1 THESE ACTIONS SEEK A DECLARATION THAT COMMISSION DECISION NO 78/670/EEC OF 20 JULY 1978 RELATING TO A PROCEEDING UNDER ARTICLE 85 OF THE EEC TREATY ( IV/28.852 - GB-INNO-BM/FEDETAB , IV/29.127 - MESTDAGH-HUYGHEBAERT - FEDETAB ; IV/29.149 - FEDETAB RECOMMENDATION , OFFICIAL JOURNAL L 224 , P . 29 ), WHICH FOUND THAT THE APPLICANTS HAD COMMITTED VARIOUS INFRINGEMENTS OF THE SAID ARTICLE , IS VOID .
2 THE APPLICANTS WHO INCLUDE ALL THE ADDRESSEES OF THAT DECISION LISTED IN ARTICLE 4 THEREOF ARE THE NON-PROFIT-MAKING FEDERATION BELGO-LUXEMBOURGEOISE DES INDUSTRIES DU TABAC , BRUSSELS , ( HEREINAFTER REFERRED TO AS ' ' FEDETAB ' ' ), A TRADE ASSOCIATION CONTAINING ALMOST ALL THE BELGIAN AND LUXEMBOURG TOBACCO MANUFACTURERS AND ON AN INDIVIDUAL BASIS SEVEN OF THE MORE IMPORTANT MEMBERS , NAMELY : - CINTA SA ( HEREINAFTER REFERRED TO AS ' ' CINTA ' ' ), BRUSSELS , - ETS . GOSSET SA ( HEREINAFTER REFERRED TO AS ' ' GOSSET ' ' ), BRUSSELS , - JUBILE SA , ( HEREINAFTER REFERRED TO AS ' ' JUBILE ' ' ), LIEGE , - VANDER ELST SA ( HEREINAFTER REFERRED TO AS ' ' VANDER ELST ' ' ), ANTWERP , - WELTAB SA ( HEREINAFTER REFERRED TO AS ' ' WELTAB ' ' ), BRUSSELS , - BAT BENELUX SA ( HEREINAFTER REFERRED TO AS ' ' BAT ' ' ), BRUSSELS , - HEINTZ VAN LANDEWYCK SARL ( HEREINAFTER REFERRED TO AS ' ' HVL ' ' ), LUXEMBOURG .
3 THE MEASURES CONDEMNED BY THE CONTESTED DECISION AND DESCRIBED BELOW RELATE TO THE DISTRIBUTION OF MANUFACTURED TOBACCO PRODUCTS IN BELGIUM AND MAY BE DIVIDED INTO TWO GROUPS . THERE ARE ON THE ONE HAND CERTAIN DECISIONS TAKEN BY FEDETAB AND CERTAIN AGREEMENTS MADE BY IT WITH OTHER TRADE ASSOCIATIONS IN THE TOBACCO SECTOR DURING THE PERIOD FROM 1 FEBRUARY 1962 TO 1 DECEMBER 1975 AND ON THE OTHER HAND PROVISIONS OF A ' ' RECOMMENDATION ' ' MADE BY FEDETAB IN RELATION TO THE SALE OF CIGARETTES ON THE BELGIAN MARKET AND NOTIFIED BY IT TO THE COMMISSION ON 1 DECEMBER 1975 .
4 SINCE THE APPLICANTS HAVE MADE NUMEROUS SUBMISSIONS RELATING TO THE COURSE OF THE ADMINISTRATIVE PROCEEDINGS WHICH LED UP TO THE CONTESTED DECISION , IT IS USEFUL FIRST OF ALL TO INDICATE THE OUTLINE OF THOSE PROCEEDINGS SO AS TO FACILITATE EXAMINATION OF THE ARGUMENTS PUT FORWARD BY THE PARTIES IN RELATION TO THE SAID SUBMISSIONS .
5 BY A COMPLAINT LODGED ON 2 APRIL 1974 WITH THE COMMISSION UNDER ARTICLE 3 ( 2 ) OF REGULATION NO 17 THE COMPANY GB-INNO-BM ( HEREINAFTER REFERRED TO AS ' ' GB ' ' ), A BELGIAN SUPERMARKET COMPANY , REQUESTED THE COMMISSION TO BRING PROCEEDINGS AGAINST FEDETAB , THE NON-PROFIT-MAKING FEDERATION NATIONALE DU COMMERCE DE GROS EN PRODUITS MANUFACTURES DU TABAC ( HEREINAFTER REFERRED TO AS ' ' FNCG ' ' ) AND THE NON-PROFIT-MAKING ASSOCIATION DES DETAILLANTS DU TABAC ( HEREINAFTER REFERRED TO AS ' ' ATAB ' ' ). FOLLOWING THAT COMPLAINT THE COMMISSION COMMENCED PROCEEDINGS UNDER THE SAID ARTICLE DURING WHICH IT SENT ON 18 JULY 1974 TO FEDETAB , ATAB AND THE NON-PROFIT-MAKING ASSOCIATION NATIONALE DES GROSSISTES ITINERANTS EN PRODUITS MANUFACTURES DU TABAC ( HEREINAFTER REFERRED TO AS ' ' ANGIPMT ' ' ), AN ASSOCIATION CREATED FOLLOWING THE DISSOLUTION OF FNCG , A NOTICE OF OBJECTIONS IN WHICH IT DECLARED THAT IN ITS OPINION CERTAIN AGREEMENTS , DECISIONS AND CONCERTED PRACTICES OF FEDETAB AND ITS MEMBERS WERE CONTRARY TO ARTICLE 85 OF THE TREATY .
6 THE HEARING OF THE APPLICANTS IN THESE CASES AND OF THE COMPLAINANT GB WAS FIXED FOR 22 OCTOBER 1975 . ON 21 OCTOBER 1975 THE COMPANY MESTDAGH FRERES ET CIE , SA , WHOLESALERS WITH MULTIPLE BRANCHES , AND THE COMPANY EUGENE HUYGHEBAERT , SA , FOOD WHOLESALERS , ASKED TO BE JOINED TO THE COMPLAINT BY GB AND LODGED COMPLAINTS WITH THE COMMISSION UNDER ARTICLE 3 ( 2 ) OF REGULATION NO 17 .
7 THE HEARING TOOK PLACE AS ARRANGED ON 22 OCTOBER 1975 , BUT SUBSEQUENTLY THE PROCEEDINGS WERE EXTENDED TO THE RECOMMENDATION IN RELATION TO THE SALE OF CIGARETTES ON THE BELGIAN MARKET ADOPTED BY FEDETAB AND NOTIFIED BY IT ON 1 DECEMBER 1975 PURSUANT TO ARTICLES 2 AND 4 OF REGULATION NO 17 . ON 17 MAY 1976 THE COMMISSION SENT FEDETAB AND THE OTHER APPLICANTS WHO HAD ALSO GIVEN NOTICE OF THE RECOMMENDATION A SECOND NOTICE OF OBJECTIONS WHICH RELATED TO THE SAID RECOMMENDATION AND WHICH WAS THE SUBJECT ON 22 SEPTEMBER 1976 OF A SECOND HEARING OF THE APPLICANTS .
8 AFTER SENDING THE APPLICANTS FINAL REQUESTS FOR INFORMATION AND OBTAINING THE OPINION OF THE ADVISORY COMMITTEE ON RESTRICTIVE PRACTICES AND DOMINANT POSITIONS THE COMMISSION ON 20 JULY 1978 ADOPTED THE CONTESTED DECISION CONCERNING BOTH THE COMPLAINTS BY GB AND MESTDAGH AND HUYGHEBAERT AND THE FEDETAB RECOMMENDATION OF 1 DECEMBER 1975 .
9 ACCORDING TO ARTICLE 1 OF THE DECISION , THE AGREEMENTS BETWEEN THE ADDRESSEES THEREOF AND THE DECISIONS BY AN ASSOCIATION OF UNDERTAKINGS TAKEN BY FEDETAB CONCERNING THE ORGANIZATION OF THE DISTRIBUTION AND SALE OF TOBACCO PRODUCTS IN BELGIUM AND HAVING AS THEIR OBJECT : ( 1 ) THE APPROVAL AND CLASSIFICATION OF WHOLESALERS AND RETAILERS INTO DIFFERENT CATEGORIES BY FEDETAB , BRUSSELS , IN ORDER TO ALLOCATE DIFFERENT PROFIT MARGINS TO SUCH CATEGORIES ; ( 2)THE MAINTENANCE OF RESALE PRICES SET BY THE MANUFACTURERS , UNDER THE AGREEMENT OF 22 MAY AND 5 OCTOBER 1967 BETWEEN FEDETAB AND FNCG AND THE SUPPLEMENTARY AGREEMENT OF 29 DECEMBER 1970 ; ( 3)THE RESTRICTIONS IMPOSED BY FEDETAB ON THE APPROVAL OF CERTAIN CATEGORIES OF WHOLESALERS ; ( 4)THE BAN ON RESALES TO OTHER WHOLESALERS , UNDER THE JOINT MEASURES AND THE ADDITIONAL AGREEMENT OF 22 MARCH 1972 ; ( 5)THE APPLICATION TO WHOLESALERS AND RETAILERS OF STANDARD TERMS OF PAYMENT , UNDER THE JOINT MEASURES OF 23 DECEMBER 1971 ; ( 6)THE DECISION OF FEDETAB TO OBLIGE RETAILERS TO STOCK A MINIMUM NUMBER OF BRANDS AND THE AGREEMENTS ENTERED INTO AND JOINT MEASURES TAKEN BY CERTAIN OF ITS MEMBERS TO ENSURE THAT RETAILERS FULFILLED THEIR OBLIGATION : ' ' CONSTITUTED , FROM 13 MARCH 1962 TO 1 DECEMBER 1975 , INFRINGEMENTS OF ARTICLE 85 ( 1 ) OF THE TREATY ' ' .
10 ACCORDING TO ARTICLE 2 , THE FEDETAB RECOMMENDATION , WHICH TOOK EFFECT ON 1 DECEMBER 1975 AND HAD AS ITS OBJECT : ( 1 ) THE DIVISION OF BELGIAN WHOLESALERS AND RETAILERS INTO CATEGORIES AND THE ALLOCATION TO THE LATTER OF DIFFERENT PROFIT MARGINS ; ( 2)THE APPLICATION TO WHOLESALERS AND RETAILERS OF STANDARD TERMS OF PAYMENT ; AND ( 3)THE GRANT TO WHOLESALERS AND RETAILERS OF END-OF-YEAR REBATES : ' ' CONSTITUTES AN INFRINGEMENT OF ARTICLE 85 ( 1 ) OF THE TREATY ESTABLISHING THE EUROPEAN ECONOMIC COMMUNITY AND DOES NOT QUALIFY FOR EXEMPTION UNDER ARTICLE 85 ( 3 ) THEREOF . ' '
11 ARTICLE 3 ( 1 ) PROVIDES THAT THE ADDRESSEES OF THE DECISION ARE REQUIRED TO TERMINATE WITHOUT DELAY THE INFRINGEMENT REFERRED TO IN ARTICLE 2 AND IN PARTICULAR IN FUTURE TO ABSTAIN FROM ALL ACTS WHATSOEVER HAVING THE SAME OBJECT AS THE FEDETAB RECOMMENDATION . ACCORDING TO ARTICLE 3 ( 2 ) FEDETAB IS REQUIRED FORTHWITH TO INFORM ALL ITS MEMBERS TO WHICH THE DECISION WAS NOT ADDRESSED OF THE CONTENTS THEREOF .
12 BY ORDER DATED 30 OCTOBER 1978 THE PRESIDENT OF THE SECOND CHAMBER OF THE COURT ACTING IN PURSUANCE OF THE SECOND PARAGRAPH OF ARTICLE 85 AND THE SECOND PARAGRAPH OF ARTICLE 11 OF THE RULES OF PROCEDURE IN PLACE OF THE PRESIDENT OF THE COURT AND AS AN INTERLOCUTORY DECISION ORDERED THAT APPLICATION OF ARTICLES 2 AND 3 OF THE DECISION SHOULD BE SUSPENDED PENDING FINAL JUDGMENT BY THE COURT .
13 BY APPLICATIONS LODGED AT THE COURT REGISTRY IN SEPTEMBER AND OCTOBER 1978 EACH OF THE APPLICANTS SOUGHT A DECLARATION THAT THE DECISION IN QUESTION WAS VOID , AND IN CERTAIN CASES ALTERNATIVELY FOR AMENDMENT THEREOF IN SO FAR AS THEY WERE CONCERNED .
14 BY ORDERS DATED 26 OCTOBER 1978 , 28 MARCH 1979 AND 27 JUNE 1979 THE COURT ALLOWED VARIOUS PARTIES TO INTERVENE IN SUPPORT BOTH OF THE CLAIMS OF THE APPLICANTS AND OF THE CONTENTIONS OF THE COMMISSION .
15 BECAUSE THEY ARE CONNECTED IT IS APPROPRIATE TO JOIN THESE CASES FOR THE PURPOSES OF JUDGMENT . II - SUBMISSIONS REGARDING FORM AND PROCEDURE FIRST SUBMISSION : REFUSAL BY THE COMMISSION TO HEAR CERTAIN INTERESTED ASSOCIATIONS OF WHOLESALERS AND RETAILERS
16 ALL THE APPLICANTS EXCEPT VANDER ELST COMPLAIN THAT THE COMMISSION REFUSED TO ACCEDE TO THE REQUEST OF THE ASSOCIATIONS ANGIPMT AND ATAB AND THE CONSORTIUM TABACS-GROEP TABAK ( HEREINAFTER REFERRED TO AS ' ' GT ' ' ), A DE FACTO ASSOCIATION CONTAINING CERTAIN OF THE FORMER MEMBERS OF ANGIPMT , TO BE HEARD DURING THE ADMINISTRATIVE PROCEEDINGS . THAT REFUSAL IS SAID TO BE AN INFRINGEMENT OF THE PROVISIONS OF ARTICLE 19 ( 2 ) OF REGULATION NO 17 AND ARTICLE 5 OF REGULATION NO 99/63 .
17 ARTICLE 19 ( 2 ) OF REGULATION NO 17 PROVIDES THAT APPLICATIONS TO BE HEARD ON THE PART OF NATURAL OR LEGAL PERSONS SHALL , WHERE THEY SHOW A SUFFICIENT INTEREST , BE GRANTED . FOR THAT PURPOSE THE COMMISSION IS REQUIRED , PURSUANT TO ARTICLE 5 OF REGULATION NO 99/63 , TO AFFORD THEM THE OPPORTUNITY OF MAKING KNOWN THEIR VIEWS IN WRITING WITHIN SUCH TIME-LIMIT AS IT MAY FIX .
18 IT APPEARS FROM THE FILE THAT THE COMMISSION ' S CONDUCT IS CRITICIZED SOLELY IN SO FAR AS IT REFUSED TO INVITE THE ABOVE-MENTIONED ASSOCIATIONS TO THE SECOND HEARING ON 22 SEPTEMBER 1976 IN RELATION TO THE FEDETAB RECOMMENDATION . ON THE OTHER HAND IT IS ALSO APPARENT FROM THE FILE THAT DURING THE PROCEEDINGS THOSE ASSOCIATIONS SENT THE COMMISSION THEIR WRITTEN OBSERVATIONS ON THE RECOMMENDATION . IT FOLLOWS THAT THE COMMISSION DID NOT REFUSE TO HEAR THE SAID ASSOCIATIONS IN BREACH OF THE PROVISIONS OF THE ABOVE-MENTIONED REGULATIONS SINCE , PURSUANT TO ARTICLE 5 OF REGULATION NO 99/63 , THE COMMISSION AFFORDED THEM THE OPPORTUNITY OF MAKING KNOWN THEIR VIEWS IN WRITING AND THEY MADE USE OF THAT OPPORTUNITY .
19 THAT SUBMISSION MUST THEREFORE BE REJECTED . SECOND SUBMISSION : COMMISSION ' S REFUSAL TO ACCEDE TO FEDETAB ' S REQUEST TO HEAR TWO ASSOCIATIONS OF WHOLESALERS
20 ON 30 JUNE 1976 FEDETAB SENT A LETTER TO THE COMMISSION ASKING IT TO SUMMON TO THE SECOND HEARING ON 22 SEPTEMBER 1976 TWO ASSOCIATIONS OF WHOLESALERS , NAMELY GT AND THE NATIONALE VERENIGING VAN FAMILIALE GROOTHANDELSONDERNEMINGEN ( HEREINAFTER REFERRED TO AS ' ' NVFG ' ' ). IT IS , HOWEVER , APPARENT FROM THE FIRST PARAGRAPH OF THAT LETTER THAT IT WAS INTENDED IN THE FIRST PLACE TO INFORM THE COMMISSION THAT FEDETAB HAD NO OBJECTION TO THE PRESENCE OF ANGIPMT AT THE HEARING ON 22 SEPTEMBER 1976 . NEVERTHELESS IN ORDER THAT THE COMMISSION MAY HAVE FULL INFORMATION IT IS STATED IN THE SECOND PARAGRAPH THAT FEDETAB WOULD LIKE THE NVFG AND GT ALSO TO BE SUMMONED . IT IS ALSO TO BE OBSERVED THAT THAT LETTER WAS SENT TO THE COMMISSION AFTER THE RECEIPT BY FEDETAB OF THE SECOND NOTICE OF OBJECTIONS IN RELATION TO THE RECOMMENDATION BUT BEFORE FEDETAB ' S ANSWER TO THE SAID NOTICE .
21 ON 20 JULY 1976 , AFTER RECEIPT BY THE COMMISSION OF FEDETAB ' S ANSWER TO THE SECOND NOTICE OF OBJECTIONS , THE COMMISSION ANSWERED THE LETTER OF 30 JUNE 1976 TO THE EFFECT THAT IT HAD DECIDED ULTIMATELY TO INVITE TO THE HEARING ONLY ' ' FEDETAB AND SUCH OF ITS MEMBERS AS HAVE MADE APPLICATION ' ' . IT JUSTIFIED THAT DECISION BY SAYING THAT IT SAW IN THE RECOMMENDATION AN ' ' AGREEMENT WHICH WAS AND REMAINS THE ACT ONLY OF THE MANUFACTURERS AND IN WHICH . . . THE WHOLESALERS AND RETAILERS . . . PLAYED NO PART ' ' .
22 IN FEDETAB ' S VIEW THE LETTER OF 30 JUNE 1976 WAS AN APPLICATION UNDER ARTICLE 3 ( 3 ) OF REGULATION NO 99/63 WHICH PROVIDES THAT UNDERTAKINGS AND ASSOCIATIONS OF UNDERTAKINGS AGAINST WHICH PROCEEDINGS ARE COMMENCED ' ' MAY . . . PROPOSE THAT THE COMMISSION HEAR PERSONS WHO MAY CORROBORATE ' ' THE FACTS SET OUT IN THEIR WRITTEN OBSERVATIONS ON THE OBJECTIONS RAISED AGAINST THEM .
23 ON THE OTHER HAND THE COMMISSION MAINTAINS THAT ACCORDING TO THE WORDING OF THE LETTER OF 30 JUNE 1976 WHICH DEALT ON AN EQUAL FOOTING WITH THE REQUEST OF ANGIPMT AND THE REQUEST MADE BY FEDETAB ON BEHALF OF THE NVFG AND GT , IT WAS A REQUEST TO HEAR THIRD PARTIES WITHIN THE MEANING OF ARTICLE 5 OF REGULATION NO 99/63 AND NOT A PROPOSAL PURSUANT TO ARTICLE 3 ( 3 ) THAT WITNESSES BE HEARD TO CORROBORATE CERTAIN FACTS . IT WAS IN THE CONTEXT OF ARTICLE 5 THAT THE COMMISSION MADE ITS ANSWER ON 20 JULY 1976 .
24 IT IS CLEAR FROM ARTICLE 3 ( 1 ) AND ( 2 ) OF REGULATION NO 99/63 THAT UNDERTAKINGS AND ASSOCIATIONS OF UNDERTAKINGS AGAINST WHICH PROCEEDINGS ARE COMMENCED MAY SET OUT ALL MATTERS RELEVANT TO THEIR DEFENCE IN THEIR WRITTEN OBSERVATIONS CONCERNING THE OBJECTIONS RAISED AGAINST THEM . ARTICLE 3 ( 3 ) ALLOWS UNDERTAKINGS AND ASSOCIATIONS TO PROPOSE THAT THE COMMISSION HEAR PERSONS WHO MAY CORROBORATE THOSE FACTS . WHEN FEDETAB SENT ITS LETTER OF 30 JUNE 1976 TO THE COMMISSION IT HAD NOT YET GIVEN ITS WRITTEN ANSWER TO THE SECOND NOTICE OF OBJECTIONS SO THAT THAT LETTER COULD NOT IN ANY EVENT HAVE CONSTITUTED A VALID PROPOSAL WITHIN THE MEANING OF ARTICLE 3 ( 3 ). MOREOVER , IT MUST BE POINTED OUT THAT THE WRITTEN ANSWER BY FEDETAB OF 12 JULY 1976 CONTAINED NO PROPOSAL TO THAT EFFECT AND THAT THE LETTER FROM THE COMMISSION OF 20 JULY 1976 BROUGHT NO REACTION BY FEDETAB IN SUPPORT OF SUCH A PROPOSAL .
25 ON THOSE GROUNDS THE SECOND SUBMISSION MUST BE REJECTED . THIRD SUBMISSION : ABSENCE OF PERSONS DELEGATED DURING PART OF THE HEARING ON 22 SEPTEMBER 1976
26 THIS SUBMISSION WHICH IS MADE BY FEDETAB AND BY THE OTHER APPLICANTS SAVE JUBILE AND VANDER ELST IS BASED ON THE STATEMENT TO THE EFFECT THAT PERSONS DELEGATED BY THE COMMISSION WERE TEMPORARILY ABSENT FROM THE HEARING .
27 THE COMMISSION HOWEVER ANSWERED , WITHOUT BEING CONTRADICTED , THAT THE ONLY PERSON DELEGATED FOR THE PURPOSE OF THE HEARING WAS MR DENNIS THOMPSON , DIRECTOR OF THE AGREEMENTS AND ABUSE OF DOMINANT POSITIONS DIRECTORATE , AND THAT HE WAS PRESENT DURING THE WHOLE HEARING . THE TEMPORARY ABSENCE OF CERTAIN PERSONS WHO WERE NOT DELEGATED BY THE COMMISSION IS THEREFORE IRRELEVANT .
28 IT FOLLOWS THAT THAT SUBMISSION MUST ALSO BE REJECTED . FOURTH SUBMISSION : IRREGULAR JOINDER , WITHOUT ANY STATEMENT OF REASONS , OF THE COMPLAINTS BY MESTDAGH AND HUYGHEBAERT
29 THIS SUBMISSION IS MAINLY BASED ON THE STATEMENT THAT THE COMMISSION HAD COMMENCED THREE SEPARATE PROCEEDINGS WHICH IT SUBSEQUENTLY DECIDED TO JOIN BY A DECISION NOT ACCOMPANIED BY A STATEMENT OF THE REASONS ON WHICH IT WAS BASED ; EACH PROCEEDING WAS DISTINGUISHED FROM THE OTHERS BY A SEPARATE ADMINISTRATIVE NUMBER . THE COMMISSION HOWEVER OMITTED TO SEND A SEPARATE NOTICE OF OBJECTIONS CONCERNING THE COMPLAINTS BY MESTDAGH AND HUYGHEBAERT , IN BREACH OF ARTICLE 2 OF REGULATION NO 99/63 SO THAT THE APPLICANTS WERE DEPRIVED , IN BREACH OF ARTICLE 4 OF THE SAID REGULATION , OF THE OPPORTUNITY OF MAKING KNOWN EITHER ORALLY OR IN WRITING THEIR VIEWS CONCERNING THE COMMISSION ' S OBJECTIONS , OF THE NATURE OF WHICH THEY WERE UNAWARE .
30 THE COMMISSION MAINTAINS THAT THERE WAS ONLY A SINGLE PROCEEDING WHICH LED TO THE DECISION OF 20 JULY 1978 . THERE ARE NO RULES STIPULATING THAT THE COMMISSION MUST MAKE FORMAL DECISIONS JOINING CASES AND THE CONCEPT OF JOINDER IS UNKNOWN TO ITS ADMINISTRATIVE PRACTICE . IN THIS CASE IT CONDUCTED THE ADMINISTRATIVE PROCEEDINGS AND GAVE A RULING IN A SINGLE DECISION ON ONE AND THE SAME INFRINGEMENT THE SUBJECT OF SUCCESSIVE COMPLAINTS HAVING THE SAME SUBJECT-MATTER AND IT DID SO WITHOUT ADVERSELY AFFECTING THE RIGHTS OF THE DEFENCE AND WITHOUT DISTORTING THE COURSE OF THE PROCEEDINGS .
31 REGARDING THIS SUBMISSION IT MUST BE OBSERVED THAT ON 10 AND 13 OCTOBER 1975 MESTDAGH AND HUYGHEBAERT BOTH SENT A LETTER TO THE COMMISSION ASKING TO BE JOINED TO THE COMPLAINT BY GB . ON 20 OCTOBER 1975 THE COMMISSION INFORMED FEDETAB THAT THE COMPLAINT BY MESTDAGH WOULD BE JOINED TO THAT OF GB AND THAT IT HAD BEEN DECIDED TO ALLOW MESTDAGH TO ATTEND THE HEARING ON 22 OCTOBER 1975 . IT MUST NEVERTHELESS BE OBSERVED THAT AS A RESULT OF THE APPLICANT ' S OBJECTION MESTDAGH AND HUYGHEBAERT WERE NOT HEARD AT THAT HEARING . FURTHER BY LETTER DATED 13 NOVEMBER 1975 THE COMMISSION FORWARDED A COPY OF THE COMPLAINTS BY MESTDAGH AND HUYGHEBAERT TO THE APPLICANTS . IN DECEMBER 1975 AND JANUARY 1976 THE APPLICANTS SUBMITTED WRITTEN OBSERVATIONS ON THE SAID COMPLAINTS .
32 ARTICLE 2 ( 1 ) OF REGULATION NO 99/63 PROVIDES THAT THE COMMISSION ' ' SHALL INFORM UNDERTAKINGS AND ASSOCIATIONS OF UNDERTAKINGS IN WRITING OF THE OBJECTIONS RAISED AGAINST THEM ' ' . ARTICLE 4 THEREOF PROVIDES THAT ' ' THE COMMISSION SHALL IN ITS DECISIONS DEAL ONLY WITH THOSE OBJECTIONS RAISED AGAINST UNDERTAKINGS AND ASSOCIATIONS OF UNDERTAKINGS IN RESPECT OF WHICH THEY HAVE BEEN AFFORDED THE OPPORTUNITY OF MAKING KNOWN THEIR VIEWS ' ' . IT IS CLEAR FROM ALL THOSE PROVISIONS THAT THE COMMISSION MUST INCLUDE IN ITS DECISION ONLY OBJECTIONS OF WHICH THE UNDERTAKINGS AND ASSOCIATIONS CONCERNED HAVE BEEN GIVEN WRITTEN NOTICE AND AN OPPORTUNITY OF MAKING KNOWN THEIR VIEWS . ON THE OTHER HAND THERE IS NOTHING TO PREVENT THE COMMISSION FROM RULING IN A SINGLE DECISION ON ONE AND THE SAME INFRINGEMENT WHICH IS THE SUBJECT OF SEVERAL SUCCESSIVE COMPLAINTS LODGED DURING ONE AND THE SAME PROCEEDING .
33 THE COMPLAINT BY MESTDAGH AND HUYGHEBAERT RELATES SOLELY TO THEIR EXCLUSION , WHICH IS NOT BASED ON ANY OBJECTIVE CRITERION , FROM THE CATEGORIES OF WHOLESALERS CONTAINED IN THE CLASSIFICATION MADE BY THE CIGARETTE MANUFACTURERS THROUGH THE INTERMEDIARY OF FEDETAB SO THAT THEY ARE ACTUALLY REFUSED WHOLESALE TERMS . THAT COMPLAINT THEREFORE FALLS WITHIN THE MORE GENERAL SCOPE OF THAT MADE BY GB . FURTHER , AFTER MESTDAGH AND HUYGHEBAERT HAD , AT THE REQUEST OF THE COMMISSION , ANSWERED IN WRITING THE OBSERVATIONS OF THE APPLICANTS THE LATTER IN JULY 1976 SUBMITTED WRITTEN OBSERVATIONS ON THAT ANSWER EXPRESSING ONCE AGAIN THEIR VIEWS ON THE COMPLAINTS MADE BY MESTDAGH AND HUYGHEBAERT .
34 IN THOSE CIRCUMSTANCES IT MUST BE OBSERVED THAT THE COMPLAINT BY MESTDAGH AND HUYGHEBAERT DID NOT MAKE IT NECESSARY , FOR THE PURPOSES OF RESPECTING THE RIGHTS OF THE DEFENCE , EITHER TO COMMENCE SEPARATE PROCEEDINGS OR TO GIVE AN ADDITIONAL NOTICE OF OBJECTIONS . BY INFORMING THE APPLICANTS OF THE COMPLAINT BY MESTDAGH AND HUYGHEBAERT AND RECEIVING THEIR WRITTEN OBSERVATIONS THEREON THE COMMISSION ENSURED RESPECT FOR THOSE RIGHTS .
35 IT FOLLOWS FROM THE AFORESAID CONSIDERATIONS THAT THE SUBMISSION MUST BE REJECTED . FIFTH SUBMISSION : REFUSAL TO DISCLOSE THE FILE
36 THIS SUBMISSION , WHICH IS MADE BY ALL THE APPLICANTS EXCEPT JUBILE , IS BASED ON INFRINGEMENT OF THE GENERAL PRINCIPLE OF THE RIGHTS OF THE DEFENCE IN THAT THE COMMISSION REFUSED TO DISCLOSE THE FILE ON WHICH THE CONTESTED DECISION WAS BASED .
37 BY LETTER DATED 21 MARCH 1976 FEDETAB REQUESTED THE COMMISSION TO FORWARD IT A LETTER SENT TO THE COMMISSION BY ANGIPMT SUPPOSEDLY DATED 13 FEBRUARY 1976 ' ' TOGETHER WITH ALL OTHER DOCUMENTS ON WHICH THE COMMISSION BASED THE COMPLAINTS AND TO WHICH IT MIGHT REFER AT THE HEARING AT PRESENT FIXED FOR 29 JUNE NEXT ' ' . IN ANSWER TO THAT REQUEST THE COMMISSION ON 26 MAY 1976 FORWARDED TO FEDETAB WITHOUT ANY OTHER DOCUMENTS THE ABOVE-MENTIONED LETTER IN FACT DATED 2 MARCH 1976 .
38 THAT ANSWER DID NOT BRING FORTH ANY REACTION ON THE PART OF THE APPLICANTS REGARDING THE PRODUCTION OF OTHER DOCUMENTS . MOREOVER , IT IS COMMON GROUND THAT APART FROM THE LETTER FROM ANGIPMT THE COMMISSION FORWARDED TO THE APPLICANTS THE TWO NOTICES OF OBJECTIONS AND THE COMPLAINTS BY GB AND MESTDAGH AND HUYGHEBAERT .
39 ALTHOUGH IN ITS REPLY FEDETAB LISTS CERTAIN FACTS OR DOCUMENTS ALLEGEDLY NOT DISCLOSED , ON WHICH THE DECISION IS BASED , IT HAS NOT SHOWN THAT THE COMMISSION REFUSED TO PRODUCE THE ADMINISTRATIVE PROCEEDINGS DOCUMENTS RELATING TO ESSENTIAL FACTS SO DEPRIVING THE APPLICANTS OF NECESSARY ITEMS FOR THEIR DEFENCE . AS THE COURT OBSERVED IN ITS JUDGMENT OF 13 FEBRUARY 1979 IN CASE 85/76 HOFFMANN-LA ROCHE V COMMISSION ( 1979 ) ECR 461 , IT SUFFICES IF THE NOTIFICATION OF COMPLAINTS SETS FORTH CLEARLY , ALBEIT SUCCINCTLY , THE ESSENTIAL FACTS UPON WHICH THE COMMISSION RELIES PROVIDED ALWAYS THAT IN THE COURSE OF THE ADMINISTRATIVE PROCEDURE IT SUPPLIES THE DETAILS NECESSARY TO THE DEFENCE . SINCE IN ADDITION TO THE TWO NOTICES OF OBJECTIONS THE COMMISSION SUPPLIED FEDETAB WITH THE COMPLAINTS BY GB AND MESTDAGH AND HUYGHEBAERT AND THE LETTER FROM ANGIPMT , IT HAS NOT BEEN SHOWN THAT IT OMITTED TO SUPPLY THE APPLICANTS WITH DETAILS NECESSARY FOR THEIR DEFENCE .
40 AFTER THE CONTESTED DECISION WAS TAKEN THE APPLICANTS FEDETAB AND VANDER ELST ALSO ASKED THE COMMISSION TO MAKE AVAILABLE TO THEM THE FILE ON WHICH THE DECISION WAS BASED . THE FACT THAT THE COMMISSION REFUSED TO DISCLOSE THE ADMINISTRATIVE FILE CANNOT BE RELIED UPON TO OBTAIN ANNULMENT OF THE DECISION SINCE REQUESTS FOR DISCOVERY OF THE FILE MADE AFTER THE DECISION WAS TAKEN CANNOT HAVE HAD ANY EFFECT UPON THE COURSE OF THE ADMINISTRATIVE PROCEEDINGS . SIXTH SUBMISSION : DISCLOSURE OF CONFIDENTIAL INFORMATION
41 THIS SUBMISSION , WHICH IS MADE BY FEDETAB AND ALL THE OTHER APPLICANTS EXCEPT JUBILE AND VANDER ELST , IS BASED ON THE CLAIM BY FEDETAB THAT THE COMMISSION FORWARDED TO GB INFORMATION WHICH BY ITS VERY NATURE WAS A TRADE SECRET AND WAS SENT TO THE COMMISSION AS SUCH . IN ANSWER TO THE FIRST NOTICE OF OBJECTIONS FEDETAB ANNEXED TO ITS STATEMENT OF 22 SEPTEMBER 1975 THREE TABLES THE FIRST OF WHICH SHOWED THE TREND IN RECEIPTS DURING THE PREVIOUS FIVE YEARS FOR 160 BRANDS OF CIGARETTES , THE SECOND SET OUT THE NUMBER OF CIGARETTES PURCHASED BY THE MAIN SPECIALISTS AND THE THIRD SHOWED THE TERMS OF PAYMENT OF 25 MAIN CUSTOMERS OF THE PRINCIPAL BELGIAN CIGARETTE MANUFACTURERS . IN ITS STATEMENT IT STRESSED THE CONFIDENTIAL NATURE OF THOSE TABLES . THE COMMISSION NEVERTHELESS FORWARDED TO THE COMPLAINANT GB THE WHOLE OF FEDETAB ' S ANSWER INCLUDING THE SAID TABLES . IN SO DOING IT INFRINGED ARTICLE 20 ( 2 ) OF REGULATION NO 17 WHICH PROVIDES THAT ' ' WITHOUT PREJUDICE TO THE PROVISIONS OF ARTICLES 19 AND 21 , THE COMMISSION AND THE COMPETENT AUTHORITIES OF THE MEMBER STATES , THEIR OFFICIALS AND OTHER SERVANTS SHALL NOT DISCLOSE INFORMATION ACQUIRED BY THEM AS A RESULT OF THE APPLICATION OF THIS REGULATION AND OF THE KIND COVERED BY THE OBLIGATION OF PROFESSIONAL SECRECY ' ' . THAT DISREGARD OF A PRINCIPLE OF A COMMUNITY PUBLIC POLICY IS ALLEGED TO VITIATE THE COMMISSION ' S DECISION .
42 THE COMMISSION DOES NOT DENY THAT ON 2 OCTOBER 1975 IT FORWARDED TO GB THE WHOLE OF FEDETAB ' S ANSWER INCLUDING THE TABLES . THAT WAS DONE , ACCORDING TO THE COMMISSION , FOLLOWING A REQUEST BY GB WHICH HAD ASKED TO BE HEARD , TO BE SUMMONED TO THE HEARING AND TO SEE THE ANSWERS OF THE APPLICANTS TO THE FIRST NOTICE OF OBJECTIONS . IN JUSTIFICATION OF THIS ATTITUDE THE COMMISSION PUTS FORWARD THE FOLLOWING ARGUMENTS .
43 IN THE FIRST PLACE THE PARTICULARS IN QUESTION WERE NOT CONFIDENTIAL . SINCE THEY HAD BEEN GIVEN TO FEDETAB BY THE MANUFACTURERS THEY WERE KNOWN TO ALL THE APPLICANTS THROUGH THEIR REPRESENTATIVES ON THE BOARD OF FEDETAB . THEY HAD THEREFORE LOST THEIR CONFIDENTIAL CHARACTER AND COULD NOT BE CONSIDERED AS PROTECTED BY THE DUTY OF THE COMMISSION ' S OFFICIALS NOT TO DISCLOSE TRADE SECRETS .
44 IN THE SECOND PLACE , EVEN ASSUMING THAT THE INFORMATION WAS TO BE CONSIDERED CONFIDENTIAL , ARTICLE 20 ( 2 ) OF REGULATION NO 17 GAVE THE COMMISSION THE RIGHT AND ARTICLE 19 ( 2 ) IMPOSED ON IT A DUTY TO PASS THE INFORMATION ON TO GB . IF IT HAD ACTED OTHERWISE IT WOULD HAVE INFRINGED GB ' S RIGHT TO BE FULLY HEARD .
45 FINALLY THE COMMISSION ALLEGES THAT THE APPLICANTS HAVE IN NO WAY SHOWN HOW THE ACTION OF THE COMMISSION WITH REGARD TO THE TABLES HAS DISTORTED THE COURSE OF THE ADMINISTRATIVE PROCEEDINGS .
46 IN ANSWER TO THAT LINE OF ARGUMENT IT MUST BE OBSERVED IN THE FIRST PLACE THAT INFORMATION IN THE NATURE OF A TRADE SECRET GIVEN TO A TRADE OR PROFESSIONAL ASSOCIATION BY ITS MEMBERS AND THUS HAVING LOST ITS CONFIDENTIAL NATURE VIS-A-VIS THEM DOES NOT LOSE IT WITH REGARD TO THIRD PARTIES . WHERE SUCH AN ASSOCIATION FORWARDS SUCH INFORMATION TO THE COMMISSION IN PROCEEDINGS COMMENCED UNDER REGULATION NO 17 , THE COMMISSION CANNOT RELY ON THE PROVISIONS OF ARTICLES 19 AND 20 OF THAT REGULATION TO JUSTIFY PASSING ON THE INFORMATION TO THIRD PARTIES WHO ARE MAKING COMPLAINTS . ARTICLE 19 ( 2 ) GIVES THE LATTER A RIGHT TO BE HEARD AND NOT A RIGHT TO RECEIVE CONFIDENTIAL INFORMATION .
47 NEVERTHELESS IT MUST BE OBSERVED IN THIS CASE THAT EVEN ASSUMING THAT THE THREE TABLES AMOUNTED TO TRADE SECRETS AND WERE THEREFORE WRONGLY DISCLOSED BY THE COMMISSION TO GB , THAT PROCEDURAL IRREGULARITY WOULD INVOLVE THE ANNULMENT IN WHOLE OR IN PART OF THE DECISION ONLY IF IT WERE SHOWN THAT IN THE ABSENCE OF SUCH IRREGULARITY THE CONTESTED DECISION MIGHT HAVE BEEN DIFFERENT . CONSIDERATION OF THE FILE HAS SHOWN THAT THE DISCLOSURES IN QUESTION SUPPLIED GB WITH NO ARGUMENT LIKELY TO HAVE HAD AN INFLUENCE ON THE CONTENT OF THE DECISION IN QUESTION . SEVENTH SUBMISSION : EXEMPTION FROM NOTIFICATION
48 ACCORDING TO THIS SUBMISSION MADE BY FEDETAB AND BY ALL THE APPLICANTS EXCEPT JUBILE AND VANDER ELST , BASED ON FEDETAB ' S ARGUMENT , THE COMMISSION INFRINGED ARTICLE 85 ( 1 ) AND ( 3 ) OF THE TREATY AND ARTICLE 4 OF REGULATION NO 17 BY REFUSING TO APPLY ARTICLE 85 ( 3 ) OF THE TREATY TO THE MEASURES PRIOR TO THE RECOMMENDATION OF 1 DECEMBER 1975 ON THE GROUND THAT THOSE MEASURES WERE NOT NOTIFIED ALBEIT THEY WERE NOT EXEMPT FROM NOTIFICATION . FURTHER THE COMMISSION ' S STATEMENT OF THE REASONS ON WHICH THE DECISION WAS BASED ON THAT ISSUE IS INCORRECT AND INADEQUATE .
49 FEDETAB ALLEGES IN SUPPORT OF THAT ARGUMENT THAT ALL THE PREVIOUS MEASURES OR AT LEAST THE LARGER PART OF THEM FULFILLED THE CONDITIONS FOR EXEMPTION FROM NOTIFICATION PROVIDED FOR BY ARTICLE 4 ( 2 ) ( A ) OF THE REGULATION IN THE FOLLOWING TERMS : ' ' ( 2 ) PARAGRAPH ( 1 ) SHALL NOT APPLY TO AGREEMENTS , DECISIONS OR CONCERTED PRACTICES WHERE : ( 1 ) THE ONLY PARTIES THERETO ARE UNDERTAKINGS FROM ONE MEMBER STATE AND THE AGREEMENTS , DECISIONS OR PRACTICES DO NOT RELATE EITHER TO IMPORTS OR TO EXPORTS BETWEEN MEMBER STATES ; ( 2)NOT MORE THAN TWO UNDERTAKINGS ARE PARTY THERETO , AND THE AGREEMENTS ONLY : ( A ) RESTRICT THE FREEDOM OF ONE PARTY TO THE CONTRACT IN DETERMINING THE PRICES OR CONDITIONS OF BUSINESS UPON WHICH THE GOODS WHICH HE HAS OBTAINED FROM THE OTHER PARTY TO THE CONTRACT MAY BE RESOLD . . . ' ' IN THE VIEW OF FEDETAB THE COMMISSION OUGHT TO HAVE CONSIDERED THE VARIOUS MEASURES AND IN EACH CASE CHECKED WHETHER THE CONDITIONS FOR EXEMPTION FROM NOTIFICATION WERE SATISFIED . IN FEDETAB ' S VIEW , THAT WAS SO .
50 THE APPROVAL BY FEDETAB OF WHOLESALERS AND RETAILERS AND THEIR CLASSIFICATION INTO CATEGORIES AND THE OBLIGATIONS WITH REGARD TO THE STOCKING BY RETAILERS OF A SPECIFIC RANGE OF BRANDS ARE THE RESULT OF DECISIONS BY FEDETAB ALONE , WHICH IS AN ASSOCIATION HAVING LEGAL PERSONALITY AND ACTING THROUGH ITS OWN ORGANIZATION IN ACCORDANCE WITH ITS ARTICLES . IT IS NOT THEREFORE AN AGREEMENT BETWEEN UNDERTAKINGS OR A DECISION TAKEN BY THOSE UNDERTAKINGS AS SUCH . THOSE DECISIONS MAY THEREFORE , ACCORDING TO FEDETAB , ENJOY THE EXEMPTION FROM NOTIFICATION PROVIDED FOR BY ARTICLE 4 ( 1 ) OF THE REGULATION .
51 FURTHER THE AGREEMENTS MADE BETWEEN FEDETAB AND THE FNCG ARE BETWEEN TWO TRADE FEDERATIONS ACTING AS SUCH IN THE NAME OF THEIR MEMBERS BUT NOT AS DELEGATES SO THAT SUCH AGREEMENTS MAY , IN FEDETAB ' S VIEW , ENJOY THE EXEMPTION PROVIDED FOR IN ARTICLE 4 ( 2 ) ( 1 ).
52 THE STANDARD AGREEMENTS SIGNED BY SEVERAL DISTRIBUTORS AT THE INVITATION OF FEDETAB AND CONTAINING AN UNDERTAKING TO OBSERVE THE BAN ON RESALE TO CERTAIN WHOLESALERS ARE IN FACT ONLY UNILATERAL UNDERTAKINGS BY THOSE DISTRIBUTORS SO THAT SUCH STANDARD AGREEMENTS MAY , ACCORDING TO FEDETAB , ENJOY THE EXEMPTION PROVIDED FOR IN ARTICLE 4 ( 2 ) ( A ) OF THE REGULATION .
53 AS REGARDS THE COLLECTIVE MEASURES ADOPTED ON 23 DECEMBER 1971 IN RELATION TO TERMS OF PAYMENT FEDETAB ALLEGES THAT THEY WERE NOT DECISIONS BY UNDERTAKINGS OR AGREEMENTS BETWEEN SEVERAL UNDERTAKINGS BUT RATHER AGREEMENTS MADE BY EACH MANUFACTURER WITH EACH OF HIS CUSTOMERS . SUCH AGREEMENTS ARE , IT IS CLAIMED , OBVIOUSLY NOT SUBJECT TO NOTIFICATION .
54 THE COMMISSION STATES AT PARAGRAPH 110 OF THE DECISION THAT IT WAS UNABLE TO CONSIDER APPLYING ARTICLE 85 ( 3 ) TO THE MEASURES ADOPTED IN RELATION TO DISTRIBUTION FOR THE PERIOD 13 MARCH 1962 TO 1 DECEMBER 1975 ( DESCRIBED IN PARAGRAPHS 19 TO 57 OF THE DECISION ), SINCE THEY WERE NOT NOTIFIED TO THE COMMISSION IN ACCORDANCE WITH ARTICLE 4 ( 1 ) OF REGULATION NO 17 ALTHOUGH THEY DID NOT BELONG TO ANY OF THE CATEGORIES OF AGREEMENTS AND DECISIONS EXEMPTED FROM NOTIFICATION BY ARTICLE 4 ( 2 ).
55 IT MUST BE OBSERVED THAT IN ADOPTING THE MEASURES IN QUESTION FEDETAB WAS ACTING IN FACT IN THE NAME OF ITS MEMBERS , THAT IS TO SAY THE MAJORITY OF THE BELGIAN TOBACCO MANUFACTURERS AND A LUXEMBOURG MANUFACTURER ( THE APPLICANT HVL ). THAT APPEARS PARTICULARLY CLEAR FROM ARTICLE 8 ( 2 ) OF THE STATUTES OF FEDETAB ACCORDING TO WHICH THE REQUIREMENTS FOR MEMBERSHIP OF FEDETAB ARE THAT APPLICANT FIRMS MUST SUSCRIBE TO THE STATUTES AND ALL DECISIONS TAKEN UNDER THEM AND SATISFY ALL OBLIGATIONS FLOWING FROM THEM . THE MANUFACTURERS WERE THUS PARTIES TO THE SAID MEASURES THROUGH THE INTERMEDIARY OF THEIR TRADE ASSOCIATION . THAT FACT IS CORROBORATED BY VARIOUS STATEMENTS OF FEDETAB ITSELF . BY LETTER DATED 26 JANUARY 1971 SENT TO THE COMMISSION IN ANSWER TO A REQUEST FOR INFORMATION FEDETAB GAVE A SUMMARY OF ITS POLICY AND OF THE PRACTICE IN RELATION TO THE DISTRIBUTION OF MANUFACTURED TOBACCO PRODUCTS IN BELGIUM . AT POINT B ON PAGE 2 OF THAT LETTER IN REFERENCE TO THE FREE NATURE OF THE DISTRIBUTION SYSTEM FEDETAB ADDS : ' ' THE ONLY RESTRICTION , AGREED ONLY BETWEEN MEMBERS OF FEDETAB AND NOT BINDING ON FOREIGN MANUFACTURERS , IS TO CONFINE WHOLESALE TERMS TO WHOLESALERS ' RECOGNIZED ' FOR THE SPECIAL SERVICES THEY RENDER THE INDUSTRY ' ' . IT IS MOREOVER APPARENT FROM THE ACTUAL WORDING OF THE AGREEMENT OF 22 MAY 1967 ON CUT-PRICE SELLING ( ANNEX II TO THE SAID LETTER ) THAT THE AGREEMENT WAS MADE BETWEEN THE FNCG AND FEDETAB ACTING IN THE NAME OF THEIR RESPECTIVE MEMBERS . THE FACT THAT THE MEMBERS WERE ACTUALLY PARTIES TO THE SUBSTANCE OF THE AGREEMENT IS CLEARLY APPARENT FROM ARTICLE 1 WHICH PROVIDES : ' ' BELGIAN WHOLESALERS REPRESENTED BY THE UNDERSIGNED OF THE FIRST PART ( FNCG ) UNDERTAKE BOTH INTER SE AND VIS-A-VIS THE CIGARETTE MANUFACTURERS , REPRESENTED BY THE UNDERSIGNED OF THE SECOND PART ( FEDETAB ), TO SELL MANUFACTURED TOBACCO PRODUCTS BOUGHT BY THEM AT THE PRICES INDICATED BY THE SUPPLIERS WITHOUT ANY REBATE . . . ' '
56 IT FOLLOWS FROM THOSE CONSIDERATIONS THAT THE MEASURES IN QUESTION DID NOT FALL WITHIN ARTICLE 4 ( 2 ) OF REGULATION NO 17 SINCE THE PARTIES INCLUDED MANUFACTURERS OF TWO MEMBER STATES , NAMELY BELGIUM AND THE GRAND DUCHY OF LUXEMBOURG AND THERE WERE MORE THAN TWO UNDERTAKINGS , NAMELY AT LEAST THE APPLICANTS . SINCE THE MEASURES WERE NOT EXEMPT FROM NOTIFICATION THIS SUBMISSION MUST BE REJECTED . EIGHTH SUBMISSION : REFUSAL TO CONSIDER THE LETTER FROM FEDETAB DATED 26 JANUARY 1971 AS A NOTIFICATION
57 ACCORDING TO THIS SUBMISSION MADE BY FEDETAB AND BY ALL THE OTHER APPLICANTS EXCEPT JUBILE AND VANDER ELST THE COMMISSION WRONGLY REFUSED TO CONSIDER AS A VALID NOTIFICATION OF THE ARRANGEMENTS IN RELATION TO THE DISTRIBUTION OF MANUFACTURED TOBACCO PRODUCTS THE ABOVE-MENTIONED LETTER FROM FEDETAB OF 26 JANUARY 1971 , ALTHOUGH THAT LETTER INCLUDING ITS ANNEXES INFORMED THE COMMISSION OF THE ARRANGEMENTS WHICH WERE SUBSEQUENTLY CONDEMNED BY THE COMMISSION AND SET OUT THE REASONS WHY THOSE ARRANGEMENTS EITHER DID NOT COME WITHIN ARTICLE 85 ( 1 ) OF THE TREATY OR IN ANY EVENT WERE BENEFICIAL TO THE ORGANIZATION OF THE MARKET .
58 IN THE DECISION ( PARAGRAPH 111 ) THE COMMISSION POINTS OUT THAT THAT LETTER SENT TO THE COMMISSION IN ANSWER TO A FORMAL REQUEST FOR INFORMATION UNDER ARTICLE 11 OF REGULATION NO 17 CONTAINED NO APPLICATION FOR EXEMPTION UNDER ARTICLE 85 ( 3 ) OF THE TREATY AND MADE NO MENTION OF THE APPLICATION OF ARTICLES 4 AND 5 OF REGULATION NO 17 . FURTHER FEDETAB DID NOT USE THE NOTIFICATION FORMS PRESCRIBED BY COMMISSION REGULATION NO 27 ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1959-1962 , P . 132 ).
59 IN THE DEFENCE THE COMMISSION ALSO CONTENDS THAT IN THE FIRST NOTIFICATION OF OBJECTIONS OF 18 JULY 1975 IT HAD STATED THAT THE MEASURES IN QUESTION COULD NOT HAVE EXEMPTION SO LONG AS NOTIFICATION OF THEM HAD NOT BEEN GIVEN .
60 IN ITS ANSWER OF 22 SEPTEMBER 1975 TO THE FIRST NOTIFICATION OF OBJECTIONS FEDETAB SAID THAT IN ITS VIEW THE LETTER OF 26 JUNE 1971 COULD BE REGARDED AS A VALID NOTIFICATION .
61 THE FORM , CONTENT AND OTHER TERMS OF NOTIFICATION PROVIDED FOR IN PARTICULAR IN ARTICLE 4 OF REGULATION NO 17 ARE GOVERNED BY ARTICLE 4 OF REGULATION NO 27 AS AMENDED BY THE SOLE ARTICLE OF REGULATION NO 1133/68 OF THE COMMISSION OF 26 JULY 1968 ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1968 ( II ), P . 400 ). IT FOLLOWS FROM THE TERMS OF THAT PROVISION THAT NOTIFICATIONS MUST BE SUBMITTED ON FORM A/B AS SHOWN IN THE ANNEX TO REGULATION NO 1133/68 AND MUST CONTAIN THE INFORMATION ASKED FOR THEREIN .
62 THE USE OF THAT FORM IS THEREFORE MANDATORY AND IS AN ESSENTIAL PRIOR CONDITION FOR THE VALIDITY OF THE NOTIFICATION . IT TAKES ACCOUNT , FOR THE PURPOSE OF LAYING DOWN DETAILED RULES FOR THE APPLICATION OF ARTICLE 85 ( 3 ), OF THE NEED , EXPRESSED IN ARTICLE 87 ( 2 ) ( B ) OF THE TREATY , TO ENSURE EFFECTIVE SUPERVISION AND TO SIMPLIFY ADMINISTRATION TO THE GREATEST POSSIBLE EXTENT . THE PRESENT CASE PROVIDES A STRIKING EXAMPLE OF THE CONFUSION AND MISUNDERSTANDINGS TO WHICH NOTIFICATION OTHERWISE THAN ON THE PRESCRIBED FORM MAY GIVE RISE . IT WAS ONLY IN ITS ANSWER OF 22 SEPTEMBER 1975 TO THE FIRST NOTIFICATION OF OBJECTIONS THAT FEDETAB STATED FOR THE FIRST TIME THAT THE LETTER OF 26 JANUARY 1971 CONSTITUTED NOTIFICATION .
63 FOR THE REASONS SET OUT ABOVE IT IS THEREFORE NECESSARY TO REJECT THIS SUBMISSION . NINTH SUBMISSION : INADEQUATE ANSWER TO THE ARGUMENTS CONCERNING THE APPLICATION OF ARTICLE 85 ( 3 ) OF THE TREATY
64 ACCORDING TO THIS SUBMISSION MADE BY FEDETAB AND BY ALL THE OTHER APPLICANTS EXCEPT JUBILE AND VANDER ELST THE COMMISSION , INSTEAD OF TAKING ACCOUNT OF ITS DECISION OF ALL THE ARGUMENTS OF FEDETAB REGARDING THE APPLICABILITY OF ARTICLE 85 ( 3 ) TO THE PROVISIONS OF THE RECOMMENDATION , CONSIDERED ONLY SOME OF THOSE ARGUMENTS AND THUS DISREGARDED THE REQUIREMENT CONTAINED IN ARTICLE 190 OF THE TREATY TO STATE REASONS ON WHICH ITS DECISION WAS BASED .
65 IT IS APPARENT FROM THE DECISION THAT THE COMMISSION , AFTER REFERRING ( PARAGRAPHS 114 TO 117 ) TO CERTAIN ARGUMENTS OF THE PARTIES , SET OUT ( PARAGRAPHS 118 TO 132 ) ITS VIEWS REGARDING THE APPLICATION OF ARTICLE 85 ( 3 ) TO THE RECOMMENDATION . ALTHOUGH THEY CONTAIN ANSWERS TO SOME OF THE SAID ARGUMENTS , THE VIEWS CONSTITUTE NOT A DETAILED REFUTATION OF THEM BUT AN INDEPENDENT ARGUMENT SETTING OUT IN GENERAL TERMS THE REASONS WHY THERE COULD BE NO EXEMPTION UNDER ARTICLE 85 ( 3 ) IN THIS CASE .
66 ALTHOUGH PURSUANT TO ARTICLE 190 OF THE TREATY THE COMMISSION IS BOUND TO STATE THE REASONS ON WHICH ITS DECISIONS ARE BASED , MENTIONING THE FACTS , LAW AND CONSIDERATIONS WHICH HAVE LED IT TO ADOPT THEM , IT IS NOT REQUIRED TO DISCUSS ALL THE ISSUES OF FACT AND LAW WHICH HAVE BEEN RAISED BY EVERY PARTY DURING THE ADMINISTRATIVE PROCEEDINGS . THIS SUBMISSION , WHICH IS BASED ON THE ASSUMPTION THAT THERE IS SUCH A REQUIREMENT , MUST THEREFORE BE REJECTED . TENTH SUBMISSION : ALLEGATION THAT THE COMMISSION TOOK INTO ACCOUNT OBJECTIONS OF WHICH IT HAD NOT GIVEN NOTICE
67 THIS SUBMISSION , MADE BY ALL THE APPLICANTS , ALLEGES THAT THE COMMISSION INFRINGED THE PROVISIONS OF ARTICLE 19 ( 1 ) OF REGULATION NO 17 AND ARTICLE 4 OF REGULATION NO 99/63 INASMUCH AS IT OMITTED TO GIVE THE APPLICANTS THE OPPORTUNITY TO EXPRESS THEIR POINTS OF VIEW REGARDING OBJECTIONS WHICH THE COMMISSION TOOK INTO ACCOUNT IN THE CONTESTED DECISION . IN THE SECOND NOTIFICATION OF OBJECTIONS THE COMMISSION IS SAID TO HAVE REFUSED TO EXEMPT THE RECOMMENDATION UNDER ARTICLE 85 ( 3 ) ON THE SOLE GROUND THAT IT DID NOT SATISFY THE FIRST OF THE FOUR CONDITIONS CONTAINED IN THAT ARTICLE , NAMELY IMPROVING THE PRODUCTION OR DISTRIBUTION OF GOODS OR PROMOTING TECHNICAL OR ECONOMIC PROGRESS . THE APPLICANTS THEREFORE DEALT ONLY WITH THAT CONDITION . HOWEVER , THE CONTESTED DECISION REFUSES EXEMPTION BECAUSE THE THREE OTHER CONDITIONS OF ARTICLE 85 ( 3 ) ARE NOT SATISFIED . THE APPLICANTS WERE THUS DEPRIVED OF THE OPPORTUNITY OF EXPRESSING THEIR POINT OF VIEW IN COMPLIANCE WITH THOSE CONDITIONS .
68 AS THE COURT INDICATED IN ITS JUDGMENT OF 15 JULY 1970 IN CASE 41/69 ACF CHEMIEFARMA V COMMISSION ( 1970 ) ECR 661 AT P . 691 , PARAGRAPHS 91 TO 93 , THE DECISION IS NOT NECESSARILY REQUIRED TO BE A REPLICA OF THE COMMISSION ' S NOTICE OF OBJECTIONS . IN FACT THE COMMISSION MUST TAKE INTO ACCOUNT THE FACTORS EMERGING FROM THE ADMINISTRATIVE PROCEDURE IN ORDER EITHER TO ABANDON SUCH OBJECTIONS AS HAVE BEEN SHOWN TO BE UNFOUNDED OR TO SUPPLEMENT AND RE-DRAFT ITS ARGUMENTS BOTH IN FACT AND IN LAW IN SUPPORT OF THE OBJECTIONS WHICH IT MAINTAINS . THIS LATTER POSSIBILITY DOES NOT CONFLICT WITH THE PRINCIPLE OF THE RIGHTS OF THE DEFENCE PROTECTED BY ARTICLE 4 OF REGULATION NO 99/63 .
69 IN THIS CASE IT IS APPARENT FROM CONSIDERATION OF THE SECOND NOTIFICATION OF OBJECTIONS THAT THE REFUSAL TO GRANT EXEMPTION UNDER ARTICLE 85 ( 3 ) OF THE TREATY WAS BASED SOLELY ON THE FINDING THAT THE FIRST CONDITION OF THE SAID PARAGRAPH IS NOT SATISFIED . IN THE DECISION , AFTER A DETAILED STATEMENT OF REASONS ( PARAGRAPHS 113 TO 131 ), THAT OBJECTION IS FOUND SUBSTANTIATED AT PARAGRAPH 132 .
70 ON THE OTHER HAND IT MUST BE OBSERVED THAT TWO OTHER OBJECTIONS ARE ACTUALLY TAKEN INTO ACCOUNT IN THE DECISION . AT PARAGRAPH 132 IT IS ADDED THAT THE RECOMMENDATION DOES NOT ' ' ALLOW CONSUMERS A FAIR SHARE OF ANY BENEFIT WHICH MIGHT RESULT ' ' . MOREOVER AT PARAGRAPH 133 IT IS SAID THAT ' ' IN VIEW OF THE MARKET SHARE OF FEDETAB AND ITS MEMBERS , THE AGREEMENTS AFFORD THE UNDERTAKINGS CONCERNED THE POSSIBILITY OF ELIMINATING COMPETITION IN RESPECT OF A SUBSTANTIAL PART OF THE PRODUCTS IN QUESTION ' ' .
71 THE COMMISSION OBSERVES IN THE FIRST PLACE THAT THE APPLICANTS HAD ALREADY TO A LARGE EXTENT GIVEN THEIR VIEWS REGARDING THE FOUR CONDITIONS OF ARTICLE 85 ( 3 ) DURING THE ADMINISTRATIVE PROCEEDINGS AND IN PARTICULAR ON NOTIFICATION OF THE RECOMMENDATION . THE SECOND CONDITION ( ALLOWING CONSUMERS A FAIR SHARE OF THE RESULTING BENEFIT ) HAD BEEN MENTIONED IN THE FIRST NOTIFICATION OF OBJECTIONS . FURTHER THE COMMISSION SUMMARIZED IN ITS DECISION THE STATEMENTS OF THE APPLICANTS REGARDING THAT CONDITION ( IN PARTICULAR AT PARAGRAPHS 114 TO 117 ) AND ALSO ANSWERED CERTAIN OF THEIR ARGUMENTS ( AT PARAGRAPHS 119 , 121 , 122 , 125 , 126 AND 131 ).
72 SINCE WHAT THE COMMISSION SAYS IS CORRECT , THE COURT FINDS THAT HAVING REGARD TO THE FACT THAT THE TWO NOTIFICATIONS OF OBJECTIONS MUST BE REGARDED AS A WHOLE AND THAT THE SECOND CONDITION IS REFERRED TO IN THE FIRST NOTIFICATION , THE OBJECTION PUT FORWARD IN RELATION TO IT IN PARAGRAPH 131 OF THE DECISION CANNOT CONSTITUTE AN INFRINGEMENT OF ARTICLE 4 OF REGULATION NO 99/63 .
73 AS REGARDS THE REFERENCE IN PARAGRAPH 133 OF THE DECISION TO THE FOURTH CONDITION IN ARTICLE 85 ( 3 ) OF THE TREATY THE COMMISSION CLAIMS THAT IT MERELY SUPPLEMENTS ITS ARGUMENTS IN LAW IN SUPPORT OF THE REFUSAL TO GRANT EXEMPTION AND ITS MAIN ARGUMENTS RELATE TO THE FIRST CONDITION .
74 IT IS COMMON GROUND THAT THE TWO NOTICES OF OBJECTIONS CONTAINED NO EXPRESS MENTION OF ANY OBJECTION RELATING TO THE FOURTH CONDITION IN THE CONTEXT OF THE APPLICABILITY OF THE PROVISIONS OF ARTICLE 85 ( 3 ). SINCE HOWEVER THE QUESTION OF HOW FAR THE RECOMMENDATION GIVES THE APPLICANTS THE OPPORTUNITY OF ELIMINATING COMPETITION CONSTITUTES THE VERY BASIS OF THE SECOND NOTICE OF OBJECTIONS , ON WHICH THE APPLICANTS EXPRESSED THEIR VIEWS , ITS INTRODUCTION INTO THE PART OF THE DECISION RELATING TO THE APPLICABILITY OF ARTICLE 85 ( 3 ) TO THE RECOMMENDATION CANNOT CONSTITUTE AN INFRINGEMENT OF THE RIGHTS OF THE DEFENCE UNDER ARTICLE 4 OF REGULATION NO 99/63 . FOR THAT REASON THIS SUBMISSION MUST BE REJECTED . ELEVENTH SUBMISSION : WRONG ASSESSMENT OF THE RECOMMENDATION IN RELATION TO THE PREVIOUS MEASURES
75 THE APPLICANTS JUBILE AND VANDER ELST COMPLAIN THAT THE COMMISSION INFRINGED THE PROVISIONS OF ARTICLES 85 AND 190 OF THE TREATY INASMUCH AS IT WRONGLY CONSIDERED THE RECOMMENDATION OF 1 DECEMBER 1975 AS AN EXTENSION OF THE MEASURES ADOPTED PRIOR TO THAT DATE AND THEREFORE DID NOT PROPERLY ASSESS THE RECOMMENDATION . IT IS SAID THAT COMPARISON OF THE RESTRICTIONS ON COMPETITION RESULTING , ACCORDING TO THE COMMISSION , FROM THE FORMER AGREEMENTS WITH THE TENOR OF THE RECOMMENDATION SHOWS THAT THE FACTUAL CIRCUMSTANCES OF THE TWO CASES ARE QUITE DIFFERENT AND HAVE DIFFERENT EFFECTS UPON COMPETITION . THAT FACTUAL ERROR IS SAID TO HAVE LED THE COMMISSION TO RELY ON THE EFFECTS OF THE FORMER AGREEMENTS AS REASONS FOR THE ALLEGED RESTRICTIVE EFFECTS ON COMPETITION RESULTING FROM THE RECOMMENDATION .
76 IN THAT RESPECT IT IS WELL TO OBSERVE IN THE FIRST PLACE THAT THE RECOMMENDATION AND THE MEASURES PRIOR TO IT ARE TREATED SEPARATELY IN THE DECISION FROM THE POINT OF VIEW OF BOTH THE FACTS AND THEIR LEGAL ASSESSMENT . AS REGARDS THE FACTS IT IS STATED IN PARAGRAPH 60 OF THE DECISION THAT THE RECOMMENDATION ' ' . . . REPLACES THE ARRANGEMENTS DESCRIBED IN I ( C ) ABOVE ' ' ( NAMELY THE PREVIOUS MEASURES ), WHICH IS A SIMPLE FACTUAL OBSERVATION NOT OPEN TO CHALLENGE . THE OPERATIVE PART MAINTAINS THE DISTINCTION BETWEEN THE TWO SETS OF MEASURES BY DEALING WITH THEM IN TWO SEPARATE ARTICLES , NAMELY , THE PREVIOUS MEASURES IN ARTICLE 1 AND THE RECOMMENDATION IN ARTICLE 2 .
77 AS THE COURT STATED IN ITS JUDGMENT OF 16 DECEMBER 1975 IN JOINED CASES 40 TO 48 , 50 , 54 TO 56 , 111 , 113 AND 114/73 ( SUIKER UNIE AND OTHERS V COMMISSION ( 1975 ) ECR 1663 AT P . 1930 , PARAGRAPH 111 ), THERE IS NO REASON AT ALL WHY THE COMMISSION SHOULD NOT MAKE A SINGLE DECISION COVERING SEVERAL INFRINGEMENTS PROVIDED THAT THE DECISION PERMITS EACH ADDRESSEE TO OBTAIN A CLEAR PICTURE OF THE COMPLAINTS MADE AGAINST IT . BECAUSE OF ITS STRUCTURE THE DECISION ALLOWS A CLEAR PICTURE OF DISTINCTION BETWEEN THE VARIOUS MEASURES , EVEN IF IT IS TRUE THAT AT VARIOUS PLACES IN THE LEGAL ASSESSMENT OF THE RECOMMENDATION , OBJECTIVES AND EFFECTS SIMILAR OR IDENTICAL TO THOSE CHARACTERISTIC OF CERTAIN FORMER MEASURES ARE ATTRIBUTED TO IT .
78 IT FOLLOWS THAT THE COMMISSION HAS NOT INFRINGED THE PROVISIONS OF ARTICLE 190 OF THE TREATY BY REASON OF THE INADEQUACY OR LACK OF THE STATEMENT OF REASONS . IT WILL BE APPROPRIATE TO EXAMINE THE VARIOUS FACTUAL INACCURACIES AND RESULTING ERRORS OF LAW CITED BY THE APPLICANTS WHEN THE SUBMISSIONS ON THE SUBSTANCE OF THE CASE ARE CONSIDERED . 0 III - THE FIRST SIX SUBMISSIONS AND THE TENTH SUBMISSION IN RELATION TO ARTICLE 6 OF THE EUROPEAN CONVENTION FOR THE PROTECTION OF HUMAN RIGHTS
79 IN ITS REPLY FEDETAB MAINTAINS THAT THE CONDUCT OF THE COMMISSION WHICH IS THE SUBJECT OF THE ABOVE SEVEN SUBMISSIONS IS ALSO AN INFRINGEMENT OF ARTICLE 6 ( 1 ) OF THE EUROPEAN CONVENTION FOR THE PROTECTION OF HUMAN RIGHTS , WHICH PROVIDES THAT IN THE DETERMINATION OF HIS CIVIL RIGHTS AND OBLIGATIONS EVERYONE IS ENTITLED TO A FAIR HEARING BY AN INDEPENDENT AND IMPARTIAL TRIBUNAL . CITING THE CASE-LAW OF THE EUROPEAN COURT OF HUMAN RIGHTS IN SUPPORT ( IN PARTICULAR ITS JUDGMENT IN THE CASE OF KONIG OF 31 MAY 1978 , SERIES A , NO 27 , P . 30 , PARAGRAPH 90 ), FEDETAB ALLEGES THAT THE RIGHTS DEFINED IN ARTICLE 85 ET SEQ . OF THE TREATY IN RELATION TO COMPETITION AND BY THE IMPLEMENTING REGULATION ARE CIVIL RIGHTS WITHIN THE MEANING OF THE PROVISIONS OF ARTICLE 6 ( 1 ) OF THE CONVENTION .
80 IN ANSWER THE COMMISSION OBSERVES THAT WHEN IT IS APPLYING THE RULES OF THE TREATY ON COMPETITION IT IS NOT A TRIBUNAL WITHIN THE MEANING OF THE SAID PROVISIONS . POINTING OUT THAT ONE OF THE CRITERIA FOR THE EXISTENCE OF A ' ' TRIBUNAL ' ' LAID DOWN BY THE EUROPEAN COURT OF HUMAN RIGHTS IS ITS INDEPENDENCE OF THE EXECUTIVE ( CF . THE JUDGMENT IN RINGEISEN , SERIES A , NO 13 , P . 39 , PARAGRAPH 94 ), THE COMMISSION OBSERVES THAT SINCE THE EXECUTIVE POWER OF THE COMMUNITY IS IN FACT VESTED IN IT IS AT LEAST DOUBTFUL WHETHER , NOT BEING INDEPENDENT OF THAT POWER , IT CAN CONSTITUTE A TRIBUNAL WITHIN THE ABOVE-MENTIONED SENSE .
81 THE ARGUMENTS OF FEDETAB ARE IRRELEVANT . THE COMMISSION IS BOUND TO RESPECT THE PROCEDURAL GUARANTEES PROVIDED FOR BY COMMUNITY LAW AND HAS DONE SO , AS IS APPARENT FROM WHAT HAS GONE BEFORE ; IT CANNOT , HOWEVER , BE CLASSED AS A TRIBUNAL WITHIN THE MEANING OF ARTICLE 6 OF THE EUROPEAN CONVENTION FOR THE PROTECTION OF HUMAN RIGHTS . IV - SUBMISSIONS ON A GENERAL PRINCIPLE OF LAW
82 ALL THE APPLICANTS EXCEPT JUBILE AND VANDER ELST COMPLAIN THAT THE COMMISSION HAS DISREGARDED A GENERAL PRINCIPLE OF LAW , NAMELY THAT OF THE EQUALITY OF PUBLIC AND PRIVATE UNDERTAKINGS WITH REGARD TO THE PROVISIONS OF THE TREATY . THE COMMISSION IS SAID TO HAVE CONDEMNED THE PRACTICES OF THE APPLICANTS IN RELATION TO DISTRIBUTION WHILST AT THE SAME TIME TOLERATING UNDOUBTED RESTRICTIONS ON COMPETITION IN FRANCE AND ITALY WHERE THERE ARE STATE MONOPOLIES FOR TOBACCO PRODUCTS .
83 IN SUPPORT OF THAT ARGUMENT FEDETAB ALLEGED THAT PENETRATION OF THE FRENCH AND ITALIAN MARKETS IS OBSTRUCTED BY MANY SERIOUS OBSTACLES OF A LEGAL AND ADMINISTRATIVE NATURE , WHICH IT LISTS IN ITS ORIGINATING APPLICATION . ANSWERING IN ITS REPLY THE EXPLANATIONS OF THE COMMISSION RELATING TO THE PROCEEDINGS WHICH THE COMMISSION HAS COMMENCED FOR THE PURPOSE OF ADJUSTING THOSE MONOPOLIES , FEDETAB STATES THAT IT REMAINS CONVINCED THAT THE COMMISSION HAS NOT OBSERVED THE LIMITS WHICH THE PRINCIPLE OF EQUALITY OF UNDERTAKINGS VIS-A-VIS THE TREATY PLACES ON ITS DISCRETION .
84 THAT ARGUMENT MUST BE REJECTED . IT IS APPARENT FROM THE FILE THAT VARIOUS ACTIONS HAVE BEEN COMMENCED BY THE COMMISSION AGAINST THE ABOVE-MENTIONED MEMBER STATES SO THAT IN FACT THE ARGUMENT IS INCORRECT . IN ANY EVENT EVEN ON THE ASSUMPTION THAT THE COMMISSION HAS FAILED TO FULFIL CERTAIN OF ITS OBLIGATIONS UNDER ARTICLE 155 OF THE TREATY BY FAILING TO ENSURE THE APPLICATION OF THE COMMUNITY LAW ON COMPETITION AND THE ADJUSTMENT OF STATE MONOPOLIES IN THE MANUFACTURED TOBACCO SECTOR , THAT FACT CANNOT JUSTIFY ANY INFRINGEMENTS OF THE COMMUNITY LAW ON COMPETITION COMMITTED IN THE SAME SECTOR IN THE PRESENT CASES BY THE APPLICANTS . V - SUBSTANTIVE SUBMISSIONS ON ARTICLE 85 ( 1 ) OF THE TREATY A - WRONG ASSESSMENT OF THE NATURE AND SCOPE OF THE RECOMMENDATION
85 JUBILE AND VANDER ELST MAINTAIN THAT THE COMMISSION INFRINGED ARTICLES 85 AND 190 OF THE TREATY BY WRONGLY REGARDING THE RECOMMENDATION AS HAVING CONSTITUTED AN AGREEMENT BETWEEN UNDERTAKINGS OR A DECISION OF AN ASSOCIATION OF UNDERTAKINGS OR AS HAVING IMPOSED OBLIGATIONS ON THE APPLICANTS . TO CONSTITUTE SUCH AN AGREEMENT THE RECOMMENDATION WOULD HAVE HAD TO INVOLVE FEATURES MAKING IT A BINDING CONTRACT UNDER NATIONAL LAW . IN THE PRESENT CASE IT IS NOT SUCH A CONTRACT SINCE THE BINDING ELEMENT IS LACKING .
86 THAT ARGUMENT CANNOT BE ACCEPTED . IN THE PRESENT CASE THE APPLICANT MEMBERS OF FEDETAB INFORMED THE COMMISSION THAT THEY WISHED TO BE PARTY TO THE NOTIFICATION OF THE RECOMMENDATION AND DURING THE PROCEEDINGS BEFORE THE COURT THEY ADMITTED THAT THEY HAD COMPLIED WITH IT SINCE 1 DECEMBER 1975 . IT FOLLOWS THAT THE RECOMMENDATION IS A FAITHFUL EXPRESSION OF THE APPLICANTS ' INTENTION TO CONDUCT THEMSELVES ON THE BELGIAN CIGARETTE MARKET IN CONFORMITY WITH THE TERMS OF THE RECOMMENDATION . THE NECESSARY CONDITIONS FOR THE APPLICATION OF ARTICLE 85 ( 1 ) ARE THEREFORE SATISFIED .
87 CERTAIN APPLICANTS INCLUDING THE INTERVENER AGROTAB COMPLAIN FURTHER THAT THE COMMISSION WRONGLY TREATED THE RECOMMENDATION AS A DECISION OF AN ASSOCIATION OF UNDERTAKINGS WITHIN THE MEANING OF ARTICLE 85 ( 1 ). THE RECOMMENDATION IS SAID TO HAVE BEEN MADE BY FEDETAB , A NON-PROFIT-MAKING ASSOCIATION WHICH AS SUCH DOES NOT TRADE .
88 THAT ARGUMENT CANNOT BE ACCEPTED EITHER . IT IS APPARENT FROM ARTICLE 8 OF THE STATUTES OF FEDETAB THAT THE DECISIONS TAKEN BY IT ARE BINDING ON ITS MEMBERS . FURTHER , ARTICLE 85 ( 1 ) ALSO APPLIES TO ASSOCIATIONS IN SO FAR AS THEIR OWN ACTIVITIES OR THOSE OF THE UNDERTAKINGS BELONGING TO THEM ARE CALCULATED TO PRODUCE THE RESULTS WHICH IT AIMS TO SUPPRESS . SINCE SEVERAL MANUFACTURERS HAVE EXPRESSLY STATED THAT THEY ARE COMPLYING WITH THE PROVISIONS OF THE RECOMMENDATION , IT CANNOT ESCAPE ARTICLE 85 OF THE TREATY SIMPLY BECAUSE IT HAS BEEN MADE BY A NON-PROFIT-MAKING ASSOCIATION .
89 NOR IS IT POSSIBLE TO ACCEPT THE ARGUMENT TO THE EFFECT THAT THE RECOMMENDATION HAS NO BINDING EFFECT AND THAT THE DECISION IS WRONG IN REFERRING IN PARAGRAPH 61 TO A GENUINE MANDATORY RULE OF CONDUCT FOR ALL FIRMS IN THE INDUSTRY . APART FROM THE FACT THAT PURSUANT TO ARTICLE 8 OF THE STATUTES OF FEDETAB THE PROVISIONS OF THE RECOMMENDATION ARE BINDING ON ITS MEMBERS , IT IS NECESSARY ALSO TO POINT OUT THAT COMPLIANCE WITH THE RECOMMENDATION BY SEVEN UNDERTAKINGS , THE APPLICANTS IN THE PRESENT CASES , WHO CONTROL A SUBSTANTIAL PART OF THE TOTAL CIGARETTE SALES IN BELGIUM , HAS A PROFOUND INFLUENCE ON COMPETITION IN THE MARKET IN QUESTION . B - WRONG ASSESSMENT ALLEGED BY THE APPLICANT HVL
90 THE APPLICANT HVL , A LUXEMBOURG CIGARETTE MANUFACTURER , COMPLAINS OF INFRINGEMENT OF ARTICLES 85 AND 190 OF THE TREATY WITH REGARD TO IT , INASMUCH AS THE COMMISSION WRONGLY CONSIDERED THAT HVL TOOK CONCERTED ACTION WITH THE OTHER PARTIES IN RESPECT OF THE MEASURES PRIOR TO 1 DECEMBER 1975 . IN THAT RESPECT THE APPLICANT OBSERVES THAT AS REGARDS THE PERIOD PRIOR TO 1 DECEMBER IT DIT NOT SIGN ANY OF THE AGREEMENTS REFERRED TO IN THE DECISION EXCEPT THE LETTER OF 23 DECEMBER 1971 LAYING DOWN THE MAXIMUM PERIODS ALLOWED FOR PAYMENT . IT FOLLOWS THAT ONLY THE MEASURES REFERRED TO IN THAT LETTER CAN BE HELD AGAINST IT . BECAUSE OF PRESSURE FROM THE BELGIAN MARKET IT FELL INTO LINE WITH THE CONDUCT OF THE OTHER BELGIAN MANUFACTURERS AND IMPORTERS , BUT THAT DID NOT MEAN THAT THERE COULD BE ASSUMED TO BE AN AGREEMENT OR CONCERTED PRACTICE .
91 THAT ARGUMENT CANNOT BE ACCEPTED . THE APPLICANT HAS BEEN A MEMBER OF FEDETAB SINCE 1947 AND PURSUANT TO ARTICLE 8 OF THE STATUTES OF FEDETAB THE APPLICANT HAD TO COMPLY WITH ALL THE DECISIONS TAKEN PURSUANT TO THE SAID STATUTES . FURTHER , AS HAS ALREADY BEEN OBSERVED IN RELATION TO THE PREVIOUS MEASURES , FEDETAB ACTED IN THE NAME OF ITS MEMBERS , WHO TOOK PART IN THE ADOPTION AND OBSERVANCE OF THE SAID MEASURES THROUGH THE INTERMEDIARY OF THEIR TRADE ASSOCIATION . C - SUBMISSIONS RELATING TO THE EFFECT UPON COMPETITION
92 THE APPLICANTS MOREOVER ALLEGE ESSENTIALLY THAT WITH ITS DECISION THE COMMISSION INFRINGED ARTICLE 85 ( 1 ) OF THE TREATY INASMUCH AS IT WRONGLY CONSIDERED THAT THE PURPOSE OR EFFECT OF THE CONTESTED MEASURES WAS , AT THE VERY LEAST , APPRECIABLY TO RESTRICT COMPETITION . 1 . INTRODUCTORY OBSERVATIONS
93 FOR THE BETTER APPRECIATION OF THE APPLICANTS ' ARGUMENTS IT IS ADVISABLE IN THE FIRST PLACE TO RECALL THE NATURE AND SCOPE OF THE CONTESTED MEASURES FOR THE PURPOSE OF CONSIDERING THEM IN THE LIGHT OF ARTICLE 85 OF THE TREATY . ( A ) THE CONTESTED MEASURES ( I ) THE PERIOD PRIOR TO 1 DECEMBER 1975
94 AS HAS ALREADY BEEN STATED , IN ARTICLE 1 OF THE DECISION THE COMMISSION LISTS THE MEASURES WHICH IT CONDEMNS AS CONSTITUTING INFRINGEMENTS OF ARTICLE 85 ( 1 ) PRIOR TO 1 DECEMBER 1975 .
95 IN THE FIRST PLACE THERE IS THE APPROVAL AND CLASSIFICATION BY FEDETAB OF WHOLESALERS AND RETAILERS INTO DIFFERENT CATEGORIES ACCORDING TO A CLASSIFICATION MADE BY THE BELGIAN COMMITTEE FOR DISTRIBUTION AND THE ALLOCATION TO THOSE CATEGORIES OF DIFFERENT FIXED PROFIT MARGINS INCLUDING IN PARTICULAR A DIRECT REBATE REPRESENTING THE MAXIMUM MARGIN ALLOWED BY THE BELGIAN MINISTER FOR ECONOMIC AFFAIRS UNDER THE SYSTEM OF NOTIFICATION OF PRICE INCREASES . ACCORDING TO THE COMMISSION , THAT REBATE WAS RETAINED ONLY BY CO-OPERATIVES AND SUPERMARKETS WHICH ACTED ALSO AS RETAILERS SINCE WHOLESALERS PROPERLY SO CALLED HAD TO ALLOW PART OF IT TO THE RETAILERS TO WHOM THEY RESOLD THEIR PRODUCTS . THE RETAILERS , NUMBERING 80 000 IN BELGIUM , WERE ACCORDING TO THE COMMISSION DIVIDED PURSUANT TO AN AGREEMENT MADE ON 29 DECEMBER 1970 BETWEEN FEDETAB AND THE FNCG INTO ' ' APPROVED RETAILERS ' ' ( NUMBERING SOME 2 000 ) AND ' ' NON-APPROVED RETAILERS ' ' , THE LATTER RECEIVING FROM THE WHOLESALER A LESSER PROPORTION OF THE REBATE THAN THAT ALLOWED TO APPROVED RETAILERS .
96 THE COMMISSION THEN POINTS TO A NUMBER OF MEASURES ADOPTED BY FEDETAB AND THE FNCG IN RELATION TO RESALE PRICES . IT DRAWS ATTENTION IN PARTICULAR TO THE AGREEMENT OF 22 MAY 1967 MADE BETWEEN FEDETAB AND THE FNCG ACCORDING TO WHICH WHOLESALERS UNDERTOOK TO RESELL THE MANUFACTURED TOBACCO PRODUCTS AT THE PRICES INDICATED BY THE SUPPLIERS WITHOUT ANY REBATE OR BENEFIT OTHER THAN THE RETAILERS ' MARGIN . PURSUANT TO THE SAME AGREEMENT WHOLESALERS HAVING RETAIL SHOPS UNDERTOOK TO RESELL THE CIGARETTES AT THE RETAIL PRICES STATED ON THE TAX BAND WITHOUT ANY ALLOWANCE TO THE CONSUMER . APPROVED RETAILERS SIGNED A STANDARD AGREEMENT SUBMITTED TO THEM BY FEDETAB CONTAINING A SIMILAR UNDERTAKING . BY AN INTERPRETATIVE SUPPLEMENT DATED 5 OCTOBER 1967 TO THE ABOVE-MENTIONED AGREEMENT FEDETAB AND THE FNCG SPECIFIED THAT WHOLESALERS OPERATING RETAIL SHOPS WERE REGARDED AS UNDERTAKING TO REFUSE TO SUPPLY RETAILERS WHO DID NOT OBSERVE THE PRICE ON THE TAX BAND . BY A FURTHER INTERPRETATIVE SUPPLEMENT OF 29 DECEMBER 1970 SIGNED BY FEDETAB AND THE FNCG THE LATTER UNDERTOOK TO CARRY OUT A STRICT AND SYSTEMATIC CHECK THAT THE AGREEMENTS WERE IMPLEMENTED . ON 30 JUNE 1972 ( THE DATE ON WHICH THE AGREEMENT OF 22 MAY 1967 WOULD IN DUE COURSE HAVE EXPIRED ) FEDETAB SUBMITTED A STANDARD TYPE OF AGREEMENT DESCRIBED AS ' ' SPECIAL AGREEMENT IN RELATION TO CUT-PRICE SELLING ' ' TO WHOLESALERS WHO THEREBY RECOGNIZED THE AGREEMENT OF 22 MAY 1967 AND THE TWO SUPPLEMENTS THERETO OF 29 DECEMBER 1970 AND 22 MARCH 1972 ( SEE BELOW ) AND UNDERTOOK FOR THE PERIOD FROM 1 JULY 1972 TO 30 JUNE 1977 TO RESELL THE MANUFACTURED TOBACCO PRODUCTS AT THE PRICES LAID DOWN BY THE SUPPLIERS WITHOUT ANY REBATE OR BONUS .
97 THE COMMISSION ALSO REFERS TO THE REFUSAL BY FEDETAB SINCE 1 JANUARY 1971 TO APPROVE ANY NEW WHOLESALERS EXCEPT IN THE CATEGORIES OF ' ' SPECIALIST ITINERANT WHOLESALERS ' ' OR ' ' HOTELS , RESTAURANTS , CAFES ' ' OR CO-OPERATIVES OR SUPERMARKETS EXCEPT IN THE CATEGORIES OF ' ' LARGE DEPARTMENT STORES AND POPULAR DEPARTMENT STORES ' ' . APPLICANTS FOR APPROVAL IN THOSE CATEGORIES HAD TO UNDERTAKE TO OBSERVE THE PRICES LAID DOWN , TO PAY FOR THEIR PURCHASE IN CASH AND TO HELP TO PROMOTE ANY NEW BRANDS .
98 THE COMMISSION MOREOVER REFERS TO AN ADDITIONAL INTERPRETATIVE AGREEMENT OF 22 MARCH 1972 WHEREBY THE FNCG , REFERRING TO THE ADDITIONAL AGREEMENT OF 29 DECEMBER 1970 , INFORMED ITS MEMBERS THAT IN FUTURE THEY WERE STRICTLY FORBIDDEN TO SELL MANUFACTURED TOBACCO PRODUCTS TO FOOD-WHOLESALERS AND OTHER WHOLESALERS NOT DIRECTLY SUPPLIED BY MANUFACTURERS , WHERE THE PRODUCTS CONCERNED WERE FOR RESALE TO RETAILERS AND TO WHOLESALERS TO WHOM THE MANUFACTURERS HAD ALREADY ALLOCATED A QUOTA . SUPPLIES WOULD BE SUSPENDED IF THE BAN WERE BROKEN . THAT AGREEMENT WAS REINFORCED ACCORDING TO THE COMMISSION BY THE TERMS OF A STANDARD AGREEMENT SIGNED BY ALMOST ALL WHOLESALERS AFTER BEING INVITED BY FEDETAB ON 30 JUNE 1972 TO DO SO AND ACCORDING TO WHICH THE WHOLESALERS UNDERTOOK TO OBSERVE IN PARTICULAR THE ABOVE-MENTIONED BAN . FAILURE TO HONOUR THESE COMMITMENTS , ACCORDING TO THE COMMISSION , WOULD RESULT IN THE WITHDRAWAL OF END-OF-YEAR REBATES AND WHOLESALE TERMS .
99 COLLECTIVE MEASURES ON TERMS OF PAYMENT ADOPTED BY CERTAIN MEMBERS OF FEDETAB ARE ALSO THE SUBJECT OF AN OBJECTION MADE BY THE COMMISSION AGAINST THE APPLICANTS . BY LETTER DATED 23 DECEMBER 1971 ON FEDETAB LETTER PAPER NINE MANUFACTURING MEMBERS THEREOF INFORMED ALL THOSE ENJOYING WHOLESALE TERMS THAT TERMS OF PAYMENT WOULD BE REDUCED TO A MAXIMUM OF A FORTNIGHT AND THAT MANUFACTURERS WOULD SUSPEND SUPPLIES OF THOSE TIME-LIMITS WERE NOT OBSERVED . ACCORDING TO THE COMMISSION THOSE MEASURES WERE APPLIED UNTIL THE ENTRY INTO FORCE OF THE RECOMMENDATION OF 1 DECEMBER 1975 .
100 THE COMMISSION FINALLY COMPLAINS THAT THE APPLICANTS REQUIRED CERTAIN CATEGORIES OF RETAILERS , NAMELY LARGE DEPARTMENT STORES AND POPULAR DEPARTMENT STORES TO OFFER A MINIMUM RANGE OF BRANDS DECIDED UPON BY FEDETAB AND ENSURED THAT THE REQUIREMENT WAS OBSERVED BY VARIOUS COLLECTIVE MEASURES AND IN PARTICULAR BY SUSPENDING SUPPLIES OF CIGARETTES TO GB IN MARCH 1972 .
101 IT SHOULD BE NOTED THAT THE APPLICANTS DO NOT CHALLENGE THE CORRECTNESS IN SUBSTANCE OF THE FACTS ALLEGED BY THE COMMISSION EXCEPT TO SAY THAT THE PRICE MEASURES LAPSED IN AUGUST 1974 AND THOSE RELATING TO THE BAN ON RESALE WERE NOT FOLLOWED UP AND IN ANY EVENT TERMINATED ON 1 JULY 1973 . ( II ) THE FEDETAB RECOMMENDATION OF 1 DECEMBER 1975
102 THE RECOMMENDATION WHICH REPLACED THE PREVIOUS MEASURES AND OF WHICH NOTICE WAS GIVEN BY FEDETAB TO THE COMMISSION ON 1 DECEMBER 1975 CONCERNS ONLY THE CIGARETTE SUB-SECTOR . IT IS COMMON GROUND THAT THE OTHER APPLICANTS INFORMED THE COMMISSION THAT THEY INTENDED TO COMPLY WITH THE RECOMMENDATION AND WISHED TO BE PARTY TO THE NOTIFICATION . ACCORDING TO THE REASONS STATED IN THE COMMISSION DECISION THE FIRMS IN FEDETAB HAD A GREAT INFLUENCE ON OTHER MANUFACTURERS AND IMPORTERS AND ON WHOLESALERS AND RETAILERS . THE RECOMMENDATION THEREFORE OPERATES AS A GENUINE MANDATORY RULE OF CONDUCT FOR ALL FIRMS IN THE INDUSTRY . IT CONSTITUTES A DECISION OF AN ASSOCIATION OF UNDERTAKINGS AND AN AGREEMENT BETWEEN THEM THE OBJECT AND EFFECT OF WHICH ARE APPRECIABLY TO RESTRICT COMPETITION BETWEEN MANUFACTURERS AND ALTERNATIVELY BETWEEN WHOLESALERS WITHIN THE COMMON MARKET . FURTHER , IT DOES NOT SATISFY THE CONDITIONS OF ARTICLE 85 ( 3 ) OF THE TREATY INASMUCH AS IT DOES NOT CONTRIBUTE TO IMPROVING DISTRIBUTION SUFFICIENTLY TO COUNTER-BALANCE THE RESTRICTIVE EFFECTS UPON COMPETITION WHICH IT CAUSES AND DOES NOT ALLOW CONSUMERS A FAIR SHARE OF THE RESULTING BENEFIT .
103 UNDER THE RECOMMENDATION THE ORGANIZATION OF CIGARETTE DISTRIBUTION IN BELGIUM IS GOVERNED BY THE FOLLOWING THREE PRINCIPLES : - THE CLASSIFICATION OF WHOLESALERS AND RETAILERS INTO CATEGORIES AND THE LAYING DOWN BOTH FOR WHOLESALE AND RETAIL TRADE OF MAXIMUM GRADED REBATES TO BE GRANTED ON INVOICES TO CUSTOMERS AND THE MINIMUM REQUIREMENTS ( DEGREE OF SPECIALIZATION IN TOBACCO PRODUCTS , VOLUME OF SALES , NUMBER OF BRANDS OFFERED AND NUMBER OF SALES OUTLETS SERVED ) FOR ENTITLEMENT ; - THE PAYMENT BY FEDETAB TO THE WHOLESALER OR RETAILER OF AN END-OF-YEAR REBATE CALCULATED ON THE BASIS OF HIS CIGARETTE PURCHASES OF ALL BRANDS MADE DURING THE YEAR FROM ANY BELGIAN OR FOREIGN MANUFACTURER WHETHER OR NOT A MEMBER OF FEDETAB ; - THE PRINCIPLE OF CASH PAYMENT WITH THE OPPORTUNITY OF GRANTING SPECIAL PERIODS OF CREDIT NOT EXCEEDING A FORTNIGHT FROM THE DATE OF THE INVOICE .
104 IT IS APPARENT FROM THAT ANALYSIS THAT THE VARIOUS MEASURES ADOPTED PRIOR TO 1 DECEMBER 1975 AND THOSE CONTAINED IN THE RECOMMENDATION , EVEN THOUGH DIFFERING IN CERTAIN RESPECTS , HAD BASICALLY SIMILAR AIMS CONCERNING THE PROFIT MARGINS OF WHOLESALERS AND RETAILERS ( HEREINAFTER REFERRED TO AS ' ' TRADE MARGINS ' ' ), END-OF-YEAR REBATES AND TERMS OF PAYMENT .
105 FOR THE PURPOSE OF CONSIDERING THE QUESTION WHETHER THE OBJECT OR EFFECT OF THE CONTESTED MEASURES IS TO PREVENT , RESTRICT OR DISTORT COMPETITION WITHIN THE COMMON MARKET IT IS AS WELL TO CONSIDER SEPARATELY FIRST OF ALL THE MEASURES RELATING TO THE TRADE MARGINS , END-OF-YEAR REBATE AND TERMS OF PAYMENT FOR THE WHOLE OF THE TWO PERIODS . 2 . MEASURES RELATING TO THE TRADE MARGINS , END-OF-YEAR REBATE AND MAXIMUM TERMS OF PAYMENT ( A ) TRADE MARGINS
106 AS IS APPARENT FROM THE DESCRIPTION OF THE CONTESTED MEASURES , ONE OF THEIR FEATURES IS THE AGREEMENT BY THE MANUFACTURERS OF TOBACCO PRODUCTS AS TO THE CLASSIFICATION OF THE WHOLESALE AND RETAIL TRADE AND AS TO THE CORRESPONDING TRADE MARGINS . THAT SYSTEM WAS MODIFIED BY THE FEDETAB RECOMMENDATION OF 1 DECEMBER 1975 ONLY TO THE EFFECT , AS THE COMMISSION POINTED OUT IN PARAGRAPH 97 OF THE CONTESTED DECISION , THAT THE RECOMMENDATION TAKES ACCOUNT OF THREE NEW CRITERIA FOR ESTABLISHING THE AMOUNT OF THE VARIOUS MARGINS , NAMELY THE ANNUAL SALES VOLUME , THE NUMBER OF BRANDS OFFERED AND THE NUMBER OF SALES OUTLETS SERVED . FURTHER , THE SYSTEM ESTABLISHED BY THE RECOMMENDATION IS CONFINED TO THE CIGARETTE SUB-SECTOR ALONE , WHEREAS THE MEASURES IN FORCE PREVIOUSLY APPLIED TO ALL MANUFACTURED TOBACCO PRODUCTS .
107 THE COMMISSION FOUND AT ARTICLES 1 AND 2 OF THE DECISION THAT THE CLASSIFICATION OF BELGIAN WHOLESALERS AND RETAILERS INTO CATEGORIES AND THE ALLOCATION TO THE LATTER OF DIFFERENT PROFIT MARGINS CONSTITUTES AN INFRINGEMENT OF ARTICLE 85 ( 1 ) OF THE TREATY . IT GIVES AS REASON FOR THAT FINDING ( PARAGRAPHS 81 AND 97 ) THAT THE SYSTEM CONSTITUTES A RESTRICTION ON COMPETITION BOTH FOR MANUFACTURERS AND FOR WHOLESALERS . IT DEPRIVES MANUFACTURERS OF THE OPPORTUNITY OF COMPETING INTER SE WITH REGARD TO PROFIT MARGINS AND WHOLESALERS WITH REGARD TO THE SERVICES THEY RENDER MANUFACTURERS . BOTH IN THE SYSTEM PRIOR TO 1 DECEMBER 1975 AND THAT ESTABLISHED BY THE RECOMMENDATION OF THAT DATE NO ACCOUNT IS TAKEN OF SERVICES , OTHER THAN THOSE BEARING ON THE CLASSIFICATION , WHICH INTERMEDIARIES MAY RENDER INDIVIDUALLY .
108 DURING THE PROCEEDINGS BEFORE THE COURT THE COMMISSION STRESSED THAT THE ESSENCE OF THE MEASURES IN QUESTION IS THE HORIZONTAL CONCERTED PRACTICE OF THE APPLICANTS REGARDING THE PROFIT MARGINS AND OTHER FINANCIAL ADVANTAGES WHICH THE MANUFACTURERS AND IMPORTERS ALLOW TRADERS . IN THE COMMISSION ' S VIEW TO MAKE THOSE MARGINS AND BONUSES UNIFORM IS STRICTLY EQUIVALENT TO AN AGREEMENT ON PRICES BETWEEN MANUFACTURERS AND IMPORTERS GOVERNING THE PRICE TO BE PAID FOR THE SERVICE OF INTERMEDIARIES . IT CONSTITUTES A SERIOUS BREACH OF THE COMPETITIVE SYSTEM INTENDED BY THE TREATY .
109 FROM THAT POINT OF VIEW IT IS NECESSARY TO CONSIDER WHETHER , IN SO FAR AS THE CONTESTED MEASURES RELATE TO TRADE MARGINS AND OTHER FINANCIAL BENEFITS , THEY HAVE AS THEIR OBJECT OR EFFECT , CONTRARY TO ARTICLE 85 ( 1 ) OF THE TREATY , THE PREVENTION , RESTRICTION OR APPRECIABLE DISTORTION OF COMPETITION IN THE SECTOR OF THE PRODUCTS IN QUESTION WITHIN THE COMMON MARKET . GROUNDS CONTINUED UNDER DOC.NUM : 678J0209.1
110 PRIMA FACIE IT APPEARS FROM THE ACTUAL SUBSTANCE OF THE CONTESTED MEASURES THAT THEIR OBJECT IS IN PARTICULAR TO EXCLUDE THE POSSIBILITY OF MANUFACTURERS AND IMPORTERS NEGOTIATING WITH WHOLESALERS INDIVIDUAL MARGINS AND MORE ADVANTAGEOUS BENEFITS ACCORDING TO THE MARKET SITUATION . THAT IS CONFIRMED BY THE FACT THAT THE APPLICANTS ADMITTED COMPLYING WITH THE SYSTEM , ESTABLISHED BOTH BY THE RECOMMENDATION AND THE MEASURES IN FORCE PRIOR THERETO , IN RELATION TO MARGINS .
111 THE APPLICANTS MAINTAIN HOWEVER THAT VARIOUS NATIONAL RULES AND ADMINISTRATIVE PRACTICES IN FORCE IN BELGIUM IN THE SECTOR OF MANUFACTURED TOBACCO PRODUCTS HAVE SUCH DECISIVE EFFECT UPON CONDUCT OF THE BELGIAN MANUFACTURERS AND IMPORTERS OF THOSE PRODUCTS BOTH AS REGARDS THE MARGINS AND OTHER FINANCIAL BENEFITS ALLOWABLE TO TRADERS AND THE SALE PRICES TO CONSUMERS THAT THE OBJECT OR EFFECT OF THE CONTESTED MEASURES CANNOT BE TO RESTRICT COMPETITION , AT LEAST TO AN APPRECIABLE EXTENT .
112 IT FOLLOWS FROM THE PREVIOUS CONSIDERATIONS THAT IT IS NECESSARY TO CONSIDER THE NATURE AND SCOPE OF THE SAID BELGIAN RULES AND ADMINISTRATIVE PRACTICES AND ANY EFFECT THEY MAY HAVE ON COMPETITION . ( I ) BELGIAN RULES AND ADMINISTRATIVE PRACTICES - THE BELGIAN TAX RULES REGARDING EXCISE DUTIES ON TOBACCO
113 IT IS APPARENT FROM THE FILE THAT A FEATURE OF THE TAX SYSTEM TO WHICH MANUFACTURED TOBACCO PRODUCTS , ESPECIALLY CIGARETTES , ARE SUBJECT IN BELGIUM IS AN AD VALOREM EXCISE DUTY CALCULATED ON THE RETAIL SELLING PRICE INCLUDING VALUE- ADDED TAX . THE AGGREGATE AMOUNT OF THE TWO TAXES MUST BE PAID BY THE MANUFACTURER OR IMPORTER WHEN BUYING THE TAX BANDS WHICH ARE AFFIXED TO THE VARIOUS TOBACCO PRODUCTS BEFORE THEY ARE MARKETED WHETHER THEY ARE MANUFACTURED IN BELGIUM OR IMPORTED INTO THAT COUNTRY ; THE TAX BANDS SHOW THE RETAIL PRICE TAKEN INTO ACCOUNT IN CALCULATING THE TAXES DUE .
114 UNDER BELGIAN LAW RETAILERS MUST STRICTLY OBSERVE THE PRICES SHOWN ON THE TAX BANDS . THAT REQUIREMENT ARISES FROM ARTICLE 58 OF THE BELGIAN LAW OF 3 JULY 1969 ESTABLISHING THE VAT CODE , WHICH PROVIDES THAT AS REGARDS THE SAID PRODUCTS THE VALUE-ADDED TAX IS CALCULATED ON THE BASIS OF THE PRICE ON THE TAX BAND WHICH MUST BE THE IMPOSED CONSUMER PRICE . IT FOLLOWS THAT AS FROM 1 JANUARY 1971 , WHEN THE PROVISIONS OF ARTICLE 58 ENTERED INTO FORCE , THE RETAIL PRICE SELECTED BY THE MANUFACTURER OR IMPORTER AUTOMATICALLY BECOMES THE IMPOSED CONSUMER PRICE .
115 IT IS COMMON GROUND THAT DURING THE WHOLE PERIOD DURING WHICH THE MEASURES IN QUESTION HAVE APPLIED AND IN ANY EVENT FROM 13 MARCH 1962 , THE DATE WHEN REGULATION NO 17 OF THE COUNCIL OF 6 FEBRUARY 1962 ENTERED INTO FORCE , MANUFACTURED TOBACCO PRODUCTS HAVE BEEN AND STILL ARE SUBJECT TO A HIGH PROPORTIONAL EXCISE DUTY .
116 IT IS APPARENT FROM THE FILE THAT THE PROPORTION OF THE RETAIL PRICE REPRESENTED BY TAXATION IS MADE UP AS FOLLOWS : A SPECIFIC EXCISE DUTY OF A GIVEN AMOUNT IN BELGIAN FRANCS PER ARTICLE ; A PROPORTIONAL EXCISE DUTY AMOUNTING TO A GIVEN PERCENTAGE OF THE RETAIL PRICE ; VALUE-ADDED TAX CALCULATED ON THE NON-TAX ITEMS OF THE RETAIL PRICE AND ON THE TOTAL EXCISE DUTY . THAT EXCISE DUTY IS ALMOST WHOLLY PROPORTIONAL , SINCE THE RATIO BETWEEN THE SPECIFIC EXCISE DUTY AND THE PROPORTIONAL EXCISE DUTY IS 5 : 95 . IT APPEARS FROM A TABLE OF FIGURES SUPPLIED BY THE COMMISSION IN ITS REJOINDER , THE ACCURACY OF WHICH HAS NOT BEEN CHALLENGED BY THE APPLICANTS , THAT AT 1 JANUARY 1979 EXCISE DUTIES REPRESENTED 65.65% AND VALUE-ADDED TAX 5.66% OF A PACKET OF 25 CIGARETTES IN THE MOST POPULAR PRICE CATEGORY IN BELGIUM ( BFR 41 ) SO THAT TAX REPRESENTED SOME 71.31% OF THE RETAIL SALE PRICE . IN PARAGRAPH 11 OF THE COMMISSION DECISION IT IS SAID THAT IN AGGREGATE TAX ACCOUNTS FOR APPROXIMATELY 70% OF THE RETAIL SELLING PRICE . IT FOLLOWS THAT THE NON-TAX PART OF THE RETAIL PRICE , MADE UP ON THE ONE HAND OF THE MANUFACTURERS ' OR IMPORTERS ' SHARE OF THE RETAIL PRICE AND ON THE OTHER HAND THE TRADE MARGINS , REPRESENTS SOME 30% OF THE RETAIL PRICE .
117 IT SHOULD BE NOTED THAT THE RATIO OF 5 : 95 BETWEEN THE SPECIFIC EXCISE DUTY AND THE PROPORTIONAL EXCISE DUTY IS IN ACCORDANCE WITH THE MINIMUM REQUIREMENT IMPOSED BY COUNCIL DIRECTIVE NO 72/464 OF 19 DECEMBER 1972 ON TAXES OTHER THAN TURNOVER TAXES WHICH AFFECT THE CONSUMPTION OF MANUFACTURED TOBACCO ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1972 ( 31 DECEMBER ), L 303 AND 306 , P . 3 ) AS AMENDED IN PARTICULAR BY COUNCIL DIRECTIVE NO 77/805 OF 19 DECEMBER 1977 ( OFFICIAL JOURNAL L 338 , P . 22 ). THAT DIRECTIVE LAYS DOWN THE PRINCIPLE OF THE HARMONIZATION OF THE NATIONAL STRUCTURES OF EXCISE DUTIES BY SEVERAL STAGES WITHIN A SYSTEM OF EXCISE DUTIES TO BE ESTABLISHED BY EACH MEMBER STATE CONTAINING A PROPORTIONAL ELEMENT CALCULATED ON THE RETAIL SELLING PRICE AND A SPECIFIC ELEMENT CALCULATED PER UNIT OF THE PRODUCT . AS IS CLEAR FROM THE PREAMBLE TO THE DIRECTIVE THE OBJECT OF THAT HARMONIZATION IS INTER ALIA THE PROGRESSIVE ELIMINATION OF TAXATION SYSTEMS AFFECTING THE CONSUMPTION OF TOBACCO IN THE MEMBER STATES AND THE FACTORS LIKELY TO IMPEDE THE FREE MOVEMENT OF TOBACCO AND TO DISTORT THE CONDITIONS OF COMPETITION BOTH ON A NATIONAL AND COMMUNITY LEVEL .
118 ARTICLE 10 OF DIRECTIVE NO 72/464 AND ARTICLE 10 B ( 5 ) INSERTED THEREIN BY DIRECTIVE NO 77/805 NEVERTHELESS ALLOW MEMBER STATES TO LEVY ON CIGARETTES A MINIMUM EXCISE DUTY , THE AMOUNT OF WHICH MAY NOT EXCEED 90% OF THE SUM OF THE PROPORTIONAL EXCISE DUTY AND THE SPECIFIC EXCISE DUTY WHICH THEY LEVY ON CIGARETTES IN THE MOST POPULAR PRICE CATEGORY . IT IS COMMON GROUND THAT THE BELGIAN STATE USES THAT POWER TO THE MAXIMUM . - PRICE CONTROL MEASURES IN BELGIUM AND BELGIAN TAXATION POLICY
119 THE MINISTERIAL ORDER OF 22 DECEMBER 1971 PROVIDES THAT NOT LATER THAN THREE MONTHS BEFORE IT IS TO TAKE EFFECT MANUFACTURERS AND IMPORTERS ARE REQUIRED TO INFORM THE MINISTER FOR ECONOMIC AFFAIRS OF EVERY INTENDED PRICE INCREASE IN THE BELGIAN MARKET IN RESPECT OF ALL PRODUCTS , MATERIALS , COMMODITIES , GOODS AND SERVICES . BEFORE THE EXPIRY OF THE AFOREMENTIONED PERIOD THE MINISTER FOR ECONOMIC AFFAIRS MAY INFORM THE UNDERTAKING GIVING NOTICE THAT THE INTENDED PRICE INCREASE MAY NOT TAKE EFFECT EITHER IN WHOLE OR IN PART FOR A MAXIMUM PERIOD OF SIX MONTHS . ON THE EXPIRY OF THE PERIOD LAID DOWN BY THE MINISTER THE UNDERTAKING MAY CHARGE THE INCREASE OF WHICH IT HAS GIVEN NOTICE BUT IT MUST NOTIFY THE PRICES WHICH IT IN FACT CHARGES .
120 IT MUST HOWEVER BE OBSERVED THAT ALTHOUGH IN THE MANUFACTURED TOBACCO SECTOR INDIVIDUAL NOTIFICATIONS BY SEPARATE UNDERTAKINGS ARE POSSIBLE , IT NEVERTHELESS APPEARS THAT IN PRACTICE NEGOTIATIONS IN RELATION TO PRICE INCREASES ARE CONDUCTED IN THE MAJORITY OF CASES BY THE TRADE ASSOCIATIONS OF THE VARIOUS BRANCHES OF THE SECTOR . IT ALSO APPEARS THAT DURING THOSE JOINT NEGOTIATIONS ALL THE ITEMS OF THE RETAIL PRICE , INCLUDING THE VARIOUS MAXIMUM TRADE MARGINS , ARE SUBJECT TO CAREFUL EXAMINATION BOTH BY THE MINISTER FOR ECONOMIC AFFAIRS AND THE MINISTER FOR FINANCE WHO EXERCISES CONSIDERABLE INFLUENCE ON THE AMOUNT OF THE INCREASE IN THE PRICE .
121 SINCE MANUFACTURED TOBACCO IS A VERY IMPORTANT SOURCE OF REVENUE , THE GOVERNMENT ENSURES THAT THE REVENUE IS NOT REDUCED BY REASON OF A TOO SHARP INCREASE IN RETAIL PRICE , WHICH MIGHT LEAD TO A REDUCTION IN CONSUMPTION . THE APPLICANTS HAVE CITED CERTAIN EXAMPLES OF GOVERNMENT INTERVENTION THE EFFECT OF WHICH HAS BEEN TO PREVENT SUCH AN INCREASE .
122 MOREOVER , AS THE BELGIAN GOVERNMENT CONFIRMED IN ANSWER TO A WRITTEN QUESTION PUT BY THE COURT , THE BELGIAN PROVISIONS LAID DOWN BY LAW AND REGULATION IN RESPECT OF REVENUE DO NOT ALLOW THE MANUFACTURER OR IMPORTER SIMULTANEOUSLY TO MARKET CIGARETTES OF THE SAME QUALITY AND THE SAME BRAND WITH THE SAME NUMBER IN IDENTICAL PACKAGING BUT WITH DIFFERENT TAX BANDS . THE BELGIAN GOVERNMENT OBSERVES THAT THAT CONDITION ACCORDS WITH ARTICLE 4 ( 1 ) OF COUNCIL DIRECTIVE NO 72/464 WHICH PROVIDES THAT THE PROPORTIONAL EXCISE DUTY SHALL BE CALCULATED ON THE MAXIMUM RETAIL SELLING PRICE . ACCORDING TO THE BELGIAN GOVERNMENT , IF THERE WERE SEVERAL MAXIMUM PRICES FOR THE SAME PRODUCT AT ONE AND THE SAME TIME , IT WOULD FOLLOW THAT IN ALL CASES EXCEPT THAT OF THE HIGHEST PRICE THE EXCISE DUTY WOULD HAVE BEEN LEVIED ON A LOWER BASIS THAN THE LAWFUL ONE . ( II ) ASSESSMENT OF THE EFFECTS UPON COMPETITION CAUSED BY THE RULES AND PRACTICES REFERRED TO UNDER ( I )
123 IN PARAGRAPHS 4 TO 18 OF THE DECISION THE COMMISSION HAS DESCRIBED THE TERMS FOR FIXING PRICES AND FOR LEVYING THE DUTY ON MANUFACTURED TOBACCO PRODUCTS IN BELGIUM AND IN PARAGRAPH 36 IT HAS TAKEN ACCOUNT OF THE ENTRY INTO FORCE ON 1 JANUARY 1971 OF ARTICLE 58 OF THE BELGIAN VAT CODE .
124 IN PARAGRAPH 88 OF THE DECISION THE COMMISSION CONSIDERS THAT IT IS NOT POSSIBLE TO SUSTAIN THE CLAIM OF FEDETAB AND THE FIRMS INVOLVED TO THE EFFECT THAT THE MEASURES PRIOR TO THE RECOMMENDATION DID NOT CONSTITUTE SIGNIFICANT RESTRICTIONS ON COMPETITION BECAUSE THE BELGIAN GOVERNMENT LEVIES HEAVY TAXES AND REQUIRES NOTIFICATION OF THE RESALE PRICES AND PROFIT MARGINS FOR TOBACCO PRODUCTS SO THAT COMPETITION IS ALREADY SUBSTANTIALLY RESTRICTED AND UNIFORM CONDUCT IS IMPOSED ON ALL THE FIRMS OPERATING ON THE MARKET . IT ADDS THAT IF NATIONAL LEGISLATION HAS THE EFFECT OF RESTRICTING COMPETITION , THE ADDED EFFECTS OF PRIVATE ARRANGEMENTS RESTRICTING COMPETITION CAN ONLY BE THE MORE SIGNIFICANT .
125 IN PARAGRAPH 105 OF THE DECISION THE COMMISSION CITES THE SAME REASONING TO REJECT THE ARGUMENT THAT ' ' THE RESTRICTIONS ON COMPETITION FLOWING FROM THE RECOMMENDATION WERE NOT APPRECIABLE BY REASON OF STATE INTERVENTION IN THE TOBACCO INDUSTRY ' ' .
126 IT IS THEREFORE NECESSARY TO CONSIDER IN THE FIRST PLACE WHETHER , CONTRARY TO THE COMMISSION ' S ARGUMENT , THE BELGIAN RULES AND THEIR APPLICATION , AS DESCRIBED ABOVE , HAVE AS THEIR EFFECT EITHER TO EXCLUDE , AS THE APPLICANTS MAINTAIN , THE OPPORTUNITY FOR MANUFACTURERS AND IMPORTERS TO COMPETE SIGNIFICANTLY IN RELATION TO THE MARGINS TO BE ALLOWED TO THE TRADE OR TO CAST SERIOUS DOUBT ON THE EXISTENCE OF SUCH AN OPPORTUNITY . IN BOTH CASES THE COURT WOULD BE LED TO FIND THAT THE CONTESTED COMMISSION DECISION DID NOT CORRECTLY OR SUFFICIENTLY TAKE ACCOUNT OF THE EFFECT OF THE SAID RULES AND THEIR APPLICATION BY THE COMPETENT BELGIAN AUTHORITIES ON THE OPPORTUNITIES FOR COMPETITION BY THOSE IN THE INDUSTRY .
127 IN THAT RESPECT IT IS NECESSARY TO OBSERVE IN THE FIRST PLACE , AS THE PARTIES AGREE , THAT IN A SYSTEM OF BASICALLY PROPORTIONAL EXCISE DUTY , AS APPLICABLE IN BELGIUM , ANY ALTERATION IN THE MANUFACTURERS ' OR IMPORTERS ' SHARE CONTAINED IN THE RETAIL PRICE INVOLVES AN ALTERATION SEVERAL TIMES GREATER IN THE TAX AND THEREFORE IN THE RETAIL PRICE ITSELF WHERE THE SAID ALTERATION IS ADJUSTED SO AS TO BE RECOVERED IN THE PRICE . THAT MULTIPLIER EFFECT IN PRINCIPLE WORKS AS REGARDS BOTH INCREASES AND REDUCTIONS . NEVERTHELESS IN THE LATTER CASE THE DECREASING EFFECT OF THE MULTIPLIER WHICH WORKS IN FAVOUR OF THE CONSUMER IS LIMITED BY THE MINIMUM EXCISE DUTY LAID DOWN BY THE BELGIAN STATE PURSUANT TO COUNCIL DIRECTIVES NOS 72/464 AND 77/805 BY REASON OF THE FACT THAT THE EXCISE DUTY IS FIXED AT 90% OF THE AGGREGATE AMOUNT OF THE PROPORTIONAL AND THE SPECIFIC EXCISE DUTY LEVIED BY THE BELGIAN STATE ON CIGARETTES IN THE MOST POPULAR PRICE CATEGORY .
128 IT FOLLOWS FROM THIS MULTIPLIER EFFECT IN CONJUNCTION WITH THE MINIMUM EXCISE DUTY LEVIED BY THE BELGIAN STATE TO GUARANTEE ITS REVENUE THAT ANY COMPETITIVE EFFORT IN RELATION TO PROFIT MARGINS BY THE MANUFACTURER OR THE IMPORTER HAVING A REPERCUSSION ON THE RETAIL PRICE IS LIMITED .
129 FURTHER , ALTHOUGH IN PRINCIPLE THE BELGIAN RULES ON CONSUMER TAXES AND PRICE CONTROLS DO NOT PREVENT THE MANUFACTURER OR IMPORTER FROM CHOOSING THE RETAIL PRICE DESIRED BY HIM FOR EACH OF HIS PRODUCTS , SUCH LIBERTY OF CHOICE IS IN PRACTICE SUBJECT TO VARIOUS CONSTRAINTS . AS HAS ALREADY BEEN SHOWN IT SEEMS THAT THE PRACTICAL APPLICATION IN THE MANUFACTURED TOBACCO SECTOR OF THE PRICE CONTROL MEASURES IN WHICH THE REVENUE AUTHORITIES IN PARTICULAR TAKE PART ENCOURAGES JOINT NEGOTIATIONS WITH THE TRADE ASSOCIATIONS REPRESENTING THE VARIOUS BRANCHES OF THE SECTOR EVEN IF THE SYSTEM DOES NOT EXCLUDE THE POSSIBILITY OF SEPARATE UNDERTAKINGS ' GIVING INDIVIDUAL NOTIFICATIONS ESPECIALLY IN THE CASE OF THE INTRODUCTION OF A NEW BRAND . DURING SUCH NEGOTIATIONS GREAT INFLUENCE ON THE FIXING OF THE RETAIL PRICE IS EXERCISED BY THE REVENUE AUTHORITIES WHOSE CONCERN IS ABOVE ALL TO GUARANTEE THE REVENUE ARISING FROM THE TAXATION OF THE PRODUCTS IN QUESTION . IT ALSO APPEARED DURING THE PROCEEDINGS THAT THE BELGIAN STATE IS ABLE BY USING THE RANGE OF TAX BANDS TO RESTRICT THE FREEDOM OF UNDERTAKINGS AS REGARDS THE CHOICE OF THE RETAIL PRICES FOR THEIR PRODUCTS . IN THAT RESPECT THE APPLICANT BAT STATED THAT AFTER INTRODUCING A NEW BRAND OF CIGARETTES IT WAS FORCED TO INCREASE THE PRICE BY BFR 6 PER PACKET IN ORDER TO MARKET THEM AT A PRICE CORRESPONDING TO THE LOWEST TAX BAND AVAILABLE FROM THE AUTHORITIES , WHO HAD ABOLISHED THE TAX BANDS FOR LOWER PRICES .
130 IT FOLLOWS FROM ALL THE CONSIDERATIONS SET FORTH ABOVE THAT IN THE MANUFACTURED TOBACCO SECTOR THE BELGIAN RULES ON CONSUMER TAXES AND PRICE CONTROLS AND THEIR APPLICATION PURSUANT TO THE REVENUE POLICY PURSUED BY THE STATE HAVE THE EFFECT OF MAKING IT PRACTICALLY IMPOSSIBLE FOR MANUFACTURERS AND IMPORTERS TO COMPETE IN SUCH A WAY THAT THERE WOULD BE AN EFFECT UPON THE AMOUNT OF THE RETAIL SELLING PRICE .
131 ON THE OTHER HAND IT IS NECESSARY TO POINT OUT THAT IT HAS BY NO MEANS BEEN SHOWN THAT THE SAID RULES OR THEIR APPLICATION PREVENT THE MANUFACTURER OR IMPORTER FROM ALLOWING PARTICULAR WHOLESALERS ON AN INDIVIDUAL BASIS A LARGER PROFIT MARGIN OUT OF THE MANUFACTURERS ' OR IMPORTERS ' SHARE OF THE RETAIL PRICE . IN TAKING CONCERTED ACTION REGARDING THE MAXIMUM LEVEL OF PROFIT MARGINS WHICH THEY ALLOW WHOLESALERS THE APPLICANTS JOINTLY PREVENT THEMSELVES FROM SO COMPETING AND AT THE SAME TIME DISCOURAGE THOSE INTERMEDIARIES FROM PURSUING A SALES POLICY WHICH WOULD BENEFIT THE PRODUCTS OF THE MANUFACTURER OR IMPORTER FROM WHOM THEY OBTAIN OR HOPE TO OBTAIN A MORE ADVANTAGEOUS PROFIT MARGIN .
132 IN THAT RESPECT IT IS NECESSARY TO POINT OUT THAT ARTICLE 85 ( 1 ) OF THE TREATY PROHIBITS ANY RESTRICTION ON COMPETITION AT ANY TRADING LEVEL BETWEEN THE MANUFACTURER AND THE ULTIMATE CONSUMER . THUS ARTICLE 85 ( 1 ) ( A ) SPEAKS IN GENERAL TERMS OF ' ' TRADING CONDITIONS ' ' ; ARTICLE 85 ( 1 ) ( B ) OF ' ' PRODUCTION ' ' AND ' ' MARKETS ' ' AND ARTICLE 85 ( 1 ) ( C ) WITHOUT ANY DISTINCTION BETWEEN THE RESPECTIVE STAGES OF TRADE OF ' ' MARKETS ' ' OR ' ' SOURCES OF SUPPLY ' ' .
133 FURTHER , IN THE PRESENT CASE EVEN IF THE SHARE OF THE RETAIL PRICE DUE TO THE REVENUE IS LARGE THERE REMAINS FOR THE MANUFACTURER OR IMPORTER A SUFFICIENT MARGIN TO ALLOW EFFECTIVE COMPETITION EVEN WITH REGARD TO MASS-PRODUCED PRODUCTS OF CURRENT CONSUMPTION IN RESPECT OF WHICH A VERY SMALL REDUCTION IN THE PRICE AT THE MANUFACTURING OR IMPORT STAGE MAY HAVE A SIGNIFICANT EFFECT AT THE CONSUMER STAGE .
134 THE CONCERTED ACTION IN RELATION TO PROFIT MARGINS INVOLVED BOTH IN THE RECOMMENDATION OF 1 DECEMBER 1975 AND IN THE MEASURES ADOPTED PRIOR THERETO RESULTING FROM AN AGREEMENT BETWEEN THE MAJORITY OF MANUFACTURERS AND IMPORTERS OF WIDELY CONSUMED PRODUCTS IN A SUBSTANTIAL PART OF THE COMMON MARKET , NAMELY BELGIUM , MUST THEREFORE BE REGARDED AS CONSTITUTING A RESTRICTION ON COMPETITION PROHIBITED BY ARTICLE 85 ( 1 ) OF THE TREATY , ON THE ASSUMPTION ON THE ONE HAND THAT IT IS LIKELY TO HAVE A SIGNIFICANT EFFECT UPON TRADE BETWEEN MEMBER STATES AND ON THE OTHER HAND THERE ARE NO OTHER FACTORS IN THE PRESENT CASE ALLOWING IT TO BE FOUND THAT THE DISTRIBUTION SYSTEM SET UP BY THE APPLICANTS IS NOT AS A WHOLE CAUGHT BY THE SAID PROHIBITION .
135 IN THE LATTER RESPECT THE APPLICANTS RELY ON THE JUDGMENT OF THE COURT OF 25 OCTOBER 1977 IN CASE 26/76 ( METRO SB-GROSSMARKTE GMBH V COMMISSION ( 1977 ) ECR 1875 ) AND ALLEGE THAT IN VIEW OF ITS BENEFICIAL INFLUENCE ON THE STRUCTURE OF THE MARKET THE AIM OF ENSURING A CERTAIN LEVEL OF INCOME FOR THE SPECIALIZED TRADE DOES NOT NECESSARILY FALL UNDER THE PROHIBITION IN ARTICLE 85 ( 1 ). THE COURT RECOGNIZED IN THAT JUDGMENT THAT MEASURES WHICH SERVE TO MAINTAIN TRADITIONAL TRADE BY DISTINGUISHING BETWEEN THE FUNCTIONS OF THE WHOLESALE AND RETAIL TRADES ARE NOT NECESSARILY RESTRICTIVE OF COMPETITION OR THAT IF THEY ARE THEY MAY QUALIFY FOR EXEMPTION UNDER ARTICLE 85 ( 3 ). ABOVE ALL THE COURT RECOGNIZED THAT PRICE COMPETITION DOES NOT HAVE ABSOLUTE PRIORITY OVER ALL OTHER EFFECTIVE FORMS OF COMPETITION .
136 THE APPLICANTS COMPLAIN THAT THE COMMISSION DID NOT PROPERLY TAKE ACCOUNT OF THOSE FACTORS IN ASSESSING THE DISTRIBUTION SYSTEM WHICH IS THE SUBJECT OF THE ABOVE-MENTIONED MEASURES .
137 IT IS RIGHT , HOWEVER , TO OBSERVE THAT THE COMMISSION DOES NOT CRITICIZE THE PRINCIPLE OF THE SEPARATION OF FUNCTIONS BETWEEN INTERMEDIARIES BUT RATHER THE CONCERTED ACTION BETWEEN MANUFACTURERS AND IMPORTERS IN RELATION TO THE FINANCIAL BENEFITS TO BE ALLOWED TO INTERMEDIARIES .
138 MOREOVER , ALTHOUGH IT IS TRUE THAT THE COURT IN ITS JUDGMENT IN THE METRO CASE GAVE SOME CONSIDERATION TO THE QUESTION WHETHER A SELECTIVE DISTRIBUTION SYSTEM MAY BE COMPATIBLE WITH ARTICLE 85 ( 1 ) OF THE TREATY , THAT CASE WAS CONCERNED WITH A SYSTEM CONCEIVED , AS DISTINCT FROM THAT IN QUESTION IN THE PRESENT CASES , FOR THE PURPOSE OF DISTRIBUTING HIGHLY TECHNICAL , DURABLE CONSUMER GOODS SO THAT TRADERS HAD TO BE SELECTED ON THE BASIS OF QUALITATIVE CRITERIA .
139 IT IS ALSO RIGHT TO RECALL THAT IN THE METRO CASE THE APPLICANT WAS CHALLENGING A COMMISSION DECISION FOR GRANTING EXEMPTION UNDER ARTICLE 85 ( 3 ) FROM THE PROHIBITION IN ARTICLE 85 ( 3 ) IN RESPECT OF A DISTRIBUTION SYSTEM SET UP BY AN INDIVIDUAL MANUFACTURER . MOREOVER , THE COURT STATED THAT IT WAS FOR THE COMMISSION TO ENSURE THAT THE RIGIDITY OF PRICE STRUCTURE AMONG DISTRIBUTORS APPROVED BY THE MANUFACTURER IN QUESTION WAS NOT REINFORCED , AS MIGHT HAPPEN IF THERE WERE AN INCREASE IN THE NUMBER OF SELECTIVE DISTRIBUTION NETWORKS FOR MARKETING THE SAME PRODUCT .
140 IT THEREFORE APPEARS THAT THE APPLICANTS ' ARGUMENT TO THE EFFECT THAT THE COMMISSION WRONGLY FOUND THAT THE CONTESTED MEASURES RESTRICTED COMPETITION , PARTICULARLY IN RELATION TO TRADE MARGINS , FINDS NO SUPPORT IN THE REASONING OF THE COURT IN THE METRO CASE .
141 THE CONCLUSION MUST THEREFORE BE REACHED THAT THE AGREEMENT BETWEEN THE APPLICANTS REGARDING THE SIZE OF THE MARGINS TO BE ALLOWED TO DIRECT TRADERS FROM THEM , THUS PREVENTING MARKET FORCES FROM DETERMINING THE SIZE OF THOSE BENEFITS , IN PARTICULAR ON THE BASIS OF THE SERVICES WHICH SUCH INTERMEDIARIES MAY RENDER INDIVIDUALLY , IS A RESTRICTION ON COMPETITION PROHIBITED BY ARTICLE 85 ( 1 ), ASSUMING THAT IT IS ALSO LIKELY TO HAVE A SIGNIFICANT EFFECT UPON TRADE BETWEEN MEMBER STATES . ( B ) END-OF-YEAR REBATE
142 IT APPEARS FROM THE ANNEXES TO THE LETTER OF 26 JANUARY 1971 SENT BY FEDETAB TO THE COMMISSION THAT FROM 1 JANUARY 1971 THE MANUFACTURING MEMBERS OF FEDETAB WOULD PAY THROUGH FEDETAB TO WHOLESALERS AND RETAILERS AN END-OF-YEAR REBATE , THE AMOUNT OF WHICH VARIED BETWEEN 20 CENTIMES AND 200 CENTIMES PER 1 000 CIGARETTES DEPENDING ON CIGARETTE SALES DURING THE YEAR . IT IS RIGHT TO OBSERVE HOWEVER THAT NEITHER THE STATEMENT OF THE REASONS ON WHICH THE CONTESTED DECISION IS BASED ( PARAGRAPHS 19 TO 27 AND 81 ) NOR ARTICLE 1 OF THE OPERATIVE PART CLEARLY TAKES ACCOUNT OF THAT REBATE FOR THE PERIOD PRIOR TO THE RECOMMENDATION . IT FOLLOWS THAT IT IS ONLY IN RESPECT OF THE RECOMMENDATION THAT IT IS NECESSARY TO CONSIDER THE END-OF-YEAR REBATE .
143 IN THAT RESPECT IT IS COMMON GROUND , AS THE COMMISSION HAS POINTED OUT IN PARAGRAPH 74 OF THE DECISION , THAT EVERY DIRECT CUSTOMER , WHOLESALER OR RETAILER , MAY RECEIVE FROM FEDETAB THAT REBATE , THE SCALE OF WHICH IS SET OUT IN THE RECOMMENDATION AND IS BASED ON CIGARETTE PURCHASES OF ALL BRANDS MADE DURING THE YEAR FROM ANY BELGIAN OR FOREIGN MANUFACTURER , WHETHER OR NOT A MEMBER OF FEDETAB . IT APPEARS FROM THE FILE THAT THE REBATE IS ONLY A FRACTION OF 1% OF THE PURCHASE PRICE . THE NECESSARY INFORMATION FOR CALCULATING THE REBATES ON CIGARETTES DUE TO EACH CUSTOMER ARE COLLECTED CENTRALLY BY FEDETAB OR BY A BODY APPOINTED FOR THE PURPOSE .
144 IN THE COMMISSION ' S VIEW THE END-OF-YEAR REBATE SYSTEM AS FINALLY BROUGHT IN BY THE RECOMMENDATION EFFECTIVELY STIFLED ALL COMPETITION IN THIS FIELD BETWEEN THE MANUFACTURERS WHO HAD SIGNED IT INASMUCH AS IT REMOVED THE INCENTIVE FOR INTERMEDIARIES TO MAKE GREATER COMPETITIVE EFFORTS WITH A VIEW TO OBTAINING IMPROVED BENEFITS OR TO TAKE THEIR CUSTOM EXCLUSIVELY TO A GIVEN MANUFACTURER AND MADE IT MORE DIFFICULT FOR MANUFACTURERS DESIROUS OF PENETRATING THE MARKET TO DO SO .
145 THE APPLICANT FEDETAB MAINTAINS ON THE OTHER HAND THAT COMPETITIVE EFFORT IS STIMULATED BY THE DIFFERENCE IN THE RATES OF RETURN ACCORDING TO THE QUANTITIES SOLD . IT FURTHER CLAIMS THAT THE SUM OF THE DIRECT MARGINS AND THE END-OF-YEAR REBATES IS PRECISELY THE MAXIMUM AUTHORIZED BY THE MINISTER FOR ECONOMIC AFFAIRS PURSUANT TO THE NEGOTIATIONS ON PRICE INCREASES . THE REBATE IS NOT FORMALLY IMPOSED ON ANYONE BUT IT IS VIGOROUSLY DEMANDED BY WHOLESALERS SO THAT NO SUPPLIER CAN ESCAPE PAYING IT . HAVING REGARD TO ITS VERY SMALL AMOUNT IT CANNOT IN ANY CASE CONSTITUTE A HEAVY BURDEN ON THE MANUFACTURER WHATEVER THE PROPORTION OF PURCHASES MADE FROM HIM BY THE TRADER .
146 IT IS RIGHT TO OBSERVE IN THE FIRST PLACE WITH REGARD TO THE SAID REBATE THAT AS WITH THE DIRECT MARGINS ALLOWED TO THE TRADE THERE IS CONCERTED ACTION AMONG THE APPLICANTS WITH REGARD TO IT PURSUANT TO THE RECOMMENDATION . AS APPEARS FROM THE STATEMENT OF FEDETAB ITSELF IT MUST BE REGARDED JOINTLY WITH THE DIRECT MARGINS ; ON THAT BASIS IT CONSTITUTES AN ITEM IN THE MAXIMUM MARGINS THE LEVEL OF WHICH IS DETERMINED BY JOINT ACTION BY THE APPLICANTS , HAVING AS ITS OBJECT AND EFFECT , AS ALREADY POINTED OUT , THE SIGNIFICANT RESTRICTION OF INDIVIDUAL COMPETITION IN THIS RESPECT AMONG MANUFACTURERS AND IMPORTERS IN THE BELGIAN CIGARETTE MARKET . ( C ) RULES ON TERMS OF PAYMENT
147 AS REGARDS THE MEASURES ON MAXIMUM TERMS OF PAYMENT ADOPTED PRIOR TO THE RECOMMENDATION IT IS NECESSARY TO RECALL THAT BY LETTER OF 23 DECEMBER 1971 ON FEDETAB WRITING PAPER NINE CIGARETTE MANUFACTURERS , INCLUDING ALL THE APPLICANTS EXCEPT BAT , INFORMED WHOLESALERS AND OTHERS ENJOYING WHOLESALE TERMS THAT THEY HAD DECIDED TO PUT AN END TO LONG-TERM CREDIT WHICH WOULD BE REDUCED PROGRESSIVELY TO A MAXIMUM OF A FORTNIGHT .
148 THE RECOMMENDATION OF 1 DECEMBER 1975 LAYS DOWN THE RULE OF CASH PAYMENT SUBJECT TO THE POSSIBILITY OF A MANUFACTURER ' S ALLOWING , BY WAY OF EXCEPTION , TO ONE OR MORE OF HIS CUSTOMERS A PERIOD NOT EXTENDING BEYOND A FORTNIGHT FROM THE INVOICE DATE .
149 ACCORDING TO FEDETAB THE RECOMMENDATION IS INSPIRED BY THE SAME CONCERN WITH REGARD TO TERMS OF PAYMENT WHICH LED TO THE LETTER OF 23 DECEMBER 1971 . ACCORDING TO FEDETAB THAT LETTER FOLLOWED A REQUEST BY GB , A SUPERMARKET COMPANY , THAT CREDIT FACILITIES BE GRANTED FOR 90 DAYS FROM THE END OF THE MONTH WHICH WAS PART OF A POLICY OF PRESSURE BY ALL SUPERMARKETS . IT ADDS THAT ' ' TO GIVE ALL THE NECESSARY WEIGHT TO THE LETTER FROM FEDETAB ' ' THE MAIN MANUFACTURING MEMBERS OF FEDETAB DECIDED TO SIGN THE LETTER . THAT ANSWER WAS A LEGITIMATE DEFENCE . ANY CONSIDERABLE EXTENSION OF CREDIT WOULD INEVITABLY HAVE A REPERCUSSION UPON PRICES TO THE DETRIMENT OF THE CONSUMER BY REASON IN PARTICULAR OF THE MULTIPLER EFFECT OF THE BELGIAN TAXATION SYSTEM ON CIGARETTES . IN THOSE CIRCUMSTANCES ANY DELAY WOULD , IN FEDETAB ' S VIEW , HAVE CAUSED THE MARKET TO COLLAPSE .
150 FURTHER , THE APPLICANTS CITE IN DEFENCE OF THE PROVISIONS OF THE RECOMMENDATION ON TERMS OF PAYMENT THE EFFECT OF THE BELGIAN TAXATION SYSTEM ON THE OPPORTUNITIES FOR COMPETITION IN THAT SPHERE ESPECIALLY HAVING REGARD TO THE PURCHASING POWER OF THE SUPERMARKETS . IT IS ALLEGED THAT THOSE PROVISIONS DO NOT ADVERSELY AFFECT LEGITIMATE COMPETITION BUT ARE INTENDED TO COUNTERACT THE EXCESSIVE COMPETITION INDULGED IN BY THE SUPERMARKETS , WHICH TAKE ADVANTAGE OF THE FACT THAT THE BELGIAN STATE MAKES THE MANUFACTURER OR IMPORTER ITS TAX-COLLECTOR AS REGARDS CIGARETTE DUTIES . FOUR-FIFTHS OF THE DEBT OF INTERMEDIARIES IS THUS MADE UP OF THE REIMBURSEMENT OF THE TAX DEBT ALREADY PAID BY THE MANUFACTURER OR IMPORTER WHO THUS BEARS THE FINANCIAL RISKS OF ANY FAILURES ON THE PART OF THE TRADE . IF FURTHER IT IS BORNE IN MIND THAT THE TURNOVER OF CIGARETTE STOCKS IS ON AVERAGE TEN DAYS AND EVEN THREE DAYS WITH SUPERMARKETS , ANY COMPETITION GOING BEYOND THAT IS NOT LEGITIMATE , THE MORE SO WHERE SEVERAL SUPERMARKET COMPANIES , PROFITING FROM THEIR POSITION ON THE MARKET , SEEK TO IMPOSE IN ADDITION VERY CONSIDERABLE DELAYS WITH THE INTENTION OF HAVING LOAN CAPITAL AVAILABLE AT NO INTEREST FOR FINANCING PRODUCTS OTHER THAN CIGARETTES . IT THEREFORE SEEMS LEGITIMATE AS SELF DEFENCE FOR THE MANUFACTURERS AND IMPORTERS TO ENDEAVOUR TO ENSURE THAT TERMS OF PAYMENT ARE USED IN A NEUTRAL MANNER FROM THE POINT OF VIEW OF COMPETITION .
151 IT APPEARS FROM PARAGRAPHS 86 AND 100 OF THE CONTESTED DECISION THAT THE COMMISSION CONSIDERS THAT THE COLLECTIVE AND UNIFORM FIXING BY FEDETAB OF MAXIMUM TERMS OF PAYMENT FOR THOSE ENJOYING WHOLESALE TERMS HAD AND STILL HAS AS EFFECT TO PREVENT COMPETITION IN THAT FIELD AND TO REINFORCE THE RESTRICTIONS ON COMPETITION RESULTING FROM THE OTHER MEASURES ADOPTED IN RELATION TO PROFIT MARGINS AND END-OF-YEAR REBATES . THE COMMISSION ALSO INSISTS IN PARAGRAPHS 101 AND 102 OF THE DECISION THAT ACCORDING TO ITS INFORMATION CREDIT PERIODS ARE IN PRACTICE TENDING TO SETTLE DOWN AT A FORTNIGHT OR LESS AND CONTRARY TO WHAT FEDETAB AND SOME OF ITS MEMBERS SAY THE CONDUCT OF THE VARIOUS MANUFACTURERS , NONE OF WHOM HAS REJECTED THE RECOMMENDATION , COMPLIES WITH THE PROVISIONS THEREOF .
152 DURING THE PROCEEDINGS IN THE PRESENT CASES CERTAIN APPLICANTS HAVE CHALLENGED THOSE LATTER STATEMENTS OF THE COMMISSION AND HAVE MAINTAINED THAT THE APPLICATION OF THE TERMS OF PAYMENT IS FLEXIBLE AND NOT UNIFORM . FOR THEIR PART THE APPLICANTS JUBILE AND VANDER ELST DRAW ATTENTION TO THE FACT THAT THE RESPECTIVE LETTERS FROM EACH OF THEM DATED 18 DECEMBER 1975 INFORMING THE COMMISSION OF THEIR DECISION TO FOLLOW THE RECOMMENDATION THEY STATED THAT CASH PAYMENT HAD ALWAYS BEEN THE RULE WITH THEIR COMPANIES AND THAT THEY WOULD CONTINUE TO MAKE IT THEIR PRACTICE INDEPENDENTLY OF THE RECOMMENDATION . THEY THEREFORE CONTEND THAT IF IT IS NECESSARY TO CONSIDER APPROVAL OF THE RECOMMENDATION AS AN AGREEMENT WITHIN THE MEANING OF ARTICLE 85 OF THE TREATY THEY ARE NOT IN ANY EVENT A PARTY TO THAT AGREEMENT AS REGARDS THE TERMS OF PAYMENT AND IN THAT RESPECT THE DECISION WAS WRONGLY ADDRESSED TO THEM .
153 ALTHOUGH IT IS TRUE THAT THE BELGIAN TAXATION SYSTEM , WHICH MAKES THE MANUFACTURER OR IMPORTER ACCOUNTABLE FOR THE VERY HIGH TAXATION ELEMENT IN THE RETAIL PRICE , HAS A VERY DEFINITE INFLUENCE ON THE COMPETITION IN WHICH THE INDUSTRY MAY ENGAGE IN RELATION TO TERMS OF PAYMENT HAVING REGARD TO THE SPEEDY TURNOVER OF STOCK AND HIGH BANK INTEREST , IT DOES NOT MEAN THAT THERE IS NO OPPORTUNITY FOR EFFECTIVE COMPETITION IN THIS SPHERE . IT IS ALSO IMPORTANT NOT TO LOSE SIGHT OF THE FACT THAT IF THE MANUFACTURER ALLOWS THE TRADER CREDIT FACILITIES , THAT IS EQUIVALENT TO THE TRADER ' S RECEIVING AN ADDITIONAL PROFIT MARGIN , WHICH IS IN NO WAY PROHIBITED OR EXCLUDED BY THE BELGIAN RULES ON TAXATION OR PRICE CONTROL . THOSE FINDINGS ARE REINFORCED BY THE FACT THAT IT IS APPARENT FROM A TABLE ANNEXED TO FEDETAB ' S ANSWER OF 22 SEPTEMBER 1975 TO THE FIRST NOTICE OF OBJECTIONS THAT THE ACTUAL CREDIT FACILITIES ALLOWED BY THE OTHER APPLICANTS EXCEPT HVL VARIED FROM NONE AT ALL ( CASH PAYMENT ) TO 40 DAYS DEPENDING ON THE MANUFACTURER AND CUSTOMER .
154 THE JOINT PROVISIONS ON TERMS OF PAYMENT PURSUANT TO BOTH THE LETTER OF 23 DECEMBER 1971 AND THE RECOMMENDATION , BY REASON OF THEIR SUBSTANCE , HAVE AT THE VERY LEAST AS OBJECT THE SIGNIFICANT RESTRICTION OF COMPETITION ; THAT FACT SUFFICES TO BRING THEM WITHIN THE PROHIBITION OF ARTICLE 85 ( 1 ) SHOULD THEY BE REGARDED AS LIKELY TO AFFECT TRADE BETWEEN MEMBER STATES .
155 IN VIEW OF THE FACT THAT THE OPPORTUNITY FOR COMPETITION BETWEEN THE APPLICANTS WITH REGARD TO TERMS OF PAYMENT MUST BE REGARDED AS ESTABLISHED AND THAT THE ABOVE-MENTIONED PROVISIONS ARE INTENDED TO RESTRICT THEM SIGNIFICANTLY BY LAYING DOWN A MAXIMUM PERIOD OF A FORTNIGHT WHICH , AS REGARDS THE RECOMMENDATION , MAY BE ALLOWED ONLY IN EXCEPTIONAL CASES , IT IS NOT NECESSARY TO CONSIDER THE QUESTION HOW FAR THOSE PROVISIONS HAVE BEEN PUT INTO EFFECT BY THE APPLICANTS .
156 AS REGARDS THE STATEMENT BY THE APPLICANTS JUBILE AND VANDER ELST TO THE EFFECT THAT CASH PAYMENT HAS ALWAYS BEEN STRICTLY REQUIRED BY THEM AND THAT THEY WOULD CONTINUE THEIR PRACTICE INDEPENDENTLY OF THE RECOMMENDATION , IT IS RIGHT TO SAY THAT SUCH A MANIFESTATION OF INTENT CANNOT BE TAKEN INTO ACCOUNT IN VIEW OF THE FACT THAT IT HAS BEEN REITERATED SEVERAL TIMES THAT ACCORDING TO ARTICLE 8 OF THE STATUTES OF FEDETAB THE MEMBERS THEREOF MUST ABIDE BY ITS DECISIONS TAKEN PURSUANT TO THE STATUTES . 3 . THE PREVIOUS MEASURES ON OBSERVANCE BY WHOLESALERS AND CERTAIN RETAILERS OF SELLING PRICES LAID DOWN BY MANUFACTURERS , THE RESTRICTION ON THE APPROVAL OF WHOLESALERS IN CERTAIN CATEGORIES , THE BAN ON APPROVED WHOLESALERS ' SUPPLYING CERTAIN OTHER WHOLESALERS AND THE REQUIREMENT ON STOCKING A MINIMUM RANGE OF BRANDS
157 THE AGREEMENT OF 22 MAY 1967 MADE BETWEEN FEDETAB AND THE FNCG FOR A PERIOD OF FIVE YEARS , REINFORCED BOTH BY THE STANDARD AGREEMENT SUBMITTED BY FEDETAB TO APPROVED RETAILERS AND SIGNED BY THEM , AND BY THE ADDITIONAL INTERPRETATIVE AGREEMENTS OF 5 OCTOBER 1967 AND 29 DECEMBER 1970 CONTAINED A SET OF JOINT MEASURES TO WHICH THE APPLICANTS WERE PARTIES AND HAD AS OBJECT ON THE ONE HAND TO PREVENT WHOLESALERS FROM SELLING TO RETAILERS MANUFACTURED TOBACCO PRODUCTS AT PRICES DIFFERING FROM THOSE INDICATED BY THE SUPPLIERS WITHOUT ANY REDUCTION OR BENEFIT OTHER THAN THE RETAILERS ' MARGIN AND FURTHER TO ENSURE THAT RETAILERS STRICTLY OBSERVED THE PRICE STATED ON THE TAX BAND ON THE ULTIMATE SALE TO THE CONSUMER .
158 AS FEDETAB ADMITS IN ITS APPLICATION , THE BASIC OBJECT OF THOSE MEASURES WAS TO PREVENT CUT-PRICE SELLING BY WHOLESALERS AND RETAILERS . ACCORDING TO FEDETAB CUT-PRICE SELLING JEOPARDIZED THE EXISTENCE OF SPECIALIST WHOLESALERS AND RETAILERS , WHOSE DISAPPEARANCE WOULD BE AGAINST THE INTERESTS OF THE CONSUMER . IT FURTHER APPEARS FROM STATEMENTS OF FEDETAB IN ITS APPLICATION THAT THE CONCERN TO PROTECT THOSE TRADERS WAS ALSO BEHIND THE POLICY AFTER 1 JANUARY 1971 OF NOT ALLOWING THE MAXIMUM WHOLESALE TERMS TO NEW APPLICANTS IN CERTAIN CATEGORIES AND IN PARTICULAR TO WHOLESALERS SPECIALIZING IN FOOD .
159 ARTICLE 58 OF THE BELGIAN VAT CODE , WHICH ENTERED INTO FORCE ON 1 JANUARY 1971 AND PROVIDED THAT THE PRICE ON THE TAX BAND MUST BE THE CONSUMER PRICE , HENCEFORTH PROHIBITED ANY REDUCTION IN THE RETAIL PRICE .
160 ON THE OTHER HAND IT IS ADMITTED THAT AS REGARDS WHOLESALERS THE ABOVE-MENTIONED MEASURES WERE RENEWED BY THE STANDARD AGREEMENT , REFERRED TO AS ' ' SPECIAL AGREEMENT ON CUT-PRICE SELLING ' ' SUBMITTED BY FEDETAB TO WHOLESALERS ON 30 JUNE 1972 AND SIGNED BY ALMOST ALL OF THEM . PURSUANT TO THAT AGREEMENT AND FOR A PERIOD OF FIVE YEARS WHOLESALERS UNDERTOOK ON RESALE OF THE PRODUCTS IN QUESTION NOT ONLY TO OBSERVE THE PRICES INDICATED BY THE SUPPLIERS WITHOUT ANY REDUCTION OR BONUS BUT ALSO TO OBSERVE THE BAN ON RESALE OF MANUFACTURED TOBACCO PRODUCTS ON THE ONE HAND TO WHOLESALERS TO WHOM THE MANUFACTURERS HAD ALREADY ALLOCATED A QUOTA AND TO FOOD WHOLESALERS AND OTHER WHOLESALERS NOT DIRECTLY SUPPLIED BY MANUFACTURERS , WHERE THE PRODUCTS CONCERNED WERE FOR RESALE TO RETAILERS AND ON THE OTHER HAND TO RETAILERS WHERE THE DELIVERY WAS MANIFESTLY NOT INTENDED TO BE SOLD TO THE RETAILER ' S NORMAL CUSTOMERS . THAT BAN REINFORCED THE TERMS OF THE NOTICE OF 22 MARCH 1972 REFERRED TO ABOVE WHICH THE FNCG HAD SENT TO ITS MEMBERS AND WHICH , AS REGARDS THE WHOLESALERS REFERRED TO ABOVE , WAS TO THE SAME EFFECT .
161 IT IS APPARENT FROM THE ACTUAL SUBSTANCE OF THE MEASURES DESCRIBED ABOVE THAT THEIR AIM WAS ESSENTIALLY TO PREVENT COMPETITION FROM ARISING BETWEEN THE MANUFACTURING AND IMPORTING MEMBERS OF FEDETAB WITH REGARD TO THE RESALE PRICES OF THEIR PRODUCTS BOTH AT THE WHOLESALE LEVEL AND , AT LEAST BEFORE 1 JANUARY 1971 WHEN ARTICLE 58 OF THE VAT CODE ENTERED INTO FORCE , AT THE RETAIL LEVEL .
162 RULES WHICH HAVE AS THEIR OBJECT SUCH A GENERAL AND SYSTEMATIC RESTRICTION ON COMPETITION UNDOUBTEDLY FALL WITHIN THE PROHIBITION OF ARTICLE 85 ( 1 ) OF THE TREATY PROVIDED THEY ARE ALSO LIKELY TO HAVE A SIGNIFICANT EFFECT UPON TRADE BETWEEN MEMBER STATES .
163 AS REGARDS THE OBLIGATION IMPOSED ON A LIMITED NUMBER OF RETAILERS CONTAINED IN THE MEASURES PRIOR TO THE RECOMMENDATION TO STOCK A MINIMUM RANGE OF 60 BRANDS OF CIGARETTES WHICH WAS ENFORCED AGAINST CERTAIN UNDERTAKINGS INCLUDINGS GB BY THE INTERRUPTION OF SUPPLIES , THE COMMISSION CRITICIZES THAT MEASURE ( IN PARAGRAPH 87 OF THE DECISION ) FOR PREVENTING RETAILERS FROM PUSHING THE SALE OF CERTAIN BRANDS TO THE DETRIMENT OF OTHERS AND FORCING THEM TO TIE UP PART OF THEIR WORKING CAPITAL IN STOCKS OF VARIOUS SLOW-MOVING BRANDS .
164 IN VIEW HOWEVER OF THE FACT , AS HAS ALREADY BEEN OBSERVED , THAT IN SO FAR AS THE PREVIOUS MEASURES RELATED TO TRADE MARGINS , TERMS OF PAYMENT AND OBSERVANCE OF PRICES FIXED BY THE MANUFACTURERS AND IMPORTERS , THEY ESSENTIALLY AND IN PRINCIPLE FALL UNDER THE PROHIBITION OF ARTICLE 85 ( 1 ), IT IS NOT NECESSARY TO DECLARE SEPARATELY WHETHER THE OBLIGATION IMPOSED ON CERTAIN RETAILERS PRIOR TO 1 DECEMBER 1975 TO STOCK A MINIMUM RANGE OF BRANDS WAS COMPATIBLE WITH THAT ARTICLE . 4 . EFFECT UPON TRADE BETWEEN MEMBER STATES
165 IT REMAINS TO CONSIDER WHETHER THE ABOVE RESTRICTIONS ARE ALSO LIKELY TO HAVE A SIGNIFICANT EFFECT UPON TRADE BETWEEN MEMBER STATES . ONLY IF THAT IS SO DO THE SAID RESTRICTIONS FALL WITHIN THE PROHIBITION OF ARTICLE 85 ( 1 ).
166 THE COMMISSION ALLEGES IN THE CONTESTED DECISION THAT THE MEASURES PRIOR TO THE RECOMMENDATION WERE LIKELY TO AFFECT TRADE BETWEEN MEMBER STATES BECAUSE CERTAIN MANUFACTURING MEMBERS OF FEDETAB WERE RESPONSIBLE FOR A VERY SUBSTANTIAL PART OF THE MANUFACTURED TOBACCO IMPORTED INTO BELGIUM AND DISTRIBUTED IT ON THE SAME ANTI-COMPETITIVE TERMS AS THEIR OWN PRODUCTS . MOREOVER , BELGIAN IMPORTERS AND MANUFACTURERS OR THOSE OF OTHER MEMBER STATES WHO HAD NOT SUBSCRIBED TO THE RESTRICTIVE RULES DRAWN UP BY FEDETAB AND THE FNCG WITH REGARD TO DISTRIBUTION WERE SUBJECT TO THE APPLICATION OF THOSE RULES WHEN THEY RESOLD THEIR PRODUCTS , INCLUDING THOSE ORIGINATING IN OTHER MEMBER STATES , TO A WHOLESALER OR RETAILER WHO OBSERVED THE RULES LAID DOWN BY THOSE TWO ASSOCIATIONS , WHICH , HAVING REGARD TO THE STRONG POSITION OF THE TWO ASSOCIATIONS ON THE MARKET , WAS THE GENERAL RULE .
167 IN VIEW OF THOSE CONSIDERATIONS THE COMMISSION FOUND IN PARAGRAPH 93 OF THE DECISION THAT ALTHOUGH THE TAX ARRANGEMENTS IN FORCE CREATED PRACTICAL DIFFICULTIES WITH REGARD TO PARALLEL IMPORTS BY WHOLESALERS AND RETAILERS , THE FACT REMAINS THAT THE ALTERATION OF TRADING CONDITIONS IN BELGIUM WAS SUCH AS TO DIVERT THE FLOW OF TRADE FROM ITS NORMAL COURSE ( THAT IS , FROM THE COURSE WHICH IT WOULD HAVE FOLLOWED IN THE ABSENCE OF THE RESTRICTIONS OF COMPETITION FOUND BY THE COMMISSION ), AND SO TO AFFECT TRADE BETWEEN MEMBER STATES .
168 THE COMMISSION ALLEGES IN PARAGRAPH 106 OF THE DECISION THAT THE MEASURES IN THE RECOMMENDATION ARE LIABLE TO AFFECT TRADE BETWEEN MEMBER STATES FOR THE SAME REASONS AS THOSE PUT FORWARD AS REGARDS THE PREVIOUS MEASURES .
169 THE APPLICANTS CRITICIZE THAT STATEMENT OF REASONS MAINTAINING ESSENTIALLY THAT TRADE BETWEEN MEMBER STATES IS NOT AFFECTED BY THE MARKET POSITION OF THE MANUFACTURING AND IMPORTING MEMBERS OF FEDETAB SINCE , SOLELY BECAUSE OF THE CONSEQUENCES OF THE DIFFERENCES IN TAXATION OF MANUFACTURED TOBACCO IN THE MEMBER STATES , THE CONTESTED MEASURES GOVERN A PURELY NATIONAL SITUATION . AT THE PRESENT STAGE OF THE HARMONIZATION OF DUTIES ON THE CONSUMPTION OF MANUFACTURED TOBACCO THE INDIVIDUAL WAYS OF CALCULATING AND LEVYING THOSE DUTIES CONSTITUTE A FUNDAMENTAL IMPEDIMENT TO INTRA-COMMUNITY TRADE AND PREVENT THE MAKING OF PARALLEL IMPORT ARRANGEMENTS . MOREOVER , EVEN ASSUMING THAT THE CONTESTED MEASURES ARE CAPABLE OF HAVING AN INDIRECT EFFECT UPON THE VOLUME OF MANUFACTURED TOBACCO PRODUCTS IMPORTED BY THE MANUFACTURERS , IT HAS IN NO WAY BEEN SHOWN THAT SUCH EFFECT IS LIKELY TO AFFECT FREE TRADE BETWEEN MEMBER STATES SO AS ADVERSELY TO AFFECT ACHIEVEMENT OF THE AIMS OF A SINGLE MARKET BETWEEN THE STATES .
170 IN THE FACE OF THOSE CONFLICTING ARGUMENTS IT IS RIGHT TO RECALL IN THE FIRST PLACE , AS THE COURT OBSERVED IN ITS JUDGMENT OF 30 JUNE 1966 IN CASE 56/65 SOCIETE TECHNIQUE MINIERE V MASCHINENBAU ULM GMBH ( 1966 ) ECR 235 , THAT IN ORDER THAT AN AGREEMENT , DECISION OR CONCERTED PRACTICE MAY AFFECT TRADE BETWEEN MEMBER STATES IT MUST BE POSSIBLE TO FORESEE WITH A SUFFICIENT DEGREE OF PROBABILITY ON THE BASIS OF A SET OF OBJECTIVE FACTORS OF LAW OR FACT THAT THE AGREEMENT , DECISION OR CONCERTED PRACTICE IN QUESTION MAY HAVE AN INFLUENCE , DIRECT OR INDIRECT , ACTUAL OR POTENTIAL , ON THE PATTERN OF TRADE BETWEEN MEMBER STATES . THE INFLUENCE THUS FORESEEABLE MUST GIVE RISE TO A FEAR THAT THE REALIZATION OF A SINGLE MARKET BETWEEN MEMBER STATES MIGHT BE IMPEDED .
171 IN THAT RESPECT IT IS RIGHT TO OBSERVE THAT IT IS COMMON GROUND , THAT AS WAS SAID IN PARAGRAPHS 8 AND 91 OF THE DECISION , A SUBSTANTIAL PART OF THE MANUFACTURED TOBACCO PRODUCTS SOLD IN BELGIUM ARE IMPORTED THROUGH MANUFACTURING MEMBERS OF FEDETAB WHO MARKET THEM USING THE SAME DISTRIBUTION NETWORKS AS FOR THE PRODUCTS WHICH THEY MANUFACTURE THEMSELVES . BY WAY OF EXAMPLE , IN 1974 THEY IMPORTED 51% OF THE CIGARETTES AND 12 TO 14% OF THE CIGARS ARRIVING IN BELGIUM , THAT IS SOME 5% OF THE CIGARETTES AND 10% OF THE CIGARS SOLD THERE .
172 MOREOVER , ALTHOUGH BECAUSE OF DIFFICULTIES OF A FISCAL AND TECHNICAL NATURE WHICH THE COURT POINTED OUT IN ITS JUDGMENT OF 16 NOVEMBER 1977 IN CASE 13/77 INNO V ATAB ECR 2115 , PARALLEL IMPORTS INTO BELGIUM OF MANUFACTURED TOBACCO ARE LARGELY EXCLUDED , IT IS NECESSARY TO OBSERVE THAT THE INFLUENCE ON THE TRADE IN QUESTION IN THE PRESENT CASES IS , AS CLEARLY APPEARS FROM THE STATEMENT OF THE REASONS ON WHICH THE CONTESTED DECISION WAS BASED , ABOVE ALL FROM THE LARGE IMPORTS MADE BY MANUFACTURING MEMBERS OF FEDETAB . IN THAT RESPECT IT MUST BE OBSERVED THAT THE RESTRICTIONS ON COMPETITION POINTED OUT ABOVE IN RELATION TO TRADE MARGINS , END-OF-YEAR REBATE AND TERMS OF PAYMENT ARE LIKELY TO DISTORT TRADE PATTERNS IN MANUFACTURED TOBACCO FROM THE COURSE WHICH THEY WOULD HAVE OTHERWISE HAVE FOLLOWED . A FORTIORI THE SAME IS TRUE AS REGARDS THOSE OF THE MEASURES PRIOR TO THE RECOMMENDATION WHICH AIMED AT ENSURING STRICT OBSERVANCE AT EACH STAGE OF DISTRIBUTION OF THE PRICES LAID DOWN BY THE MANUFACTURERS AND IMPORTERS . IN TAKING CONCERTED ACTION ON THESE FUNDAMENTAL ASPECTS OF THE SALE TERMS TO BE ALLOWED TO INTERMEDIARIES , THE APPLICANTS APPRECIABLY REDUCED STILL FURTHER ANY INDUCEMENT THE INTERMEDIARIES MAY HAVE HAD OF ENCOURAGING THE SALE AS REGARDS IMPORTED PRODUCTS OF CERTAIN PRODUCTS IN RELATION TO OTHERS , IN EXCHANGE FOR INDIVIDUAL FINANCIAL ADVANTAGE .
173 THE COMMISSION DECISION THEREFORE RIGHTLY FINDS THAT THE RESTRICTIONS ON COMPETITION BY THE APPLICANTS ARE LIKELY TO AFFECT TRADE BETWEEN MEMBER STATES . VI - BASIC SUBMISSION RELATING TO ARTICLE 85 ( 3 ) OF THE TREATY
174 THE APPLICANTS ALLEGE IN SUBSTANCE THAT THE COMMISSION INFRINGED THE PROVISIONS OF ARTICLE 85 ( 3 ) OF THE TREATY AND THE RIGHTS OF THE DEFENCE INASMUCH AS IT WRONGLY REFUSED TO GRANT EXEMPTION TO THE RECOMMENDATION , DID NOT TAKE ACCOUNT OF THE SUBMISSIONS MADE BY THE APPLICANTS AND COMMITTED ERRORS OF FACT IN THAT RESPECT .
175 BEFORE CONSIDERING THE ARGUMENTS OF THE PARTIES WITH REGARD TO THE APPLICATION TO THE RECOMMENDATION OF ARTICLE 85 ( 3 ) IT IS NECESSARY TO RECALL THAT AN AGREEMENT WHICH IS FOUND TO BE CONTRARY TO THE PROVISIONS OF ARTICLE 85 ( 1 ) CANNOT HAVE EXEMPTION UNDER ARTICLE 85 ( 3 ) UNLESS IT SATISFIES THE FOLLOWING CONDITIONS NAMELY THAT IT : - CONTRIBUTES TO IMPROVING THE PRODUCTION OR DISTRIBUTION OF GOODS OR TO PROMOTING TECHNICAL OR ECONOMIC PROGRESS ; - ALLOWS CONSUMERS A FAIR SHARE OF THE RESULTING BENEFIT ; - DOES NOT IMPOSE ON THE UNDERTAKINGS CONCERNED RESTRICTIONS WHICH ARE NOT INDISPENSABLE TO THE ATTAINMENT OF THOSE OBJECTIVES ; - DOES NOT AFFORD SUCH UNDERTAKINGS THE POSSIBILITY OF ELIMINATING COMPETITION IN RESPECT OF A SUBSTANTIAL PART OF THE PRODUCTS IN QUESTION .
176 IN THAT RESPECT IT IS APPROPRIATE ALSO TO RECALL , AS THE COURT STATED IN ITS JUDGMENT IN THE METRO CASE ( AT PARAGRAPH 21 ), THAT THE POWERS CONFERRED UPON THE COMMISSION UNDER ARTICLE 85 ( 3 ) SHOW THAT THE REQUIREMENTS FOR THE MAINTENANCE OF WORKABLE COMPETITION MAY BE RECONCILED WITH THE SAFEGUARDING OF OBJECTIVES OF A DIFFERENT NATURE AND THAT TO THIS END CERTAIN RESTRICTIONS ON COMPETITION ARE PERMISSIBLE , PROVIDED THAT THEY ARE ESSENTIAL TO THE ATTAINMENT OF THOSE OBJECTIVES AND THAT THEY DO NOT RESULT IN THE ELIMINATION OF COMPETITION AS REGARDS A SUBSTANTIAL PART OF THE COMMON MARKET .
177 IN PARAGRAPH 132 OF THE CONTESTED DECISION THE COMMISSION FINDS FOR THE REASONS SET OUT IN PARAGRAPHS 113 TO 131 THAT THE RECOMMENDATION CANNOT ENJOY EXEMPTION UNDER ARTICLE 85 ( 3 ) BECAUSE IT DOES NOT SATISFY THE CONDITIONS FOR APPLYING THAT PROVISION . IN PARTICULAR THE RECOMMENDATION DOES NOT LEAD TO IMPROVEMENTS IN DISTRIBUTION SUFFICIENT TO OFFSET THE RESTRICTIONS ON COMPETITION WHICH IT CAUSES OR ALLOW CONSUMERS A FAIR SHARE OF ANY BENEFIT WHICH MIGHT RESULT .
178 IN THE CONTESTED DECISION THE COMMISSION GIVES A GROUND FOR MAINTAINING ITS REFUSAL OF EXEMPTION UNDER ARTICLE 85 ( 3 ) THE FACT THAT IT HAS NOWHERE BEEN SHOWN THAT THE DISTRIBUTION SYSTEM ESTABLISHED BY THE RECOMMENDATION BRINGS TO DIRECT CUSTOMERS OF THE MEMBERS OF FEDETAB AND BUYERS FROM SUCH CUSTOMERS MORE BENEFITS THAN THEY WOULD RECEIVE FROM NORMAL COMPETITION WHICH WOULD ALLOW THE CONSUMER A FREE CHOICE . WHILE RECOGNIZING THAT BY THE INDIRECT MEANS OF THE VERY LARGE NUMBER OF WHOLESALERS AND RETAILERS THE SYSTEM ALLOWS THE CONSUMER A WIDE CHOICE OF BRANDS , THE COMMISSION MAINTAINS THAT SUCH CHOICE IS AVAILABLE ONLY FROM SPECIALIST RETAILERS WHO REPRESENT ONLY A SMALL SHARE OF THE 80 000 SALES OUTLETS A LARGE MAJORITY OF WHICH OFFER CUSTOMERS ONLY A VERY RESTRICTED RANGE OF BRANDS . THE MULTIPLICITY OF SALES OUTLETS CAN MOREOVER ONLY INCREASE DISTRIBUTION COSTS .
179 THE COMMISSION ALSO CHALLENGES THE ARGUMENT TO THE EFFECT THAT THE DISAPPEARANCE OF THE COLLECTIVE SYSTEM ESTABLISHED BY THE RECOMMENDATION WOULD INEVITABLY INVOLVE THE DISAPPEARANCE OF THE SPECIALIST TRADE . THAT TRADE WOULD NOT BE THREATENED EVEN IF IT NO LONGER ENJOYED FROM FEDETAB AND ITS MEMBERS FINANCIAL TERMS MORE FAVOURABLE THAN THOSE ALLOWED TO THE NON-SPECIALIST TRADE IF THEIR SERVICES ARE ACTUALLY APPRECIATED BY THE USERS THEREOF AND CONSUMERS . WHILST EXPRESSING DOUBTS REGARDING THE DANGER ALLEGEDLY THREATENING THE SURVIVAL OF SPECIALIST WHOLESALERS WHO ARE RESPONSIBLE FOR SOME 80% OF CIGARETTE SALES ON THE BELGIAN MARKET , THE COMMISSION CONSIDERS THAT TO GRANT THEM MORE FAVOURABLE CONDITIONS IS AN ATTEMPT ARTIFICIALLY TO KEEP FIRMS ON THE MARKET WHEN THE ULTIMATE BUYER IS NOT CONVINCED THAT THEY ARE SO ESSENTIAL AND THE NORMAL FORCES OF COMPETITION WOULD HAVE PUT THEM OUT OF BUSINESS .
180 IN PARAGRAPH 133 OF THE DECISION THE COMMISSION IN REFERENCE TO THE PROVISIONS OF THE RECOMMENDATION FINDS MOREOVER THAT IT DOES NOT SATISFY EITHER THE LAST TEST FOR THE APPLICATION OF ARTICLE 85 ( 3 ) BECAUSE ' ' IN VIEW OF THE MARKET SHARE OF FEDETAB AND ITS MEMBERS , THE AGREEMENTS AFFORD THE UNDERTAKINGS CONCERNED THE POSSIBILITY OF ELIMINATING COMPETITION IN RESPECT OF A SUBSTANTIAL PART OF THE PRODUCTS IN QUESTION ' ' .
181 THE APPLICANTS MAINTAIN THAT THE AIM OF THE RECOMMENDATION IS TO MAINTAIN IN BELGIUM A VERY DENSE TRADITIONAL DISTRIBUTION NETWORK COMPRISING 80 000 RETAILERS WHICH WOULD MAKE AVAILABLE TO THE CONSUMER AND FOR HIS BENEFIT EVEN IN THE MOST OUT-OF-THE-WAY PARTS OF THE COUNTRY A WIDE RANGE OF BRANDS WHICH IN TURN CONTRIBUTES TO STRENGTHENING COMPETITION . THE MAINTENANCE OF THAT SYSTEM DEPENDS ON THE SPECIALIST TRADE AND IN PARTICULAR SPECIALIST WHOLESALERS WHO SUPPLY VERY MANY SMALL RETAILERS THROUGHOUT THE COUNTRY .
182 THE RECOMMENDATION , IT IS SAID , CONTAINS NO RESTRICTION WHICH IS NOT NECESSARY FOR THE ATTAINMENT OF THE ABOVE OBJECTIVE . IN PARTICULAR A SMALL ADDITIONAL PREMIUM MUST BE ALLOWED SPECIALIST WHOLESALERS AND RETAILERS TO ENSURE THEIR SURVIVAL IN THE FACE OF COMPETITION FROM OTHER TRADERS , ESPECIALLY SUPERMARKETS , WHICH DO NOT GIVE THE SAME SERVICE . THE ELIMINATION OF MANY SPECIALIST INTERMEDIARIES WOULD , IN THE APPLICANTS ' OPINION , INVOLVE NOT ONLY A REDUCTION IN THE NUMBER OF BRANDS AVAILABLE TO THE CONSUMER BUT ALSO SERIOUS SOCIAL CONSEQUENCES . IN THAT RESPECT IT IS PERTINENT TO OBSERVE THAT THE COURT STRESSED IN ITS JUDGMENT IN THE METRO CASE THAT CONSIDERATIONS OF A SOCIAL NATURE , AND IN PARTICULAR CONCERN TO SAFEGUARD EMPLOYMENT IN AN UNFAVOURABLE ECONOMIC CLIMATE , MAY BE TAKEN INTO ACCOUNT UNDER ARTICLE 85 ( 3 ).
183 IN THE FIRST PLACE IT MUST BE OBSERVED IN THAT RESPECT THAT THE RECOMMENDATION NO DOUBT CONTAINS CERTAIN BENEFITS IN RELATION TO PRODUCTION AND DISTRIBUTION OF CIGARETTES BOTH FOR THE CONSUMER AND FOR NUMEROUS SMALL RETAILERS INCLUDING IN PARTICULAR THE BELGIAN NEWSAGENTS AND TOBACCONISTS WHO , AS IS APPARENT FROM THE FILE , ARE RESPONSIBLE FOR SOME 60% OF NATIONAL CIGARETTE SALES . THE EXISTENCE OF A VERY LARGE NUMBER OF SALES OUTLETS IN BELGIUM UNDOUBTEDLY FACILITATES THE PURCHASE OF CIGARETTES BY THE CONSUMER EVEN THOUGH IT MUST BE OBSERVED THAT THERE IS A VERY WIDE RANGE OF BRANDS ONLY FROM A LIMITED NUMBER OF SPECIALIST OR SEMI-SPECIALIST RETAILERS WHO CONSTITUTE AN OUTLET IN PARTICULAR FOR NEW BRANDS OR THOSE WITH A SMALL TURNOVER .
184 NEVERTHELESS THE NUMBER OF INTERMEDIARIES AND BRANDS IS NOT NECESSARILY AN ESSENTIAL CRITERION FOR IMPROVING DISTRIBUTION WITHIN THE MEANING OF ARTICLE 85 ( 3 ). THE QUALITY OF A DISTRIBUTION SECTOR MAY BE JUDGED ABOVE ALL BY ITS COMMERCIAL FLEXIBILITY AND CAPACITY TO REACT TO STIMULI BOTH FROM MANUFACTURERS AND CONSUMERS . AS REGARDS THE LATTER THE EFFECTIVENESS OF DISTRIBUTION IMPLIES THAT IT CAN CONCENTRATE ITS ACTIVITIES ON PRODUCTS WHICH HAVE THE GREATEST PERFORMANCE IN THE EYES OF CONSUMERS AND IS TO BE JUDGED ALSO ACCORDING TO ITS ADAPTABILITY TO NEW PURCHASING HABITS WHICH MAY BECOME APPARENT . IT IS CLEAR FROM THE FIGURES SUPPLIED BY THE COMMISSION , THE ACCURACY OF WHICH HAS NOT BEEN CHALLENGED BY THE OTHER PARTIES TO THE PRESENT CASES , THAT THE CIGARETTE SALES MADE BY SUPERMARKETS HAVE INCREASED MUCH MORE THAN THOSE MADE BY OTHER RETAILERS AND THAT IS SO IN SPITE OF THE FACT THAT SUPERMARKETS OFFER ONLY A RESTRICTED NUMBER OF THE COMPLETE RANGE OF BRANDS OF CIGARETTES SOLD ON THE BELGIAN MARKET .
185 IT FOLLOWS FROM THOSE CONSIDERATIONS THAT IT MAY BE SERIOUSLY DOUBTED WHETHER THE BENEFITS IN RELATION TO DISTRIBUTION ARISING FROM THE RECOMMENDATION ARE LIKELY SUFFICIENTLY TO COMPENSATE FOR THE STRINGENT RESTRICTIONS WHICH IT IMPOSES ON COMPETITION IN RESPECT OF SALES TERMS ALLOWED THE TRADE TO JUSTIFY THE CONCLUSION THAT IT CONTRIBUTES TO IMPROVING THE DISTRIBUTION OF CIGARETTES WITHIN THE MEANING OF ARTICLE 85 ( 3 ).
186 IT IS HOWEVER UNNECESSARY TO GIVE A FINAL ANSWER TO THAT QUESTION SINCE IT MUST BE RECORDED THAT ANOTHER CONDITION FOR APPLYING ARTICLE 85 ( 3 ) IS NOT FULFILLED IN THIS CASE .
187 FOR THE PROVISIONS OF THE RECOMMENDATION TO ENJOY EXEMPTION THEY MUST NOT AFFORD THE MEMBERS OF FEDETAB THE POSSIBILITY OF ELIMINATING COMPETITION IN RESPECT OF A SUBSTANTIAL PART OF THE PRODUCTS IN QUESTION .
188 IN THAT RESPECT IT MUST BE REMEMBERED , AS THE COMMISSION POINTED OUT IN PARAGRAPH 8 OF THE CONTESTED DECISION , THAT FEDETAB MEMBER FIRMS PRODUCE OR IMPORT ROUGHLY 95% OF THE CIGARETTES SOLD IN BELGIUM AND THAT TEN FEDETAB MEMBERS , WHO ALSO IMPORT FOREIGN BRANDED PRODUCTS , IMPORTED IN 1974 51% OF THE CIGARETTES IMPORTED INTO BELGIUM , OR ABOUT 5% OF THE CIGARETTES SOLD THERE . MOREOVER THE SEVEN APPLICANT COMPANIES ALONE ARE RESPONSIBLE FOR A VERY HIGH PERCENTAGE ( GIVEN AS 80% IN PARAGRAPH 61 OF THE DECISION AND 92% IN THE COMMISSION ' S REJOINDER ) OF THE TOTAL CIGARETTE SALES IN BELGIUM . IT IS ALSO TO BE OBSERVED THAT ACCORDING TO FIGURES ALSO GIVEN BY THE COMMISSION IN ITS REJOINDER AND NOT CHALLENGED ALMOST TWO-THIRDS OF CIGARETTE SALES IN BELGIUM ARE REPRESENTED BY SOME TEN BRANDS ONLY , LARGELY MARKETED BY ONE OR MORE OF THE APPLICANT COMPANIES .
189 AS HAS ALREADY BEEN STATED , THE PROVISIONS OF THE RECOMMENDATION TO WHICH THE APPLICANT COMPANIES AGREED HAVE AS THEIR OBJECT , BY MEANS OF A COLLECTIVE AGREEMENT , THE RESTRICTION ON COMPETITION IN WHICH THOSE COMPANIES MIGHT ENGAGE BETWEEN THEMSELVES . HAVING REGARD TO THE VERY LARGE SHARE OF THE BELGIAN CIGARETTE MARKET HELD BY THE FEDETAB MEMBERS AND IN PARTICULAR BY THE APPLICANT COMPANIES , THERE MUST BE A FINDING THAT THE RECOMMENDATION HAS THE EFFECT OF AFFORDING THE APPLICANTS THE POSSIBILITY OF ELIMINATING COMPETITION IN RESPECT OF A SUBSTANTIAL PART OF THE PRODUCTS IN QUESTION . IT FOLLOWS THAT THE RECOMMENDATION CANNOT IN ANY EVENT HAVE EXEMPTION UNDER ARTICLE 85 ( 3 ). VII - CONCLUSION
190 IT FOLLOWS FROM ALL THE CONSIDERATIONS SET OUT ABOVE THAT THE APPLICATIONS AS A WHOLE MUST BE REJECTED AS UNFOUNDED .