued to increase. They then remained stable until a further increase in the third and fourth quarters of 1981, which, according to the Commission, was not ‘accepted’ in all the Member States.

31. It should be pointed out at this juncture that the Commission considers that during the period in question the producers almost simultaneously announced similar prices for similar periods and invoiced identical transaction prices, a finding which, in its view, can be explained only by the existence of a concerted practice. However, the Commission states that in 1977 and 1978 transaction prices differed significantly from announced prices, since according to the decision, weak demand led to greater competitive pressure which made it impossible for the undertakings to charge unrealistic concerted prices.

32. It should be noted that in April 1978 the Commission initiated an antidumping procedure concerning imports of pulp originating in Canada, the United States, Finland and Sweden, ( 10 ) which was terminated at the end of the same year. ( 11 )

Procedure and decision

33. In 1977, after carrying out investigations under Article 14 of Regulation No 17, ( 12 ) the Commission stated that it had discovered the existence in the wood pulp industry of a number of restrictive practices and agreements which had not been notified under Articles 4 and 5 of that regulation.

34. On completion of those investigations, on 29 July 1981 the Commission commenced on its own initiative a proceeding under Article 3(1) of Regulation No 17 against 57 producers or associations established in the United States, Canada, Finland, Norway, Sweden, the United Kingdom, Spain and Portugal. On 4 September 1981 the Commission served its Statement of Objections on them. They were alleged to have participated in price fixing by way of concerted practices, in decisions by associations, in common organizations, in joint and common agency agreements, in agreements on sales conditions and in exchanges of information. I have deliberately confined myself to reproducing the terms of the letter accompanying the Statement of Objections since the contents and scope of the latter are the subject of dispute between the parties.

35. The hearing of the producers was held by the Commission in March/April 1982. On 1 September 1982 the Commission requested the addressees of the Statement of Objections to provide additional information under Article 11 of Regulation No 17.Taking the view that it was necessary, in the light of the observations made by the producers in reply to the Statement of Objections and at the hearing, to update and complement the information relating to the facts on which the proceeding was based, ( 13 ) the Commission asked the producers, in particular, to submit for the period from 1974 to the second quarter of 1982 the invoices and documents concerning transaction prices that differed from announced prices. The producers accordingly forwarded over 100000 invoices to the Commission.

36. During the first six months of 1982, the producers and the Commission entered into negotiations concerning an undertaking by the producers to change their conduct on the Community market, particularly as regards the choice of the currency in which prices were to be announced or invoiced and the period of validity of price announcements. The Commission's aim was to reduce what it describes as ‘artificial transparency of the market’ in order, still according to the defendant, to make concertation on prices more difficult between the producers. ( 14 ) That undertaking was initially intended to serve as a basis for an amicable settlement of the matter (as the Commission acknowledged at the hearing in reply to a specific question in that regard). The discussions continued into 1983 and 1984, raising difficulties concerning, it would seem, both the actual content of the undertaking and the fact that certain producers consistently refused to sign it, in particular because they rejected any charge that they were engaging in a concerted practice.

37. At the beginning of December 1984 the Swedish and Finnish producers signed the undertaking in the terms desired by the Commission, which included ‘currency’ clauses that were rejected by the North American producers at the time. According to those producers, on 11 December 1984 the Commission advised them that an amicable settlement was out of the question unless they gave an undertaking identical to that signed by the Scandinavian producers, no later than the following morning. Some of those producers thereupon agreed to give the undertaking, but were allegedly informed on 12 December that on the previous evening it had been resolved to adopt a decision.

38. On 15 December 1984 the press ( 15 ) named the producers concerned and gave details of the fines that would be imposed on them by a forthcoming Commission decision. In imposing those fines, the Commission was said to have taken into account the undertaking signed by the Swedish and Finnish producers with regard to their future conduct.

39. On 18 December 1984 the North American applicants were informed by the Commission that it would not go back on its resolve to adopt a decision and that the normal procedure would be followed leading to the notification of the decision. ( 16 ) The producers were also given until 18.00 hours (Belgian time) on the same day to agree to an undertaking identical to that which had been agreed by the Swedish and Finnish producers in order to qualify for a reduction in the amount of the fines in the same proportion. That period seems to have been extended by few hours. All the applicants but three (Bowater, St Anne and International Pulp Sales) agreed to the undertaking and accordingly had their fines reduced by 90% in the decision which was adopted on 19 December 1984 in relation to 43 of the addressees of the Statement of Objections. ( 17 ) Fines of between ECU 50000 and ECU 500000 were imposed on 36 of those addressees. ( 18 ) Six addressees of the decision have their registered offices in Canada, eleven in the United States, twelve in Finland, eleven in Sweden, one in Norway, one in Portugal and one in Spain. The Norwegian, Portuguese and Spanish addressees, as well as four Swedish producers, two Finnish producers and a United States producer, were not fined.

40. The Commission found that the addressees had committed a number of infringements. First, it was found that practically all of them had concerted on prices for bleached sulphate wood pulp announced for deliveries to the Community ( 19 ) during the whole or part — depending on the producer — of the period from 1975 to 1981, and on actual transaction prices for the same pulp charged on the markets of five Member States in the whole or part — depending on the producer — of 1975, 1976, and 1979 to 1981. ( 20 ) Secondly, the addressees who are members of KEA were found to have concerted on announced prices and on actual transaction prices for deliveries of pulp, and to have exchanged individualized data concerning prices for those deliveries. ( 21 ) Thirdly, certain addressees (Swedish producers, Finncell, other European producers and a Canadian producer) were found to have concerted on announced and transaction prices and to have exchanged within the framework of Fides ( 22 ) individualized data concerning prices for deliveries of bleached sulphate hardwood pulp to the Community from 1973 to 1977. ( 23 ) Finally, an infringement was established against some of the addressees of the decision inasmuch as they had applied, in contracts for the sale of wood pulp to customers in the Community, clauses prohibiting export or resale of wood pulp purchased by the latter. ( 24 )

41. The undertaking is annexed to the decision which specifies that the fines imposed on the producers who have signed it have been substantially reduced.

42. So far as the decision is concerned, it is necessary to recall certain aspects of the Commission's findings regarding ‘general’ concertation on announced prices and transaction prices, which is referred to in Article 1(1) and (2) of the decision.

43. The operative part of the decision does not specify precisely the producers between whom concertation took place. The producers mentioned therein are said to have engaged in a concerted practice in certain specified years. The Court asked the Commission to give details of its findings, which it did by producing lengthy tables that are set out in the addendum to the Report for the Hearing.

44. It would appear that the ‘Commission concluded that concertation had taken place at least between those producers who announced (or sold at) a common price for a given product in a given area for a given quarter.’ ( 25 )

45. In that regard, the details of the Commission's findings relating to prices are set out in Tables 6 and 7 annexed to the decision.

46. Table 6 gives the prices that were allegedly announced by the producers concerned for each quarter of the period covered by the decision.

47. Table 7 gives the transaction prices. The version published in the Official Journal does not mention any names. Each producer was sent a copy of the decision in which Table 7 omitted the names of its competitors and gave only that producer's own prices. The Court had received during the written procedure the table setting forth the transaction prices of all the producers.

48. In April 1985, 28 of the 43 addressees of the decision brought between them a series of ten actions for annulment. ( 26 )

49. In view of the fact that on 21 February 1989 The Mead Corporation (Case 114/85) withdrew from the proceedings and that, by judgment of 27 September 1988, the Court declared the decision void in so far as it related to KEA (Case 114/85), the number of applicants has been reduced to 26, namely one association (Finncell) and 25 producers. The Swedish producers did not bring proceedings.

50. The applicants seek the annulment of the decision adopted by the Commission against them or, failing that, a reduction in the fines imposed. In addition, some of the applicants have asked the Court to annul or discharge them from the undertaking.

51. It should be borne in mind that in its judgment of 27 September 1988 the Court rejected the submission alleging that the Community lacked jurisdiction in relation to producers, such as the applicants, established outside the Community, on the ground that the conduct which they are alleged to have engaged in took place within the common market.

52. By order of 25 November 1988 the Court decided to obtain an expert's report relating essentially to an analysis of the documents concerning the announced prices and the transaction prices; on 16 March 1989, the Court appointed the firm of Moret and Limperg to draw up the report together with Mr Whitehouse.

53. I refer to the Report for the Hearing for the questions formulated by the Court and the written conclusions of the experts, who were heard by the Court on 5 June 1990.

54. The Court subsequently asked Mr Fishwick and Mr Cockram to prepare an expert's report designed, in particular, to describe and analyse the characteristics of the wood pulp market during the period covered by the decision and to give their opinion, in the light of those characteristics, on whether and for what reasons the natural operation of the wood pulp market should lead to a differential price structure or to a uniform price structure. I shall deal at some length with the experts' conclusions, which are set out in the addendum to the Report for the Hearing, in my analysis below.

55. As a preliminary remark, let me point out that some applicants raised an objection under Article 91(1) of the Rules of Procedure at the same time as they instituted these proceedings. They have asked the Court, in substance, for an order restraining the Commission from using or invoking in these proceedings the invoices communicated to the latter after the producers were heard. According to those applicants, the Statement of Objections did not contain any allegation of an infringement involving concertation on transaction prices.

56. In their view, the Commission based the findings in its decision relating to concertation on transaction prices exclusively on an analysis of the invoices forwarded by the addressees after they had been heard. During the administrative procedure they were denied access to those documents by the Commission. The latter cannot remedy that irregularity by giving the producers an opportunity to consult those documents before the Court. That is not the function of the Court, which would be obliged to consider complex facts and rule on matters which the Commission ought normally to have examined during the administrative procedure on the basis of the observations submitted by the producers. The defendant cannot therefore make use of that evidence before the Court.

57. The Court has reserved for the final judgment the decision on that interlocutory application which the Commission considers inadmissible on the grounds that it constitutes in fact a submission on the substance of the case, and is, moreover, irrelevant, and not a procedural issue or an objection. Although I do not consider it essential to state my views in that regard, let me point out that the applicants' reasoning in connection with the interlocutory application is substantively identical to that relied upon in support of the main applications themselves inasmuch as the latter seek the annulment of the decision with regard to concertation on transaction prices on the ground that the rights of the defence have been infringed. I would therefore suggest that the Court begin by considering the applicants' submissions concerning the irregularities in the administrative procedure which relate to transaction prices.

58. I shall examine in turn: I. Procedural submissions II. ‘General’ concertation on announced prices III. Concertation within KEA IV. Concertation within Fides V. Export and resale bans VI. Effect on trade between Member States VII. The allegations of discrimination VIII. The undertaking IX. The fines X. Costs

I — Procedural submissions ( 27 )

59. All the applicants have criticized the procedure followed by the Commission in relying on complaints which, on examination, let it be said at once, reveal certain manifest irregularities affecting much of the contested decision.

60. Before we examine those irregularities, it should be noted that Bowater has pointed out that the letter notifying the decision bears a date on which the signatory was no longer the Commissioner responsible for competition. The Commission explains that anomaly by the Secretariat General's heavy workload at the time, in particular as a result of the large number of decisions despatched at the end of 1984.

61. It is scarcely satisfactory for the Court to be confronted with a document which was not signed on the date which it bears. However, that finding, which is only to be deplored, does not seem to me to have any effect on the validity of the decision itself. That, it seems to me, is the conclusion which must be drawn from the Court's case-law, according to which ‘irregularities in the procedure for notification of a decision are extraneous to that measure and cannot therefore invalidate it.’ ( 28 ) The Court undoubtedly takes the view, however, that such irregularities are capable of preventing the period for lodging an application from starting to run. But it cannot be disputed in this case that the applicants ‘had full knowledge of the text of the decision and... exercised [their] right to institute proceedings within the prescribed period’. ( 29 ) Accordingly, ‘the question of possible irregularities concerning notification ceases to be relevant’. ( 30 )

62. I shall examine in turn the irregularities alleged with regard to the existence of complaints embodied in the decision and not referred to in the Statement of Objections, — the use in the decision of evidence not communicated to the parties, — the refusal to organize a joint hearing of the parties, — the failure to consult the Advisory Committee on Restrictive Practices and Monopolies after some producers had agreed to the undertaking.

A — The decision embodies complaints which are not referred to in the Statement of Objections

(1) The Statement of Objections did not refer to concertation on transaction prices

63. The applicants found to have concerted on transaction prices ( 31 ) (that is to say the prices actually charged) claim that the Statement of Objections was concerned exclusively with concertation on announced prices. In embodying in its decision a distinct infringement relating to concertation on transaction prices, therefore, the Commission failed to observe the rights of the defence guaranteed in Article 4 of Regulation No 99/63 and in Article 19 of Regulation No 17, which provides that the only complaints which may be taken into account are those on which the undertakings concerned have been given an opportunity to make their views known. According to the producers, it was only in October 1984, that is to say two months before the adoption of the decision, that the Commission informed them that it would also make a finding of infringement relating to concertation on transaction prices.

64. The Commission counters those arguments primarily by reference to the wording of the Statement of Objections, which contains passages concerning concertation on both transaction prices and announced prices.

65. Before considering the passages in question, there is a point I wish to make. The defendant is obliged to rely both on passages in the ‘facts’ part of the Statement of Objections and on passages in the part headed ‘applicability of Article 85(1) of the EEC Treaty’. In the absence of a formal operative part, I consider that at least the latter part of the Statement of Objections should specifyin detail the infringements with which the addressees are charged.

66. In the light of those remarks, the fact that certain passages in the ‘facts’ part of the Statement of Objections refer to transaction prices ( 32 ) is, in my view, of only limited significance in determining whether concertation on those prices was envisaged.

67. As for the part headed ‘applicability of Article 85(1) of the EEC Treaty’, it refers to ‘concerted price-fixing practices pursued inter alia through the system of price announcements’. ( 33 ) Even though the expression ‘inter alia’ is underlined in the body of the text, it would require a considerable effort of the imagination to regard it as a reference to concertation on transaction prices. In any event, it is very much an implicit reference, to say the least.

68. Paragraph 54 et seq. of the Statement of Objections, in which the Commission analyses concerted price-fixing practices between the producers, call in question essentially the practice of price announcements and ‘other contacts between producers’. The only reference which may be relevant ( 34 ) in support of the Commission's contention is to be found in paragraph 66 which states that ‘the North American producers charged until 1978... the same price as the Scandinavian producers, except during the first half of 1977, when they granted rebates and increased their market share’. In any event, a reading of the Statement of Objections does not reveal any express and unequivocal reference to support the conclusion that a complaint was formulated regarding concertation on transaction prices.

69. However, the Commission maintains in its rejoinder that it is clear from the replies of certain producers to the Statement of Objections or at the administrative hearing that they had understood that concertation on transaction prices was meant.

70. I do not believe that the passages relied upon by the Commission in that regard conclusively bear out its argument. Admittedly, KEA itself considered that ‘the Statement of Objections is wrong in assuming that actual transaction prices did not fluctuate in accordance with the market’, and criticized that document, moreover, for stating that ‘actual transaction prices were the same as announced prices or so-called list prices’. It is also true that the Finnish applicants maintained that competition was extremely vigorous and had led to the fixing of widely differing transaction prices. Nevertheless, those assertions do not in any way establish beyond dispute that the Statement of Objections envisaged concertation on transaction prices. The argument that those prices differed from announced prices may constitute a defence to a charge of concertation on announced prices alone. Nor does the Commission gain more leverage by relying on passages in which, for instance, the Canadian producers state that ‘each of the Canadian respondents is charged with a concerted practice to fix price’ or Bowater denies participating ‘in any price fixing or price setting’. It would still be necessary to establish beyond doubt that the expression ‘to fix price’ covers concertation on transaction prices, and that is precisely what has to be proved.

71. Admittedly, the Commission's view that to distinguish between announced prices and transaction prices is not tantamount to considering that two wholly distinct concerted practices are involved would not seem to be altogether illogical.

72. However, is the uncertainty not the result primarily of the course of action taken by the Commission itself? In that regard, the decision found that concertation on prices charged and concertation on announced prices constituted two distinct infringements. Thus, for 1977 and 1978, no concertation on transaction prices was found whereas, for the same years, an infringement was established with regard to announced prices. In the decision, St Anne was found to have taken part only in concertation on announced prices, whilst other producers were alleged to have taken part in concertation on transaction prices alone. Furthermore, it is clear from the explanations of the Commission itself that the fines were determined by taking into account concertation on announced prices separately from concertation on transaction prices.

73. It must be stated that in the decision the Commission did indeed take the view that there were two distinct infringements, whereas in the Statement of Objections there was no express charge concerning the complaint regarding concertation on transaction prices.

74. There is a further consideration which tips the scales decisively in favour of the applicants' argument. In Annex VI to the Statement of Objections there is a table which in fact refers only to announced prices, as the Commission confirmed, moreover, at the hearing in reply to a specific question on that point. The Statement of Objections does not contain any annex comparable to Table 7 of the decision which sets out transaction prices. That difference between the Statement of Objections and the decision is in itself extremely revealing. Admittedly, the Commission maintains that in the Statement of Objections it had quoted the announced prices on the ground that those prices mostly corresponded to the transaction prices. ( 35 ) However, that argument runs counter to the Commission's line of reasoning. In support of its contention to the effect that concertation on transaction prices was envisaged in the Statement of Objections, the Commission points in particular to certain passages thereof which mention a difference for certain periods between announced prices and actual prices. ( 36 ) Annex VI to the Statement of Objections contains no mention of transaction prices for those periods. To accept that the Statement of Objections envisaged concertation on transaction prices, it would still have been necessary for the table in question to show, clearly at the very least, the periods in which, according to the Commission itself, they had differed from the announced prices.

75. As the Court has declared, the purpose of the Statement of Objections ‘is to enable those concerned to put forward their arguments in the context of proceedings initiated against them’. To that end, it must be possible for the addressee actually‘to take cognizance of the objections held against him’. ( 37 )

76. That function of the Statement of Objections would be largely disregarded in this case if the Commission's view were to prevail. The Court considers that the Statement of Objections satisfies the requirements laid down in Article 4 of Regulation No 99/63 where ‘it sets out, summarily indeed but clearly, the principal facts upon which the Commission relies’. ( 38 ) That requirement of clarity, which the Court has consistently recalled and verified, ( 39 ) is quite obviously not complied with when laborious explanations are needed to discern in the Statement of Objections the existence of a specific charge. It is essential for complaints which are brought to the attention of an undertaking to be precisely formulated ( 40 ) in order to enable the latter to present a full defence. In areas characterized by the complexity of the facts, the volume of information and the consequences of the procedures in question, the Court cannot allow those requirements to be satisfied by stretching the terms of the Statement of Objections which, in this regard, does not in any case contain an expressly formulated charge regarding concertation on transaction prices.

77. I would therefore propose that the Court hold that, by making a finding in its decision of an infringement regarding concertation on transaction prices which had not been clearly, precisely and expressly envisaged in the Statement of Objections, the Commission has failed to comply with its obligations under Article 4 of Regulation No 99/63 and Article 19 of Regulation No 17. That infringement should, in my view, lead to the annulment of Article 1(2) of the decision, as requested by the applicants concerned. In any event, my examination of the legality of the procedure in regard to the evidence on which the Commission relied in establishing concertation on transaction prices will lead to the same conclusion.

(2) Duration of concertation

78. A number of applicants claim that the duration of the infringement as found in the decision was longer than the period referred to in the Statement of Objections.

(a) Duration of the infringement until the date of the Statement of Objections

79. The decision establishes the existence of concertation until the date of the Statement of Objections, namely September 1981. Table 6 annexed to the decision shows the prices announced for the four quarters of 1981, whilst Table 7 shows the transaction prices for the first three quarters of that year.

80. The Canadian applicants and Bowater claim that the Statement of Objections covered a period which did not go beyond the second quarter of 1980.

81. The Commission maintains that the Statement of Objections covers the whole of the period from 1973 until the date of its notification, namely September 1981. The description of the market and the conduct of the addressees of the Statement of Objections, as well the assessment of that conduct, relate to the whole of that period. There is not a single passage in the Statement of Objections which confines to a shorter period the description of the facts relating to the involvement of each applicant in the infringements.

82. Let me point out in the first place that although the table set out in Annex VI to the Statement of Objections goes no further than the second quarter of 1980, there is a note expressly stating that prices were the same for the third and fourth quarters of 1980. At the very least, therefore, 1980 was covered in its entirety. But what about 1981? In my view, having regard to the information provided by the aforesaid table, a clear reference was necessary specifying that the infringement continued after the end of 1980 since prices for 1981 were not set out in Annex VI to the Statement of Objections. In maintaining that the Statement of Objections was never confined to a period shorter than that ending in September 1981, the Commission is, it seems to me, inverting the terms of the issue. The absence from Annex VI of any reference to 1981 should logically have been such as to exclude that period from the duration of the infringement, unless the Commission expressly stated otherwise in the Statement of Objections itself.

83. According to the defendant, however, the document ‘clearly’ calls in question the addressees' ongoing conduct.

84. I must voice serious reservations in that regard. There is not a single passage in the Statement of Objections which the Commission can properly rely upon in support of that contention, with the exception of paragraph 21 which reads ‘the table in Annex VI shows the prices announced by the... producers from 1974 to 1981’. The Court will gauge the weight to be attached to that statement from the fact that the table in question does not in fact contain any reference to prices after 1980. Furthermore, that sentence immediately precedes a long passage describing price trends for wood pulp over the period from 1974 to 1980. Accordingly, the statement in question in no way corroborates the Commission's contention.

85. The Commission also denies that it was raising a fresh issue by extending in its decision the duration of the infringement until the date of the Statement of Objections. The Commission simply found that the addressees of the decision had continued to engage in the same conduct until the date of notification, pointing out that the prices announced and charged between the third quarter of 1980 and the third quarter of 1981 were the same as those announced and charged during the second quarter of 1980. There is no rule of Community law which requires the Commission to use only the information at its disposal when it draws up the Statement of Objections. Furthermore, in submitting the invoices and documents relating to 1981 requested by the Commission in its letter of 1 September 1982 pursuant to Article 11 — covering, it should be borne in mind, the period from 1974 to 1982 — the applicants are said to have commented on the Commission's allegation that they had concerted on prices. The Commission's letter referred expressly to the Statement of Objections and to the administrative hearing, yet none of the applicants refused to submit invoices for the period after the second quarter of 1980 on the ground that that period was not covered by the Statement of Objections.

86. Let me point out first of all that the letter of 1 September 1982 seeking ‘to update and complement the information on the facts on which the... proceeding is based’ cannot in any event be equated with a Statement of Objections. Moreover, it seems to me particularly dangerous to infer from the attitude of the applicants, who did not express any reservations with regard to the transmission of the documents in question, implied confirmation that the Statement of Objections covered 1981.

87. As certain producers point out, they also submitted in their replies documents relating to the period subsequent to the Statement of Objections — third quarter of 1981/second quarter of 1982 — which, by definition, cannot have been covered by the Statement of Objections.

88. Besides, in response to the Commission's argument to the effect that ultimately the applicants should be taken to have been aware that the period subsequent to 1980 was covered by the Statement of Objections on the ground that they did not refuse to submit documentation in respect of that period, the producers maintain that they were trying to be cooperative on the assumption that the information would be used, in particular, for comparative purposes.

89. The Court has held that the duration of an infringement constitutes an ‘essential factor’ in the infringement, which the Commission must indicate ‘on the basis of the information available to it at the time when it formulates the Statement of Objections’, ( 41 ) although ‘the Commission may extend the period thus stated if supplementary information obtained during the administrative procedure so justifies, provided that the undertakings have had an opportunity to make their views known in that respect’. ( 42 )

90. In this case, by claiming the right to use information obtained during the administrative investigation, the Commission would thus seem to acknowledge that it was that investigation which yielded the information for the period subsequent to 1980. It was still necessary for the producers in question clearly to be given an opportunity to state their views in that regard, something which has not specifically been established in the Commission's observations to the Court.

91. I would therefore propose that the Court uphold the application submitted by the applicants concerned so far as concerns 1981, unless it adopts a purely exegetic argument based on the covering letter accompanying the Statement of Objections, according to which ‘it is proposed to require the firms concerned to terminate such infringements’. ( 43 )

(b) Duration of the infringement established for certain producers

92. IPS claims that the Statement of Objections envisaged infringements by IPS only in the period from 1974 to 1978 (with the exception of the first quarter of 1977), whereas the decision concerning IPS covers the period from 1975 to 1981.

93. In my view, that argument cannot be upheld. With regard to the period commencing in the third quarter of 1978, Annex VI to the Statement of Objections refers to the prices of ‘producers US’, and it is undisputed that IPS is a United States producer. Accordingly, the can to my mind be no denying the fact that IPS was alleged to have taken part in concertation on prices in the period subsequent to 1978. On the same grounds, the Court should reject the argument in which Bowater, also a United States company, denies that the Statement of Objections called in question its conduct for the period subsequent to the first quarter of 1978.

94. On the other hand, the Court should uphold Bowater's arguments with regard to 1975. Annex VI to the Statement of Objections does not mention Bowater's prices for that year, although it does specify those of the other United States producers for the same period, who are designated by name.

95. Bowater's absence from the list set out in Annex VI for 1975 is not disputed by the Commission. The Commission also acknowledges that it did not contradict Bowater when the latter stated, at the administrative hearing, as regards the period from 1975 to 1976, that it was not involved in a ‘process covering a period first of all where there is no complaint, or none against us separately’. The defendant considers, however, that a possible irregularity cannot lead to the annulment of the decision in that respect since, in view of the existence of convincing evidence for the period in question, it does not seem that the Commission's finding would have differed in substance if the complaints relating to 1975 had been couched in more specific terms in the Statement of Objections.

96. In my view, that suggestion is unacceptable: Bowater's conduct in 1975 was not in any event referred to in the Statement of Objections, if it is borne in mind that Annex VI does not give any of Bowater's prices for that year. Moreover, that annex, as we have seen, relates to announced prices whilst Bowater was found only to have participated in concertation on transaction prices in 1975. The applicant pointed out at the administrative hearing that it did not consider its conduct for that period to have been called in question. Since the Commission acknowledges that it refrained from challenging it in any way at the time, there cannot be any justification now in maintaining that the procedural irregularity is ‘covered’, as it were, in view of the evidence against Bowater for the period in question.

97. The Commission seems to be suggesting here that the Court should apply the doctrine of breach of essential procedural requirements.

98. It is true that in its judgment in Distillers ( 44 ) the Court considered it unnecessary to examine the procedural irregularities alleged by the applicant, pointing out that ‘the position would be different only if in the absence of those irregularities the administrative proceedings could have led to a different result’. ( 45 ) But it is necessary to specify what irregularities were at issue in that case. They related, in particular, to the failure to notify to the Advisory Committee the minutes of the applicant's hearing and matter supplementing the applicant's answer to the Statement of Objections, and to notify the complaint in full. The Court held that those procedural defects could not in any event have affected the decision inasmuch as it refused to grant exemption under Article 85(3) on the ground that as the price terms had not been notified to the Commission, they could not in any event be examined with a view to exemption.

99. The difference between the gravity of those irregularities and that of an infringement resulting from an impairment of the primary function of the Statement of Objections — namely to indicate precisely the complaints made against an undertaking in order to enable it to present its defence — is too obvious for there to be any need for me to draw attention to it here. Let me simply point out that the contention put forward by the defendant in these proceedings could ultimately lead to the formulation of complaints against an undertaking being deemed to serve no purpose if the Commission considered that sufficient evidence existed against that undertaking. That is precisely the consequence to which the Commission's position leads on the specific issue of the complaint that Bowater engaged in concertation in 1975, and I strongly advise the Court to reject it.

(3) Identity of the producers involved in the concerted practice

100. IPS considers that the Statement of Objections envisaged only its involvement in a concerted practice with the Scandinavian producers; in the decision IPS is alleged to have concerted on announced prices during certain periods with the Canadian producers and with other United States producers. In addition, so far as transaction prices are concerned, IPS claims that in the decision it is charged with concerting on southern hardwood pulp with producers whom the applicant ‘assumes’ are from the United States.

101. The Commission emphasizes that by calling in question ‘concerted practices between Scandinavian producers and North American producers’, the Statement of Objections also envisaged concertation within each of those two groups of producers. According to the defendant, if the Statement of Objections had called in question only concertation between Scandinavian producers on the one hand and North American producers on the other, the result would have been a type of concertation so extraordinary that it could have been described as fanciful. It would mean interpreting the Statement of Objections as covering a series of distinct concerted practices, each involving producers from two continents separated by thousands of kilometres, but never involving more than a single competitor from the same region, the same country or the same continent.

102. It is necessary to ascertain, therefore, whether the words ‘concerted practices between Scandinavian producers and North American producers’ covered only concertation between those two groups of producers, without calling in question concertation between producers within each of those groups.

103. In my view, the Commission's standpoint, outlined above, would seem to be appropriate. It clearly exposes the ‘unreasonable’ consequences of IPS's argument regarding the identity of the producers involved in the concertation established in the Statement of Objections. It is self-evident, however, that the words ‘concerted practices between Scandinavian producers and North American producers’ are not entirely free from ambiguity. But it is clear from the actual contents of the Statement of Objections, in my view, that both concertation between regional groups and concertation within those groups were meant.

104. Thus the following passage is to be found, as the Commission rightly emphasizes, under the heading in question: ‘C. Concerted practices between Scandinavian producers and North American producers. The relevant documents (...) indicate the existence of direct contacts between the Canadian firm MacMillan and US producers Weyerhaeuser and Georgia Pacific. The contacts resulted in exchanges of information on KEA prices and on sales quantities’. That passage establishes beyond doubt that concertation within the group of North American producers was covered by the Statement of Objections. The Court should therefore reject IPS's arguments in that regard.

(4) St Anne's participation in Fides

105. St Anne, a Canadian producer, claims that the Statement of Objections did not call in question its participation in Fides, whereas the decision established that the applicant had committed an infringement on that account.

106. The Commission acknowledges that Annex VII to the Statement of Objections, which lists the members of Fides, does not mention St Anne, and that the references in other passages to concerted practices between ‘Scandinavian producers and European producers’ to describe such practices within Fides are ‘unfortunate’ since they do not envisage St Anne, a Canadian producer. However, in view, in particular, of the telex mentioned in the factual part of the Statement of Objections referring to St Anne, the defendant considers that it is for the Court to determine whether St Anne should have regarded the Statement of Objections as alleging its participation in concerted practices within Fides.

107. Let me point out first of all that in its legal assessment the Statement of Objections does not refer to St. Anne in connection with concertation within Fides. Nor is that producer included on the list in Annex VII to the Statement of Objections headed ‘Principal Members of the Hardwood Pulp Section of Fides’.

108. Next, the factual part of the Statement of Objections sets out the text of a telex from a third party reporting on a meeting in which various producers, including St Anne, exchanged information on prices. In my view, however, that reference cannot constitute a sufficient ground for alleging that St Anne was involved in concertation within Fides. Another undertaking mentioned in the same telex as having taken part in the same meeting, Celbi, was not one of the addressees of the Statement of Objections and has not been involved in these proceedings. Accordingly, if the reference to Celbi in that document did not result in the Commission addressing the Statement of Objections to that undertaking, I do not consider that the telex could in itself have sufficed to formulate a complaint against St Anne regarding participation in Fides.

109. Furthermore, it is unacceptable, in my view, for the Commission to justify in this case the failure to formulate a complaint against St Anne on the ground, relied upon on in the defence, that ‘it would have taken too long to enumerate, each time, all producers involved’. It was necessary to specify clearly, at least once, that St Anne was alleged to have taken part in concertation within Fides. In addition, the Commission emphasizes that St Anne is not mentioned in Annex VII to the Statement of Objections because that list is not exhaustive and concerns only the principal members. That argument, it seems to me, leads to the opposite conclusion to that which the Commission purports to draw. If St Anne is not regarded in the Statement of Objections as a sufficiently ‘important’ member of Fides to be included as such in the list of producers annexed to the Statement of Objections, the only logical consequence which can be drawn therefrom is that no complaint was made against St Anne in that regard. The interpretation which the Commission apparently seeks to derive from the fact that the list is not exhaustive flouts the most elementary requirements regarding the precision and clarity with which complaints must be formulated. Failure to comply with those requirements, in connection with St Anne's participation in Fides, must entail the annulment by the Court of Article 1(4) of the operative part of the decision in so far as it affects St. Anne.

B — The evidence on which the decision is based

(1) Transaction prices

110. To begin with, let me remind the Court that earlier I came to the conclusion that the Statement of Objections did not in any event set out the allegation of concertation on transaction prices clearly, precisely and expressly, and therefore in conformity with the requirements stemming from the rights of the defence.

111. Next, in order to make it easier to follow the applicants' reasoning, it is necessary to recapitulate briefly the chronological sequence of events in the proceeding. After hearing the producers in March/April 1982, the Commission notified them on 1 September 1982 of its intention ‘to update and complement the information on the facts on which the above proceeding is based’. With that end in view, it requested them to forward the invoices and documents relating to the period from 1974 to 1982 in order to establish that the transaction prices differed from their announced prices, an argument put forward by the applicants at the administrative hearing. In response to that request, made under Article 11 of Regulation No 17, approximately 100000 invoices were forwarded to the Commission, as I pointed out earlier.

112. The applicants found to have concerted on transaction prices dispute the legality of the procedure followed by the Commission. ( 46 ) They maintain that the Commission relied exclusively on a comparative analysis of the documents in question as a basis for the findings in its decision with regard to transaction prices. Accordingly, they consider that the rights of the defence have been infringed since the defendant allegedly failed to inform them before the adoption of the decision of the results of that analysis. As regards the invoices communicated by the other producers, they emphasize, relying on the case-law of the Court and, in particular, on its judgment in Hoffmann-Laroche, ( 47 ) that if the confidential nature of those documents precluded their being communicated to the applicants, the Commission was not entitled to use the documents against them. In any event, the defendant should have asked the producers, before adopting the decision, whether they had any objection to their invoices being forwarded to their competitors or to their competitors' lawyers.

113. The Commission denies in the first place that it relied exclusively on documents produced after the administrative hearing. It points out that in the course of its investigations in 1977 it asked the producers concerned for representative invoices showing that the prices actually charged duly corresponded to the ‘announced’ prices. The invoices produced after the administrative hearing merely confirmed that those prices were the same. The Commission also points out that it relied exclusively on the documents submitted by each applicant for confirmation that the transaction prices of each did not generally differ from its announced prices. Where those prices were broadly the same as the transaction prices, it was unnecessary to draw any conclusions from a comparison with the documents of other producers which were inaccessible to the applicants. In its view, therefore, the applicants had in no way substantiated their allegations to the effect that the Commission had relied entirely on conclusions of that kind or exclusively on documents submitted after the hearing. It was not necessary for each producer to consult the other parties' invoices to assert that its transaction prices differed from its announced prices, since those invoices had played no part in the Commission's assessment of that producer's involvement in concertation on transaction prices.

114. Finally, the defendant contends that it was under no obligation either to inform every applicant of the results of its analysis of the documents produced by the latter or to give every applicant an opportunity to submit its observations on the Commission's evaluation. Each producer was given an opportunity to state its views on the facts alleged and on the legal assessment of those facts set out in the Statement of Objections, and to defend itself. It did not have any right to be informed whether or not the Commission considered its defence persuasive, or to discuss the position taken by the Commission before a decision was adopted.

115. Let us begin by considering the applicants' claim that the Commission based it findings regarding concertation on transaction prices exclusively on documents produced after the administrative hearing.

116. It should be borne in mind that the Court asked the ‘accountancy’ experts whether the documents which were available to the Commission when it drew up the Statement of Objections had already enabled it to conclude that the transaction prices offered by the producers to customers were identical to the prices announced by them.

117. The experts' answer to that question was that the documents in question were not sufficient to enable the Commission to conclude that the transaction prices offered by the producers to their customers were the same as their announced prices.

118. In reaching that conclusion, the experts pointed out, on the basis of an analysis of the documents that were at the Commission's disposal when it drew up the Statement of Objections, that — there are only 199 invoices relating to 13 producers of which only 9 are ‘defendants’; for 28 of the ‘defendants’ there are no invoices on file; — the invoices cover only the years 1974 to 1978; for the years 1979 to 1981 there are no invoices on file; — the number of invoices selected as such is very small in relation to the total number, that is to say the total number of invoices for all the producers over the relevant period; — it is clear that the invoices have not been chosen at random, since 5 producers ( 48 ) account for 159 out of the total of 199 invoices selected.

119. Those conclusions, which are amply reasoned, establish beyond doubt that at the date of the Statement of Objections, the Commission had no objective evidence whatsoever that the announced prices and the prices charged were the same for all the producers. Even on the assumption that the sample available to the Commission at the time showed that the announced prices were the same as the prices charged, those invoices related only to a very small number of producers and transactions. Accordingly, the documents relating to transaction prices which the Commission had on file at the date of the Statement of Objections did not by any means constitute objective evidence concerning transaction prices against the vast majority of the producers.

120. Accordingly, the evidence on which the finding of concertation on transaction prices is based — namely the documents used to compile Tables 7 and 8 annexed to the decision — was obtained in the main after the administrative hearing. Furthermore, a reading of paragraph 25 of the decision would seem to dispel any doubts in that regard. ( 49 )

121. That finding thus raises the question whether the Commission was under an obligation to draw up a new Statement of Objections.

122. According to the case-law of the Court, ‘the Commission must take into account the factors emerging from the administrative procedure in order... to supplement and redraft its arguments both in fact and in law in support of the objections which it maintains’ and ‘the decision is not necessarily required to be a replica of the Commission's notice of objections’. ( 50 ) The Court has also held that the Commission ‘has the right and where appropriate the duty to institute fresh inquiries during the administrative procedure if it appears from the course of that procedure that additional investigations are necessary’ ( 51 ) and that the Commission is not systematically obliged to draw up an additional Statement of Objections following those investigations. The Court has made it quite clear, however, that an additional Statement of Objections would be required if the result of the further inquiries led the Commission ‘to take new facts into account against the undertakings or to alter materially the evidence for the contested infringements’. ( 52 )

123. Let us pause to consider the reasons which seem to have led the Court to lay down that requirement. The Statement of Objections constitutes the ‘measures stating the final attitude of the Commission concerning undertakings’. ( 53 ) On the one hand, it informs undertakings of the conduct which constitutes an infringement of the rules of competition, that is the complaints against them. On the other hand, however, it also brings to their attention the principal evidence in the Commission's possession, that is the evidence on which they may be charged with one or more infringements. When there is a very considerable alteration in the evidence as a result of investigations carried out during the administrative procedure, the initial Statement of Objections can no longer correctly describe the basis on which the complaints are founded. In other words, the Commission is then required formally to approach the undertakings concerned, specifying the substantial alteration in the evidence henceforth at its disposal.

124. That, in my view, is precisely the step which the Commission was required to take in this case if it had reached the conclusion that the 100000 or so invoices ‘confirmed’, in the Commission's contention, the existence of concertation on transaction prices.

125. The most, elementary common sense shows that there had been, at the very least, a material alteration in the evidence of the infringements: it is sufficient to note that the Commission did not have at its disposal, by the date of the Statement of Objections, the information to compile Tables 7 and 8 annexed to the decision. In addition, the substantial administrative task — emphasized by the Commission itself — of analysing the invoices involved deepening and widening its investigations, which in themselves provided a very revealing picture of the substantial extension in the range of evidence of concertation on transaction prices.

126. Applying the Court's case-law to this case, the Commission would have been required to draw up a new Statement of Objections after processing the 100000 or so invoices and credit notes. That Statement was all the more essential since, in my view, as I mentioned earlier, the actual complaint regarding concertation on transaction prices was not referred to in a manner consistent with the requirements stemming from the rights of the defence in the Statement of Objections of 4 September 1981. That is my first conclusion, which would therefore lead to acceptance of the contention that the Commission unlawfully based its finding of concertation on transaction prices largely on documents submitted after the administrative hearing, when it was required to issue a new Statement of Objections.

127. However, I shall extend my investigation to two further questions: — Was the Commission under an obligation, before adopting the decision, to notify each producer of its conclusions concerning that producer's transaction prices, drawn on the basis of an analysis of the invoices submitted by the latter? — Was the Commission entitled to refuse to communicate to each producer the documents submitted by the other producers?

128. It should be borne in mind, in the first place, that the Commission did not give each producer the opportunity, before the decision was adopted, to discuss the conclusions which it had reached concerning that producer's own invoices and credit notes. In that regard, a letter dated 12 November 1984 states as follows: ‘It was the respondents in their replies who alleged that although the announced prices were similar the transaction (applied) prices widely differed. In raising this defence and submitting relevant documents the respondents have therefore already commented on the finding of the Commission that their transaction (applied) prices were broadly identical. Each respondent had the opportunity “to make known its views on the truth and relevance” of the invoices, credit notes, etc. submitted by him’. ( 54 )

129. Let me state first of all that, as the Canadian applicants have righdy pointed out, the administrative hearing could not ex hypothesi relate to the conclusions reached by the Commission in its decision to the effect that transaction prices were identical since, as we have seen, it was essentially the invoices received subsequently which made it possible to substantiate that conclusion.

130. Secondly, I fail to grasp the significance which the Commission attaches to the statement that the producers had the opportunity to make known their views on the correctness and relevance of the documents in question at the same time as they forwarded them. The crucial issue here is whether each producer was entitled to be notified before the adoption of the decision of the individual conclusions resulting from the Commission's analysis of the documents forwarded to it by that producer.

131. In support of an affirmative answer, it should be borne in mind that the Court stated in its judgment in AEG that ‘it must be observed that the important point is not the documents as such but the conclusions which the Commission has drawn from them’ ( 55 ) and excluded certain documents which emanated from the company in question itself but which it had been unable to react to before the adoption of the decision.

132. However, the AEG case differed from the present cases in one respect. Here, the documents were submitted by the producers themselves to the Commission, whilst in that case it was not AEG which had communicated the documents in question to the Commission. AEG was not in a position to know that the documents would be used in the decision. In this case, on the other hand, the producers quite clearly could not rule out that possibility.

133. It is plain from the Court's decision, however, that knowledge of the document ‘as such’ is not necessarily sufficient to ensure compliance with the rights of the defence. It is indisputable that in these proceedings, regard being had in particular to the volume of documentation and the need to assess the competitive nature of rebates or discounts, the conclusions drawn from the documents presupposed an in-depth and detailed analysis, as is borne out by the discussions before the Court with regard to the first expert's report.

134. However, the producers were never given an opportunity to discuss the Commission's conclusions before the decision was taken, precisely because at the time of the administrative hearing the invoices in question were not in the defendant's possession. It is obvious, therefore, that they were found to have concerted on transaction prices even though they had not been given an opportunity to state their views on the Commission's analysis of their own invoices, on which the complaint was based. As for the importance of discussing conclusions drawn from documents which, I repeat, were produced after the Statement of Objections, it is sufficiently apparent from the fact that they make up the total contents of Tables 7 and 8 annexed to the decision, on which the finding of concertation on transaction prices is based. That, in my view, is a further ground on which the Court should annul the findings in the decision regarding concertation on transaction prices, if it adopts my opinion that it was necessary to communicate to each producer the conclusions from the study of the invoices submitted by that producer.

135. Second question: Was the Commission entitled to refuse to communicate to the producers the invoices from the other producers before the adoption of its decision?

136. The defendant's refusal is based on two considerations: — the need to protect business secrets: the invoices and documents submitted by most of the producers after the administrative hearing contained individual data on pricing policy which they regard as business secrets; — the view that communication of those invoices would not have been of any use in the producers' defence since each producer was merely required to demonstrate that the prices it charged differed from its announced prices.

137. Let us consider the latter justification first. The Commission contends that a comparison between the producers' invoices was unnecessary. It was sufficient for it to establish that each producer's transaction prices did not as a rule differ from its announced prices. However, a reading of the decision reveals precisely findings as to the similarity or identical nature of the producers' transaction prices.

138. Thus, in the following passage, the similarity between transaction prices is referred to in these terms: ‘The firms concerned allowed such discounts on very similar terms. They usually did not exceed 3% and never amounted to more than 7%’. ( 56 ) Moreover, the decision itself describes the conduct of two producers in certain periods as regards the prices charged in support of the view that it was possible to differentiate between the prices for bleached sulphate pulp. In the case of the first producer, Domtar, the decision states that ‘prices ranged according to customer from USD 420 to USD 565 per tonne for northern softwood, whereas the firms to which this decision is addressed were uniformly charging USD 545 per tonne’. ( 57 ) As for Bowater, its conduct is described in the following terms: ‘whereas, in the latter years, its transaction prices corresponded to both announced prices and transaction prices of its competitors, its transaction prices in the first two years generally differed widely from those of itscompetitors’. ( 58 ) Finally, is it not in fact the aim of Table 7 annexed to the decision precisely to draw attention to the identical nature of transaction prices and that of Table 8 to point up the similarity between the discounts or allowances granted? Nevertheless, no producer was able to consult the documents furnished by its competitors which enabled those tables to be drawn up. Contrary to the defendant's contention, the rights of the defence cannot be exercised in full except in so far as undertakings are able not only to ascertain whether the analyses of their own price structures are correct but also, and above all, to see for themselves whether their own prices are identical to those of their competitors. The Commission's position in this case irresistibly calls to mind those plans of prisons in which the warder alone is able to see all the inmates but they cannot see each other.

139. Moreover, as regards transaction prices at any rate, the producers were never given an opportunity before the adoption of the decision to ascertain the precise identity of those of their competitors with whom they allegedly concerted on transaction prices over a given period.

140. Therefore I cannot accept the Commission's argument that the invoices and credit notes of other competitors were unnecessary for the purposes of each individual producer's defence. I would also point out that the Commission itself, in a letter subsequent to the adoption of the decision, acknowledged that full access to the documents in question was ‘psychologically more satisfactory’. ( 59 ) In my view, such access is surely no less important from the point of view of the legal requirements.

141. What course of action should the Commission have taken, however, in view of the fact that the documents in question were regarded as business secrets, and that as such they were confidential?

142. In that regard, the Court has consistently stated that the Commission cannot ‘use to the detriment of the undertakings involved in a proceeding referred to in Regulation No 17, facts, circumstances or documents which it cannot in its view disclose if such a refusal of disclosure adversely affects that undertaking's opportunity to make known effectively its views on the truth or implications of those circumstances, on those documents or again on the conclusions drawn by the Commission from them’. ( 60 )

143. I have had occasion to discuss in some depth the difficulties raised by the need to reconcile observance of confidentiality and the rights of the defence in connection with antidumping proceedings; I pointed out, in particular, that: ‘If the European Commission of Human Rights declares inadmissible applications directed against national decisions enacted pursuant to a Community act, the main reason is that, through its successive judgments, the Court has established the principle that it reviews the Community institutions' observance of fundamental rights. It is therefore far from unimportant to avoid conspicuous discrepancies between the construction this Court puts on the right to a fair trial and the requirements already laid down by the European Court of Human Rights. On this point there seems to be no doubt that the antidumping proceeding, although conducted by an administrative authority, must meet the needs of a “fair hearing”, which implies that an “equality of arms” must prevail between the parties. Furthermore, observance of the principle of hearing arguments from both sides demands that the party or his representative have the opportunity of consulting and criticizing the case documents, and in particular the evidence on which the decision was based’. ( 61 )

144. After recalling the fundamental character of the principle that the rights of the defence must be observed, the Court emphasized that: ‘Consequently, in performing their duty to provide information, the Community institutions must act with all due diligence by seeking, as the Court stated in its judgment of 20 March 1985 in Case 264/82, Timex Corporation v Council and Commission [1985] ECR 849, to provide the undertakings concerned, as far as is compatible with the obligation not to disclose business secrets, with information relevant to the defence of their interests, choosing, if necessary on their own initiative, the appropriate means of providing such information. In any event, the undertakings concerned should have been placed in a position during the administrative procedure in which they could effectively make known their views on the correctness and relevance of the facts and circumstances alleged and on the evidence presented by the Commission in support of its allegation concerning the existence of dumping and the resultant injury’. ( 62 )

145. In the light of those principles, ( 63 ) therefore, in establishing the existence of concertation on transaction prices on the basis of confidential documents, the Commission should either have specified the procedures for communicating the information necessary for the exercise of the rights of the defence or have refrained from using the invoices even though its findings are based on them.

146. It is clear from the correspondence exchanged between the Commission and the applicants after the adoption of the decision that various solutions were examined by both sides in order to find ways of enabling the producers to consult the documents in question. I do not consider it necessary at this juncture to assess the merits and drawbacks of those solutions. Allow me simply to point out that the applicants have referred to the practice applied by the Commission in other competition cases for safeguarding business secrets whilst observing the rights of the defence. In any event, however, communication subsequent to the adoption of the decision is too late to satisfy the requirements stemming from those rights if the infringements found are based specifically on the documents at issue. As we have seen, the infringement involving concertation on transaction prices was established essentially on the basis of documents and invoices submitted after the administrative hearing.

147. The Court has categorically stated 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 claim that there has been an infringement’. ( 64 ) Those requirements have manifestly not been observed in this case. That irregularity therefore affects the decision in so far as it establishes concertation on transaction prices, and it must once again lead to the annulment of that finding of infringement.

148. The ‘status’ of the documents at issue in the proceedings before the Court remains to be defined, by way of reply, in particular, to the objection raised by certain applicants under Article 91 of the Rules of Procedure. In that regard, since I am proposing that the Court should annul the decision in so far as it concerns concertation on transaction prices, the issue concerning the use of invoices in support of that complaint becomes devoid of purpose. Furthermore, it seems reasonable to me for the Court to consider that the Commission cannot rely in these proceedings on the conclusions drawn from the documents submitted after the administrative hearing in support of its findings relating to announced prices, having regard to the procedural irregularities which I have detected.

(2) The documents relating to Fides

149. Finncell claims that the Commission's findings regarding the former's participation in concertation within the framework of Fides are based on documents which were not communicated to it, in particular written and oral opinions from third parties, and on a memorandum of a meeting said to have taken place in Zurich on 31 March 1977. Those documents, which are set out in paragraphs 57 to 60 of the decision, were produced either in reply to the Statement of Objections ( 65 ) or at the administrative hearing, ( 66 ) or else were forwarded in response to a request for further information made by the Commission after that hearing. ( 67 )

150. The Commission does not deny that those documents were not brought to Finncell's attention, but it maintains that there were other documents set out in the Statement of Objections which in any event established Finncell's participation in the infringement in question.

151. In my view, the information and the documents mentioned in paragraphs 57 to 60 of the decision cannot be relied upon against the applicant since it was unable to consult them before the adoption of the decision.

152. It will be necessary, therefore, when the substance of the case comes to be considered, to verify whether this finding of infringement against Finncell is proven by the other evidence which is referred to in the decision and on which the applicant was properly given an opportunity to state its views.

C — The refusal to organize a joint administrative hearing

153. All the applicants, with the exception of St. Anne and IPS, claim that the Commission infringed the rights of the defence by refusing to organize a joint hearing of the producers or, at the very least, joint hearings on a regional basis. According to the producers, such hearings were necessary because the Commission was charging them with engaging in a concerted practice. They therefore had to be acquainted with the statements made when the other parties were heard in order to organize their own individual defence. They conclude, therefore, that they should have been allowed to attend the hearings of the other producers. Moreover, the Commission might have made improper use of separate hearings by pitting some of the ‘codefendants’ against the others or by extracting confidential information. Accordingly, even though Article 9(3) of Regulation No 99/63, under which persons are to be heard separately, does not provide for a joint hearing, it should be interpreted as meaning that it is for the producers themselves to decide whether it is necessary to hold a joint hearing rather than separate hearings. Furthermore, the Commission allegedly failed to keep its promise to hear the producers subsequently on any new facts or arguments which might arise in a hearing of one or other of them. Finally, certain producers state that they did not receive a copy of the record of the hearing until the end of 1985, that is say two months after the adoption of the decision.

154. In reply to those arguments, the Commission considers that it alone has the power to decide whether or not it is necessary to organize a joint hearing. In this case, it took the view that the producers had to be heard separately. It was foreseeable that the principal matters dealt with at such hearings would concern the pricing policy of the different producers and the production and sales position. Information of that kind is covered by business secrecy and cannot be divulged. Hence most of the producers themselves had emphasized that the hearings should be held separately. In any event, it was for each producer to state its views, so far as it was concerned, on the Commission's conclusions regarding its own price structure. There is no general right for each party to a proceeding to state its views on each and every argument put forward by the other parties to that proceeding in relation to their own competitive conduct. In any event, the reasons stated in the decision were not based on any information disclosed in a hearing of one of the producers which was used against other producers.

155. In my view, the applicants' argument is unfounded. Even though it is not expressly provided for in Article 9(3) of Regulation No 99/63, it is for the Commission, the authority entrusted with responsibility for laying down the detailed rules of the administrative procedure, and not for the producers, to decide whether it is necessary to organize a joint hearing.

156. However, those powers must be exercised subject to observance of the rights of the defence and, in support of its decision, the Commission may not therefore use information gathered at the hearing of one of the producers against another producer, without having shown the information to the latter first.

157. It is by no means apparent from a reading of the contested decision that the Commission based its findings of concertation on information gathered at the hearings. ( 68 ) Moreover, the applicants have failed to demonstrate that the decision is based on information so obtained.

158. The Court should therefore reject their arguments in that regard.

D — The failure to consult the Advisory Committee on Restrictive Practices and Monopolies

159. According to Bowater, the Commission is guilty of an irregularity in failing to consult the Advisory Committee on Restrictive Practices and Monopolies after certain producers had given the undertaking — not signed by Bowater — thereby obtaining a 90% reduction in the amount of the fines imposed on them.

160. Consultation of the Advisory Committee would have enabled the Commission to recognize the illogicality regarding the amount of the fine imposed on Bowater. Bowater emphasizes that it was never a member of KEA and is charged with taking part in a concerted practice for periods shorter than those established for many other producers, yet one of the two largest fines was imposed on it even though the Commission has acknowledged elsewhere that it had cooperated during the procedure. The Advisory Committee would undoubtedly have drawn the defendant's attention to that situation and the Commission would then have reduced the amount of the fine imposed on Bowater.

161. The Commission points out that the fines were initially fixed on the basis of the opinion given by the Advisory Committee on 26 September 1984. It concedes that the Advisory Committee was not consulted again after the undertakings were agreed but before the adoption of the decision. However, it rejects Bowater's arguments regarding the consequences of the failure to consult the Committee again after certain producers had agreed to the undertaking. It considers that any illogicality could have been taken into account only with regard to the proposed reduction in the fine but could not have affected the basic amount of the fine imposed on Bowater.

162. It does not seem to me that, so far as Bowater is concerned, the procedure is unlawful on account of the failure to consult the Advisory Committee. Since it did not agree to the undertaking, Bowater's own position remained quite unchanged compared to what it had been at the time of the Advisory Committee's initial opinion. Accordingly, so far as concerns Bowater, the Commission was entitled to adopt the decision on the basis of that opinion. The Court will not, in any event, have to consider whether it was necessary to consult the Advisory Committee again with regard to the reduction in the amount of the fines imposed on the other producers, since they have not raised the issue.

Conclusion

163. It is clear from consideration of the allegations relating to procedural irregularities that the Court must uphold a number of the submissions put forward by the applicants, the foremost of which relates to the finding in the decision of concertation on transaction prices (Article 1(2)), which I strongly urge the Court to annul, as requested by the applicants. In view of the reasons tor my attitude and the extensive discussion called for by the examination of the present applications, I do not propose to consider the merits in that regard, not even on a subsidiary basis. ( 69 )

II — ‘General’ concertation on announced prices

164. It is necessary, in my view, to begin with a discussion of the concept of concerted practices. I do not share the defendant's view that ‘the case-law extracted from continental systems (referred to by certain applicants) merely serves to underline the proposition that the problem in cases of alleged concerted practices is one of proof rather than [of] definition’. ( 70 )

165. On the contrary, as MacMillan rightly points out, a satisfactory approach in examining the concerted practices alleged in this case presupposes that that concept is defined first, before the question whether the Commission has furnished proof of such infringement of competition rules is considered.

A — The concept of concerted practices ( 71 )

166. In prohibiting concerted practices, Article 85(1) of the EEC Treaty did not define that concept. ( 72 ) The Court has had the matter raised before it on numerous occasions ( 73 ) and has therefore been able to provide guidance of some value in a number of noted cases. However, I cannot dissemble the fact that there is still, in my view, some uncertainty regarding the definition of concerted practices. Quite clearly, it is necessary to proceed with caution in order to avoid general forms of words which are too constricting in areas in which the law is faced with changing and complex economic realities. Courts must not engage in academic theorizing. However, one is not succumbing to the temptation to theorize if one seeks to clarify certain concepts where the requirements of legal certainty are at stake. Traders must have a clear frame of reference to ascertain which practices are prohibited by competition rules. Besides, who would deny that the effectiveness of the law depends on its precision? Let us therefore now attempt to identify the elements which make up the concept of concerted practices.

167. One point may already be considered established: a concerted practice is to be distinguished from a formal agreement between undertakings. In its judgments in Dyestuffs, the Court made it clear that ‘[although] Article 85 draws a distinction between the concept of “concerted practices” and that of “agreements between undertakings”... the object is to bring within the prohibition of that article a form of coordination between undertakings which, without having reached the stage where an agreement properly so-called has been concluded, ... substitutes practical cooperation between them for the risks of competition’. ( 74 ) A concerted practice ‘by its very nature, then, does not have all the elements of’ an agreement ( 75 ) and therefore constitutes a legal category ‘sui generis’, independent of the latter. In the words of one writer, that is an ‘initial delimitation of the concept of concerted practices: it presupposes a common intention which does not amount to an agreement’. ( 76 )

168. Far more delicate is the question which then arises; what is the substance of the concertation required between undertakings? In its judgment in Suiker Unie, the Court stated that ‘the criteria of coordination and cooperation..., which in no way require the working out of an actual plan, must be understood in the light of the concept inherent in the provisions of the Treaty relating to competition that each economic operator must determine independently the policy which he intends to adopt on the Common Market’. ( 77 ) The Court added that ‘this requirement of independence... however strictly preclude [s] any direct or indirect contact between... [competitors], the object or effect whereof is either to influence the conduct on the market of an actual or potential competitor or to disclose to such a competitor the course of conduct which they themselves have decided to adopt or contemplate adopting on the market’. ( 78 )

169. Those indicators are very broad in scope. They cover every form and method of contact between undertakings. From that point of view, the Court has quite rightly draw