C-66/63

JUDGMENT OF 15.7.1964 — CASE 66/63

of certain conditions imposed on the the agreements authorized. The parties concerned, the consequences limits of the High Authority's power of that agreement are not prohibited are to be found both in the purpose

by Article 65. In granting such an for which it must be exercised and in authorization the High Authority the general principles of the Treaty.

may impose any conditions which it 4. The departments of the High Au­

considers necessary having regard have thority no separate capacity to the nature and importance of the and may only act under its res­

agreements authorized, in order to ponsibility. ensure observance of the require­

In Case 66/63

Government of the Kingdom of the Netherlands , represented by Professor W. Riphagen, Legal Adviser to the Ministry of Foreign Affairs at The Hague, assisted by D. J. Veegens of The Hague, with an address for

service in Luxembourg at the Netherlands Embassy, applicant,

v

High Authority of the European Coal and Steel COMMUNITY , rep­

resented by its Legal Adviser, Erich Ziemermann, acting as Agent, assisted by C. R. C. Wijckerheld Bisdom of The Hague, with an address for service in Luxembourg at its offices. 2 place de Metz.

Advocate-General: M. Lagrange Registrar: A. Van Houtte gives the following

NETHERLANDS v HIGH AUTHORITY

JUDGMENT

Issues of fact and of law

I — Facts

The facts may be summarized as fol ws: 'annul Decisions Nos 5/63 and 6/63

the con­ authorizations granted and that, trary to the provisions of the Treaty, a III — Submissions and argu­

single marketing system had existed. ments of the parties

Decision No High Au­ By 16/60, the

thority rejected the request by almost The submissions and arguments of the

Ruhr may be follows: every mining company of the parties summarized as

Basin for the authorization of a single

tions. contracts and resolutions authorized

The mining companies ol the Ruhr were not published in extenso, the grounds Basin then concluded new agreements for the contested Decisions give only an

associating themselves into two groups incomplete the ap­ picture of system

in order to sell their products jointly proved by the High Authority. 'Geitling' through the selling agencies The defendant replies that it is not ob­

and 'Präsident', each representing one liged under the Treaties to publish in of these groups. full the texts of the agreements which it On 20 March 1963 the High Authority authorizes under Article 65 (2). To authorized these agreements by the enable the parties concerned to assess

contested Decisions Nos 5/63 and 6/63 the legality of the measures authorized, (Official Journal, 10 April 1963, No. 57). the authorization Decisions need only set out the essential features of the II — Conclusions of the parties agreements on which they are based. The applicant claims that the Court T he applicant contends that frequently should: it is the details of the companies'

were received within the required and of the contested

time it has been unable to judge whether wide as to apply to activities of widely

the High Authority has confused the different character and importance. essential features and the details. In addition, the applicant refers to the

The defendant contends that at the end considerations set out below in support

of July 1963 it returned copies of all the of the submission of infringement of the

contracts and resolutions contained in Treaty. the contested Decisions to the appli­

conditions required to grant the au­ cordance with Article 65 (2) (a), the

thorization. In particular, it emphasizes joint-selling system leads to an improved that the contested Decisions take into distribution of the products concerned.

account neither the composition and The defendant maintains that the second structure of the associations of under­ paragraph of this Recital concerning takings nor the economic situation of the conditions imposed by Article 65 (2) each association in relation to the other. (b), contains an implied reference to Thus the High Authority has in no way Recitals 27 to 33 which completes the shown that the system authorized guar­ ground for the Decision set out in the More­ antees the conditions of competition second paragraph of Recital 26. required by the Treaty (Article 65 (2) over, Recitals 20 to 25 are sufficient

(c) ). Also, no evidence is brought to evidence of the existence of the con­

show that the authorized agreements ditions referred to in Article 65 (2) (c). contributed to an improved distribution As regards the activities and powers of 'Treuhand' of the products concerned, as required the common organizations

by Article 65 (2) (a): the 26th Recital of and 'Beratung', the defendant refers to the contested Decisions merely asserts Recitals 6, 7 and 8 and to Recitals 21, 27 that this condition is fulfilled. Moreover and 28. Moreover, it refers to the con­

65 High 'non- (2), by which the Authority teed. Also, the certificate of

may grant authorizations 'subject to opposition', referred to in Article 15 (3) specified conditions and for limited of the contested Decisions can only be periods', shows that the conditions re­ given by the departments of the High ferred to therein must regulate directly Authority if the measures envisaged do the subject of the agreement itself and not contravene the Treaty or the au­

the manner of its execution. This is not thorization Decisions. the case here, since the system envisaged As regards the power to assess whether

by the High Authority consists of taking the authorization Decisions cover mea­

supervisory measures which are partly sures envisaged, the defendant contends preventive and partly repressive (Article that the decision whether or not the Deci­ laid down in Article 15 (3) and (4) of the contested measures 15(1) (a), sions). In providing for such a system, (b) and (c) comply with the contested therefore, the High Authority has ex­ authorizations is always made by the ceeded its powers. High Authority; its departments merely The Decisions the imple­ contested give to the ensure communication and

High Authority and its departments a mentation of such decisions.

Moreover, in order to give details of cies at Brussels referred to in the

these complaints of lack of competence, judgment in Case 9/56, the departments High dis­ the applicant refers to the arguments of the Authority have no

put forward to support the submission cretionary powers.

of infringement of the Treaty. The defendant maintains that the system 3. On the submission of infringement established by the contested authoriza­ of the Treaty tions cannot deprive Member States of their right to the protection of the Court. (a) The system of supervision Article (4) of the contested Decisions 15 in no way permits the High Authority The applicant maintains that the Treaty to depart tacitly from the prohibitions in does not empower the High Authority Articles 4 and 65 (1) of the Treaty. This to correct the defects of a contract which

JUDGMENT OF 15.7.1964 — CASE 66/63

is submitted for its approval otherwise toirs Belges de Charbon. Article 16 only than by amending or carrying out the extends this provision to the extent that

of the cartel agreement authorized. The exceed the powers given to the High fact that the High Authority considered Authority under Articles 5, 47 and 65 it necessary, in order to enforce the (3) of the Treaty. agreements in question, to retain the The applicant replies that the introduc­

very wide powers of control referred to tion of a system of controls over business

in Articles 15, 16 and 17 of the con­ activity and of direct intervention, ap­

tested Decisions, confirms the view that plied separately in each case according the purposes and effects of these agree­ to a subjective assessment made by ments do not comply with the arrange­ officials of the High Authority after

ments for competition within the Com­ authorization under Article 65, amounts mon Market required by the Treaty, in to conferring an entirely new power on particular by Articles 2 to 5, 65 and 66. the High Authority, since such authori­

The defendant replies that Article 15 of zation is based on a preliminary exa­

tested Decisions which provides that the circumvention of Article 65 (2) (c). High Authority shall always ensure that Far from conferring an entirely new

the selling agencies observe the limits of power on the High Authority, the

the authorizations granted, occurred in provisions complained of are a direct an almost identical form in the earlier result of the performance of the obliga­

authorization Decisions Nos 5, 6 and tions imposed by Article 65 on the High 7/56 as well as in Decisions Nos 19/57 Authority itself. A preliminary assess­

the Oberrheinische Kohlen- imple­ ment of the consequences of the concerning Union and 30/56 concerning the Comp- mentation of the agreements concerned,

NETHERLANDS v HIGH AUTHORITY

achieved. measure of competition required by the In such a complex legal and economic Treaty. In fact it is impossible for situation it is virtually impossible to the High Authority to examine in each make regulations which allow the con­ case separately 'whether or not the deter­ tent of the agreements themselves to activities of the undertakings are

remove any uncertainty as to their mined by the subject and effects of the effects. Moreover, none of the powers agreements, rather than by an assess­

given to this end to the Authority High ment of the conditions of the market'.

by Articles 15 to 17 are such as to allow Contrary to the assertions ot the appli­

direct intervention in decisions taken by cant which are intended to demonstrate the selling agencies regarding their own that the sales organizations of the Ruhr activities. Therefore, the role reserved to in fact constitute a single unit, the

competition by Article 65 (2) (c) can defendant emphasizes that the contested

though by no means autonomous, con­ the agreements submitted to it. stitute a single unit; this leads to undue Although the defendant does not dispute

in the Com­ restriction on competition that the two selling agencies show certain

mon Market as interpreted in the similarities, particularly as regards their judgment in Case 13/60. basic agreements and the total tonnage

The uniform structure of the two groups of coal mined and coke produced by is to be seen in the volume of production, each of the two groups of companies, it of sales and of the types of products contends that nevertheless the position

manufactured by each group, as well as is noticeably different as regards the in the legal and economic situation of the various grades of coal. The defendant in­ figures undertakings concerned, since the produces to support this argu­

ternal organization and sales regula­ ment. The geographical distribution of tions of the two agencies are identical the mining companies of the two groups

from the outset. identical in structure. This argument

Moreover, it is impossible tor the High was also confirmed by the fact that the Authority to have any influence on the size and the number of the undertakings form of cartel agreements submitted for controlled by public authorities and

authorization where they meet the represented in each agency was approxi­

conditions required by Article 65 (2) mately the same.

(a), (b) and (c). This division between two agencies

There is no specific economic theory of concerns those undertakings which con­

prices within the meaning of Article 65 This being so, the two agencies, even if (2) (c). The share of sales in a their do con­ cartel's activities not manifestly local market may only be considered, as travene the authorizations given, will

it was by the Court in its judgment in seek and will indeed be compelled, Case 13/60, in order to assess whether having regard to their structure and

there exists a power to determine the position in the market, to follow an

prices, but where it is necessary to know agreed marketing policy. Since out and whether this power extends to a 'substantial out competition between them is un­

part' in likely, circumstances force them to act products'

of the question, the Court must not consider the local market as one economic unit, without needing to

velop if the agencies are able to offer the two groups will be further facilitated

approximately the same grades and by their association in the 'Ruhrkohle- Treuhand' types of coal in the market. in 'Ruhrkohlen- and the

The fact that the number of collieries Beratung'. The selling agencies and 'Geitling' affiliated to and situated on their joint departments are housed in the

waterways is larger than that contained same building in Essen at 5, Frau Berta-

NETHERLANDS v HIGH AUTHORITY

Krupp-Strasse. judgment in Case 13/60, only reaches

the Common Market. Moreover, it strategy. Such factors lead to uncertainty criticizes the defendant for having failed as to the result of thisstrategy in an to examine the information concerning oligopolistic market. Thus the minimum sales in the various local markets which measure of competition required by is essential in order to determine the Article 65 (2) (c) is achieved. existence of real competition.

The defendant replies that it is not con­ (c) The position of each agency in relation tradictory to argue that, although the to Article 65(2) (c) structure of the two agencies is not

identical, the economic strength of the According to the applicant, the require­

agencies is comparable. This compar­ ments of Article 65 (2) (c) are still not able strength, which does not imply an fulfilled even if each agency is considered exactly identical structure, is also in isolation. The comparison in Recital con­

firmed by the observations of the appli­ 25 between each of the two agencies and cant on the allocation between the two Les Charbonnages de France as regards agencies of those undertakings con­ the volume of production of each under­

trolled by the State, those concentrating taking fails to appreciate the scope of on sales to third parties and those Article 65 of the Treaty according to

that the power of the oligopolies to Ruhr as regards their production — does determine the prices, accepted in the not jeopardize the minimum competi-

JUDGMENT OF 15.7.1964 — CASE 66/63

tion in the Common Market in coal tested Decisions regarding Article 65 required by the Treaty and can there­ (2) (a) might also be applied to the fore be authorized. agreements dealt with in the judgment

The applicant contends that the conclu­ in Case 13/60, it is also correct that

sion thus drawn by the defendant from Decision No 16/60 of the High Authority the judgment of the Court in Case 13/60, refusing to authorize a single cartel had according to which any organization the expressly stated that the requirements of size of which does not exceed that of this provision were satisfied by the

Les Charbonnages de France meets the agreement in question.

Les Char­ same order of magnitude as requirements of this provision of the

bonnages de France. Treaty. On the other hand, the defendant empha­ Moreover, the provisions of Article 65 sizes that the Court, in referring to these (2) (a) and (b) do not prevent an

orders of magnitude, made an express identical from existing in the structure

reservation (' … whatever corrections two selling agencies. This is a question

of detail might be necessary …'). governed solely by Article 65 (2) (c).

In its reply, the applicant states that an (d) On the grounds of complaint based on insufficient statement of reasons for the Article 65 (2) (a) and (b) Decision must be regarded as the basis of the complaint concerning the condi­

tween mining companies. They are in required to consider whether the crea­

particular applicable to the system tion of three or more sales organizations

referred to in the judgment of the Court would contribute to this improvement to in Case 13/60. the same extent.

The defendant replies that it is not correct to say that all joint selling brings about 4. On the submission of misuse of

the improvement described in the re­ powers

citals of the contested Decisions: for

did not contravene Article 65 (2), con­ course.

cludes that the High Authority used its Upon hearing the report of the Judge-

power to grant an authorization for a Rapporteur and the opinion of the

purpose other than that for which it was Advocate-General, the Court decided at conferred. the hearing on 10 March 1964 to open In answer to this submission, the the oral procedure without any pre­

defendant refers to the arguments de­ paratory inquiry. veloped under the submission of The oral part of the proceedings took

infringement of the Treaty as regards place on 21 April 1964. the assessment of the obligations as to The Advocate-General delivered his notification and supervision provided opinion on 14 May 1964. for by Articles 15 to 17 of the contested Decisions.

The applicant maintains that as the contracts and resolutions authorized

were not published in extenso, the statements of reasons on which the con­

tested Decisions are based give only an incomplete picture of the system

approved by the High Authority.

However, the reasons given for the Decisions in question must enable the nature of the agreements authorized to be assessed having regard to the requirements of the Treaty.

To this end, it is sufficient that the authorization decisions adopted under

An examination of the documents produced does not show any such omis­

sions.

This ground of complaint is therefore unjustified.

Moreover, the applicant maintains that the contested Decisions do not

sufficiently show how, under Article 65 (2) (a), joint selling contributes to a substantial improvement in the distribution of the products concerned, nor

how, under Article 65 (2) (b), the agreements in question are essential in order to achieve these results; in particular, these Decisions assert that the agreements authorized are of great importance ('van groot belang') in achieving an improved distribution of the products, while the Treaty

Furthermore the applicant claims that the High Authority gave insufficient

reasons for its opinion that the agreements were essential in order to achieve the required results and were not more restrictive than was necessary for that purpose.

In summarizing the essential features of the agreements and resolutions

submitted and in stating the advantages of joint selling, the contested

Decisions set out the facts necessary to examine whether they meet the

NETHERLANDS v HIGH AUTHORITY

clauses which appear 'more restrictive than is necessary for that purpose', or to modify their too restrictive effects by imposing conditions on them, it is not obliged to give the reasons for which the provisions of Article 65 (2) (b) are not infringed by each individual clause.

These grounds of complaint cannot therefore be maintained.

2. On the submission of infringement of the Treaty, of lack of competence and misuse of powers

(a) The system of supervision

The applicant contends that the contested Decisions infringe the Treaty and exceed the powers of the High Authority in that the effect of their

Articles 15 to 17, which provide for the right of the High Authority or its

JUDGMENT OF 15.7.1964 — CASE 66/63

The supervision provided for by the provisions complained of is clearly such as to facilitate the task of the High Authority in preventing the authorized agencies from abusing those agreements considered compatible with the

Treaty and from behaving in a manner contrary to the authorizations given

and, more generally, to the provisions of the Treaty.

Moreover, where the exercise of this supervision involves the High Authority in the adoption of policies likely to affect the interests of third parties, such a measure must be adopted in the manner provided for in Article 15 of the Treaty.

Article 15 (3) of the contested Decisions provide for the adoption of such particularly in the form of supplementary statements or authoriza­ policies

On the other hand, in Article 15 (3) of the contested Decisions the depart­ ments of the High Authority were wrongly referred to as distinct from the

Authority itself. The departments of the High Authority have no separate capacity and may act only under its responsibility. The contested Decisions were thus required to reserve the power of decision to the High Authority

alone which must arrange for such power to be exercised on its own responsi­

bility and with due regard to the rules of the Treaty. Since the reference to the departments as separate entities is without legal foundation, it cannot

properly appear in the contested Decisions. The said reference is severable from the rest of the contested Decisions with the result that their Articles

15 (3) may be annulled to the extent that they contain the words 'or its departments'.

if subjected to such supervision, and that therefore, by using its power of authorization to an end other than that for which it was conferred, it misused

its powers.

The High Authority cannot be denied the right to approve an agreement if it finds that, as a result of certain conditions imposed on the parties con­

cerned, the consequences of that agreement are not prohibited by Article 65.

Moreover, the tendency of the selling agencies of Ruhr coal earlier author­

ized to keep within the limits of the authorizations as stated in Recital 38 of the contested Decisions, is capable by itself of justifying the supervision

are given for the contested Decisions, does not maintain that other aspects

of the agreements do not fulfil this requirement.

One must, therefore, consider the ground of complaint based on subpara­

graph (b) of the above-quoted provision together with the allied grounds of complaint based on subparagraph (c). In fact, the question whether and to what extent the limitation complained of is in itself restrictive is identical to

the question whether and to what extent a limited number of selling agencies is likely to give the undertakings concerned the power to determine the prices, or to control or restrict the production or marketing of a substantial

part of the products in question within the Common Market.

with other undertakings or allied bodies.

It follows from the contested Decisions, in particular from their Recitals 20 to 25, that the High Authority based its action on such evaluations.

The Court, acting under Article 33 of the Treaty to review the legality of measures adopted by the High Authority, cannot, except in cases of flagrant error or omission by that Authority, interfere in the evaluation of the economic facts or circumstances in the light of which the contested measures were adopted.

It is true that the structure of the two agencies shows substantial uniformity both as regards the volume of production and sales of the various types of

product manufactured in each and their internal organization and group control of sales. As a result of this uniformity, the two new agencies are

placed on an equal footing. In an oligopolistic market the balance and

takings, it is almost inevitable that the prices charged by units having comparable'economic strength should be largely stable, even when they are

actually competing, since publication to other vendors as well as to pur­

chasers discourages any isolated effort by either economic unit to use prices

NETHERLANDS v HIGH AUTHORITY

in order to conquer a larger portion of the market. This applies to the

Common Market in coal today.

tenance of a high degree of competition between the undertakings in diffi­

culty, although this does not involve the elimination of all competition in the coal market.

In this case it should be observed that as the Ruhr Basin is an integral part of the Common Market in coal and steel the selling agencies, with the mod­ ern development of trade, will be more and more exposed to competition

from the various units selling coal in the market.

Moreover, one particular factor continues to increase in importance, namely the competition of other products against coal.

In such a situation, the interests of coal consumers are safeguarded by the availability, if necessary, of substitute products; this makes it necessary to consider the growing importance of this factor in assessing competition and demonstrates the desirability of taking into account the general aims of Article 3.

Therefore, taking into account the supervision established by the High

JUDGMENT OF 15.7.1964 — CASE 66/63

Authority of each agency, the points of contact existing between the two agencies are not likely to lead, with a sufficient degree of probability, to the

belief that they are capable of creating between them an effective unit or to

confer on them powers to determine the prices and to control or limit the

marketing of a substantial part of the products in question in production or

reserved to the High Authority in this field to carry out a technical assess­

ment.

The applicant maintains that because of the size of each of the two agencies authorized the existence of each one, even if considered in isolation and

irrespective of the existence of the other, is incompatible with Article 65

(2) (c).

The scope of an agreement only acquires significance in relation to the re­

mine the prices, or to control or restrict the production or marketing, of a

substantial part of the products in question within the Common Market, or

NETHERLANDS v HIGH AUTHORITY

to shield them against effective competition from other undertakings within

the Common Market'.

Thus, the grounds of complaint based on Article 65 (2) (c) concerning both the submission of infringement of the Treaty and the insufficiency of the reasons for the decision, cannot be maintained.

found no evidence of the existence of any misuse of powers by the High Authority.

This submission must therefore be rejected

Costs

Under the terms of Article 69 (2) of the Rules of Procedure the unsuccessful

party shall be ordered to pay the costs if they have been asked for in the pleadings.

The defendant has contended that the applicant should be ordered to pay the costs.

THE COURT

her by:

1. Dismisses the application as unfounded save as hereinafter

mentioned;

2. Annuls the words 'or its departments' in Article 15 (3) of the contested Decisions;

3. Orders the applicant to pay the costs.

for Ruhr coal and the vicissitudes it has does not, like its predecessors, merit

undergone since being subjected to the serious consideration, particularly in provisions of Article 65 of the ECSC that this is the first time that a Member

Treaty: the Court has been too closely State has contested before you an

involved to be unable to approach with authorization decision apparently ac­

full knowledge of the facts the new cepted by the mining undertakings and

1 — Translated from the French.