C-48/69

themselves to change. For the purpose of applying the rules Independent and non-uniform con­ on competition, unity of conduct on duct by undertakings in the Common the market as between a parent com­ Market encourages the pursuit of one pany and its subsidiaries overrides the of the basic objectives of the Treaty, formal separation between those com­ namely the interpenetration of national panies resulting from their separate markets and, as a result, direct access legal personality. by consumers to the sources of pro­ duction of the whole Community. 12. The fact that no statement is included showing why the Community ad­ 10. Although every producer is free to ministration has jurisdiction does not change his prices, taking into account stand in the way of a review of the in so doing the present or foreseeable legality of its measures. conduct of his competitors, neverthe­ The Community administration is not less it is contrary to the rules on com­ bound to include in its decisions all the petition contained in the Treaty for a arguments which it might later use in producer to cooperate with his com­ response to submissions of illegality petitors, in any way whatsoever, in which might be raised against its order to determine a coordinated measures.

course of action relating to a change of

In Case 48/69

Imperial Chemical Industries Ltd . (hereinafter referred to as 'ICI'), having registered offices in London and Manchester, assisted and represented by C. R. C. Wijckerheld Bisdom and B. H. ter Kuile, Advocates at the Hoge Raad of the Netherlands, with an address for service in Luxembourg at the Chambers of J. Loesch, Advocate, 2 rue Goethe, applicant, v

Advocate-General: H. Mayras Registrar: A. Van Houtte

gives the following

JUDGMENT

Issues of fact and of law

I — Statement of the facts the other countries already affected by the increase of 1964, a uniform increase of The facts may be summarized as follows: 10% on dyes and pigments not covered by On the basis of information supplied by the first increase. Finally, on 16 October trade associations of the various industries 1967 an increase of 8% on all dyes was using dyestuffs, the Commission made introduced by almost all producers in inquiries as to whether increases in prices Germany, the Netherlands, Belgium and for these products which had occurred Luxembourg. In France this increase since the beginning of 1964 in the coun­ amounted to 12%; in Italy no such increase tries of the Community were made by was introduced at all. mutual agreement between the under­ On 31 May 1967 the Commission decided takings concerned. upon its own initiative to commence as a result of tnese inquiries the Com­ proceedings under Article 3 of Regulation mission found that three uniform price No 17/62 of the Council for presumed increases had taken place. An increase of infringement of Article 85 of the Treaty 15% affecting most aniline dyes took place against the undertakings, including in between 7 and 20 January 1964 in Italy, particular Imperial Chemical Industries the Netherlands, Belgium and Luxembourg Ltd., London, which had participated in a and on 1 January 1965 it was extended to concerted practice for the purpose of Germany. On that same day almost all fixing prices for dyestuffs. producers introduced, in Germany and By registered letter of 11 December 1967

addressed to the undertaking in London — E.I. Du Pont de Nemours Company the Commission informed it of its decision. Inc., Wilmington, Del. (United States This letter was accompanied by a notice of of America). objections made by the Commission against the undertakings which had participated in On 10 December 1968 the Board of ICI the above-mentioned increases. There were gave its answer to the Commission's sixty recipients of the said letter and notice. notice of objections before representatives They were producers of dyestuffs estab­ of the Commission and of the Member lished both inside and outside the Com­ States. munity, and their subsidiaries and re­ At its meeting on 24 July 1969, the Com­ presentatives established within the Com­ mission adopted a decision ordering mon Market. Imperial Chemical Industries Ltd. to pay In the notice or objections the Commission a fine of 50 000 u.a. for infringements of declared that within the Common Market the provisions of Article 85(1) of the the price increases had been introduced by Treaty, which it had allegedly committed the following producers, and by their sub­ as a participant with other undertakings in sidiaries or representatives: concerted practices for the purpose of fixing the amount of price increases and — Azienda Colori Nazionali Affini S.p.A. the circumstances in which these increases (ACNA), Milan (Italy), were to be introduced in the dyestuffs — Industria Piemontese dei Colon di industry in 1964, 1965 and 1967. Anilina S.p.A. (IPCA), Milan, (Italy), For the same reasons the decision ordered — Fabbrica Lombarda Colon Anilina that fines of 50 000 u.a. be paid by: S.p.A. (FLCA) Milan (Italy), — Industria Electro-Chimica Bergamasca, — Badische Anilin- und Soda-Fabrik AG, Bergamo (Italy), — Cassella Farbwerke Mainkur AG, — Farbenfabriken Haver AG. — Farbenfabriken Bayer AO, Leverkusen (Federal Republic of Germany), — Farbwerke Hoechst AG, — Société Française des Matières Colo­ — Farbwerke Hoechst AG, Frankfurt am rantes SA, Main (Federal Republic of Germany), — Ciba SA, — Badische Anilin- und Soda-Fabnk AG — j. R. Geigy SA, (BASF), Ludwigshafen (Federal Repu­ — Sandoz SA, blic of Germany), — Cassella Farbwerke Mainkur AG, and that a fine of 40 000 u.a. be paid by Frankfurt am Main (Federal Republic Azienda Colori Nazionali Affini S.p.A. of Germany), ICI lodged an appeal against this decision — Société Française des Matières Colo­ at the Court Registry on 1 October 1969. rantes SA (Francolor), Paris (France), — Fabriek van Chemische Produkten

III — Submissions and arguments The applicant argues that this point of view of the parties is contrary to international law. As regards this matter the applicant refers to the The submissions and arguments of the opinion of several authors from various parties may be summarized as follows: countries and also produces as an annex to the application the text of an opinion by 1. The extra-territorial jurisdiction of the Professor Jennings, Professor of Inter Commission national Law at the University of Cam bridge, on the following question: A — The applicant's view 'Whether, according to recognized prin ciples of international law and practice, Complaints as to the jurisdiction claimed by the Commission would have jurisdiction, the Commission on the basis of the effects under Article 85 and Regulation 17, to arising within the Common Market of the make a "cease and desist" order, or to applicant's activity outside it impose a fine, binding upon ICI, a com pany registered in the United Kingdom, (a) International law with its head office in London.' This opinion was brought to the attention The applicant argues that the decision con of the Commission before the hearing for cerning it taken by the Commission is which Article 19 of Regulation No 17 based on an erroneous conception of the makes provision. The applicant asks the extra-territorial jurisdiction of the Com Court to consider this document as forming

On the other hand, re applicable to a course of conduct adopted straint of trade laws belong not to that within the Common Market by under category where State practice permits a takings outside it. However, in the con wide discretion but rather to the category tested decision a more general claim is put of public law peculiar to a State or group forward regarding the Community's juris of States, which should therefore be diction in relation to those undertakings, territorially confined unless there is a its basis being that the rules of the Treaty specific permissive rule. As to the terri on competition apply to all restrictions on torial test Professor Jennings notes that competition which produce, within the in the Lotus case the International Court Common Market, effects covered by of Justice relied on an objective test and Article 85(1), without its being necessary held that offences are to be regarded as to examine whether the undertakings having been committed in the national responsible for those restrictions have territory if one of the constituent elements their registered offices inside or outside the of the offence, and more especially its Community. effects, have taken place there.

This judgment

no longer requires that a part of the illegal doctrine evoked strenuous opposition from conduct should take place within the ter many quarters. ritory of the state claiming jurisdiction and A number of states, including the Nether considers it enough that all that happens lands, have made it illegal for companies within the territory is an economic reper residing in the territory to furnish docu cussion in terms of trade. Hence the judg ments or information about their activities ment creates not a difference of degree but to foreign authorities. a difference of kind.

Thus the European justified as regards conduct occurring Community and the States which com abroad and producing effects within the pose it would have to be ready to accept territory unless the contested conduct and the proposition that a third State could act its effects are generally recognized as in the same way as regards undertakings constituent elements of a crime or tort un having their headquarters within the Com der the laws of States that have reasonably munity. developed legal systems. Professor Jen Furthermore, he notes that unlike a nings observes that commentators agree sovereign State, the Community does not that neither the principles nor the methods enjoy inherent competence but only that of laws directed against trusts, cartels and attributed to it.

Moreover, it would be the theory criticized above. It is asserted absurd to suppose that the Member that these protests specifically referred to States intended to confer such jurisdiction the limits placed on State jurisdiction by on the Community when they have denied international law and opposed the extra the principle itself by showing their inten territorial jurisdiction claimed by the tion to reject the claims of the American authorities of the United States. authorities to exercise that jurisdiction. In January 1966 the Legal committee of Professor Jennings comes to the conclusion the Consultative Assembly of the Council that the EEC has jurisdiction over ICI of Europe submitted a report in which it only as regards its conduct inside the put forward the proposition that each frontiers of the Community, if that con State has jurisdiction to pass judgment in duct were to constitute some infringement accordance with its laws against an agree of the Community rules on competition.

JUDGMENT OF 14.7.1972 — CASE 48/69

question whether the applicant can be applicant draws the conclusion that the considered to have acted within the terri­ decision is vitiated by an infringement of tory of the EEC through its subsidiaries an essential procedural requirement, in established in the Community. He asserts that the Commission did not set up that the subsidiaries did not act on behalf adequate grounds against the objections of ICI as its agents, and that therefore it raised by ICI against its territorial jurisdic­ would be wrong for their actions to be tion. It is further asserted that the decision attributed to ICI. The distinct legal violates both the Treaty and international personality of the subsidiary ought to be law, because the Commission was wrong respected for the law ought not to dis- in holding that it had jurisdiction over

ICI v COMMISSION

acts committed by the applicant outside the contracts were made in England they the Common Market simply because those constitute 'conduct' exclusively in that acts allegedly had effects inside the Com­ country. According to the legal theory of munity. dispatch the contract is made at the place where he who accepts the offer—in this case B — The defendant's view the subsidiary—sends his letter of accept­ ance.

The defendant notes first of all that the (b) The jurisdiction of the Commission expression 'behaviour' or 'conduct' means based on the effects produced inside the something more than the commission of Common Market by certain conduct of acts, in that in certain circumstances in­ the applicant outside the Common action or failure to act can also be 'con­ Market duct'. The contested practices of the ap­ plicant consisted, it is asserted, in the Alternatively, should the Court have fact that the applicant gave orders to its doubts as to the soundness of the line of subsidiaries established within the Com­ reasoning set out above, the defendant munity to increase prices, as appears from argues that it had jurisdiction as regards the two Telex messages (Annexes IV-22 the 'conduct' of ICI outside the Common and III-31 to the statement of defence). Market, on account of the relationship The fact of influencing the free conduct of which this 'conduct' had with the Common the subsidiaries constitutes conduct by the Market, and that this point of view accords applicant within the Common Market, both with the present state of international constituting a concerted practice over law and with the law of the Member which the Commission has jurisdiction. States. The arguments which the applicant draws The defendant points out that the case from the delivery terms set out in the sales only raises the question of the power of contracts which it made with its sub­ authorities amenable to international law sidiaries, and from the independence of to make laws and regulations, and does not the latter in relation to itself in the eyes include the problem of their enforcement of the law do not make any less real the jurisdiction abroad. business reality of the influence which it exercised over its subsidiaries inside (aa) Jurisdiction of the Commission in the Common Market. At the level of international law purely legalistic argument the defendant sets up against the applicant the fact, which The defendant observes that the few Professor Jennings himself admits, that a authoritative judgments of an international CIF contract has more effect on the work­ character deal mainly with the jurisdiction ing of the Common Market than an FOB of States prosecuting offences against contract, and it further states that there is common law. Cartel law is in the main of some doubt about the assertion that since an administrative nature. Furthermore, the

effects of that offence occurred there. This competition should also be read in the constitutes the basis of what is called the context of a reaction against so broad an objective theory of territoriality. This interpretation of enforcement jurisdiction. theory came into existence in relation to As regards the danger of applying too the enforcement of penal laws of the widely the Alcoa principle of legislative traditional kind and in the case of offences jurisdiction, the defendant stresses, first, where the act and the result form an that the jurisdiction of a State cannot be indissoluble whole. On the other hand the based on some vague and indirect relation­ principle whereby the jurisdiction of one ship with its economy, and secondly that a State can extend to acts committed by strict application of the objective territorial foreigners on the territory of another State principle would scarcely be satisfactory in has been propounded in an entirely general determining the jurisdiction of a State on way. the basis of effects which are not indis­ The Alcoa judgment declared that an solubly linked to the conduct complained agreement between six foreign undertak­ of. ings to control their production by quotas The solution consists in finding a reason­ covering in particular their exports to the able compromise between these two ex­ United States was contrary to the Sherman treme positions, taking the special needs Act. That judgment asserted the appli­ of competition law into account. The cability of American competition law necessity for such a compromise was without setting any definite limits as re­ accepted by the Swiss Federal Court in a gards its extra-territorial application. Thus judgment of 21 March 1967 concerning the it was possible to conclude that any application of the Federal Law on cartels agreement made between foreigners abroad to a contract dividing up the market restricting competition on the American together with an exclusive dealing agree­ market could be prohibited by American ment made between French and Swiss anti-trust law, however, indirect, distant undertakings (Official Reports of the or negligible the connexion between the Federal Court 93, II, p. 192 et seq.) The agreement and the said market or its Court opted for a widening of the strict effects on that market. Furthermore, that objective criterion of territoriality, holding

that the jurisdiction of a state is based on European Machine Tool Exhibition (JO the economic repercussions arising within 1969, No L 69, p. 13). the territory of that State by reason of acts or practices taking place abroad, (bb) The question whether the jurisdiction provided that those repercussions have 'a claimed by the Commission accords direct effect on the forces of competition with the internal law of the Member within the territory of Switzerland'. States The search for a compromise should take place on the basis, first, of a criterion In answer to the applicant's argument limiting jurisdiction to direct effects, as according to which in the absence of ex was decided by the Swiss court, and, press provisions in the Treaty establishing secondly, of the principle of protection of it, the Community cannot exercise an essential interests, taking into account the extra-territorial jurisdiction to which the fact that every State is highly interested, Member States are allegedly hostile, the and quite rightly so, in maintaining the defendant points out first of all that even if economic structure of the country and in the Community was claiming to exercise allowing to the forces which go to make up wider rights than those claimed up till that economy the freedom to act. now by the Member States, there is no The defendant asserts that the community reason why this claim should not be legislation on cartels is a matter of public justified, bearing in mind the fact that the policy within the Community and that Community is in the nature of an in therefore the applicant cannot claim that dependent entity in international law. when it sells its products in the Community Although it may be that in the past the it need not take that legislation into ac Member States have not claimed the full

jurisdiction alone. Therefore it is scarcely mic effects that this conduct has produced possible to glean from this any information in the Common Market and of the result as to the attitudes of the states as regards ant disruption of the public policy of the the extra-territorial effect of their competi Community as regards competition law. tion law. To reach this result it is enough to make a The defendant gives a summary of the prudent application of the doctrine of legislation of the Member States on com economic effects, taking into account the petition and of the comments of legal extent of the direct economic effects result writers, and comes to the conclusion that ing from the conduct of the applicant, and the theory of economic effects and the in particular the successive price increases principle of protection of essential interests

JUDGMENT OF 14.7.1972 — CASE 48/69

Court on the subject of the statement of tracts governed by English law, but also reasons, such as it appears in particular the acts which it has undertaken in respect from the Grundig-Consten judgment and of those contracts took place exclusively in according to which in proceedings leading England. to a finding that infringements have oc­ It is not accurate to say that the applicant 's curred, the administration is not required subsidiaries established in the countries of to give reasons for its rejection of the the Common Market simply carry out parties' submissions. Furthermore, the orders. They are not authorized to act defendant observes that the grounds relat­ either in the applicant's name or on its ing to the Commission's jurisdiction are behalf; they have their own sales policy, partially contained in the preamble to which they themselves define, and they the decision, which deals with the effects have complete freedom in fixing sales of the activities of the applicant under­ prices to consumers. taking on competition within the Common Market and on trade between Member (c) Jurisdiction based on the effects produced States. within the Common Market

C — The applicant's Reply (aa) According to international law

messages of 1964 to prove that the ap­ Netherlands Law on competition, Article plicant acted inside the Common Market 39 of which is relied on by the Commission, in 1965 and 1967. makes it clear that the Netherlands Not only are the applicant 's sales con­ government takes the view that other

ICI v COMMISSION

States do not have any prescriptive States claim to exercise seem to imply that jurisdiction to govern the conduct of those States are reproaching the American traders on Netherlands territory. Nor is the authorities for practices to which they reference made by the Commission to the themselves have had recourse or themselves judgment of the Swiss Federal Court any wish to apply. The applicant believes that more convincing, particularly since it is it would be wrong to accept such an impossible to claim that the constituent ambiguous position without evidence. In elements to which that judgment by this connexion it invites the Commission implication refers are present in the Com­ to produce the opinion of the Advisory munity, and also since the judgment does Committee on the draft of the decision at not deal with criminal or quasi-criminal issue, since that opinion reflects the ideas jurisdiction but only with the jurisdiction of the Member States. ratione loci of the civil courts. It is at least certain that the Netherlands

JUDGMENT OF 14.7.1972 — CASE 48/69

'Confidential'. It invites the Court to take Italian companies legislation and the draft this fact into account in considering that Belgian law on companies also take into document. account the particular relationships existing The Commission also points out that the within an industrial concern. Therefore, it memorandum states that even if the illegal may be asserted that the principle of agreement has been concluded outside the vicarious liability is based on the legal territory of the State claiming jurisdiction, systems of the Member States. such jurisdiction may be admitted if the The defendant then stresses that the provi persons against whom proceedings have sions of competition law concern the been initiated have performed acts in business conduct of undertakings to the application of that agreement on the extent to which it has repercussions on the territory of the said State. According to market, and that furthermore, in matters of the Commission, this is just what ICI did, competition, business reality is more im since in application of concerted practices portant than legal form.

company. The defendant quotes the text of part of the business entity constituted by the Telex message of 13 January 1964 sent the group under the control of the parent by the applicant to its Belgian subsidiary. company. Thus while the existence of a It is asserted that this text shows the group-relationship can have favourable purely automatic way in which the order consequences for undertakings as regards given by the applicant to its subsidiary the application of Community competition was to be carried out. law, it must be admitted on the other hand Although, in normal circumstances, a that unfavourable consequences can also subsidiary may decide upon its sales prices follow. in a relatively independent way, it remains a fact nevertheless that the parent com (c) Jurisdiction based on the effects which pany may at any time restrict this in the conduct of the applicant has dependent power of decision, and this was produced within the Common Market what happened in the present case.

ICI v COMMISSION

for an exception to the rule that a State over activities taking place outside it, the may not exercise its sovereignty on the basis of such jurisdiction being the theory territory of another State, the decision of of the connecting link. the International Court of Justice in the Even if one were to approve the line of Lotus case does not forbid a State to reasoning according to which infringe­ exercise its jurisdiction on its own territory ments of competition law should be treated in all cases where the relevant facts have in the same way as infringements of occurred abroad. According to this prin­ ordinary criminal laws and thus to apply ciple States, like the Community, may the theory of effects as a constituent ele­ bring into force provisions applicable on ment, the jurisdiction of the Commission their territory to activities taking place would still have to be recognized. In effect, abroad, without a rule of international law the instruction to raise prices which the being necessary for them to have authority subsidiaries of the applicant established in to do so. the Common Market were required to The existence of special treaties governing carry out constituted an act which directly particular points, to which ICI refers, does produced effects within the Common not in any way undermine the general Market, and that act and its effects were principle set out in the Lotus judgment. constituent elements of one and the same The defendant refutes ICI's assertion that infringement, as in the Lotus case. the only exception to the strict territorial The defendant states that it would not

JUDGMENT OF 14.7.1972 — CASE 48/69

The defendant is of the opinion that the The applicant asserts that Article 4 of the applicant's observations on this subject decision and the recital concerning notifica­ are incomprehensible or, at the very least, tion are not in conformity with the Treaty, devoid of meaning. In the first place, it is or at least infringe essential procedural inaccurate to say that the Commission has requirements, in that they provide that not disputed the applicant's assertion that notification may be effected at the registered the Community may not claim a wider offices of the subsidiaries of the applicant kind of extra-territorial jurisdiction than established in the Common Market, and that of the Member States. On this point because notification was effected to the the defendant refers to page 88 of its German subsidiary. According to the laws statement of defence. and to the practice current in the Member

ICI v COMMISSION

notification is to be effected. Since, as sidiary forwarded the decision which had regards the notification of a decision relat been served on it to the applicant in the ing to competition law, it is appropriate to United Kingdom. The defendant also consider the parent company and the observes that the second paragraph of subsidiary as one entity, service at the Article 191 does not lay down any par registered place of business of the sub ticular form which notification is to take. sidiary takes effect simultaneously as The defendant states that it appears from regards the parent company. the judgment of the Court in Case 8/56 since the Ambassador of the government (ALMA) that where notification is required of the United Kingdom refused to convey during the course of administrative pro the decision through the normal diplomatic ceedings, it is sufficient that the document channels to the British parent company, of which notification is made should by the Commission, taking the view that for due process reach the inner structure of reasons of courtesy in matters of inter the addressee, and the question whether national relations it ought not have re the company concerned did in fact have course to service by post, concluded that notice of the contents of the document is notification through a subsidiary estab

Furthermore, in this case the the interests of the applicant were not decision did indeed come to the notice of prejudiced by this in any way, for it has the addressee. availed itself of its right to bring an applica The applicant is of the opinion that the tion against the decision. contested decision has not yet come into force because it has not been notified in due form. It is true that it did receive a 3. The submissions concerning the admini copy of the decision, but it has not received strative procedure notification within the meaning of Article 191 of the Treaty, according to which The applicant accuses the Commission of notice must be given through official having committed irregularities in respect

JUDGMENT OF 14.7.1972 — CASE 48/69

(a) The notice of objections referred to in to be communicated verbatim to the Article 2 of the latter regulation is parties to administrative proceedings signed by the Director-General for or for the file to be placed at their Competition 'by delegation' although disposal. It is sufficient for the Com­ no such delegation of powers on the mission to communicate the facts, part of the Commission is permitted; knowledge of which is necessary for an understanding of the objections (b) The notice goes further than the deci­ which it has made. For this purpose it sion of 31 May 1967 to which it refers was not necessary to communicate the because it takes into account price communicate the complete text of increases occurring after that decision every memorandum, and, besides, this and furthermore it considers the would have involved a risk of giving possibility of fines under Article 15 of away business secrets. In its decision Regulation No 17, whereas the decision the Commission only took into ac­ refers exclusively to the procedure men­ count the facts with which the proceed­ tioned in Article 3; ings were concerned. (c) The contested decision refers to a certain number of facts which do not The applicant replies that: appear in the notice of objections and — Since the delegation of powers men­ accordingly the applicant has not been tioned by the defendant does not appear in a position to comment on them; from any of the document furnished by the Commission, a notice from the (d) The Commission adopted its decision before ICI had had a chance to make Commission must be signed by the known its observations on the draft Commission; minutes of the hearing. — The fact that it is Article 3 and not Article 15 which is mentioned in the In its defence the defendant replies to the decision to commence proceedings first three points as follows: shows that proceedings under Article 3 (a) In the exercise of the powers delegated alone are thereby commenced; to him by the Commission the member of the Commission with competence — If Article 4 of Regulation No 99 is to for problems concerning competition mean anything, the Commission must authorized the Director-General for set out all the facts on which the notice

common only the principle that there 4. The submission regarding the period of should be a limitation period. However, limitation as regards putting that principle into practice there are important differences. The applicant argues that the contested In view of this disparity the Commission decision is contrary to the Treaty and to reaches the conclusion that it is impossible the provisions adopted in application of it to discern any precise criteria and that and that in any case the reasons on which therefore as regards limitation periods it is based are insufficiently stated because for infringements of the provisions of the Commission, in commencing proceed Article 85 of the Treaty it is the needs of ings as regards the price increase of Community law alone that should be taken January 1964 after a lapse of time in excess into consideration. of any reasonable limit, has not taken Even if it were accepted that each of the account of the effect of limitation. If three successive price increases occurred by account is taken of the rules on periods of reason of a new concerted practice, this limitation applicable in the Member would not mean that the limitation period States as regards infringement of admini had expired because it has been suspended strative law (three years according to on several occasions since 1964 by written paragraph 27 of the 'Gesetz über Ord requests for information made under nungswidrigkeiten' of 24 May 1967 in Article 11 of Regulation No 17 and by Germany and two years according to the investigations carried out by officials of Netherlands penal code) and of the fact the Commission under Article 14 of that the notice of objections was notified Regulation No 17 at the registered place of to the applicant only on 11 December 1967, business of several undertakings, including all events which may have taken place that of the applicant. before December 1964 should remain off The defendant is of the opinion that, taking the record, even if a three-year limitation into account the legal and practical period is applied. However, the applicant difficulties of the question, a limitation takes the view that it would be equitable period of even three years cannot be con to apply the shortest limitation period sidered as appropriate in cases of infringe to be found amongst the Member States. ment of the Community's rules on com The defendant objects that the three petition. uniform increases of January 1964, January The applicant notes that the infringements 1965 and October 1967 are the result of a in question were not committed inten continuous concerted practice which ex

JUDGMENT OF 14.7.1972 — CASE 48/69

The Com it is vitiated by infringement of essential mission's reasoning to the effect that every procedural requirements for want of a case of similar conduct on an oligopolistic sufficient statement of reasons. It observes market entails a strong presumption that that in order for a concerted practice to there is a concerted practice represents a exist it is not enough that undertakings misunderstanding of how an oligopolistic operating on an oligopolistic market con market really works. sciously adopt a parallel attitude. Their The applicant also observes that certain conduct must be the result of a common undertakings whose affairs were initially plan of action and of a mutual will to act investigated by the Commission and whose in accordance with that plan. According conduct on the market was precisely the to the applicant the contested decision does same as that of the undertakings to whom not clearly say that it is based on the idea the contested decision was directed were that there was just one concerted practice not ultimately fined. resulting, contrary to the Treaty, in the Therefore, the arguments drawn by the various price increases already mentioned, Commission from the fact that the in or whether its thinking is that there was creases took place at about the same dates a separate concerted practice in respect and that they were announced in similar of each of the three price increases. The wording constitute evidence against the wording of the decision seems to indicate applicant. It should indeed be noted that

increases. It is not enough to show that a stitute an adequate reason for accusing concerted practice existed; it must be him of having taken part in a concerted proved that ICI took part in it. Further practice. At all events this was certainly more, proof that a concerted practice not the case as regards the applicant. existed in relation to a price increase in For the reasons stated above, the decision country A on date X does not of itself is vitiated by infringement of essential prove the existence of a concerted practice procedural requirements.

This technique is not compatible infringed the Treaty. with the quasi-criminal nature of the proceedings in question. Furthermore, the (b) Admitting, as a pure hypothesis, that

the uniform price increases were in fact in such a market in theory, the applicant due to a concerted practice, the applicant has failed to consider the postulates of argues that it did not have the result of price theory employed in the analysis of determining the prices charged in each parallel conduct. These factors are not particular case, since it is undeniable that applicable in the case of the dyestuffs so far as dyestuffs are concerned prices industry. vary from case to case according to the The defendant observes that the modern

increase. That being so, the applicant being immediately and considerably af argues that even if the existence of the fected and reacting in consequence. In this alleged concerted practices is admitted, latter situation an undertaking only in the conduct of the producers on the creases its prices when it expects that the market would have been identical in the others will also do so. It is mainly with absence of any concertation, and this reference to their marginal costs, taking into means that the said practices did not account their demand curve, that under restrict competition. takings decide whether and to what extent Finally, the applicant expresses disagree they will follow a price increase.

These include: a limited remained intense precisely in the field of number of sellers, high fixed costs, high prices. mobility of demand, homogeneity and The defendant objects that although parallel transparency of prices, ability to adapt conduct alone does not amount to con capacity at short notice, little elasticity of certation, at the other end of the scale the demand compared with supply from all parties concerned need not necessarily have competing undertakings, technical ob drawn up a common plan with a view to stacles to announcements of alterations to adopting a given course of behaviour. It is prices and customer resistance to frequent enough that they let each other know variations in prices.

According In referring to what is expected to happen to several writers, when the products are

diversified the effects of changes in prices various dyes and the extent to which one are much slower and much less foreseeable. can be substituted for another are con­ Furthermore, even in the case of homo­ stantly undergoing rapid change because geneous products, where the prices actually of technical progress. A notable feature of charged usually differ from the prices the market for the products in question publicly quoted, conduct can no longer is a low level of transparency mainly automatically be absolutely parallel. owing to the large number of products The High Authority of me ECSC also involved, the differences between them adopted the principle that homogeneity of and the variety of users (textile, leather, products is not of itself a bar to supposing paper, food, rubber and synthetic materials that a uniform increase in prices made by industries, and manufacturers of paints, several undertakings constitutes a con­ ink, cosmetics and so on). A further reason certed practice within the meaning of is the fact that technical services are Article 65(1) of the ECSC Treaty, as ap­ provided for purchasers, which differ in pears from the fines which it imposed on degree according to the customer. It follows certain steel works by a decision of 4 that there is no single, standard price for February 1969; which has not been con­ each dye since prices are negotiated in­ tested by the parties concerned. dividually with each customer, with con­ If the criteria elaborated by the text-book siderable differences between one purchaser writers concerning conscious parallelism and another. The result of this practice is are applied to the dyestuffs industry it will that the prices calculated for each product be seen that no such parallelism is possible. by each undertaking are not known, in Competition between undertakings on the most cases, to the other undertakings, nor dyestuffs market cannot in any way be even amongst the purchasers themselves, considered as covering similar products; as ICI has itself agreed. Therefore changes this is clear from Report No 100 of the in prices introduced by one manufacturer National Board for Prices and Incomes on are only imperfectly known on the market the dyestuffs industry, dated 21 January or only become known long after the 1969 (Annex V-1 to the defence), from the event.

The market for the products in question As for mobility of demand, according to covers about six thousand different pro­ Professors Bombach and Hill price com­ ducts. Each of the undertakings concerned petition on the market in question is manufactures from 1 500 to 3 500 products particularly intense and purchasers are and these, at least in part, display various inclined to change supplier if more qualities, mixtures and physical forms. The favourable terms are offered to them. differences in strength, shade, fastness and This tendency seems to nave increased solubility are such that when the products during the course of the last few years, of various manufacturers are compared it according to the abovementioned Report is rare to find two dyes that are perfectly of the National Board for Prices and In­ identical. The degree of similarity varies comes, at page 5. This mobility is rendered considerably: it runs from a fairly high easier by the fact that normally purchasers degree of comparability in standard dye- only maintain low stocks and only buy in stuffs to the existence of near monopolies, small quantities. often protected by patents, for products since purcnasers carry low stocks, manu­ having special characteristics. Further­ facturers must themselves maintain large more, the competitive position of the stocks as this makes it easy for them to

ICI v COMMISSION

regards costs. that one undertaking would decide uni­ This necessarily results in differences in laterally on a large general increase in profits. The widest profit margins are ob­ prices without first consulting its com­ tained with speciality products, so long petitors. Supposing that there were uni­ as they remain so. Profits vary in relation lateral, independent increases on the part to the level of prices for the different pro­ of certain undertakings, each of the other ducts on the market. The volume of sales undertakings would have been able, by has an influence on profits: thus for ex­ setting different prices and by taking ac­ ample, ACNA can only begin to make a count of the position occupied on the profit on its production of special dyestuffs market by the various products being if the quantity produced reaches a volume manufactured by it, to attempt to obtain higher than that of present demand in Italy. the best results. In order to prevent com­ Taking into account these characteristics petitors from immediately withdrawing of the market in dyestuffs and of the their increase, each undertaking would at criteria drawn from the theory of oligo­ the most have had to tell the purchasers of polies, one is forced to conclude that it is totally interchangeable products that it was inconceivable for undertakings on the falling in line with this increase as regards dyestuffs market to behave with conscious these products, but this would not have parallelism. been necessary for all the other products Since several of the proaucts in question since, because of the lack of transparency are not interchangeable or only to a small of the market for those products, the extent, an undertaking putting up its various purchasers would not immediately

defence). It stresses the fact certain passages The applicant asserts that, as appears from are the same almost word for word. the description of the market in question As for the rises of 1965 and 1967, the and from the first report of Professors defendant states that the undertakings Bombach and Hill, it can be seen that on were careful not to make the instructions the dyestuffs market competitors cannot read too obviously alike. do otherwise than behave in the same way, In its reply the applicant observes as a and different price rises cannot be intro preliminary point that since the defendant duced without agreement on this point. has produced a single statement of defence The applicant completes the definition of in which it gives one reply to the various an oligopoly given by the defendant by applicants, the result is that as regards adding that no undertaking will take a ICI the Commission has not replied to measure affecting competition on a trans certain of its arguments but has, on the parent market without having previously other hand, devoted a great deal of energy studied the probable reactions of its com to arguments which the applicant has petitors, and that furthermore a market never put forward. becomes transparent when one producer The applicant also requests the court to introduces a general prices increase.

practices and evidence thereof be able to take such an initiative because in The applicant declares itself strongly against doing so it would be infringing Article 85 the idea that the oligopoly situation found of the Treaty. In such a case proof of the on the dyestuffs market is not compatible existence of a concerted practice would with conscious parallelism. As to the reside simply in the fact of a price increase importance that homogeneity of products and of parallel conduct by competitors, can have in assessing whether such conduct and this would be so even if in fact there has occurred, the applicant observes that had not been any agreement between the Professor Shubik, who is quoted by the undertakings.

ICI v COMMISSION

Accord Therefore it is not necessary to show that ing to the defendant, it is enough that there the participants have collaborated or drawn exists conscious and purposeful coopera up a common plan in order to argue that tion between several undertakings, without there exists a concerted practice for the its being necessary that there be a com purposes of Article 85. In the present case mon plan consisting, for example, in prior the Commission has proved that as regards consulation. prices the dyestuffs manufacturers in ques The citations from American case-law tion behaved in a uniform way.

petition decisions being taken independently by various undertakings does not necessarily The applicant emphasizes that the Com lead to similar conduct on the market. mission agrees that because of the wide This is why in an oligopoly also where range of product involved and because of sellers are acting in parallel there is a the different degrees of 'interchangeability' presumption of fact as to the existence of of those products, prices are very flexible a concerted practice, unless the particular and that in fact price lists cannot be structure of the market is such as to create published. Furthermore, the following economic constraints causing the various phenomenon occurs: on the one hand, there undertakings to behave in a uniform way. are constant discussions about prices be That is the position in American case-law. tween suppliers and users considered in As for Community law on competition, a dividually, but, on the other hand, pro concerted practice within the meaning of ducers attempt, as soon as the occasion Article 85 exists every time that the con arises, to adapt the general level of prices in duct of several undertakings on the market force for dyestuffs as a whole to new condi proceeds from a common will on the part tions on the market, doing so by measures

of a completely different kind. Without with each user and for each product. In wishing to reject the Commission's asser this way, each supplier can introduce new tion that certain prices have risen in differences in prices between various pro dependently of any general increase, the ducts. When a producer wishes to alter his applicant argues that since the level of prices policy on a given national market, prices is constantly being eroded, all he waits until a percentage alteration in producers are inclined to seize instantly prices occurs. In this way a price increase upon the slightest occasion for a general does not as such given rise to a restriction

The applicant argues that it appears from As regards the prices of the different all these considerations that the price in dyestuffs, the applicant observes that the creases at issue were legitimately introduced average price of a given dye differs accord in the context of consciously parallel con ing to the country. However, the im duct on the part of the producers, without portance of factors which formerly deter there being any concerted practice. Further mined the differences between average more, these increases did not have any national prices (economic and commercial effect on the competitive relationships factors proper to each country, strength of between the undertakings in question, for the position of a group of buyers and so the strict competition existing on the on) has considerably diminished since the markets remained the same after the in establishment of the European Economic creases were introduced.

Competition proceed to a general alteration of their between manufacturers was limited to such prices. Producers who wish to take ad a point that they found themselves unable vantage of the initiative of a competitor either to continue with the prices in force who alters his prices have to act at once: or to content themselves with smaller this is recognized by the text book writers, price increases. Moreover, purchasers were and in particular by Shubik. Thus pro adversely affected because they were pre ducers are at pains to avoid complicated vented from buying dyestuffs at more price alterations and they proceed to a favourable prices from manufacturers not general change in prices, both because of taking part in the concerted practice. the necessity of acting immediately and in The defendant makes it clear that it is not

applied mechanically, and it should be not met in the market for dyestuffs, ascertained whether the interests of the which are heterogeneous to a large extent, undertakings diverge and whether the struc both because of rapid and constant change ture of the market is wide enough to allow in the degree to which products can be sub the undertakings to transpose those stituted for one-another and because of the divergences into different competitive competitive position of the various dyes.

In the present representatives, no other form of inter- case the right question to ask is what are State trade can exist in the field of dyestuffs, the factors on the market which determine for reasons (also pointed out in the report the degree of elasticity. According to by Bombach and Hill) such as: Shubik, these are, amongst others, the degree of homogeneity of the products, the — The requirements of immediate de transparency of the market and the mobility livery ;

JUDGMENT OF 14.7.1972 — CASE 48/69

There of users. was such a restriction in this case because In the contested decision the Commission the concerted practice in question extended is of the opinion that these reasons taken to the territory of several Member States. together would not allow the possibility of Trade between Member States was par imports between Member States by users ticularly seriously affected because the to be excluded if sufficient differences in the undertakings concerned, taken as a whole, price levels in the various countries were to effect more than 80% of deliveries of arise. dyestuffs in the Community, and because The applicant observes that in respect of they increased their prices in such a way Article 85 of the Treaty the decisive point that direct importations by consumers is not whether it is a priori impossible for from other Member States were thereby there to be an unfavourable effect on inter- prevented to the maximum possible extent. State trade, but whether it is possible to Contrary to what the applicant asserts, say with a sufficient degree of probability there has for many years been significant that the concerted practices are of a trade in dyestuffs between States inside the nature such as to affect, directly or in Community, and the amount of this trade directly, actually or potentially, freedom of and the profits therefrom have been con trade between Member States to such an stantly increasing. The defendant here extent as to affect the achievement of the refers to statistics of the OECD and objectives of the Common Market. The states that it is willing to produce these. applicant emphasizes that there have In its reply, the applicant insists on the fact always been noticeable differences both as that the deliveries which it makes from regards the general level of prices for England to its subsidiaries and to other dyestuffs and as regards the price of each producers established in the Member one of them, but that nevertheless these States of the Common Market are not of differences have never given rise to a such a nature as of themselves to influence movement of goods between States. It is trade between Member States within the possible for a consumer to think of chang meaning of Article 85. ing his supplier for these products if he To the defendant's argument that the in thinks that he is being charged too high a creases have prevented users from import price, but it would not be possible for ing directly from other Member States, the consumers to replace a local supplier by a applicant answers that this allegation is competing supplier established in another not supported by any evidence either in the country. decision or in the statement of defence.

Community.

IV — Procedure 2. The parties may, by agreement between themselves, propose the name of an The procedure took the following course: expert to the Court before 1 October By order of 11 December 1969 the Court 1970. decided that the defendant should lodge separate statements of defence without By order of the same date the Court joined reference to the other cases pending on the Cases 48/69, 49/69, 51/69, 52/69, 53/69, subject of dyestuffs. 54/69, 55/69, 56/69 and 57/69 for the By order of 8 July 1970, the Court, having purposes of the expert's report. regard to the report of the Judge-Rappor By order dated 13 November 1970 the teur and the views of the Advocate-General, Court, having regard to the proposal ordered as follows: made by common agreement between the parties on the names of two experts, in

The normal commercial criteria, for a experts summarized the results of their producer acting independently who report in the following terms: wished to increase his prices to do so otherwise than by a general uniform — Question (a) should be answered in the and public increase, by fixing dif affirmative; according to normal com ferent rates for each product in his mercial criteria a producer of dyestuffs individual relationships with each acting independently could in principle customer? have increased his prices on a variable basis in relation to each customer and (b) For a producer acting indepen

tent? What is the approximate pro for the producer who takes the initiative prortion of speciality dyes compared in putting prices up and for the producer with the total production of dyes of dyestuffs who has to fall in with a for each of the undertakings con general and uniform increase announced cerned? by a competitor. Both as regards the

2 Between 7 and 20 January 1964, a uniform increase of 15% in the prices of most dyes based on aniline, with the exception of certain categories, took place in Italy, the Netherlands, Belgium and Luxembourg and in certain third countries.

3 On 1 January 1965 an identical increase took place in Germany.

4 On the same day almost all producers in all the countries of the Common Market except France introduced a uniform increase of 10% on the prices of dyes and pigments excluded from the increase of 1964.

5 Since the ACNA undertaking did not take part in the increase of 1965 on the Italian market, the other undertakings did not maintain the announced increase of their prices on that market.

6 Towards mid-October 1967, an increase for all dyes was introduced, except in Italy, by almost all producers, amounting to 8% in Germany, the Netherlands, Belgium and Luxembourg, and 12% in France.

ICI v COMMISSION

The submissions concerning the administrative procedure

(a) The complaint relating to the signing of the 'notice of objections' by an official of the Commission

11 The applicant asserts that the notice of objections, for which Article 2 of Regula­ tion No 99/63 of the Commission makes provision, is irregular because it is signed by the Director-General for Competition per procurationem although, according to the applicant, no such delegation of powers on the part of the Commission is permitted.

12 It is established that the Director-General for Competition did no more than sign the notice of objections which the Member of the Commission responsible for problems of competition had previously approved in the exercise of the powers which the Commission had delegated to him.

JUDGMENT OF 14.7.1972 — CASE 48/69

13 Therefore that official did not act pursuant to a delegation of powers but simply signed as a proxy on authority received from the Commissioner responsible.

19 Although the decision to commence proceedings mentions 'especially' Articles 3 and 9(2) and (3) of Regulation No 17, it refers to that regulation as a whole, and thus also to Article 15 concerning fines.

20 Therefore these submissions are unfounded.

(c) The complaints relating to infringements of the rights of the defence

21 The applicant complains that in the contested decision the Commission refers to facts which are not mentioned in the notice of objections and that therefore, it was unable to deal with them during the course of the administrative procedure.

22 In order to protect the rights of the defence during the course of the administrative procedure, it is sufficient that undertakings should be informed of the essential elements of fact on which the objections are based.

ICI v COMMISSION

28 Article 9(4) of Regulation No 99/63 of the Commission provides that the essential content of the statements made by each person heard shall be recorded in minutes which shall be read and approved by him.

29 The purpose of this provision is to assure the persons heard that the minutes contain a true record of the substance of what they have said.

30 The minutes of the hearing of 10 December 1968 were sent to the applicant only on 27 June 1969, about four weeks before the decision was adopted.

31 Although the Commission was dilatory in sending the minutes, the delay of which the applicant complains could only affect the legality of the decision if the record of the applicant's statements contained in the minutes was of doubtful accuracy.

32 Since this is not the case, the abovementioned omission is not of such a nature as to vitiate the contested decision.

33 Accordingly this complaint is unfounded.

37 Article 4 of the contested decision cannot in any circumstances alter that provision.

38 Therefore it cannot prejudice the applicant.

39 Irregularities in the procedure for notification of a decision are extraneous to that measure and cannot therefore invalidate it.

40 In certain circumstances such irregularities may prevent the period within which an application must be lodged from starting to run.

41 The last paragraph of Article 173 of the Treaty provides that the period for in­ stituting proceedings for the annulment of individual measures of the Commission starts to run from the date of notification of the decision to the applicant or, in the absence thereof, from the day on which it came to the knowledge of the latter.

42 In the present case it is established that the applicant has had full knowledge of the text of the decision and that it has exercised its right to institute proceedings within the prescribed period.

47 In order to fulfil their function, limitation periods must be fixed in advance.

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

49 Although, in the absence of any provisions on this matter, the fundamental require­ ment of legal certainty has the effect of preventing the Commission from in­ definitely delaying the exercise of its power to impose fines, its conduct in the present case cannot be regarded as constituting a bar to the exercise of that power as regards participation in the concerted practices of 1964 and 1965.

so Therefore the submission is unfounded.

Substantive submission as to the existence of concerted practices

Arguments of the parties

56 It is argued that it is enough that they should previously have informed each other of the attitude which they intended to adopt so that each could regulate his con­ duct safe in the knowledge that his competitors would act in the same way.

57 The applicant argues that the contested decision is based on an inadequate analysis of the market in the products in question and on an erroneous understanding of the concept of a concerted practice, which is wrongly identified by the decision with the conscious parallelism of members of an oligopoly, whereas such conduct is due to independent decisions adopted by each undertaking, determined by objective business needs, and in particular by the need to increase the unsatis­ factorily low rate of profit on the production of dyestuffs.

58 It is argued that in fact the prices of the products in question displayed a constant tendency to fall because of lively competition between producers which is typical of the market in those products, not only as regards the quality of the products and technical assistance to customers, but also as regards prices, particularly the large reductions granted individually to the principal purchasers.

59 The fact that the rates of increase were identical was the result, it is said, of the existence of the 'price-leadership. of one undertaking.

60 It is also argued that the large number of dyestuffs produced by each undertaking makes it impossible in practice to raise prices product by product.

61 A further argument is that different price increases for interchangeable products either could not produce economically significant results because of the limited level of stocks and of the time necessary for adapting plant to appreciably increased demand, or would lead to a ruinous price war.

66 Although parallel behaviour may not by itself be identified with a concerted practice, it may however amount to strong evidence of such a practice if it leads to conditions of competition which do not correspond to the normal conditions of the market, having regard to the nature of the products, the size and number of the undertakings, and the volume of the said market.

67 This is especially the case if the parallel conduct is such as to enable those con­ cerned to attempt to stabilize prices at a level different from that to which com­ petition would have led, and to consolidate established positions to the detriment of effective freedom of movement of the products in the Common Market and of the freedom of consumers to choose their suppliers.

68 Therefore the question whether there was a concerted action in this case can only be correctly determined if the evidence upon which the contested decision is based is considered, not in isolation, but as a whole, account being taken of the specific features of the market in the products in question.

The characteristic features of the market in dyestuffs

69 The market in dyestuffs is characterized by the fact that 80% of the market is supplied by about ten producers, very large ones in the main, which often manufac­ ture these products together with other chemical products or pharmaceutical specialities.

70 The production patterns and therefore the cost structures of these manufacturers are very different, and this makes it difficult to ascertain competing manufacturers' costs.

76 In the territory of the Community, the market in dyestuffs in fact consists of five separate national markets with different price levels which cannot be explained by differences in costs and charges affecting producers in those countries.

77 Thus the establishment of the Common Market would not appear to have had any effect on this situation, since the differences between national price levels have scarcely decreased.

78 On the contrary, it is clear that each of the national markets has the characteristics of an oligopoly and that in most of them price levels are established under the influence of a 'priceleader', who in some cases is the largest producer in the country concerned, and in other cases is a producer in another Member States or a third State, acting through a subsidiary.

79 According to the experts this dividing-up of the market is due to the need to supply local technical assistance to users and to ensure immediate delivery, generally in small quantities, since, apart from exceptional cases, producers supply their subsidiaries established in the different Member States and maintain a network of

agents and depots to ensure that user undertakings receive specific assistance and supplies.

so It appears from the data produced during the course of the proceedings that even in cases where a producer establishes direct contact with an important user in another Member State, prices are usually fixed in relation to the place where the user is established and tend to follow the level of prices on the national market.

84 The increase of 15 % in the prices of most aniline dyes in Germany on 1 January 1965 was in reality nothing more than the extension to another national market of the increase applied in January 1964 in Italy, the Netherlands, Belgium and Luxembourg.

85 The increase in the prices of certain dyes and pigments introduced on 1 January 1965 in all the Member States, except France, applied to all the products which had been excluded from the first increase.

86 The reason why the price increase of 8% introduced in the autumn of 1967 was raised to 12% for France was that there was a wish to make up for the increases of 1964 and 1965 in which that market had not taken part because of the price control system.

87 Therefore the three increases cannot be isolated one from another, even though they did not take place under identical conditions.

88 In 1964 all the undertakings in question announced their increases and immediately put them into effect, the initiative coming from Ciba-Italy which, on 7 January 1964, following instructions from Ciba-Switzerland, announced and immediately introduced an increase of 15%. This initiative was followed by the other producers on the Italian market within two or three days.

89 On 9 January ICI Holland took the initiative in introducing the same increase in the Netherlands, whilst on the same day Bayer took the same initiative on the Belgo-Luxembourg market.

95 Otherwise the increase was general, was simultaneously introduced by all the producers mentioned in the contested decision, and was applied without any differences concerning the range of products.

96 As regards the increase of 1967, during a meeting held at Basel on 19 August 1967, which was attended by all the producers mentioned in the contested decision except ACNA, the Geigy undertaking announced its intention to increase its selling prices by 8 % with effect from 16 October 1967.

97 On that same occasion the representatives of Bayer and Francolor stated that their undertakings were also considering an increase.

98 From mid-September all the undertakings mentioned in the contested decision announced a price increase of 8%, raised to 12% for France, to take effect on 16 October in all the countries except Italy, where ACNA again refused to in­ crease its prices, although it was willing to follow the movement in prices on two other markets, albeit on dates other than 16 October.

99 Viewed as a whole, the three consecutive increases reveal progressive cooperation between the undertakings concerned.

100 In fact, after the experience of 1964, when the announcement of the increases and their application coincided, although with minor differences as regards the range of products affected, the increases of 1965 and 1967 indicate a different mode of operation. Here, the undertakings taking the initiative, BASF and Geigy re­ spectively, announced their intentions of making an increase some time in advance, which allowed the undertakings to observe each other's reactions on the different markets, and to adapt themselves accordingly.

106 These producers are sufficiently powerful and numerous to create a considerable risk that in times of rising prices some of them might not follow the general movement but might instead try to increase their share of the market by behaving in an individual way.

107 Furthermore, the dividing-up of the Common Market into five national markets with different price levels and structures makes it improbable that a spontaneous and equal price increase would occur on all the national markets.

108 Although a general, spontaneous increase on each of the national markets is just conceivable, these increases might be expected to differ according to the particular characteristics of the different national markets.

109 Therefore, although parallel conduct in respect of prices may well have been an attractive and risk-free objective for the undertakings concerned, it is hardly conceivable that the same action could be taken spontaneously at the same time, on the same national markets and for the same range of products.

no Nor is it any more plausible that the increases of January 1964, introduced on the Italian market and copied on the Netherlands and Belgo-Luxembourg markets, which have little in common with each other either as regards the level of prices or the pattern of competition, could have been brought into effect within a period of two to three days without prior concertation.

JUDGMENT OF 14.7.1972 — CASE 48/69

117 By reason of the limited elasticity of the market in dyestuffs, resulting from factors such as the lack of transparency with regard to prices, the interdependence of the different dyestuffs of each producer for the purpose of building up the range of products used by each consumer, the relatively low proportion of the cost of the final product of the user undertaking represented by the prices of these products, the fact that it is useful for users to have a local supplier and the influence of transport costs, the need to avoid any action which might artificially reduce the opportunities for interpenetration of the various national markets at the consumer level becomes particularly important on the market in the products in question.

118 Although every producer is free to change his prices, taking into account in so doing the present or foreseeable conduct of his competitors, nevertheless it is contrary to the rules on competition contained in the Treaty for a producer to cooperate with his competitors, in any way whatsoever, in order to determine a coordinated course of action relating to a price increase and to ensure its success

ICI v COMMISSION

by prior elimination of all uncertainty as to each other's conduct regarding the essential elements of that action, such as the amount, subject-matter, date and place of the increases.

119 In these circumstances and taking into account the nature of the market in the products in question, the conduct of the applicant, in conjunction with other undertakings against which proceedings have been taken, was designed to replace the risks of competition and the hazards of competitors' spontaneous reactions by cooperation constituting a concerted practice prohibited by Article 85(1) of the Treaty.

The jurisdiction of the Commission

125 The applicant, whose registered office is outside the Community, argues that the Commission is not empowered to impose fines on it by reason merely of the effects produced in the Common Market by actions which it is alleged to have taken out­ side the Community.

JUDGMENT OF 14.7.1972 — CASE 48/69

126 Since a concerted practice is involved, it is first necessary to ascertain whether the conduct of the applicant has had effects within the Common Market.

127 It appears from what has already been said that the increases at issue were put into effect within the Common Market and concerned competition between producers operating within it.

128 Therefore the actions for which the fine at issue has been imposed constitute practices carried on directly within the Common Market.

135 In view of the unity of the group thus formed, the actions of the subsidiaries may in certain circumstances be attributed to the parent company.

136 It is well-known that at the time the applicant held all or at any rate the majority of the shares in those subsidiaries.

137 The applicant was able to exercise decisive influence over the policy of the sub­ sidiaries as regards selling prices in the Common Market and in fact used this power upon the occasion of the three price increases in question.

ICI v COMMISSION

138 In effect the Telex messages relating to the 1964 increase, which the applicant sent to its subsidiaries in the Common Market, gave the addressees orders as to the prices which they were to charge and the other conditions of sale which they were to apply in dealing with their customers.

139 In the absence of evidence to the contrary, it must be assumed that on the occasion of the increases of 1965 and 1967 the applicant acted in a similar fashion in its relations with its subsidiaries established in the Common Market.

146 Therefore this objection is unfounded.

The fine

147 In view of the frequency and extent of the applicant's participation in the prohibited practices, and taking into account the consequences thereof in relation to the creation of a common market in the products in question, the amount of the fine is appropriate to the gravity of the infringement of the Community rules on com­ petition.

JUDGMENT OF 14.7.1972 — CASE 48/69

Costs

148 Under Article 69(2) of the Rules of Procedure the unsuccessful party shall be ordered to pay the costs.

1. Dismisses the application;

2. Orders the applicant to bear the costs.

Lecourt Mertens de Wilmars Kutscher Donner Trabucchi Monaco Pescatore

Delivered in open court in Luxembourg on 14 July 1972.

A. Van Houtte R. Lecourt

Registrar President of the First Chamber