C-36/64

3. Cartels — Authorization — Revocation (ECSC Treaty, Article 65)

1. The statement of reasons for a 2. The High Authority may refuse to decision, as it emerges from the renew the authorization of an agree­ decision itself and from the state­ ment if it finds that the requirements ments of reasons, with which it is of subparagraphs (a) to (c) of Article closely connected, in previous 65 (2) are no longer met. decisions, is sufficient where on the Cf. para. 3 of summary in Case one hand it enables those concerned 67/63, Rec. 1964, p. 297. to know the essential considerations 3. The High Authority must revoke of fact and of law upon which the the authorization of an agreement in High Authority relies, and on the particular if it finds that the actual other hand to enable the Court to results of the agreement or of its exercise the judicial review entrusted application are contrary to the to it by the Treaty. requirements for its authorization. Of. para. 1 of summary in Case Cf. para. 4 of summary in Case 1/63, [1963] E.C.R. 303 67/63, Rec. 1964, p. 297.

In Case 36/64

SOCIÉTÉ RHÉNANE D'EXPLOITATION ET dE MANUTENTION (SOREMA), a limited liability company having its registered office in Strasbourg, repre­ sented by its managers, assisted by Romain Garnon of the Strasbourg Bar, with an address for service in Luxembourg at the Chambers of Charles Turk, Advocate, 6 rue Brasseur, applicant,

v

1 — Language of the Case: French. 2 — CMLR.

Advocate General: M. Lagrange Registrar: A. Van Houtte

gives the following

JUDGMENT

Issues of fact and of law

I — Facts Among the undertakings associated to­ gether in OKU were fifteen wholesalers The facts may be summarized as established in France and affiliated to follows: the Société Rhénane d'Exploitation et 1. In April 1956, the Oberrheinische de Manutention (hereinafter referred to Kohleunion, Bettag, Puton & Co. as SOREMA). (hereinafter referred to as OKU), which 2. The High Authority by Decision No was then a joint-selling organization of 19/57 of 26 July 1957 (Official Journal the mining companies of the Aachen, p. 352/57) pursuant to Article 65 of Ruhr, Saar and Lorraine basins selling the Treaty authorized, subject to certain on the South German market, was reservations and conditions, the above- transformed by a decision of its mentioned joint-buying agreement of members into a joint-buying organiza­ OKU. tion to buy from the said companies The validity of this Decision lasted fuel intended for re-sale in Southern until 31 March 1959, except with Germany. respect to the participation of the coal

SOREMA v HIGH AUTHORITY

3. By Decision No 4/58 of 2 April Decision No 23/59 did not, however, in 1958 (Official Journal p. 169/58), the its operative part make any special High Authority, taking the view that reference to the participation within the merchants grouped within SOREMA OKU of the merchants affiliated to had had no opportunity, by reason of SOREMA. certain circumstances, of developing 6. By Decision No 31/59 of 27 May their own sales operations in Southern 1959 (Official Journal p. 697/59), the Germany, extended until 31 July 1958 High Authority again extended the the transitional period on the expira­ validity of Decision No 19/57 concern­ tion of which Decision No 19/57 would ing OKU, this time until 31 March lapse so far as concerned the participa­ 1962. tion of these companies in OKU, unless This decision stated on the one hand they proved by this date that they ful­ that the merchants grouped within filled the previously mentioned require­ SOREMA, not having given proof of ments of the association agreement of fulfilling the conditions for admission OKU for the admission of new com­ to OKU, must consequently be excluded panies. from it, and declared on the other hand 4. By letter of 15 July 1958 (Official that the participation of SOREMA itself Journal p. 286/58), the High Authority in OKU would be authorized tem­ informed SOREMA that there was no porarily until 31 March 1960. longer any justification for the retention 7. By Decision No 12/60 of 18 May within OKU of the undertakings re­ 1960 (Official Journal p. 813/60), the presented by SOREMA, since for them High Authority extended SOREMA's to continue within it would be incom­ authority to participate in OKU until patible with the principles which had 31 March 1962. been decisive for the purposes of the 8. On 28 March 1962 by Decision No conversion of OKU and for its 3/62 the High Authority extended authorization by Decision No 19/57. It OKU's joint-buying agreement until 31 pointed out that it was only as an December 1962, and specified that this exception and for the transitional period authorization also extended SOREMA's of one year that its participation in participation, though for a transitional

period the duration of which would be tions in which an agreement regularly laid down in a later decision. authorized should come to an end. 9. By Decision No 8/63 of 30 April According to the third subparagraph of 1963 (Official Journal p. 1441/63), the Article 65(2) of the ECSC Treaty the High Authority decided that SOREMA's duration and the conditions of an authorization to participate in OKU authorization of a joint-buying agree­ would expire on 30 June 1963. ment must be laid down in the This Decision, on application by authorization decision itself. It follows SOREMA (Case No 67/63), was annull­ from the fourth subparagraph of Article ed by a judgment of the Court of 19 65(2) that the revocation or amendment March 1964 (Rec. 1964, pp. 293 et of the authorization may arise only from seq.). later circumstances. 10. On 15 July 1964, the High However, the annulment of the parti­ Authority adopted Decision No 15/64 cipation of SOREMA in OKU took (Official Journal p. 1969/64), which is place in contravention of these pro­ the subject of the present application. visions and in the exercise of a pre­ By this Decision, which was notified rogative which the High Authority, to the applicant on 21 July and entered illegally conferred upon itself by a into force on 30 September 1964, previous decision, to the extent that it SOREMA's authorization to participate reserved to itself the right to settle the in agreements for the joint buying of length of the validity of the first fuels by wholesalers operating in South­ decision by a later decision. ern Germany through the agency of The contested Decision is disguised OKU was terminated. under the appearance of a decision not to renew an authorization or of a decision to issue a revocation. In fact II — Conclusions of the it is by its character, which does not parties conform to the Treaty, a decision to put into practice an arbitrarily created The applicant claims that the Court should: right. The defendant points out that Decision — annul the contested decision; No 3/62 was not made the subject of — order the High Authority to pay the costs. an application for annulment in good time. As it is an individual decision it The defendant contends that the Court cannot be disputed by way of an objec­ should dismiss the application as un­ tion of illegality either. founded and order the applicant to pay The argument of the applicant is, the costs of the proceedings. furthermore, contradicted according to the High Authority by the judgment of III — Submissions and the Court in Case 67/63 between the arguments of the same parties. parties The applicant during the procedure also disputed Decision No 31/59 The submissions and arguments of the which conferred upon the High parties may be summarized as follows: Authority in abstract terms the right to decide the duration of validity of the 1. Misuse of powers authorization. It maintains that this The applicant maintains that the con­ Decision is not obligatory in nature tested Decision is vitiated by misuse of and that it could not give it grounds powers, in that it lays down a for complaint since it fixed no time- posteriori the time-limit and the condi- limit.

Further, the essential conditions which ments of OKU, the carrying on of governed the adoption of Decision No sales activities in Southern Germany 31/59 were the subject of a change not being a requirement for joining. because of the judgment in Case 67/63 Further, according to the applicant which necessitated the High Authority's Article 4 (b) of the Treaty prohibits reconsidering its position. only discrimination between producers, The defendant replies in this respect: purchasers or consumers; it cannot — on the one hand, that the applicant therefore apply to SOREMA, an is confusing Decisions Nos 31/59 association of undertakings within the and 3/62: the first certainly fixed the meaning of Article 48 and one which period of validity of the authorization as such was expressly authorized to (31 March 1960); it was the second take part in OKU by Decision No which deferred the fixing of the date 31/59. on which SOREMA should leave Further, the applicant states that in OKU to a later decision; any case Article 3 (b) of the Treaty — on the other hand that it must of prohibits only discrimination whose course draw the relevant conclusions aim or whose effect is to deprive com from the judgment in Case 67/63, parably placed consumers in the Com but that this leads to conclusions mon Market of equal access to the different from those of the applicant; sources of production.

a prohibited discrimination ditioned by the application of transport The applicant maintains that the con rates offering comparable price condi tested Decision wrongly finds that its tions to comparably placed consumers. continuation within OKU would con The failure of the High Authority to stitute a discrimination detrimental to act in this sphere prevents it from the merchants or associations which, asserting the existence of any dis because they do not carry on activities crimination as a result of the participa in Southern Germany, cannot adhere tion of SOREMA in OKU.

JUDGMENT OF 2. 6. 1965 — CASE 36/64

On the other hand the fact of being petition was not in operation prior to an association of undertakings does not the Treaty, the agreement cannot be allow the applicant to escape the declared contrary to the Treaty. application of the rules of the Treaty Further, according to the applicant, its or the decisions of the High Authority. participation in OKU does not affect As to the argument based upon the free competition, because it holds the alleged failure to act on the part of the shares of its members in OKU exclu High Authority in respect of transport sively as an agent.

3. Defects in the statement of reasons 'between its participants in the pur for the finding of the existence of chase of their products, comes under restrictions on competition Article 65; the fact that joint-buying According to the applicant the High agreements can be authorized only Authority has not sufficiently explain in the situations provided for in ed: Article 65 (2) suffices furthermore — in what way the joint-buying agree to show that in principle they are ment made by the coal wholesalers prohibited by paragraph (1); of Southern Germany falls under the — the idea that the prohibitions of prohibition of Article 65 (1) of the Article 65 apply equally to the Treaty and applies because of this activities of SOREMA as an associa to the participation of SOREMA, tion of undertakings flows directly an association of undertakings within from the judgment in Case 67/63; the meaning of Article 48; — it follows from the combination of — in what way the conditions provided paragraphs (1) and (2) of Article 65 for in Article 65 (2) (a) to (c) are that a joint-buying agreement, not fulfilled and, in particular, how although it tends to restrict com participation in the authorized agree petition and is thus in principle for ment tends to prevent, restrict or bidden by the first paragraph, may distort normal competition within be permitted if it fulfils the condi the Common Market. tions required by paragraph (2).

On the other hand the agreements in taking account of the special conditions question were not made prior to the of the Southern German market, the entry into force of the Treaty, OKU authorized agreement contributed not having subsequently been converted ably to the improvement of distribution into a buyers' cartel. In any case, of fuel; the Decision provided for a agreements made even 'before the geographical limitation to avoid its Treaty which are intended to restrain having a more restrictive character than competition fall under the provisions its objects required. of Article 65. As to other arguments put forward by 5. Defect in the statement of reasons the applicant to support this submission, for a revocation of authorization the defendant cannot see that they have any relationship to the question whether The applicant complains that the con the participation of SOREMA in the tested Decision states wrongly that the OKU joint-buying agreement falls results of the authorized agreement or within the ambit of the prohibition of of its application are contrary to the Article 65 (1). requirements for its authorization. The collective participation in OKU

Rhine. It matters little that SOREMA does not The defendant replies that it is suffi operate in Southern Germany since the cient to consider the consequences of competition situation in the Common the decisions made in this case and in Market has not been changed. particular Decision No 3/62, with According to the defendant the argu reference to which the contested ment of the applicant rests upon a mis Decision was made, to be convinced taken understanding of the requirements that their object has always been only of Article 65. to allow merchants affiliated to To the very extent that it is intended SOREMA to carry on a commercial to restrict competition, a joint-buying activity in Southern Germany.

JUDGMENT OF 2. 6. 1965 — CASE 36/64

IV — Procedure Judge-Rapporteur and the Advocate- General, decided that it was not neces­ The procedure followed the normal sary to undertake a preparatory in­ course. quiry. A request by the applicant for suspen­ The parties presented their oral argu­ sion of the operation of the contested ments at the hearing on 16 February Decision was dismissed by order of the 1965. President of the Court dated 17 The Advocate-General delivered his September 1964. opinion at the hearing on 11 March The Court, after hearing the 1965.

Grounds of judgment

I — As to Admissibility

The defendant does not dispute the admissibility of the present application and no grounds exist for the Court to raise the matter of its own motion. The application is therefore admissible.

II — On the substance of the case

The first submission is unfounded.

2. As to the second submission

The applicant complains that the contested Decision wrongly assumes that its continuation in OKU would constitute a discrimination in respect of merchants or associations which, because of the fact that they are not carry­ ing out sales activities in Southern Germany either, are excluded from it.

The agreement made in April 1956 by the members of OKU had as its object the joint buying, in the coalfields of Aachen, the Ruhr, the Saar and Lorraine or through their selling agencies, of fuel intended for resale in Southern Germany. It was with this object that the agreement was authorized by Decision No 19/57 and subsequent decisions of the High Authority.

Although by its Decision No 31/59 the High Authority as a transitional measure authorized participation in the said agreement by SOREMA itself as an association of undertakings, it did not however intend to exempt the merchants represented by the applicant from the fundamental condition which results from the very object of the agreement, namely that of carrying on. sales activities in Southern Germany. The applicant did not contest the legality of this condition in good time. It is not disputed that the applicant carries out no sales activity in Southern Germany. In this situation its con­ tinuance in OKU would have the consequence of favouring it as compared with merchants who, though not having any sales activity in Southern Germany, are in an identical situation and are however excluded from OKU.

The applicant maintains further that, even if its participation in OKU con­ stitutes discrimination, the contested Decision wrongly assumed that in the present case it was a matter of discrimination prohibited by the Treaty, in particular by Article 4 (b).'

'Whereas the agreements concerning joint buying, made by the wholesale coal merchants of Southern Germany belonging to OKU fall under the basic prohibition of Article 65 (1) as restricting competition between these whole­ sale merchants in the purchase of their products; and whereas this prohibi­ tion is equally valid in respect of SOREMA which in accordance with the findings of the Court of Justice groups together as an association within the meaning of Article 48 of the Treaty undertakings which, being wholesale coal merchants, come within the provisions of Article 65 (1)'.

Further, it is necessary in the present case to read this statement of reasons in the light of the statements of reasons, with which it is clearly connected, in previous decisions adopted in respect of OKU and in particular of the appli­ cant. All of these reasons are sufficient on the one hand to enable the appli­ cant to know the essential considerations of fact and of law on which the High Authority relies and on the other hand to enable the Court, on this point of the contested Decision, to exercise the judicial review entrusted to it by the Treaty.

The applicant maintains further that the OKU joint-buying agreement was made prior to the Treaty and cannot thus be contrary to it.

It is sufficient in this respect to say that in April 1956, by a decision of its members, OKU was converted from a selling organization into a joint-buying

SOREMA v HIGH AUTHORITY

organization and was, as such, authorized by Decision No 19/57 of the High Authority. The joint-buying agreement in question in the present case was thus not made prior to the entry into force of the Treaty.

The High Authority must revoke the authorization in particular if it finds that the actual results of the agreement or of its application are contrary to the requirements for its authorization. Decision No 31/59 which authorized the collective participation of SOREMA as an association of undertakings in the joint-buying agreement of OKU did not alter the actual object of the authorized agreement. The contested Decision is therefore right in finding, by reference to Decision No 3/62, that the conditions mentioned in particular in favour of the French wholesale coal trade in respect of supplies from the Ruhr cod-selling agencies have had favourable effects on the French whole­ sale coal trade as a whole in the Common Market, but that the members of SOREMA have remained inactive in Southern Germany and that conse­ quently the actual effects of the agreements are contrary to the requirements for their authorization.

The fourth and fifth submissions are thus unfounded.

JUDGMENT OF 2. 6. 1965 — CASE 36/64

III — Costs

Under Article 69 (2) of the Rules of Procedure of the Court, the unsuccessful party shall be ordered to pay the costs. In the present case the applicant, having failed in its submissions, must bear the costs of the proceedings.

The order of the President of the Court dated 17 September 1964 reserved the costs of the application for the adoption of an interim measure. The appli­ cant having failed in that application must bear the costs of those proceedings.

Hammes Donner Lecourt

Delvaux Trabucchi Strauß Monaco

Delivered in open court in Luxembourg on 2 June 1965.

H. J. Eversen Ch. L. Hammes

Assistant Registrar President

For the Registrar