C-41/69

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all the issues of fact and of law referred meaning of that article and its clauses to be every interested party in the amount to a faithful expression of the course of the administrative procedure. joint intention of the parties. The statement of reasons for a decision imposing a fine is to be considered 10. The penalties provided for in Article 15 sufficient if it indicates clearly and of Regulation No 17 are not in the coherently the considerations of fact nature of periodic penalty payments. and of law on the basis of which the fine Their object is to suppress illegal has been imposed on the parties con­ activity and to prevent its recurrence so cerned, in such a way as to acquaint both that their application is not restricted to the latter and the Court with the current infringements alone. The Com­ essential factors of the Commission's mission's power to impose penalties is reasoning. in no way affected by the fact that the conduct constituting the infringement 8. The Commission is entitled to publish and its effects have ceased. decisions imposing penalties with re­ gard to cartels to the extent to which 11. For the purpose of fixing the amount of such publication does not amount to the fine, the gravity of the infringement divulging the undertakings' business is to be appraised by taking into ac­ secrets. count in particular the nature of the restrictions on competition, the number 9. A gentlemen's agreement constitutes a and size of the undertakings concerned, measure which may fall under the pro­ the respective proportions of the market hibition contained in Article 85 (1) if it controlled by them within the Com­ contains clauses restricting competition munity and the situation of the market in the Common Market within the when the infringement was committed.

Application for the annulment or amendment of the decision of the Commission of 16 July 1969, published in the Official Journal of the European Communities

JUDGMENT OF 15. 7. 1970 —CASE 41/69

L 192 of 5. 8. 1969, p. 5 et seq., and relating to proceedings under Article 85 of the EEC Treaty,

THE COURT

composed of: R. Lecourt, President, R. Monaco and P. Pescatore, Presidents of Chambers, A. M. Donner, A. Trabucchi (Rapporteur), W. Strauß and J. Mertens de Wilmars, Judges,

Advocate-General: J. Gand

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scope. Following this request Boehringer other with certain information on the basis and Nedchem concluded a new agreement of which Nedchem would, for the purposes on 14 July 1959 excluding supplies to other of quantitative compensation, make per States of the EEC. iodic calculations of the deliveries in excess Negotiations entered into in 1959 between of or below the quota of each of the under Buchler, Boehringer, Nedchem, the group takings. of French quinine producers (Nogentaise, Apart from this agreement, which governed Pointet-Girard, Taillandier and Pharmacie the problem of Buchler's adherence to the Centrale) together with Carnegies of Wel agreement concluded on 8 and 14 July 1959 wyn Ltd and Lake & Cruickshank Ltd of the between Boehringer and Nedchem, another United Kingdom resulted in an agreement agreement was concluded on 7 April 1960 between all those undertakings. First of all between Boehringer, Buchler, Nedchem, on 10, 24 and 31 March 1960 Boehringer the abovementioned French group and the (acting also in the name of its above two British undertakings, Carnegies and mentioned subsidiary), Buchler and Ned Lake & Cruickshank, in order to settle the chem (acting also in the name of all the conditions for the adherence of the French abovementioned Netherlands undertakings) and British undertakings to the above concluded an agreement providing for : mentioned agreement of 10, 24 and 31 March 1960, in so far as it related to quinine. — the fixing by agreement of prices and Parallel with the export agreement two rebates applicable to exports of quinine gentlemen's agreements containing sub and quinidine; stantially identical provisions were con cluded on 9 April 1960 and recorded in — the allocation of export quotas and the writing although they were not signed; one reservation of certain markets outside the was between the French group, Boehringer, Community; Buchler, Nedchem and Carnegies and the other was between the French group, — the retention of the clause making the Boehringer, Buchler, Nedchem and Lake & agreement inapplicable to exports in the Cruickshank. Those two gentlemen's agree States of the EEC; ments extended the provisions laid down in the export agreement with regard to price,

German and Netherlands parties and to — application to be made, in case of dis purchase this product ecxlusively from the pute, at the option of the parties, to German and Netherlands parties and to arbitration or to the ordinary courts of maintain the agreed prices on resale. The law. French undertakings entered into the same obligation with regard to synthetic quin It was agreed that this export agreement idine. Derogations from the gentlemen's

agreements could take place only with the 1962 difficulties arose between the parties on agreement of all the parties and disputes the question of the 'bark-pool'. As a pre were to be settled exclusively by arbitration. liminary condition to concluding an agree It was further decided that failure to comply ment on bark, Nedchem requested the with or termination of the gentlemen's abolition of the prohibition on exporting agreements would automatically be regard bark which was in force in the Congo al ed as failure to comply with or termination though Pharmakina, Boehringer's Congo of the formal export agreements relating to lese subsidiary, was in avour of this pro quinine and quinidine, and vice versa. hibition. As a result of this Lake & Cruick The gentlemen's agreements were kept shank and Boehringer requested revision of secret. the quotas. The scope of the decisions taken The said agreements were supplemented at this meeting with regard to the gentle during 1961 and 1962 by an association men's agreements gave rise to a dispute relating to the joint purchase of raw between the parties to the present pro materials which, in accordance with the ceedings. decision taken during a meeting on 26 On 2 November 1962 Nedchem notified the January 1961, was drafted in conformity other members that the export agreement with the arrangements laid down in a draft and the gentlemen's agreement should no agreement instituting a pool of stocks longer be regarded as binding; it alleged purchased ('bark pool') but which was never that the proposals made by Boehringer and

advance. On 4 September 1964 the Ameri 25 % at the meeting on 28 October, whilst can General Service Administration gave a the prices of quinidine were raised by 20 %. definite refusal to make any further An agreement modifying the length of the deliveries to Nedchem alleging that military validity of the export agreement (which was requirements had arisen: Following each in the meantime extended for 12 months delivery Nedchem divided it amongst the only instead of the five years initially other members. provided for) was concluded in December The commission was always fixed on the 1964 and January 1965 between Boehringer, basis of the rate of 2 %. When on 13 March Buchler, Nedchem, the French group and 1962 the first regulation in implementation Lake & Cruckshank.

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15 December 1968. date from 1960 to 1963. Consideration of those documents led the Commission to On 11 and 12 February 1969 the under take the view that the implementation of the takings concerned were given the opportun abovementioned agreements (the export ity of submitting their oral observations. agreement and the gentlemen's agreements) had been continued after October 1963. In addition to representatives of the under takings and of the Commission, officials of Communications were exchanged in May the States directly concerned in the inter and June 1967 with the competent author national quinine cartel, such as Belgium, the ities with regard to cartels in the Federal Federal Republic of Germany, France and Republic of Germany, France and the Netherlands in connexion with the investi the Netherlands, were also present at the

during which period the termination of the On 17 July 1967 the Commission's Director- export cartel had been notified to the Bun General for Competition signed the author deskartellamt. izations to carry out investigations the object of which was expressed thus: to During its meeting on 16 July 1969 the establish whether or not the activities of the Commission adopted a decision imposing international cartel in the quinine industry on the Nedchem undertaking a fine of have infringed the provisions of Article 85 210 000 units of account for infringement of of the Treaty establishing the European the provisions of Article 85 (1) of the Treaty Economic Community'.

decision. Thereafter investigations were was extended by the agreement of 14 Decem carried out on the two Belgian undertakings ber 1964 and 19 January 1965), the gentle and on the five Italian undertakings who men's agreements of 9 April 1960 and the were purchasers of quinine, in order to agreements implementing or supplementing establish the prices maintained in those two those agreements, in particular the agree countries by the members of the cartel. ments with regard to the fixing of prices and On 29 July 1960 the Commission decided on of export rebates for quinine and quinidine, the basis of Article 3 of Regulation No 17 to the division of domestic markets, the take proceedings upon its own inititaive system of quotas and of quantity compen against the six abovementioned under sation and the limitation of the production

JUDGMENT OF 15. 7. 1970 —CASE 41/69

For the same reasons this decision imposed : annulment, the applicant claimed that the Court should: (1) on Boehringer Mannheim GmbH,a fine of 90 000 units of account, (a) annul the contested decision,

(2) on Buchler und Co., KG, a fine of (b) order the Commission to pay the costs. 65 000 units of account, Within the framework of the appeal to the (3) on the Société Chimique Pointet- Court's unlimited jurisdiction, the applicant claimed that the Court should : Girard SA, a fine of 12 500 units of account, (a) annul the contested decision,

(4) on the Société Nogentaise de Produits (b) cancel the fine imposed on the appli­ Chimiques, a fine of 12 500 units of cant, account,

(c) alternatively, reduce such fine, (5) on the Pharmacie Centrale de France, a fine of 10 000 units of account. (d) order the Commission to pay the costs.

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the procedure for the exchange of informa on Article 87 of the Treaty. tion on sales that the two are quite distinct; it has ignored the fact that at the meeting on (b) The Commission's lack of powers in 29 October 1962 the gentlemen's agreement that the cartels were notified to the com was terminated and that in addition the petent national authorities. applicant ended the export agreement in November 1962. The Commission has The applicant complains that the Commis failed to adduce documentary evidence that sion has misinterpreted or ignored its noti the alleged uniformity of export prices was fication of the cartel to the Bundeskartell regularly fixed or, if it was so fixed, that this amt, its notification to the Netherlands resulted from an agreement or concerted Minister for Economic Affairs and subse practice. quent correspondence in this connexion. On the contrary it is clear from the minutes The Bundeskartellamt was aware of the of the meeting on 12 March 1964 that the system of quotas and of the quantitative increase in prices decided upon on that compensation. The applicant requests the occasion related exclusively to sales in third Court in this connexion to consider to what countries and not in the Common Market. extent Articles 88 and 89 of the Treaty and, The Commission has consequently exceeded if necessary, Regulation No 17/62 at its powers with regard to the extra-territo present deny the Commission the power to rial effect of the prohibition on cartels. consider cartels notified to the national The exchange of letters in October 1963 on authorities. the protection of domestic markets did not The defendant replies that there can be no constitute a legally enforceable agreement doubt that the agreement was authorized by although it was a concerted practice the the national authorities to which it was actual effects of which should be appraised. notified. It further observes that the gentle Since respect for domestic markets is tra men's agreements were not notified to the ditionally automatic, the correspondence in national authorities and that consequently October 1963 is almost without significance their attitude to the export agreement can in as the situation would not have been fun no wise be interpreted as a tacit approval of damentally different without such corres all the agreements in question.

JUDGMENT OF 15. 7. 1970 —CASE 41/69

minutes. The applicant observes that it only sultation of the entire file. received the draft minutes on 10 June 1969 The applicant replies that it is only in the and since it considered that they were very present proceedings that it has been able to badly drawn up it felt unable to sign them in acquaint itself, from the documents annexed the form in which they were submitted to it to the Commission's statement of defence, and that it was better to invite the Commis with the result of the investigations made in sion to improve its drafting.

January 1969. The chronology of events mission should as a matter of course lodge gives grounds for the upposition that the with the Court the entire file of the adminis decision had already been taken, at any trative procedure, including the records of event in draft, even before the final minutes the hearing of the undertakings concerned of the hearing of the undertakings concern before the Commission and the documents ed had been drawn up. pertaining to the consultation with the Furthermore the period of three weeks Advisory Committee. which the Commission allowed for the The defendant replies that the rule pro applicant to submit its observations on the pounded in the judgment in Joined Cases 56 minutes was quite insufficient, the more so and 58/64 that it is unnecessary that the since July must be regarded as a holiday entire contents of the file should be com

The Nedchem beginning of the statement of complaints, undertaking, unlike the other undertakings the applicant was in a position to know its concerned, did not request an extension of point of view in this connexion. the period for submitting its observations

on the minutes. Furthermore it emerges The defendant replies that the delegation of from Schedule 17 to the application that on powers provided for in Article 24 of 30 June 1969 the applicant returned to its Regulation No 17 is entirely in accordance lawyer the complete list of observations with the Treaty under the express provisions drawn up on the subject of the draft of Article 155. minutes. Those observations were sent in The applicant objects that the European the name of Boehringer on 7 July 1969 and Parliament was not properly consulted on

fied procedure'. sion (d) Complaints with regard to the com In the third place, the applicant raises the position of the administrative body question of the validity of Regulation No 99/63. It is not certain that under the com The applicant complains of the violation of bined provisions of Article 87 (2) and the general principle of continuity in the Article 155 of the EEC Treaty the Council composition of the administrative body had the power to delegate to the Commis dealing with a matter which may give rise to sion the task of drawing up the provisions penalties. relating to the hearing of persons in The applicant maintains that Article 9 (1) accordance with the provisions of Article 19 of Regulation No 99/63 of the Commission, (1) and (2) of Regulation No 17.

The persons who drew up EEC Treaty. In any case the Commission the statement of complaints must also hear has at least violated the general principles the persons concerned and collaborate in of law which confer on persons a wider pro drawing up the minutes of the meeting and tection by the courts than that laid down by of the final cecision. Regulation No 99/63. The defendant expresses doubts as to the

existence of the principle which the appli The applicant states that the Commission cant maintains. Furthermore, it is clear violated the general principle of law that in from the minutes of the meeting on 11 and the course of a procedure an administrative 12 February 1969 that it took place in the body is obliged to correct errors in agree presence of a number of officials who were ment with the persons concerned, allow the dealing with the matter when the statement completion of insufficient arguments and of complaints was drafted and who also took allow the persons concerned to be heard on part in preparing the final decision. all the essential points in the matter. The applicant doubts this. The applicant maintains that the contested decision contains manifest errors which (e) Points relating to the consultation of the arose through a misunderstanding of what Advisory Committee the applicant maintained in its reply to the The applicant considers that the Advisory statement of complaints. Furthermore the

Furthermore, there is no guarantee of continuity or of unity in The defendant recalls the various stages of the composition of the Advisory Commit the procedure which resulted in the con tee. tested decision. It is clear from this proce The defendant maintains that this complaint dure that the undertakings concerned had is unfounded as, in accordance with Article ample opportunity to state their position in 10 (5) of Regulation No 17, the notice sent writing with regard to the outcome of the to the Committee was accompanied by a investigation, as contained in the notice of summary of the case together with an complaints, and to give more detailed ex indication of the most important documents planations in the course of the lengthy in the minutes of the hearing of the under hearing at which they were able to set forth takings and a preliminary draft decision orally their points of view.

Article 10 of Regulation No 17 that con new provisions which do not appear in the sultation of the Advisory Committee was notice of complaints or, if they do, in another form and, secondly, by emphasizing instituted in order to protect the interests not of undertakings but of the Member certain specific complaints (for example, the States, and moreover that it is the duty of the legal implications of the gentleman's agree members of this Committee to ensure that ment and of the suspension of the export they are in possession of all the information agreement, the implications of the export which they consider necessary. agreement for the domestic markets, etc.). The defendant replies that this complaint (f) Complaints relating to the applicant's would not be well founded unless the participation in the administrative pro decision were to set out new complaints cedure which do not appear in the statement of

objections notified at the time of the Commission has violated the general prin administrative procedure, but this was not ciple of law that the attention of persons done since the decision merely modified the subject to the law must be drawn to the pos drafting of this statement following the sibility of bringing an action and to the hearing of the persons concerned. time-limits fixed for so doing. The defendant replies that this principle is (h) Complaints in connexion with the not common to all the Member States.

Dutch. This constitutes a violation of the principles contained in Articles 217 and 248 of the EEC Treaty together with the pro The applicant maintains that particular visions of Regulation No 1 of the Council strictness is required in this case with regard (OJ Special Edition 1952-1958, p. 59). to the statement of reasons because the con The defendant admits that through an over tested decision involves quasi-criminal sight it only sent the applicant the French penalties. The Commission passed over in and German versions. This is because silence whole sections of the applicant's French and German were selected as statement in reply to the notice of com working languages since it was impossible plaints, such as for example what is said on quickly to draw up all the documents in the the particular characteristics of pharmaceu

The Com 85 (1). All those are important factors in mission's oversight has in no way altered appraising whether the Commission was Nedchem's right of action. If it had indi competent to intervene on the ground of a cated the oversight when it occurred the potential effect on trade between Member Commission would no doubt have rectified Statss. The statement of reasons is self- the situation. contradictory with regard to quantitative The applicant'replies that the principle of the compensation, to the alteration of the equality of languages is a matter of public export figures and to the period from the policy aud that consequently, even if no-one beginning of February 1965. has been prejudiced, its violation entails the Furthermore, the Commission has in no nullity of the measure. Furthermore the way established that but for the cartel in agreement required of the applicant must question the consumer would have enjoyed relate not only to the substance but to the a wider choice and more advantageous drafting in the addressee's language. prices. The allegation that prices were in creased because of the cartel is therefore (i) Other violations of procedural prin quite unproved. ciples The applicant considers that it is for the Commission to supply proof in support of The applicant further complains that the the allegations in the decision and that in the

absence of such proof the decision should Since the object of this cartel is to restrict be annulled. competition within the Common Market The defendant refers in this connexion to between the undertakings concerned, it is point II in its statement of defence from unnecessary in addition to prove that it has which it is clear that the actions allegedly had the effect of restricting competition. omitted by the applicant fall under the pro­ It is sufficient that competition may be hibitions set out in Article 85 (1) of the effected and there can be no doubt about Treaty. this in the present case in view of the pro­ It states in particular that there is no reason vision concerning the division of domestic to consider the pharmaceutical products markets and the fixing of single export under trade-mark as the 'trade' referred to prices, including trade between Member by the decision is solely in raw materials States, until February 1965. (quinine, quinidine and their salts) from If the Court does not share the defendant's which it is intended to manufacture phar­ opinion as to the type of agreement con­ maceutical products. stituted by the gentlemen's agreement, and It observes moreover that the fact that the considers that it must appraise the appli­ parties to the gentlemen's agreement con­ cant's action from the point of view of a tinued to abide by it voluntarily, as had been concerted practice, the abovementioned provided for at the meeting in October 1962, principle, which was affirmed by the Court amounts to a concerted practice with regard in its judgment in Joined Cases 56 and 58/64 to their action in the Common Market. with regard to an agreement must, accord­ The practical implementation of this agree­ ing to the defendant, also logically apply to ment is clear from the following facts : concerted practices. In fact, such practices differ from agreements solely in that their (1) From 1960 to 1965 the prices of quinine provisions may not be enforced through the and quinidine were the same for all exports courts, but they are always based on an including those to Italy and Belgium. understanding, like agreements. If the pro­ visions of the understanding are reduced to (2) The undertakings concerned retained writing and if it appears on perusal that its their domestic markets under the agreement, object is to restrict competition it is then un­ as emerges from the record of the meeting necessary to consider the actual situation of on 2 December 1959 and from the letters of the market. October 1963. Without those provisions supplies would certainly have been sent 4—The submission of infringement of the from the Netherlands to Germany as prices Treaty or of the rules of law relatingto were lower in the Netherlands. Although its application limited deliveries were sometimes made their purpose was to conceal the division of (a) Determining the degree of competition the market. necessary

reply to theoretical questions relating to the in practice the Commission is competent, degree of competition which it considers within the framework of its power of necessary. appraisal and subject to review by the The applicant considers in addition that the Court, to fix the limits to be set for actions Commission is wrong in stating that a cer with regard to proceedings for infringement. tain minimum degree of competition must The applicant's view in connexion with the be maintained. This view is in accordance application of national law has no founda with the German system but it is foreign to tion in Community law.

of the Treaty. On the other hand, the defendant concedes that the question is admissible whether, (b) Time-limits with regard to time-limits, there is a prin ciple common to the legal systems of the Secondly the applicant complains that the Member States. In the four Member States Commission has violated, or at least with legislation on cartels, infringements of erroneously applied, the general principle such provisions are given varying legal of limitation. It is not permissible to deprive status: in German law (as in Community those subject to the law of the protection law) such infringements are of an adminis afforded them by the national legal system trative nature; on the other hand under with regard to time-limits. It considers that French, Belgium and Netherlands law such the Member States cannot be held to have infringements take on a criminal aspect. alienated or restricted their sovereign rights With regard to interruption of the limita in this area. tion period the rules applicable in the The applicant states that, if reference must Member States are likewise extremely be made to the beginning of 1965 in order to diverse. obtain the first written evidence proving Taking into account the extreme diversity that the undertakings actually carried out in the various Member States of the status of independent policies with regard to prices infringements, of penalties, of the periods of in the Common Market, this does not limitation and of the acts interrupting them, prove that the undertakings did not fix the defendant concludes that no criterion those prices independently prior to 1965. can be derived common to the law of the Since in the applicant's opinion the limita Member States with regard to the detailed tion period was only interrupted by rules of application of the general principle notification of the formal decision institu

Nor should the fact at the hearing on 11 February 1969 in con be ignored that the Commission is obliged nexion with the general principle of limita to rely on the co-operation of the Member tion relating to the case. States in investigating infringements. The defendant observes that the fact that no Applying those considerations to the provision has been laid down in Regulation present case, the defendant maintains that No 17 with regard to time-limits means that the period of limitation which began to run

from February 1965 was interrupted by the If the Council had intended to confer such investigations which it made on the appli powers of enforcement on the Commission cant in October 1967. The official entrusted under Article 15 of Regulation No 17, the with the investigations in question produced regulation would thus be null and void on an authorization signed by the Director- this point, because the Council would have General for Competition indicating in exceeded its powers and contravened the detail the object and the aim of the check to obligation to consult the European Par be made in connexion with specific infrin liament laid down in the second sub

ment of an average but the application of a tions made by the Commission depending more modern and progressive system. on whether they were carried out on the The length of the period of limitation is in basis of an authorization or a decision. fluenced by the principle of the opportunity Between the point when the infringements of initiating proceedings with regard to were discontinued and the investigations by actions judged punishable and by the prin the Commission a period of less than three ciple of the legal certainty of persons con years elapsed which is insufficient to con

The applicant stres procedure on 29 July 1968, the period of ses in addition that contrary to the Com three and a half years which had thus mission's assertion the market in England elapsed is insufficient to establish a bar was an open market. It further draws the under Community law since, within the Court's attention to Buchler's letter of 1 framework of the EEC, the rules on com January 1965 to its representative in Italy petition assume a greater importance than (Schedule VII-69 to the statement of under national law, as is clear from the fact defence). that 'the institution of a system ensuring With regard to the interruption of the period that competition in the Common Market is of limitation, the applicant disagrees with not distorted' constitutes one of the object the conclusions which the Commission ives of the EEC Treaty. draws from its examination of comparative The applicant replies that it is clear from the law. It maintains that the system of Regula studies of the European Parliament relating tion No 17 conforms only to the German to Regulation No 17 that that institution and Netherlands systems so that the author only proposed penalties for cases in which ization to investigate was not capable of undertakings continued to commit an in suspending the period of limitation, all the fringement which had been duly established more so since its wording was vague.

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This second the Commission refers to Mr Deringer's part ended with the following finding: commentary which raises no criticism with 'A general discussion followed owing to regard to the decision of the Council. the existence of opposing points of view; Furthermore, if the Council had taken a with regard in particular to revision of the decision other than that proposed by Par quotas, it was considered now no longer liament, the problem in question would useful to have the lawyers draft an agree have been discussed in Parliament in full ment on the purchase of bark, so that the knowledge of the case. bark pool was terminated.

as October 1962. In order to discount this it ments, and in particular to the gentle emphasizes that the first part of the meeting men's agreement, the undertakings Lake

& Cruickshank and Boehringer have French prices. An analogous finding has failed to comply with the gentlemen's been made with regard to the German agreement which stipulates that failure to market. implement it ipso facto constitutes an infringement of the official agreements, (d) The legal nature and practical applica by which latter term is intended the tion of the gentlemen's agreement export agreement.' Lake & Cruickshank and also Boehringer The applicant considers that the Commis assumed that the gentlemen's agreement sion has infringed the combined provisions remained in force even after 29 October. of Article 85 (1) and (2) in defining the gen This point of view also forms the basis of the tlemen's agreement as an agreement within letter of 10 December sent by Lake & the meaning of that article and not as a con Cruickshank to all the other members of the certed practice and, furthermore, by its

manufacturers' proceedings. and conforms completely to the practice of In the applicant's Opinion the distinction the gentlemen's agreement. between an agreement and a concerted The applicant's letter of 7 August 1963 practice is extremely important in this case maintained the point of view that the export for, if it is conceded that the acts impugned agreement had been terminated and by result from concerted practices, the Com threatening the members with price com mission may not maintain that it is Un petition in their domestic markets it had the necessary to appraise their actual conse effect of preventing the increase in prices. quences.

agreement. The defendant observes that the The defendant maintains that both the applicant continued up to the end of 1964 written provisions termed a gentlemen's to apply the prices fixed jointly on the agreement and the additional provisions Italian market. This uniformity also extend contained in minutes of meetings or arising ed to increases relating to small amounts from an exchange of letters are to be con and to the calculation of the packaging and sidered as agreements. transport costs and of customs duties. The provision laying down that infringe The continued protection of domestic ment of the gentlemen's agreement should markets in 1963 and 1964 is proved by the also constitute infringement of the export prices maintained by the applicant on the agreement and providing for the settlement French market; such prices exceeded the of disputes by arbitration proceedings current export prices for quinine in order to proves the legal nature of the obligation to take account of the higher level of domestic observe the gentlemen's agreement.

Nevertheless, even if such provisions are documents produced as a schedule to the only to be considered as concerted practices, statement of defence relate to investigations this does not alter the outcome with regard undertaken in Italy, Belgium and Luxem to considering them incompatible with bourg and do not support the Commission's Article 85 (1), for the reasons set out at (3) view that prices were calculated uniformly above. for exports to those countries. In the present case this distinction is also The defendant annexes to its rejoinder a unimportant with regard to Article 85 (2) table which analyses, as an example, the as there can be no question of applying that price calculated in a number of cases of provision to agreements which are already sales in Italy and Belgium, from which it is terminated. clear that the prices fixed by the applicant in The applicant complains that the Commis

been largely discontinued. able flow of goods may be imputed first to the shortage occurring as a result of the With regard to the first point, the applicant breach by the Americans of the stockpile observes that since 1962 the Commission agreement and secondly to an element of has contributed by its own policy to the inactivity after years of cooperation. increase in legal uncertainty for under The defendant admits that there were tech takings : in fact, excessive powers have been nical obstacles to trade in pharmaceutical conferred upon it, it has not viewed Article specialities but it doubts whether such 85 (1) within the framework of the objectives obstacles also exist with regard to raw of the Treaty and finally it has omitted to materials such as quinine, quinidine and establish criteria for the application of the

provided for by Article 85 (2). Thus in ceutical specialities to the exclusion of all Article 15 (2) (a) of Regulation No 17 only pharmaceutical raw materials. the present indicative tense 'they infringe' is The applicant further maintains that the employed. In this connexion the applicant

observes that the fines are in the nature of publication in the Official Journal, the periodic penalty payments and not penalties defendant observes that Article 21 of Regu of a criminal law nature. It stresses further lation No 17 does not prohibit the publica more that the European Parliament was not tion of decisions other than those which it consulted in connexion with the rulse laying lists. down the fines. The defendant replies that in this case there 7 — Application within the framework of the can be no question of violation of the prin Court's unlimited jurisdiction with ciple of legal certainty, as the practice im regard to fines

This considera this view. The applicant confuses fines and tion should bring the Court to the conclu periodic penalty payments when it com sion that Article 85 (1) is inapplicable and plains that the Commission has imposed that the fine should be cancelled; alter fines for an infringement committed in the natively, if it is ruled that this provision is past. applicable, the Court should decide that the fine should nevertheless be cancelled, 6 — Complaints relating to the publicity because the infringement committed was of given to the decision a purely formal nature; or as a further alternative it should considerably reduce The applicant complains that the Commis

in the Official Journal. The Commission initiative in ending the cartel. The statement thus influenced public opinion to the detri in the contested decision that the existence ment of the applicant's position, thereby of the commission of 2% showed that the causing inter alia a fall in its shares on the cartel had been in existence after 1962 is stock market and harm to its reputation. inconsistent with the facts. In reality, al The applicant refers in particular to state though the applicant considered that it was ments in the contested decision relating to entitled to a commission of 7 %, it neverthe the possible existence of a cartel with regard less renounced this right whilst maintaining to tenders, and observes that such state its point of view that the cartel had come to ments may give rise to proceedings against and end. Nor is the fine proportionate to the the applicant by the American authorities purpose in view and finally it is out of all and requests the Court to annul this part of proportion to the fines imposed in the Dye- the decision, so far as necessary, which Stuffs case. moreover contains facts irrelevant to the The defendant rejects the idea that the proceedings. present case relates to a purely formal in The defendant objects that the publicity fringement. In fact, it displays three of the given to the contested decision was justified five examples of expressly prohibited prac by the fact that it was the first decision im

ACF CHEMIEFARMA ν COMMISSION

The large amount of the fines is justified by cant had a quota of 52.5 %. Nevertheless, the grave and intentional nature of the the fine imposed on it in relation to the other restriction of competition continued after members of the cartel is smaller in propor­ the entry into force of Regulation No 17. tion to such quotas, as the Commission took Furthermore the fine imposed on the appli­ into account the weaker position of the cant represents no more than a fifth of the applicant in relation to Boehringer on the maximum amount laid down. market in raw materials together with the If the British undertakings' quotas are left applicant's attitude with regard to prices. out of account, within the cartel the appli-

Grounds of judgment

1 NV Nederlandse Combinatie voor Chemische Industrie, Amsterdam, (hereinafter referred to as 'Nedchem') of which the applicant is the successor, together with five other Netherlands undertakings which were subsequently always represented by it, entered into an agreement in 1958 with the undertakings C. F. Boehringer & Söhne, Mannheim, and Vereinigte Chininefabriken Zimmer & Co., GmbH, Mannheim (hereinafter referred to as 'Boehringer') and Buchler & Co., Bruns­ wick, whereby those undertakings retained their respective domestic markets and provided for the fixing of the prices and quotas for the export of quinine and quinidine to other countries.

2 Buchler withdrew from this agreement of 28 February 1959.

3 In July 1959, following the intervention of the Bundeskartellamt to which the agreement had been notified, Boehringer and Nedchem amended that agreement in such a way as to exclude deliveries to the Member States of the EEC.

8 Since the Commission considered that the restrictions on competition therein provided for were capable of affecting trade between Member States, it imposed on the applicant a fine of 210,000 units of account by a decision of 16 July 1969 (OJ L 192, p. 5 et seq.).

9 By an application lodged at the Court Registry on 13 September 1969 the under­ taking Chemiefarma NV initiated proceedings against this decision.

A —The submission of the Commission's lack of powers

10 Relying upon the fact that the export agreement had been notified to the competent national authorities without objections' being raised, the applicant requests the Court to consider to what extent Articles 88 and 89 of the Treaty and, if appropriate, Regulation No 17/62 of the Council deny the Commission power to appraise agreements so notified.

11 Under Article 9 (3) of Regulation No 17 'the authorities of the Member States shall remain competent to apply Article 85 (1)', but only 'as long as the Commis­ sion has not initiated any procedure under Articles 2, 3 or 6' of the regulation.

12 The provisional character thus conferred on steps taken by national authorities cannot call in question the Commission's exercise to the full of its powers within the framework of the Common Market.

17 The applicant complains that the Commission did not take into account the fact that proceedings in respect of the alleged infringement are barred having regard to the period which elapsed between the date of the acts and the initiation of the administrative procedure by the Commission.

18 The provisions governing the Commission's power to impose fines for infringement of the rules on competition do not lay down any period of limitation.

19 In order to fulfil their function of ensuring legal certainty limitation periods must be fixed in advance.

20 The fixing of their duration and the detailed rules for their applications come within the powers of the Community legislature.

21 Consequently the submission is unfounded.

C — Submissions relating to procedure and form

26 The. notice of complaints fulfils this requirement since it sets forth clearly, albeit succinctly, the essential facts on which the Commission relies.

27 The requirement imposed on the Commission by Article 19 is met when in the course of the administrative procedure it supplies the details necessary to the defence.

28 In the present case the Commission has clearly set out the essential factors on which it based the complaints listed, referring expressly to statements contained in the minutes of certain meetings of the undertakings concerned and to corre­ spondence relating to the protection of domestic markets which was exchanged between those undertakings in October and November 1963.

29 Furthermore, maintaining on the basis of its investigations that the undertakings concerned had continued to exchange information on their sales with a view to possible quantitative compensation and that up to the end of 1964 they had maintained a policy of uniform prices, the Commission thereby deduced that after 1962 they had continued to apply the gentlemen's agreement on production and sale in the Common Market.

30 Consequently the objections raised with regard to the notice of complaints are unfounded.

II — The objection relating to consultation of the administrative file

35 In support of this statement the notice of complaints (last subparagraph of paragraph 11) refers to the outcome of investigations carried out by the Commis­ sion's staff in those countries.

36 In the course of the administrative procedure the applicant requested the Com­ mission to acquaint it with the facts referred to.

37 The Commission rejected this request on the ground that it must protect the business secrets of the other undertakings.

38 Nevertheless the Commission itself alleged that those undertakings regularly exchanged information on the amounts sold in the States in question.

39 Furthermore in case of doubt the Commission could have requested the opinion of the other undertakings concerned with regard to the applicant's request for the communication of the documents relating to them.

40 It does not appear that the Commission consulted the said undertakings in this way.

45 In the course of the administrative procedure the applicant, which had been given a period of three weeks within which to submit its observations on the draft minutes which the Commission had submitted to it, neither exercised its right to propose amendments nor requested an extension of the period allowed.

46 There is thus no foundation in the complaint now made against the Commission that it concurred with the minutes before adopting the contested decision.

47 The applicant further maintains that by its failure to submit the minutes to it in Dutch, the Commission infringed the principles contained in Articles 217 and 248 of the EEC Treaty together with the provisions of Regulation No 1 of the Council.

48 Under the terms of Article 3 of Regulation No 1 of the Council, documents which an institution of the Community sends to a person subject to the jurisdiction of a Member State shall be drafted in the language of such State.

49 The failure to communicate a Dutch version of the draft minutes thus constitutes

an irregularity in drawing up that document which is capable of affecting its validity.

54 The applicant complains that the Commission has failed to observe a general principle of law requiring it to allow persons concerned to participate closely in the administrative procedure in order that they may together correct any inaccuracies and supplement inadequate arguments.

55 It is alleged that the failure of the Commission to co-operate in this way arises in particular from the fact that the contested decision retained patent inaccuracies since account was not taken of the observations submitted by the applicant in its reply to the notice of complaints.

56 The rights of the defence are respected when each of the persons concerned has had the opportunity to submit its written and oral observations on the complaints made against it by the Commission.

57 It is not disputed that in the course of the administrative procedure the applicant had such an opportunity.

58 Consequently this complaint is unfounded.

V — Complaints concerning the legal basis of Regulation No 99 of the Commission

63 In Article 19 of Regulation No 17 the Council has provided that undertakings which were parties to one of the procedures provided for by that regulation shall have the opportunity of being heard by the Commission.

64 In Article 24 of the same regulation the Council has conferred on the Commission power to adopt implementing provisions concerning such hearings.

65 Since the principle that the persons concerned shall be given the opportunity of being heard by the Commission was adopted by the Council the rules laying down the procedure to be followed in this connexion, however important they may be, constitute implementing provisions within the meaning of the above-mentioned Article 155.

66 Consequently it was lawful for the Council to entrust the institution authorized to apply this procedure with the task of laying down its details.

67 Consequently the objection of illegality put forward by the applicant with regard to Article 24 of Regulation No 17 is unfounded.

68 The applicant further maintains that the draft of Regulation No 17 which was submitted to the Parliament did not provide for power to be conferred on the Commission so that it was unable to give its opinion on this point.

VII — Submission of the infringement of an essential procedural requirement through failure to provide a statement of reasons

73 With regard to the infringement of an essential procedural requirement the applicant puts forward a series of complaints with regard to the reasoning of the contested decision.

74 It complains first of all that the decision omitted to refer to important parts of its reply to the notice of complaints, which dealt in particular with the character­ istics of the market in pharmaceutical products and the pointlessness of territorial protection.

75 Those omissions hamper any review of the Commission's powers to intervene under Article 85 of the Treaty on the ground of a potential obstacle to trade be­ tween Member States.

76 Under Article 190 of the Treaty the Commission is required to state the reasons on which itc decisions are based, enumerating the facts forming the legal basis of the measure and the considerations which led it to adopt the decision.

JUDGMENT OF 15. 7. 1970 — CASE 41/69

83 The applicant then maintains that a number of the recitals in the preamble to the decision are contradictory.

84 Nevertheless, since the applicant has merely noted these recitals without giving details in support of its statement, this submission cannot be relied upon.

85 The applicant further complains that the contested decision contains statements without the reasons for them being stated or adequately stated.

86 With regard to the passages which have been criticized in the statement of reasons relating to the harm caused to consumers by the agreement, those considerations are not basic to the Commission's reasoning.

ACF CHEMIEFARMA ν COMMISSION

87 With regard to the allegation of the inadequacy of the statement of reasons relating to the statements contained in the second and third subparagraphs of paragraph 24 of the decision, this complaint relates to the factual evidence forming the basis for the decision and consequently to the substance of the proceedings.

93 This latter factor does not contradict the rights of the defence protected by the abovementioned Article 4.

94 This provision is observed if the decision does not allege that the persons concerned have committed infringements other than those referred to in the notice of com­ plaints and only takes into consideration facts on which the persons concerned have had the opportunity of making known their views.

95 No complaint of this nature arises from a comparison between the notice of complaints addressed to the applicant on 30 July 1968 and the provisions of the contested decision.

96 Consequently this complaint is unfounded.

JUDGMENT OF 15. 7. 1970 — CASE 41/69

97 The applicant finally complains that the Commission violated a general principle of law to the effect that persons concerned must be made aware of their rights of action and of the time-limits fixed for this purpose.

103 The Commission's communication to the press altered neither the meaning nor the content of the decision.

104 The publicity thus given to the decision may even contribute to ensuring the observance of the rules of the Treaty on competition.

105 The present complaint is thus unfounded.

ACF CHEMIEFARMA ν COMMISSION

D — Substance

I — The status and duration of the gentlemen's agreement

112 This document thus amounted to the faithful expression of the joint intention of the parties to the agrement with regard to their conduct in the Common Market.

из Furthermore it contained a provision to the effect that infringement of the gentle­ men's agreement would ipso facto constitute an infringement of the export agree­ ment.

114 In those circumstances account must be taken of this connexion in assessing the effects of the gentlemen's agreement with regard to the categories of acts prohibited by Article 85 (1).

JUDGMENT OF 15. 7. 1970 — CASE 41/69

115 The defendant bases its view that the gentlemen's agreement was continued until February 1965 on documents and declarations emanating from the parties to the agreement the tenor of which is indistinct and indeed contradictory so that it is impossible to conclude whether those undertakings intended to terminate the gentlemen's agreement at their meeting on 29 October 1962.

116 The conduct of the undertakings in the Common Market after 29 October 1962 must therefore be considered in relation to the following four points : sharing out of domestic markets, fixing of common prices, determination of sales quotas and prohibition against manufacturing synthetic quinidine.

122 The correspondence exchanged in October and November 1963 between the parties to the export agreement with regard to the protection of domestic markets

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merely confirmed the intention of those undertakings to allow this state of affairs to remain unchanged.

123 This intention was subsequently confirmed by Nedchem during the meeting of the undertakings concerned in Brussels on 14 March 1964.

124 From those circumstances it is clear that with regard to the restriction on competi­ tion arising from the protection of the producers' domestic markets the producers continued after the meeting on 29 October 1962 to abide by the gentlemen's, agreement of 1960 and confirmed their common intention to do so.

125 The applicant maintains that owing in particular to the shortage of raw materials the sharing out of domestic markets, as emerges from the exchange of letters of October and November 1963, had no effect on competition in the Common Market.

131 Consequently, the submissions concerning that part of the decision relating to the continuation of the agreement on the protection of the producers' domestic markets until the beginning of February 1965 are unfounded.

III — The joint fixing of sales prices

132 With regard to the joint fixing of sales prices for the markets which were not shared out, that is to say, the Belgo-Luxembourg Economic Union ánd Italy, the gentlemen's agreement provided for the application to such sales of the current prices for exports to third countries fixed by mutual agreement, in accordance with the export agreement.

133 The joint fixing of sales prices by the producers of virtually all the quinine and quinidine distributed within the Common Market is capable of affecting trade between Member States and seriously restricts competition within the Common Market.

134 If, as the defendant maintains, the parties to the export agreement continued until February 1965 to apply their current export prices to supplies to the above­ mentioned Member States, it would follow that they continued to abide by that part of the gentlemen's agreement relating to the joint fixing of sales prices.

135 With regard to the period from November 1962 to April 1964, the figures supplied by the defendant show a substantial and constant identity between the current prices fixed for export within the framework of the agreement and the prices maintained by the undertakings concerned, including the applicant, for their sales in unprotected domestic markets in the Community.

140 The action taken by the parties to the agreement with regard to prices from May 1964 was only discussed in depth as a result of the questions put by the Court to the defendant during the oral procedure.

141 It is clear from the oral procedure, taking into account the information supplied by the parties, that during 1964 and in particular from May onwards, a party to the agreement applied prices which in an increasing number of cases deviated from the current export prices, and that the defendant has been unable to give a con­ vincing explanation as to how this might be reconciled with the continuation in force of the agreement in question.

142 The failure to communicate to the undertakings concerned the results of the in­ vestigations carried out in Italy and Belgium, which excluded any possibility of clarification and discussion at the stage of the administrative procedure, may have contributed to leaving unexplained facts which ought to have been clarified.

143 In these circumstances proof has not been sufficiently established in law that the applicant by mutual agreement with the other producers maintained uniform prices for its sales in the Belgo-Luxembourg Economic Union and Italy after May 1964.

144 Consequently the period from May 1964 to February 1965 must be omitted from the infringement.

IV — The sales quotas

that during 1963 and 1964 the compensation arrangements which were intended to ensure that the quotas were observed were not applied because of the scarcity of raw materials and because of the increase in demand, so that the members of the cartel had no further interest in effecting compensatory deliveries between them­ selves.

150 At the hearing the defendant produced a table of the amounts of quinine disposed of by Nedchem, Boehringer and Buchler from 1962 to 1964 with the object of proving that those quantities, viewed as a percentage of the total of the quotas, did not deviate perceptibly for that period from the quota assigned to each of the undertakings within the framework: of the agreement and thus that the quota arrangement continued to operate after 1962.

151 Nevertheless, this table, which moreover does not include sales of quinidine, shows that, even taking as a basis an average recorded over the previous two years, there are considerable deviations in the case of each of the three undertakings in relation to its own quota.

152 Furthermore, the Commission has supplied comprehensive figures covering all the sales of quinine by the undertakings concerned and it is thus impossible to discern from them the course of conduct of those undertakings in the Common Market.

153 Since there is insufficient proof that the system of quotas for sales within the Common Market was continued after October 1962, it must be concluded that the applicant's complaints with regard to this part of the contested decision are well founded.

ACF CHEMIEFARMA ν COMMISSION

159 Although it is true that in March 1964 Boehringer granted a licence to manufacture quinidine to the remaining British member of the cartel, on whom the gentlemen's agreement imposed prohibitions similar to those imposed on the French under­ takings, this has no effect on the finding which has already been made with regard to the relationship between the French undertakings and the German and Nether­ lands members of the cartel.

160 Although it is possible that, owing to the scarcity of raw materials which has established by the contested decision (No 29, last paragraph), in its ultimate period protection of the domestic markets did not have important effects on competition and trade between Member States, this cartel nevertheless lasted until February 1965.

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161 In the absence of any indication to the contrary and having regard to the above- mentioned connexions between the two aspects of the cartel, it must be considered that the agreement restricting the French undertakings' freedom to manufacture was of the same duration.

162 Consequently the applicant's complaints in this respect are unfounded.

VI — General appraisal of the agreement within the Common Market

169 Although from October 1963 the export agreement was declared to be 'in abey­ ance', it is clear from the declarations made by the undertakings concerned at their

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subsequent meetings together with their subsequent conduct as a whole that they continued to have an interest in upholding that agreement, in particular with regard to its possible employment within the Common Market.

VII — Complaints relating to the fine

170 The applicant complains that the Commission imposed on it a fine for an in­ fringement which had come to an end.

171 It claims that the fines provided for in Article 15 (2) of Regulation No 17 are in the nature of periodic penalty payments and not penalties of a criminal law nature.

JUDGMENT OF 15. 7. 1970 — CASE 41/69

178 Considered as a whole the substance of the draft regulation on which the Parlia­ ment was consulted has not been altered.

179 Consequently the objection of illegality is unfounded.

180 The applicant requests the Court to cancel or at least considerably to reduce the fine because the infringement alleged against it is of a 'purely formal' nature.

181 Furthermore, it maintains that there is no proper relationship between the fine imposed and the infringement committed taking into account in particular the fact that within the cartel the applicant always maintained that prices should be kept at a low level.

182 It is clear from the considerations previously set out in connexion with the com­ plaints relating to the findings of fact contained in the decision in dispute that the infringement was not of a purely formal nature.

188 Since excluding the fixing of sales quotas for the period from November 1962 to February 1965 and of the sales prices for the period from May 1964 to February 1965 does not appreciably diminish the gravity of the restrictions on competition arising from the agreement, it justifies only a slight reduction in the fine.

189 It is appropirate to reduce the fine of 200,00 units of account.

Costs

190 Under the first subparagraph of Article 69 (2) of the Rules of Procedure of the Court of Justice, the unsuccessful party shall be ordered to pay the costs if they have been asked for in the successful party's pleading.

191 Since the applicant has failed in the essential part of its conclusions, it must be ordered to pay the costs.

On those grounds,

3. Reduces the fine imposed on the applicant by the abovementioned decision to 200 000 units of account;

4. Orders the applicant to pay the costs of the proceedings.

Lecourt Monaco Pescatore

Donner Trabucchi Strauß Mertens de Wilmars

Delivered in open court in Luxembourg on 15 July 1970.

A. Van Houtte R. Lecourt