C-45/69

defendant,

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 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

Registrar: A. Van Houtte

ity within the framework of an inter on 14 July 1959 excluding supplies to other national cartel relating to the production States of the EEC. and sale of quinine and quinidine and of Negotiations entered into in 1959 between their salts and compounds. These products Buchler, Boehringer, Nedchem, the group are used in particular in the manufacture of of French quinine producers (Nogentaise, medicines for the treatment of malaria and Pointet-Girard, Taillandier and Pharmacie certain cardiac illnesses. The case relates Centrale) together with Carnegies of only to the sale of quinine and quinidine Welwyn Ltd and Lake & Cruickshank Ltd and of their salts and does not concern the of the United Kingdom resulted in an agree marketing of pharmaceutical products ment between all those undertakings. under trade-mark.

law. On 28 February 1959, the Buchler under taking withdrew from this agreement. It was agreed that this export agreement Pursuant to the provisions of Article 85 of would terminate on 31 March 1965 but that the EEC Treaty, the Bundeskartellamt, to it might be renewed every five years. Rules which the agreement was notified on 24 drawn up to ensure the strict cooperation of January 1959 in accordance with Article 6 the parties in order to facilitate the imple (1) of the German Law against restriction mentation of the agreement provided in of competition, requested the parties to the particular that every month each of the agreement for information on its territorial parties to the agreement should supply the

772'

BOEHRINGER MANNHEIM v COMMISSION

of quantitative compensation, make per­ The gentlemen's agreements were kept iodic calculations of the deliveries in excess secret.

The two British undertakings, Carnegies and association relating to the joint purchase of Lake & Cruickshank, in order to settle the raw materials terminated on 31 October conditions for the adherence of the French 1962. and British undertakings to the above During a meeting on 2 May 1962 a general mentioned agreement of 10, 24 and 31 increase in prices was decided upon. March 1960, in so far as it related to quinine. Agreements were also concluded for the Parallel with the export agreement two purchase of reserves from the American gentlemen's agreements containing sub stockpile which the General Service Ad stantially identical provisions were con ministration had decided to sell.

Those two gentlemen's agree sion would be increased to 7 % if the other ments extended the provisions laid down in agreements (the export agreement and the the export agreement with regard to price, gentlemen's agreements) were terminated in quotas and compensation for quantities, advance. On 4 September 1964 the Ameri for both quinine and quinidine, to all sales can General Service Administration gave a on domestic markets and abroad, and in definite refusal to make any further deliver particular to all sales within the Common ies to Nedchem alleging that military

dine. Derogations from the gentlemen's In the course of a meeting on 29 October agreements could take place only with the 1962 difficulties arose between the parties agreement of all the parties and disputes on the question of the 'bark-pool'. As a were to be settled exclusively by arbitration. preliminary condition to concluding an It was further decided that failure to comply agreement 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 favour of this pro quinine and quinidine, and vice versa. hibition. As a result of this Lake & Cruick-

shank and Boehringer requested revision of up between them and reports from the the quotas. The scope of the decisions taken director of a British company which was a at this meeting with regard to the gentle party to the agreements. These documents men's agreements gave rise to a dispute date from 1960 to 1963. Consideration of between the parties to the present pro those documents led the Commission to ceedings. take the view that the implementation of the On 2 November 1962 Nedchem notified the abovementioned agreements (the export other members that the export agreement agreement and the gentlemen's agree and the gentlemen's agreements should no ments) had been continued after October longer be regarded as binding ; it alleged that 1963. Communications were exchanged in the proposals made by Boehringer and Lake May and June 1967 with the competent & Cruickshank with regard to the 'bark authorities with regard to cartels in the pool' and the fixing of the new sales quotas Federal Republic of Germany, France and were contrary to the spirit of the said agree the Netherlands in connexion with the in ments. vestigations to be undertaken on the under The other members did not accept those takings concerned. In May 1967 the Bun reasons and at the meeting on 14 October deskartellamt had already undertaken in 1963, at which all the parties to the agree vestigations with regard to Boehringer and ment were present except Carnegies (which Buchler and the Netherlands authorities had ceased producing quinine in the same month investigated Nedchem. and intimated its withdrawal by letter of On 17 July 1967 the Commission's Direc 28 October 1963), the parties concerned tor-General for Competition signed the reached a compromise the purpose and authorizations to carry out investigations scope of which are disputed by the parties to the object of which was expressed thus: the present proceedings. '.

Thereafter investigations vided for) was concluded in December 1964 were carried out on the two Belgian under and January 1965 between Boehringer, takings and on the five Italian undertakings Buchler, Nedchem, the French group and who were purchasers of quinine, in order to Lake & Cruickshank. At the beginning of establish the prices maintained in those two 1967 the Commission's departments ob countries by the members of the cartel. tained more detailed information on the On 29 July 1960 the Commission decided activities of the international quinine cartel on the basis of Article 3 of Regulation No 17 through inquiries carried out in the United to take proceedings upon its own initiative States of America in connexion with Ned against the six abovementioned under chem's purchase of large quantities from the takings. This decision was notified to the

BOEHRINGER MANNHEIM v COMMISSION

hearing. Following discussions with the on the proposal of the Judge-Rapporteur parties concerned, the Commission with and after hearing the Advocate-General, drew its objections concerning the 'bark decided to join Cases 41/69,44/69 and 45/69 pool' and the stockpile agreement and also for the purposes of the oral procedure. with regard to the infringements for the At the request of the Court the defendant period from February 1965 to August 1966 replied to various questions by written during which period the termination of the statements lodged at the Court Registry on export cartel had been notified to the Bun

The ments of 10 and 31 March 1960 and of 7 defendant made its position known with April 1960 (the period of validity of which regard to this document by written state was extended by the agreement of 14 De ment lodged on 2 May 1970. cember 1964 and 19 January 1965), the The Advocate-General delivered his opi gentlemen's agreements of 9 April 1960 and nion at the hearing on 10 June 1970. the agreements implementing or supple menting those agreements, in particular the II — Conclusions of the parties agreements with regard to the fixing of prices and of export rebates for quinine and quinidine, the division of domestic markets, In its application, the applicant claimed that the system of quotas and of quantity com the Court should :

JUDGMENT OF 15. 7. 1970 —CASE 45/69

Article 85 (1) are set out. (a) General considerations As to the submission based on Article 190 of the EEC Treaty, the defendant states that The applicant maintains that the procedure the contested decision sets out in detail all relating to the imposition of a fine must be the facts and circumstances as well as the governed by stricter rules than the ordinary considerations of law which led it to hold administrative procedure for applying that there had been an infringement. Article 85. That difference must be reflected The applicant, referring in particular to the in particular as regards the protection of the schedules to the statement of defence con rights of the defence. cerning the results of the enquiries made of The defendant objects that the Commission, the Italian and Belgian undertakings and the even when it is acting with the purpose of allegation contained in the statement of imposing a fine, is an administrative author defence concerning the twelve compen ity and not a court as appears moreover satory deliveries which one of the partici from Regulations Nos 17/62 and 99/63. pants in the cartel had received or made It is therefore during any subsequent pro

The persons since the written notice of complaints of 30 concerned cannot defend themselves unless July 1968 did not set out in detail the con they know the concrete facts which prove tent of the information, statements, reports the alleged infringement of Article 85 of the and inquiries to which the Commission EEC Treaty. refers. That infringement is due to the fact The defendant, referring to the judgment in that the abovementioned provision, in Joined Cases 56 and 58/64 according to guaranteeing to the persons concerned the which those concerned must be informed of right to be heard, presupposes the right to all the facts necessary to establish the com know exactly all the points of evidence and plaints, states that this condition is satis-

fled since it has indicated the result of its criticizing the refusal of its request for investigations. communication of all the documents not As to the quantitative equalization, the sole expressly mentioned in the complaints, purpose of the allegations in the statement which are of importance for the decision, of defence was to dispute the applicant's because it is this refusal which prevents it statement that such equalization occurred from defending itself properly. on only two occasions. The judgment of the Court in Joined Cases It complains that the applicant has avoided 56 and 58/64 refers to a case in which the discussion of concrete facts such, for Commission had mentioned all the facts example, as the export prices fixed jointly, as which needed to be known ; that is not pre appears from investigations made in cisely the case in this instance.

of Regulation No 17/62. The undertakings French administrative law an absolute right Nedchem and Pharmacie Centrale had ap to production of the file. proved that request to consult the file with out reserve. The business secrets of the other (d) Defective consultation of the Advisory undertakings could easily have been re Committee owing to the incompleted spected by the defendant which could have nature of the minutes of the hearing of asked the latter to remove dcouments which the persons concerned might relate to such secrets and which in any case would only have amounted to a small part of the file. The applicant states that it has still not re The defendant replies that its departments, ceived any complete copy of the minutes by stating that they were inclined to author which have not therefore been signed and ize examination of the documents referred which apparently do not exist.

and 58/64. Furthermore, the defendant hearing of the persons concerned. This states that the applicant did not use the amounts to an infringement of the rules opportunity which was offered to it to relating to that hearing as well as of an acquaint itself with the essential documents. essential procedural requirement in relation The applicant replies that it is justified in to Article 10 (5) of Regulation No 17/62.

The defendant raises the objection that the (e) Defective consultation of the Advisory majority , of the members of the Advisory Committee owing to the lack of any Committee attended the hearing of the re prior indication concerning the amount presentatives of the undertaking. The Com of the fine mittee had been properly convened and the invitation which was sent to it was accom The applicant is of the opinion that the duty panied by a note explaining the case and to give the Advisory Committee a draft of mentioning the most important documents, the decision so that it may give its opinion, the draft minutes of the hearing of the in accordance with Article 10 (5) of Regula persons concerned and the draft decision. tion No 17/62, necessarily implies in the It is therefore incorrect to claim that the case of a decision imposing a fine that this Committee was not completely informed; draft shall already indicate the amount further the defence of the interests of this envisaged by the decision.

complete minutes. The fact that members of The applicant in its statement in reply the Committee attended the hearing of the mentions that the Commission has not dis undertakings cannot compensate for these, puted the infringement of Article 10 above procedural defects, for the abovementioned mentioned. persons were not present at the hearing as The defendant in its rejoinder states that the members of the Committee but only in their amount of the fines envisaged was com capacity as national officials. municated to the Advisory Committee The argument that 'the defence of the inter

In any is not made public shows that this body is case the body which is required to take the not intended to ensure the protection of the decision must be acquainted with the com individual rights of undertakings. In, any plete minutes of the hearing. case the infringement of procedural provi The defendant replies that the draft decision sions for consulting this Committee cannot accompanied by an explanatory memoran be regarded as an infringement of essential dum was submitted, with a view to its adop procedural requirements. tion by Mr Sassen, a member of the Com-

mission competent in matters of competi Commission to consider different facts tion, to the meeting of the Commissioners. separately and distinctly. The Commission Furthermore Mr Sassen gave precise in infringed that duty by not distinguishing as formation to the Commission on this sub clearly as it should have done between the ject during the meeting on 16 July 1969 in a two factors which represented, on the one very detailed oral statement. That procedure hand, the agreement concerning the export conforms to the criteria of the division of of quinine and quinidine to third countries work, which the Commission has adopted and, on the other hand, the gentlemen's by dividing between its members the duties agreements applicable to the territory of the necessary for the preparation of its deci

In this respect the in respect of the application of Article 85 (1) applicant asks that the defendant should be to the facts of the case (cf. No 3 below). required to produce to the Court the In addition, it raises the objection that the documents sent to the Members of the gentlemen's agreements and the export Commission for the preparation of the agreement cannot be separated materially meeting and the minutes of the meeting and temporally because temporally the during which the contested decision was conclusion of the export agreement with

tion. The Commission states that it is pre the domestic markets of the parties con pared, if the Court asks it so to do, to cerned. The latter regard the export agree produce the documents concerning its ment and the gentlemen's agreements as internal procedure. forming an indivisible entity; although they were actually dissociated it was because their content had to remain secret. That does not 2— Complaints relating to the establishment prevent the parties concerned from being in and the confirmation of the facts agreement that an infringement of the gentlemen's agreements must be regarded as an infringement of the export agreement. (a) General consideration of the export Their subsequent conduct confirms that agreement and of the gentlemen's agree view for, when they decided in October 1963 ments to put the export agreement into abeyance, they expressly agreed to do the same in The applicant refers to the decision of the respect of the gentlemen's agreements.

JUDGMENT OF 15. 7. 1970 —CASE 45/69

ce. It disputes, further, that compensation tion between the members of the cartel was between the members of the cartel was not continuous until 1965. The exchange of effected only twice and it states that it is in a statistical information on sales was sus position to prove that one of the under pended following Nedchem's withdrawal takings concerned made or received twelve from the agreement on 2 November 1962, compensatory deliveries during the period and was not resumed until after the meeting from 1960 to the beginning of 1963.

At the meetings on 12 coming severe, shows clearly the irony in March and 28 October 1964 the under volved. takings merely fixed new export prices and The applicant asserts further that after the expressly confirmed the suspension of the withdrawal of Carnegies there were not export agreement. The subsequent exchange more quotas agreed and that at the meeting of statistical information on exports to third on 12 March 1964 the controversy con states could not therefore have been in the cerning the distribution of quotas was left nature of economic information concerning aside as being purely theoretical.

BOEHRINGER MANNHEIM v COMMISSION

out until April 1964. agreement in question. The exchange of The applicant asks how the imposition of a letters which took place between the under fine is justified for the quantity compensa takings at the instigation of the French tion since the Commission itself agrees that undertakings at the beginning of November it is not possible to establish it in respect of 1963 concerning the protection of the the Common Market after 29 October 1962. domestic markets cannot be explained if the The applicant points out that the Commis

of the export agreement. The applicant change. mentions that the Commission, in stating in The applicant replies by pointing out that it the contested decision that the parties con appears from the minutes of the above cerned had decided to continue carrying out mentioned meeting on 29 October 1962 that, the gentlemen's agreement at the meeting on if in the first stage of that meeting the parties 29 October 1962, omitted to take into concerned did not intend entirely to abolish account the fact that the last part of the the gentlemen's agreement because they minutes of that meeting clearly and un hoped to arrive at a new agreement on the reservedly states: 'Therefore the original purchase of bark, the final result of the dis intention to live according to the gentle cussion was different, as appears at the end men's agreement cannot be kept'. of the minutes: By virtue of the principle negativa non sunt 'Mr Lumley then asked if that meant free probanda, it is neither possible nor reason

JUDGMENT OF 15. 7. 1970 — CASE 45/69

pursued. On the other hand nobody The compromise reached at the meeting on proposed to abolish the export agree 14 October 1963 consisted of leaving the ment; apart from that, everyone had agreement in abeyance for a year in order to freedom of action.' consider the question of the increase in As regards the alleged reference to the. gen prices later. tlemen's agreement at the meeting on 14 The defendant interprets a statement by October 1963, the applicant states that the Nedchem's representative during that statement of its representative mentioned meeting referring to 'agreements con by the defendant solely concerned the field stituting our convention' as meaning that of application of the export agreement. The the suspension concerned not only the letter from Nedchem of 2 November 1962 export agreement but also the gentlemen's envisaged ending all existing agreements. agreements: this follows from the ter The observations made in this respect by minology used in the 'note about equal Buchler and Boehringer refer only to the ization'. export agreement and there was no mention It appears further from the whole of the of the gentlemen's agreement. The circular discussion that the parties concerned had no of 7 August 1963 from Nedchem confirms interest in abandoning the spirit of co that the gentlemen's agreement no longer operation and in disturbing their relation existed. ships. The defendant in its rejoinder persists in Boehringer's representative declared : disputing that the gentlemen's agreement 'Nobody will be stupid enough to spoil

In offer its products on the markets of the other referring to the meeting on 14 October 1963 participants at lower prices than the latter the applicant in its letter of 25 October 1963 charged; further a significant quantity of stated that it had on that occasion made an products from the stockpile had not yet agreement to respect all domestic markets. been distributed by Nedchem. In its turn it had been able to make increases In the middle of November 1962, Lake & on its domestic market (increases made on Cruickshank complained that Nedchem 27 November 1963 and in October 1964) had infringed the gentlemen's agreement because it was assured of the protection of (the application of the export agreement to its market. the British market was expressly excluded), Thus, even after the meeting on 29 October which is not reconcilable with the appli 1962, the participants in the cartel kept all cant's statement that this gentlemen's agree the essential restrictions on competition in ment had been expressly terminated at the the Common Market which had been agreed

upon in the gentlemen's agreements, that is really a question of confirmation of the to say: the protection of domestic markets, abandonment previously agreed upon of restriction on the production of quinidine competition on the domestic markets. by three of the participants and the joint Without this stipulation deliveries would fixing of export prices, which they applied in certainly have been made to Germany from the countries of the Common Market in the Netherlands where the level of prices which there was no production of quinine. was lower. Even the rebates granted to certain pur The applicant replies that it does not follow chasers in the Common Market were jointly from the abovementioned statements con fixed. cerning the protection of their domestic With regard to the alleged fixing of common markets that the parties concerned wished prices, the applicant disputes the reliability to re-apply the gentlemen's agreement as of the evidence appearing from inquiries such, that is to say, the clauses concerning made of Italian and Belgian undertakings common prices, quotas and the limitation provided by the Commission to show the of the production of synthetic quinidine. uniform character of the prices charged on The minutes give not the slightest indication export by the undertakings concerned. of it. The Commission has not established In its rejoinder the defendant provides a that between November 1963 and the end of table containing a comparative examina 1964 because of these statements the appli tion of the prices charged for sales in cant gave up deliveries to France and the Belgium and Luxembourg and in Italy with Netherlands which it would otherwise have the export prices jointly fixed. made. Although the applicant refrained from making deliveries to France or the (d) The declarations of October and No Netherlands, this was due exclusively to the vember 1963 concerning the protection shortage of raw materials.

French manufacturers. Furthermore con place every time Nedchem threatened no siderable difficulties stood in the way of longer to respect the domestic markets of the exports to France and the Netherlands. In other participants. France there was strong territorial protec The defendant emphasizes that the internal tion; in the Netherlands the domination of price of quinine and quinidine in the Federal the market by Nedchem made access almost Republic of Germany was always higher impossible for foreign undertakings. than the export price: for quinine this The defendant raises the objection that the difference was 18% in November 1963 and correspondence in question has a meaning if 24 % at the end of 1964; for quinidine it was it is considered within the framework of the 44% in 1962 and 59 % at the end of 1964. decision of the parties concerned to keep to the gentlemen's agreement.

JUDGMENT OF 15. 7. 1970 —CASE 45/69

Although the Com Article 85 (1) of the EEC Treaty. Such a mission wished to deduce the applicability statement of reasons is necessary particular of that provision from the consideration ly in relation to the question of the start of that by reason of the compensation for the limitation period because the facts quantities the undertakings could not alter quoted in the statement of defence con their share of the market in third countries, cerning the duration of the cooperation the applicant states that this was the very refer only to the export agreement.

Community law and the legal consequences The factors on which the applicability of in civil law caused by the partial nullity Community law are based are therefore referred to in Article 85 (2). The clause in the entirely lacking. Even in the case of a gentlemen's agreement according to which theoretically conceivable re-exportation, a breach of that agreement must be regarded imports to the EEC as such could strictly also as a breach of the export agreement may speaking have been affected, but not trade therefore at the most be important from the between the Member States of the EEC. point of view of civil law for the question of Mere indirect or purely theoretical reper

Common Market. Nevertheless, after in of Carnegies and the denunciation of the vestigation it had not been able to find the agreement by Nedchem and from October existence of such effects in those two cases. 1963 to the end of 1964 only the agreement

concerning the charging of common prices concerted practice, but it should have been was regarded as still being in force. the subject of factual proof by the Commis The defendant maintains that his presenta sion because by definition a concerted tion of the facts does not correspond to practice can exist only to the extent to which reality: the export agreement cannot be it is actually carried out. No facts have been regarded in isolation because from its be put forward in this respect by the Commis ginning the regulation of competition which sion. it envisaged was intended to operate also The applicant states that on the contrary at within the Common Market as appears the meeting on 12 March 1964 concerning from its origin, from later developments at the fixing of the new prices Nedchem's re the time of the accession of Buchler and of presentative expressly stated 'that a decision the French and British undertakings and concerning new prices applied exclusively to from the priority which was given to the export markets and not to the Common gentlemen's agreement.

alone. Belgium and Italy. The defendant has never maintained that The defendant maintains that the gentle the illegality of the gentlemen's agreement men's agreement amounts to an agreement extended to the export agreement in respect within the meaning of Article 85 (1) of the of consequences in civil law in the case of Treaty and mentions that the applicant does partial nullity resulting from the provisions not dispute that that agreement falls under of Article 85 (2) of the Treaty. In the con the prohibition of this article.

of the Treaty. In fact, for the reasons set out actual restriction on competition. It suffices at 2, (c) above, the Commission refrained that this was potentially affected, as to which from producing any factual proof whatever there can be no doubt in the present case if of the continuation in force of the gentle consideration is given to the stipulation men's agreement after the meeting on 29 concerning the sharing out of domestic October 1962 during which it was decided markets and the application of identical finally to bring it to an end. prices on exports even in trade between In these circumstances, the application of Member States until February 1965. common prices in the Common Market This principle, which was asserted by the after October 1963 alleged by the Commis Court of Justice in the judgment in Joined sion may at the most be regarded as a new Cases 56 and 58/64 in respect of an agree-

ment, should logically apply also to con criterion of the appreciable effect of the certed practices. In fact, such practices differ restriction can be used only when the under from agreements only in that it is not pos takings concerned have an unimportant sible legally to ensure observance of their situation in the market or when other facts clauses but they are always based on an are not capable of forming the basis for a undertaking, as with agreements. Conse forecast, thus giving rise to the fear that the quently, when the content of the agreement agreement might have an appreciable effect is put into writing and when it appears from on trade between Member States likely to a reading of it that its object is to restrict hamper the achievement of a single market. competition it is not necessary to examine The reciprocal guarantee of non-delivery to the actual situation of the market. the national markets of the other parties had The fact that this understanding was precisely as its aim the prevention of the actually put into effect follows from the fact achievement of a single market which that during 1964 the parties concerned amounts to a serious interference in intra- actually raised their prices together and not Community trade. Consequently the Com only in respect of exports to third countries mission had no need to have recourse to the but also in respect of the Common Market, criterion of appreciable effect. that is to say, for Italy and the Belgo-

tion. (c) Declarations of October and November It maintains that the defendant does not 1963 concerning the protection of show the reason for which the period fol domestic markets lowing the end of the alleged infringements is too short to allow the application of the The applicant maintains that the declara period of limitation; tions of October and November 1963 con In view of the fact that the EEC Treaty does cerning the protection of domestic markets not itself govern the question of the limita may perhaps be regarded as concerted prac tion period, there is reason, in accordance tices but certainly not as agreements.

above). There could not therefore have been of a criminal law nature. It is therefore any noticeable restriction on competition necessary to exclude consideration of there. The Commission made no finding on national provisions concerning periods of this important fact. limitation applicable to crime. On the basis The defendant raises the objection that the of these criteria and after a comparative

examination of national rules, the applicant be that the uniform application of Com arrives at an average limitation period of a munity law would be hampered in the year and a half. It points out further than an sphere of competition law. administrative fine, as opposed to a penal On the other hand, the defendant concedes fine, does not only penalize a past infringe that the question is admissible whether, ment but must also ensure that the require with regard to time-limits, there is a prin ments of the law once more prevail. ciple common to the legal systems of the As regards the decisive date for the inter

There is no coincidence However, only the date of the commence of the systems of the four other Member ment of the procedure, 30 July 1968, is States, since only the Federal Republic of decisive for the interruption of the limita Germany has a strict prohibition on actions tion period, as both the principle of legal which restrict competition comparable to certainty and the general principles appli the Community system. In the four Member cable under the rule of law require a clear States with legislation on cartels, infringe and formal act by the administration to ments of such provisions are given varying determine the date of the interruption of legal status: in German law ( as in Com the limitation period, above all in a munity law) such infringements are of an procedure having as its subject-matter the administrative nature; on the other hand infliction of a fine. under French, Belgian and Netherlands law To the submission based on an alleged lack such infringements take on a criminal of reasons, the defendant replies that it did aspect. not give reasons for its refusal to accept that With regard to the interruption of the limita a period of limitation had expired because, tion period the German law on competition according to the case-law of the Court, it is does not in general recognize such an effect required to give reasons only for the decision except in respect of acts taking place after which it has taken. It has, furthermore, set formal proceedings have been commenced, out in that decision why the objection based but into this category are placed also on the period of limitation is not valid. provisions or measures of a purely national In respect of the submission of infringement character.

On the other hand, steps The applicant's view in connexion with the taken within the administrative systems do application of national law has no founda not have that effect. Italian law enumerates tion in Community law. The judgment of the measures which interrupt the limitation the Court in Case 18/57 cannot support this period. According to Netherlands law, argument, as the capacity to institute pro every act commencing proceedings of which ceedings referred to in that decision in no the accused has been informed interrupts the way relates to Community law.

JUDGMENT OF 15. 7. 1970 —CASE 45/69

of limitation. In those circumstances, in tes one of the objectives of the EEC Treaty. order to establish a period of limitation for The applicant maintains that it is not accept infringements of Articles 85 and 86 of the able to take into account only competition EEC Treaty only the requirements of Com law in the Member States: that method munity law may be taken as a basis, taking ignores Italian law and ignores the fact that account also of the importance and the the fines in question are not of a criminal function of the rules on competition under law nature. The importance of competition

The official entrusted into consideration the end of cooperation, with the investigations in question produced that is to say, of the application of common an authorization signed by the Director- prices within the framework of the export General for Competition indicating in detail agreement. The duration of that agreement the object and the aim of the check to be is unimportant as regards actions within made in connexion with specific infringe the Common Market. As the only decisive ments. If the applicant had refused, as it was agreement for the application of Article 85 entitled to do, to submit to the investigation (1) is the gentlemen's agreement, the Com on the basis of that authorization, the Com mission should have based its decision on

It disputes legal systems of the majority of the Member further that there is a general principle of States, the period of limitation for infringe law on the subject of the length of the period ments intentionally committed against pro of limitation. visions relating to cartels is three years. As to the alleged ending of the gentlemen's Even if it is conceded that the period of limi- agreement on 29 October 1962 the defendant

refers to its statements above in respect of secondary activity within the framework of the complaints concerning the application its undertakings, was entrusted to a person of the gentlemen's agreement. acting in a quite independent manner on the As to the interruption of the period of limita basis of a special contract of cooperation. tion the defendant points out that the Com The new management of the applicant mission delegated the power to make the undertaking did not therefore have detailed order for investigation to its member knowledge of the conduct of business in that responsible for competition questions, department and did not know until later the which he himself legally delegated to the full situation constituted by the gentlemen's Director-General for Competition so that agreement and the exchange of correspond an investigation made by an official on the ence concerning the protection of the basis of an order signed by that Director- markets. It is possible, consequently, to General was capable of interrupting the blame the applicant at the most for a failure limitation period. of organization and thus for negligence, but in no circumstances for deliberate action. 5 — Complaints concerning the finding of For those reasons the findings of the Com guilt mission concerning wrong-doing are in correct which leads consequently to the The applicant complains that the Commis necessity of at least altering the amount of sion infringed Article 15 of Regulation No the fine. 17/62 and the duty to give reasons, by sug The defendant objects that, as appears from gesting that it acted deliberately in respect statements made by Mr Köbner at the of all the agreements or concerted practices meeting on 21 September 1962, the appli including the undertakings of the export cant knew perfectly well that the Bundes agreements which had been declared to be kartellamt had only examined the export 'in abeyance'. agreement in relation to German law. The applicant mentions that it could rea Furthermore, the gentlemen's agreement sonably accept that the export agreement had not been notified to the Bundeskartell did not fall under Article 85 and that it need amt. not therefore be notified since the Bundes It appears further from the minutes of the kartellamt had also considered the com meeting on 21 September 1962 that the legal patibility of the said agreement with that representative of the applicant was not un

Lastly 1963 concerning the protection of domestic it is incorrect to claim that the gentlemen's markets, the applicant disputes the accusa agreement was brought to an end at the tion of having deliberately committed an behest of the legal representative of the infringement and emphasizes that the re applicant. presentative of its legal department had The applicant disputes having had doubts insisted on ending the gentlemen's agree on the legality of the export agreement. The ment, as appears from the minutes of the statement made by Nedchem's representa meeting on 21 September 1962.

JUDGMENT OF 15. 7. 1970 —CASE 45/69

pletely to eliminate competition between sum which is not individually fixed but them cannot be subdivided into several which is automatically allocated to it. Such parts. a manner of proceeding amounts to a According to the defendant, it appears from misuse of powers and an infringement of the discussions which took place between Article 15 of Regulation No 17/62. the participants in the cartel during the As to the duration of the infringements, the years 1961 to 1963 that they had no altern statement contained in the decision that the ative other than completely to eliminate undertakings committed the acts of which competition between them or not to elimin they are accused over a long period, that is

fine Further, the Commission wrongly blames the undertakings, regarding it as an ag The applicant maintains that the Commis gravating circumstance to have continued sion should at least have taken into con during 1965 to 1966 to exchange statistical sideration, when fixing the fine, the fact that information concerning the amount of their the alleged infringements already went back exports and to have omitted notification of several years. By omitting to do so it abused the agreement. This conduct does not its discretionary power and incorrectly amount to infringement of Article 85 of the applied Article 15 of Regulation No 17/62. Treaty or of Regulation No 17/62; there is The applicant considers it to be unjustified consequently misuse of powers in taking that the failure of the Commission to take account of them. action for a relatively long time should be By finding that the undertakings ended their compensated for by particularly heavy fines cooperation at the beginning of February imposed without warning, all the more so 1965 only because radical changes occurred

in the situation of the market, the Commis director of the applicant's legal department sion appears to have wished to penalize insisted that the gentlemen's agreement purely potential behaviour, that is to say, should be ended at the meetings in Septem the hypothetical maintenance of the export ber and October 1962, whilst this fact was agreement in the case of a different state of accepted as a mitigating circumstance in the market. That argument is unacceptable favour of the French undertakings.

That aspect It is equally incorrect that the products in falls furthermore under Article 86 of the question have particular importance and EEC Treaty on which the decision is not are partially irreplaceable. based. Thus the decision to raise prices was The seriousness of an infringement should taken in agreement with all the under depend not on the nature of the products in takings concerned and it would be un dispute but on the magnitude of the obstacle justifiable to blame this on the applicant caused to the integration of the Common alone.

The Commission's troubles in the Congo at times caused a allegation that the agreement caused complete halt to production. It should damage to the consumer during the years furthermore be regarded as unjustified dis 1963 to 1964 is absolutely untenable. crimination and as a misuse of powers that The manner in which the Commission ap the attempt to secure supplies of raw praised the particular situation of the appli materials was regarded as an aggravating cant and its participation in the alleged in circumstance in the case of the applicant fringements constitutes a misuse of powers alone. It is not in fact cooperation in the towards it and an infringement of Article 15 raw material sector which forms the subject of Regulation No 17/62. The Commission matter of the decision to impose a fine. has first of all omitted to consider as a Lastly, relying on the submission of infrin mitigating circumstance the fact that the gement of the Treaty, the applicant main-

tains, that the Commission has not suffi have ended the said infringements in order ciently taken into account the peculiarities to take account of the requirements of the of the quinine market in relation particular EEC Treaty. It is therefore only because of ly to the long growing periods of the quin the effect of the market situation that they quina, and of the effect of stabilization of ended their infringements. prices which the export convention had in The defendant denies that as a preliminary particular.

The require Market. As concerns the restriction of ment of stabilizing the market has been competition it took into account the recognized by international agreements dominant position of the undertakings on concluded under the aegis of the United the market. As to the trend of prices the Nations Organization for numerous in defendant maintains that if there had not dustrial products manufactured with the been joint fixing within the framework of the help of agricultural raw materials. agreement the deliveries made from the The defendant states that it has indicated in reserves of the American stockpile until the detail in the contested decision the con summer of 1964 would have led to a greater siderations which governed the fixing of the reduction in prices. amount of the fines in respect of the various As to the argument of the applicant con

It would be difficult to go plains that the Commission pursued 'the further in the restriction of competition. quinine case' for political reasons, solely The defendant mentions that the essential because the American authorities drew purpose of the fines provided for in Article attention to it and because it had been the 15 (2) of Regulation No 17/62 is not to lead subject of certain publicity in the press, to the ending of the infringement, because whilst innumerable infringements commit the Commission has powers for that pur ted in the period 1963 arid 1964 were not the pose provided for in Article 3 of Regulation subject of proceedings.

It also dis imposed on the cartel, the applicant main putes the statement that the parties con tains that the Commission continues to cerned voluntarily ended their infringe provide no criterion of the calculations in ments, as their previous conduct does not respect of it. allow of the conclusion that they would The applicant states that it is contrary to the

general principle according to which its very large turnover five times greater persons cannot be compelled to make than that of Nedchem. statements which may incriminate them to The defendant mentions finally that the regard the fact that the 'infringements were applicant put forward no argument capable kept secret' as a particularly aggravating of invalidating the finding that if those con circumstance. Moreover the applicant cerned had not restricted competition recalls that the export agreement was between them the prices of the products in notified to the Bundeskartellamt. question would have been reduced further The statement of the Commission that if because of the existence of quantities there had not been joint price-fixing by the coming from the 'strategic stocks'. cartel prices would have decreased con siderably until the Summer of 1964 con 7 — The deduction from the fine imposed by tradicts economic logic and may be refuted the Commission of the fine imposed on by the minutes of the meetings of March the applicant by an American court 1964 and October 1964, from which it appears that price increases were necessary The applicant mentions that it had already because of the increase in costs. been ordered by an American court to pay The defendant recalls that those concerned, a fine of 80 000 dollars based on the same far from having rapidly put an end to their acts as those to which the fine imposed by activities after the appearance of Regula the Commission refers. The first fine, which tion No 17/62, persisted in their illegal has already been completely paid, ought behaviour until February 1965.

At the that it did not know of them. time when it adopted its decision on 16 July The defendant does not claim that the agree 1969 the Commission in fact did not know ment was terminated as a result of its inter that the applicant had been sentenced on vention but it states only that it was the 3 July 1969 by an American court within the necessities of the market which led those framework of a compromise procedure to a concerned to allow it to lapse. fine of 80 000 dollars and that it had paid It is inevitable that the fines imposed on that amount on 11 July 1969.

By letter of 25 September 1969 the further that although it is true that in Director-General for Competition inform accordance with the distribution of quotas ed the applicant that in this respect further in the cartel the fine of the applicant should examination was necessary. In these cir have been 118 000 units of account, it was cumstances the applicant would suffer no nevertheless fixed at 190 000 units of damage in respect of legal protection if the account because Boehringer had an im- Court did not consider its request, because important position on the raw material it could later make an application to the market because of its plantations and its Court against any decision by the Commis processing factory in the Congo, because on sion to reject it. several occasions it had spoken in favour of The applicant in its reply states that it leaves an increase in prices, and lastly because of to the discretion of the Court the decision

2 In 1960 a new cartel was established between Boehringer and the two above­ mentioned undertakings and shortly afterwards it was extended to certain French ánd British undertakings. This cartel was based in the first place on an agreement relating to trade with third countries (hereinafter referred to as the 'export agree­ ment') and providing inter alia for the fixing by agreement of prices and rebates relating to exports of quinine and quinidine and the allocation of export quotas supported by a system of compensation depending on whether the export quotas were exceeded or not fulfilled. Furthermore, a gentlemen's agreement between the same parties extended the abovementioned provisions to all sales within the Com­ mon Market. This agreement also established the principle; of the protection of domestic markets in favour of each of the producers and bound the French members of the cartel to refrain from manufacturing synthetic quinidine.

3 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 190 000 units of account by a decision of 16 July 1969 (OJ L192, p. 5 et seq.).

4 By an application lodged at the Court Registry on 26 September 1969 the Boehrin ger undertaking initiated proceedings against this decision.

BOEHRINGER MANNHEIM v COMMISSION

A — The submission relating to the limitation period

5 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.

JUDGMENT OF 15. 7. 1970 — CASE 45/69

10 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. 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 quantita­ tive 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 con­ tinued to apply the gentlemen's agreement on production and sale in the Common Market.

11 Consequently the objections raised with regard to the notice of complaint are unfounded.

II — The objection relating to consultation of the administrative file

12 The applicant maintains that the Commission infringed the rights of the defence by refusing in the course of the administrative procedure to allow it to consult essential documents on which the contested decision was based. The defendant

replies that it had enabled the applicant to consult the documents which were of importance for the appraisal of the complaints.

III — Complaints relating to the drawing up of the minutes of the hearing

16 The applicant maintains that both the Advisory Committee on Restrictive Practices and Monopolies and the Commission acted on the basis of a preliminary version of the minutes of the hearing, which did not take into account the amendments which it had suggested. Such action is incompatible with the principles of the rule of law governing the guarantee of the fundamental rights of an undertaking threatened with sanctions.

17 The preliminary nature of the minutes of the hearing submitted to these two bodies could only amount to a defect in the administrative procedure capable of vitiating the decision which results therefrom, on the ground of illegality, if the document in question was drawn up in such a way as to be misleading in a material respect. A consideration of the amendments to the draft minutes suggested by the applicant shows that the alterations requested did not concern essential factors, with the result that the final text of the minutes containing all the applicant's suggested amendments differs in no material respect from the draft submitted to the Members of the Commission.

Thus, this draft was not capable of changing the statements of the undertakings concerned, with the result that it was able to provide the Advisory Committee and the Commission with complete information on the essential content of the state­ ments made at the hearing.

18 This complaint is therefore unfounded.

JUDGMENT OF 15. 7. 1970 —CASE 45/69

23 As the purpose of the procedure before the Commission is to apply Article 85 of the Treaty even where it may lead to the imposition of fines, it is an administrative procedure. Within the context of such a procedure there is nothing to prevent the Members of the Commission who are responsible for taking a decision imposing fines from being informed of the outcome of the hearing by such persons as the Commission has appointed to conduct it, in accordance with Article 9 (1) of Regulation No 99/63. Thus, the fact that the applicant was not heard personally by the Members of the Commission at its hearing cannot amount to a defect in the contested decision.

24 The applicant maintains in addition that the administrative procedure is vitiated by the fact that the file of the case was not sent in its entirety to each Member of the Commission.

BOEHRINGER MANNHEIM v COMMISSION

25 However, the Members of the Commission received complete and detailed in­ formation regarding the essential points of the case and had access to the entire file.

26 Therefore, the applicant's complaint is unfounded.

C — Substance

29 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

JUDGMENT OF 15. 7. 1970 — CASE 45/69

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. 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.

II — Protection of the producers' domestic markets

30 The gentlemen's agreement guaranteed protection of each domestic market for the producers in the various Member States. After October 1962 when significant supplies were delivered on one of those markets by producers who were not na­ tionals, as for example in the case of sales of quinine and quinidine in France, there was a substantial alignment of prices conforming to French domestic prices which were higher than the export prices to third countries. It does not appear that there were alterations in the insignificant volume of trade between the other Member States referred to by the clause relating to domestic protection in spite of consider­ able differences in the prices prevailing in each of those States. The divergences between the domestic legislation of those States cannot by itself explain those differences in price or the substantial absence of trade.

sharing out of domestic markets has as its object the restriction of competition and trade within the Common Market. The fact that, if there were a threatened shortage of raw materials, such an agreement might in practice have had less influence on competition and on international trade than in a normal period in no way alters the fact that the parties did not terminate their activities. Further­ more the applicant has furnished no conclusive evidence capable of proving that it had ceased to act in accordance with the agreement before the date of expiry of the export agreement.

35 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

36 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 and 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. 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. If, as the defendant maintains, the parties to the export prices to supplies to the abovementioned 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.

39 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. 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 exports prices, and that the defendant has been unable to give a convincing explanation as to how this might be reconciled with the continuation in force of the agreement in question. The failure to communicate to the undertakings concerned the results of the investiga­ tions carried out in Italy and Belgium, 'which excluded any possibility of clarifica­ tion and discussion at the stage of the administrative procedure, may have con­ tributed to leaving unexplained facts which ought to have been clarified.

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

IV — The sales quotas

41 With regard to the fixing of sales quotas for the Common Market, which was linked to a system of compensation and which constituted a supplementary guarantee of the sharing out of domestic markets, the applicant maintains that the necessary condition for the functioning of such a system, namely the reciprocal notification of all sales including those effected within the Community, was no longer fulfilled subsequent to October 1962.

V — Restrictions on the manufacture of synthetic quinidine

45 The gentlemen's agreement prohibited the group of French undertakings from manufacturing synthetic quinidine. Owing to the stringency of the restrictions imposed on undertakings from one Member State for the benefit of undertakings on the market in question, these prohibitions clearly have as their object the restriction of competition within the Common Market and are capable of affecting

JUDGMENT OF 15. 7. 1970 — CASE 45/69

trade between Member States. The fact relied upon that, when the gentlemen's agreement was concluded, the French undertakings were not in a position to manufacture synthetic quinidine does not render lawful such a restriction which entirely precluded them from taking up this activity.

VI.— General appraisal of the agreement within the Common Market

48 It is clear from the foregoing that the applicant participated with other producers of quinine and quinidine in an agreement prohibited by Article 85 of the EEC Treaty. This agreement continued in most of its forms even after the meeting on 29 October 1962. Serious doubts as to the continuation of the agreement after 1962 exist only with regard to the application of sales quotas. Nevertheless, the fact that the undertakings did not continue to apply the system of quotas does not seem perceptibly to have improved the conditions of competition, since they continued jointly to fix prices, to apply uniformly to their deliveries in the Common Market joint price increases arranged in March and October 1964 and decided within the framework of the export agreement and finally to maintain protection of their

BOEHRINGER MANNHEIM v COMMISSION

respective domestic markets and the prohibition on the French undertakings' production of synthetic quinidine. However, the application of uniform prices for deliveries to Italy, Belgium and Luxembourg has only been proved to exist up to April 1964.

49 Finally, even if it must be conceded that the export agreement could have operated independently of the agreement relating to the Common Market, it must be found that in fact the members of the cartel attributed great importance to the joint application of both agreements. Although from October 1963 the export agree­ ment was declared to be 'in abeyance', it is clear from the declarations made by the undertakings concerned at their subsequent meetings together with their subsequent conduct as a whole that they continued to have an interest in upholding that agreement, particularly with regard to its possible employment within the Com­ mon Market.

JUDGMENT OF. 15. 7. 1970 — CASE 45/69

imposition of a penalty were to be restricted to current infringements alone. The Commission's power to impose penalties is in no way affected by the fact that the conduct constituting the infringement has ceased and that, it can no longer have detrimental effects. For the purpose of fixing the amount of the fine, the gravity of the infringement is to be appraised by taking into account in particular the nature of the restrictions on competition, the number and size of the undertakings concerned, the respective proportions of the market controlled by them within the Community and the situation of the market when the infringement was committed.

54 The applicant complains that the Commission first of all fixed an aggregate amount for the fine on the cartel and then divided it amongst the undertakings. This procedure is incompatible with the requirement of fixing the fine individually. Furthermore, the applicant was subject to discrimination as compared with the other undertakings, by reason of the disproportionate amount of the fine imposed upon it.

55 The prior fixing of a maximum aggregate amount for the fine, fixed in relation to the seriousness of the danger which the agreement represented to competition and trade in the Common Market, is not incompatible with the individual fixing of the penalty. Consideration of the situation and of the individual conduct of each undertaking and of the importance of the rôle which it played in the agreement of the fine.

60 The applicant maintains that the fine of 80 000 dollars which was imposed upon it by a court in the USA, arising out of the same facts, and which was already paid before the contested decision, should be deducted from the amount of the disputed fine.

61 These penalties were imposed in respect of restrictions on competition which occurred outside the Community.

Consequently there is no reason to take them into account in these proceedings.

Costs

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

On those grounds,

2. Annuls so much of Article 1 of the decision of the Commission of the European Communities of 16 July 1969 (OJ L 192, p. 5 et seq.) as records that the applicant applied the clauses of the gentlemen's agreement of 9 April 1960 on the system of quotas and compensation during the period from November 1962 to February 1965, and the fixing of prices and rebates for the export of quinine and quinidine during the period from May 1964 to February 1965;

3. Reduces the fine imposed on the applicant by the abovementioned decision to 180 000 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.