C-49/69

BASF v COMMISSION

In Case 49/69

Badische Alinin- und Soda-Fabrik AG, having its registered office at Ludwigs- hafen (Rhine), represented by its board of management, assisted by Professor W. von Simson, with an address for service in Luxembourg at the office of E. Graf von Carmer, Counsellor (First Class) at the German Embassy, 20-22 rue de l'Arsenal, applicant,

v

Commission of the European Communities, represented by its Legal Advisers, J. Thiesing, G. Marchesini and J. Griesmar, acting as Agents, assisted by Professor W. Hefermehl, with an address for service in Luxembourg at the Chambers of its Legal, É. Reuter, 4 boulevard Royal, defendant,

Application for the annulment of the Commission Decision of 24 July 1969 published in the Journal Officiel No L 195 of 7 August 1969, p. 11 et seq., relating to proceedings under Article 85 of the EEC Treaty (IV/26.267—Dyestuffs),

I — Statement of the facts since the beginning of 1964 in the countries of the Community were made by mutual The facts may be summarized as follows: agreement between the undertakings con­ On the basis of information supplied by cerned. trade associations of the various industries As a result of these inquiries the Com­ using dyestuffs, the Commission made mission found that three uniform price inquiries as to whether increases in prices increases had taken place. An increase of for these products which had occurred 15 % affecting most aniline dyes took place

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the price increases had been introduced by that fines of 50 000 u.a. be paid by: the following producers, and by their subsidiaries or representatives: — Cassella Farbwerke Mainkur AG, — Farbenfabriken Bayer AG, — Azienda Colori Nazionali Affini S.p.A. — Farbwerke Hoechst AG, (ACNA), Milan (Italy), — Société Française des Matières Colo­ — Industria Piemontese dei Colon di rantes SA, Anilina S.p.A. (IPCA), Milan (Italy), — Ciba SA, — Fabbrica Lombarda, Colori Anilina — J. R. Geigy SA, S.p.A. (FLCA), Milan (Italy), — Sandoz SA, — Industria Electro-Chimica Bergamasca, — Imperial Chemical Industries Ltd., Bergamo (Italy), — Farbenfabriken Bayer AG, Leverkusen and that a fine of 40 000 u.a. be paid by (Federal Republic of Germany), Azienda Colori Nazionali Affini S.p.A.

BASF v COMMISSION

The applicant observes that the measure 2. Complaint concerning the failure to whereby the administrative procedure was make information available commenced on 31 May 1967 only refers to Article 3 of Regulation No 17 and does The applicant complains that the Com­ not mention Article 15. There was no mission failed to notify it of the new con­ later decision in which the Commission clusions which it had reached after the stated that it intended to commence inquiries carried out during the summer of proceedings with a view to imposing a 1968 on the increase in prices of dyestuffs. fine. Therefore an infringement of an Therefore the applicant was not informed essential procedural requirement took place of the precise facts on which the Com­ in the form of a disregard of the obligation mission was to base its assessment. In to hear the interested party. Indeed the particular the applicant cannot defend applicant, thinking that a procedure under itself against the Commission's assertion Article 3 of Regulation No 17 was involved, concerning the identical nature of the never had the opportunity to put forward content of the instructions given to the its opinion on the question of the fine. subsidiaries of the various parties con­ The defendant replies that its decision of cerned. 31 May 1967 to commence the procedure The defendant replies that the information refers 'especially' to Article 3 of Regula­ given to the applicant in the notice of tion No 17, which means that the decision objections was sufficient to acquaint it was taken in application of Regulation with the facts necessary for determining No 17 as a whole. The purpose of the the objections pur forward against it.

Therefore it was not necessary to com example, the simultaneous announcement municate the full text of every memoran of one of the price increases) only apply dum sent by the various undertakings to to the first of the alleged infringements. their subsidiaries. The essential point here However, the Commission implies that the is that the contested decision was based reasons given in relation to the first in solely on facts dealt with during the fringement also apply to the two succeeding procedure. increases. Furthermore, as regards the third increase, the Commission makes use of a decision of the Bundeskartellamt as a

Further The defendant replies that the provision of more, the fact that the decision deals with Article 9(2), which states that under arguments which were not put forward by takings may be represented by a duly all the undertakings concerned cannot be authorized agent appointed from their considered to be a fault rendering that permanent staff or by legal representatives measure illegal. or representatives authorized by their con In its reply, the applicant observes that the stitution, is justified by the fact that as a contested decision accuses the applicant general rule those persons are the best of having obtained information from other

It also refers to its remarks in relation to the submission con- 4. Complaint concerning the statement of concerning infringement of the Treaty, reasons for the contested decision relating to the impossibility of explaining the increase in question other than by The applicant asserts that certain findings prior concertation amongst the under contained in the contested decision (for takings concerned.

B — Substantive submissions state of affairs is, in the applicant's view, to adopt a policy intended to prevent the formation of oligopolistic markets. But 1. Infringement of the Treaty or of any rule concerning its application once oligopolies have been accepted, the structural consequences cannot be avoided. The applicant claims that even if the facts The applicant states that before each in set out by the Commision were accurate, crease the level of prices on the market had the conclusions which it draws from them, dropped to the lowest point at which there and which are decisive in relation to the was any return, and that therefore there applicability of Article 85 of the Treaty, was no need for an agreement between the are untenable. It must be shown that the producers for them to expect other com object or effect of the price increases was petitors to fall into line with an increase to prevent competition. The decision is in prices decided upon by a sizeable com based throughout, to the extent to which petitor. Acceptance of such a decision has it deals with the price increases and not to take place immediately because other with the circumstances in which they took wise customers will continue for some place, on the assertion that the increases months to obtain their supplies from the cannot be explained solely by the oligopo undertaking which is still charging the listic structure of the market. old prices, while its competitors will be The applicant argues that on the contrary satisfying the remaining demand at the its conduct was the natural consequence higher prices. This means that it would be of the structure of the market and that it in the best interests of a manufacturer in consisted in exercising a right of choice of the situation described above not to allow which it cannot be deprived. The danger consumers to buy all his output available that prices might be formed otherwise than for sale in the immediate future at the by market forces would only exist if the old prices. undertakings which together make up the The applicant refers to the graph appearing oligopolistic market excluded all price in Annex II to the application, which competition as between themselves or on shows the positions of various price and the part of third parties. When faced with a cost indexes and makes it clear that in price increase introduced by a competitor, executing the price increases of 1964 and and undertaking can, it is argued, either 1965 the applicant did not even manage to try to increase its share of the market, or regain its price-level of 1958.

If oligopolis take into consideration the structure of tic markets display undesirable elements that market and the implications of that from the point of view of competition structure as regards competition, in policy, the only means of countering this accordance with what was stated by the

Court in its judgment in Case 13/60. The undertakings, technical obstacles to an Commission wholly neglected to specify nouncements of alterations to prices and the markets on which the supposed in customer resistance to frequent variations fringement took place and the necessary in prices. Another condition should also extent of competition. The absence of be added: it is that the market should be any discussion and consideration of these in a period of stagnation such that the facts should be deemed a violation of the interdependence of the sellers is not affected Treaty. by notable increases in demand. The defendant maintains that the price In America both the text-book writers and increases in question cannot be explained the case-law attribute a leading role to by the oligopolistic structure of the homogeneity of products in deciding if

If the criteria elaborated by the text-book fected and reacting in consequence. In this writers concerning conscious parallelism latter situation an undertaking only in are applied to the dyestuffs industry it will creases its prices when it expects that the be seen that no such parallelism is possible. others will also do so. It is mainly with Competition between undertakings on the reference to their marginal costs, taking dyestuffs market cannot in any way be into account their demand curve, that considered as covering similar products; undertakings decide whether and to what this is clear from Report No 100 of the extent they will follow a price increase. National Board for Prices and Incomes on

ducts. Each of the undertakings concerned pared with supply from all competing manufactures from 1 500 to 3 500 products

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 have increased solubility are such that when the products during the course of the last few years, of various manufacturers are compared it is according to the above-mentioned Report rare to find two dyes that are perfectly of the National Board for Prices and identical.

A notable feature of the constantly trying to increase their share of market for the products in question is a the market, they find it necessary to build low level of transparency mainly owing to up their stocks in such a way as to be able the large number of products involved, to take advantage of all chances of selling the differences between them and the their products. It is relatively easy for variety of users (textile, leather, paper, them to adapt themselves in the medium food, rubber and synthetic materials term by changes in the production pro industries, and manufacturers of prints, gramme because the production plant can inks, cosmetics and so on). A further be used for many different purposes. reason is the fact that technical services are In view of the particular conditions on the provided for purchasers, which differ in market, the situation of manufacturers degree according to the customer. It differs from one undertaking to another. follows that there is no single, standard It follows that some undertakings have price for each dye since the prices are much more success than others in obtaining negotiated individually with each customer, the prices at which they aim to sell their with considerable differences between one products. purchaser and another. The result of this The respective rates of expansion and the practice is that the prices calculated for fluctuations in these rates are different each product by each undertaking are not for undertakings in the various Member known, in most cases, to the other under

Profits vary in relation As for mobility of demand, according to to the level of prices for the different Professors Bombach and Hill price com products on the market. The volume of petition on the market in question is sales has an influence on profits: thus for particularly intense and purchasers are example, ACNA can only begin to make a

profit on its production of special dyestuffs manufactured by it, to attempt to obtain if the quantity produced reaches a volume the best results. In order to prevent com higher than that of present demand in Italy. petitors from immediately withdrawing Taking into account these characteristics their increase, each undertaking would at of the market in dyestuffs and of the the most have had to tell the purchasers of criteria drawn from the theory of totally interchangeable products that it was oligopolies, one is forced to conclude that falling in line with this increase as regards it is inconceivable for undertakings on the these products, but this would not have dyestuffs market to behave with conscious been necessary for all the other products parallelism. since, because of the lack of transparency since several of the products in question of the market for those products, the are not interchangeable or only to a small various purchasers would not immediately extent, an undertaking putting up its have been able to react to the new prices. prices cannot assume that its competitors The defendant also refers to the statement will follow suit, at least for the products in contained in the contested decision to the

In nearly without prior concertation, would not be all the States, a different undertaking was possible for interchangeable products. The the first to announce the increase, and the example of the ACNA company, which for applicant attributes this to the position of the most part manufactures standard 'price-leader' that these undertakings oc types and which, after eight of the ten cupied on the market in question. The undertakings in question had announced applicant, it is said, played the role of a general increase in prices of pigments and price-leader in Germany for the increase of had begun to apply this increase as from January 1965. This being so, there is, in the 1 January 1965, did not fall in line with Commission's view, a contradiction in the this increase in prices, so that thereafter reasoning put forward by the applicant, the other undertakings withdraw their according to which each national price- increases shows, in the Commission's view, leader felt, on the one hand, strong enough that even in the case of products towards to be the first to increase prices on its which sellers react in a sensitive way, own national market and, on the other interests are so varied on the dyestuffs hand, too weak to fix prices at a level market that parallel action does not take corresponding to its own interests.

BASF v COMMISSION

word. As for the rises of 1965 and 1967, from the fact that the percentage increase the defendant asserts that the under was identical for all the products, the takings were careful not to make the applicant replies that it had already taken instructions read too obviously alike. into account existing differences for these It is argued that the requirement that there various products before the increase. must be an adverse effect on trade between These differences were not as great as the Member States is satisfied in this case Commission supposes.

petition. The contested decision is based in its favour in the fact that its conduct on exclusively on the supposition that the the market can be explained otherwise than price increase put into effect by the ap on the ground that it participated in con plicant can only be explained by the ex certation with its competitors; the Kam istence of prior concertation with other mergericht so held as regards the 1967 undertakings, The similarity regarding the price increase. dates and wording of the instructions sent As for the price increases of 1964, the to the representatives and subsidiaries only Bundeskartellamt put an end to the concern the first increase, and in any proceedings before it because it had be event this does not constitute a conclusive come convinced that no infringement of fact because the text of instructions of this the law on restrictions on competition had kind is practically stereotyped.

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in conjunction with the structural condi of competition because the products do tions of the market in dyestuffs. The not compete with each other. Such an applicant asserts that it is irrelevant argument could have some relevance as whether or not all the characteristics of a regards pricing policy, but the Com stagnant market, on which there is no mission has accepted that it has no power possibility of competition, are to be found in this matter. in the present case. In order for it to be Should the Commission not agree with the said that the conduct at issue can be applicant's opinion as to the structure of explained simply by the structure of the the dyestuffs market, and should the Court market certain conditions set out by Shubik feel the need for further information, the suffice: a small number of sellers, high fixed applicant proposes the appointment of costs, high costs of entering and leaving Friedrich A. von Hayek, Professor Emeri the market, interchangeability of products. tus at the Universities of Chicago and The conduct of the ACNA company shows, Freiburg im Breisgau, as expert. in the applicant's view, that there was no The defendant, in its rejoinder, adds to its prior concertation as regards the increase description of the conditions on the market

The applicant observes that the Commis many different products, have large sion accepts the proposition that a price amounts of capital at their disposal and increase can only take place on the market have a precise knowledge of market condi in question if the increase effected by one tions and competition. undertaking is accompanied by a corre The defendant asserts that the applicant's sponding increase on the part of the other line of reasoning to the effect that the sellers. This being so it is impossible to general, public and parallel price increases accept the Commission's argument that an in question constitute the only possible increase effected by a single undertaking prices policy on the dyestuffs market is can only succeed on such a market if that refuted by the real course of events as undertaking has previously concerted with regards price competition on that market. the others, for if this were the case price Referring to the applicant's argument increase would never be possible on that according to which the interdependence of market without infringing the Treaty. the undertakings' reactions was such that In reality, on a market such as that in they could predict competitors' reactions question, which is marked by a high degree with sufficient certainty, the defendant of interdependence as to conduct, each observes that the applicant does not ex undertaking can calculate how its com plain why the situation on the dyestuffs petitors are likely to act with a fairly high market could, in the years 1964, 1965 and

BASF v COMMISSION

its competitors would be the same. The prices as such, as was made clear by Mr conduct of ACNA, which in January 1965 Jaune, a Director, at the hearing of 10 did not fall in with the general increase December 1968. announced by the other producers, shows that although the degree of interdependence 3. The complaint relating to the period of of the reactions of the sellers is very high limitation for the standard dyes produced by ACNA, this does not mean that there is a similarity The applicant argues, in the alternative, of interests or that policies on prices are that the conduct held against it which identical. took place during 1964 and 1965 should no As regards the other matters, the defendant longer be taken into consideration by asserts that the applicant's line of reasoning reason of the period of limitation. concerning the economic theory of oligo The defendant objects that the three polies is not very profound and displays uniform increases of January 1964, January ambiguities. 1965 and October 1967 are the result of a Finally, the defendant charges the applicant continuous concerted practice which ex with having replaced the concept of tended over the whole period from January elasticity of demand by the concept of 1964 to October 1967.

2. The submission concerning misuse of munity law on a uniform basis. The laws of the Member States have in powers common only the principle that there The applicant complains that the Com should be a limitation period. However, mission wished to influence the pricing as regards putting that principle into policy of the undertakings by means of practice there are important differences. provisions concerning competition policy, In view of this disparity the Commission whereas the Treaty does not make provi reaches the conclusion that it is impossible sion for a policy on prices on the part of to discern any precise criteria and that

JUDGMENT OF 14.7.1972 — CASE 49/69

4. The complaint concerning the fine (a) Taking into account the charac Even if the facts alleged by the Commission teristics of the dyestuffs market in were accurate and even if they justified the European Economic Com the conclusions which it draws from them, munity, especially during the period the applicant argues that the Commission 1964 to 1967, would it have been a could have achieved its objective by apply practical possibility, according to ing Article 3 of Regulation No 17, without normal commercial criteria, for a its being necessary to impose fines.

the amount of the fine. It is of the opinion dently, what advantages and dis that for the purposes of Article 15(2) of advantages result from effecting a Regulation No 17 'the gravity of the in general and linear increase in prices, fringement' must mean not so much the as compared with an increase extent of the effects of the infringement as differing in respect of each cus its degree of blameworthiness. Yet the tomer, product and market?

BASF v COMMISSION

2. The parties, by agreement between increase announced by a competitor. themselves, propose the name of an Both as regards the producer who expert to the Court before 1 October determines the price and as regards 1970. those who follow him, the conclusion to be drawn is that during the period By order of the same date the Court in question the advantages to be ob tained from a general and uniform joined Cases 48/69, 49/69, 51/69, 52/69, 53/69, 54/69, 55/69, 56/69 and 57/69 for increase in prices were greater than the

The practical purposes, it can be said that experts summarized the results of their the proportion that they represent of the total production of dyestuffs in report in the following terms: each of the undertakings concerned is very low. However, the results of the — Question (a) should be answered in the study show that the distinction is of affirmative; according to normal com but little use in assessing the facts mercial criteria a producer of dyestuffs envisaged. acting independently could in principle have increased his prices on a variable Observations on the experts' report were basis in relation to each customer and lodged at the Court Registry on 3 July each product. 1971 by the applicant and on 21 June 1971 by the defendant. — An affirmative answer may also be On 28 September 1971 the experts named given to the question whether it would by the Court took the oath in accordance have been a practical possibility for with Article 49(b) of the Rules of such a producer to increase his prices Procedure. on a variable basis in relation to each The parties presented oral argument at the customer and product, subject to the hearings on 28, 29 and 30 September 1971 following proviso: the average increase and on 2 May 1972. in prices that a producer acting in During the course of the procedure Mr dependently could have achieved by Advocate-General Mayras replaced Mr means of a policy of differentiated prices Advocate-General Dutheillet de Lamothe, in a given field would probably have deceased. He delivered his opinion at the been lower than the average increase in hearing on 2 May 1972.

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.

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.

2 By a decision of 31 May 1967 the Commission commenced proceedings under Article 3 of Regulation No 17/62 on its own initiative concerning these increases for presumed infringement of Article 85(1) of the EEC Treaty against seventeen producers of dyestuffs established within and outside the Common Market, and against numerous subsidiaries and representatives of those undertakings.

By a decision of 24 July 1969, the Commission found that the increases were the result of concerted practices, which infringed Article 85(1) of the Treaty, between the undertakings

— Badische Anilin- und Soda-Fabrik AG (BASF), Ludwigshafen, — Cassella Farbwerke Mainkur AG. Frankfurt am Main. — Farbenfabriken Bayer AG, Leverkusen, — Farbwerke Hoechst AG, Frankfurt am Main, — Société Française des Matières Colorantes SA, Paris, — Azienda Colori Nazionali Affini S.p.A. (ACNA), Milan, — Ciba SA, Basel, — J. R. Geigy SA, Basel, — Sandoz SA, Basel, and — Imperial Chemical Industries Ltd., (ICI), Manchester.

BASF v COMMISSION

Moreover, the text of that decision, as communicated to the applicant, referred simply to Article 3(3) of Regulation No 17/62, and the adverb 'especially' does not appear in that text.

5 It is the notice of objections alone and not the decision to commence proceedings which is the measure stating the final attitude of the Commission concerning undertakings against which proceedings for infringement of the rules on competi­ tion have been commenced.

The notice of objections sent to the applicant expressly referred to Article 15(2) of Regulation No 17 relating to fines.

6 This submission is therefore unfounded.

(b) The complaint relating to a failure to make information available

7 The applicant complains that the Commission infringed the rights of the defence in failing to inform the applicant of the fresh conclusions which it had reached after the inquiries carried out in 1968 into the price increases for dyestuffs, and into the text of the instructions sent to their subsidiaries by the various under­ takings concerned.

(c) The complaint concerning the hearing of the undertakings concerned

10 The applicant complains that the Commission refused to allow it to be represented at the hearing of the parties concerned by its lawyer.

It is argued that if that refusal is in conformity with Article 9(2) of Regulation No 99/63, then that provision is contrary to the Treaty because the administration may not exercise control over the undertakings' method of choosing their re­ presentatives in a procedure which may lead to the imposition of a fine.

11 Article 9(2) of Regulation No 99/63, which provides that undertakings may be represented only by a duly authorized agent appointed from among their permanent staff or by legal representatives or representatives authorized by their constitution, is justified by the fact that as a general rule those persons are the best informed as to the facts and technical or economic aspects of their undertakings' actions which may be of decisive importance in applying the rules on competition.

The hearing of the parties concerned cannot serve any useful purpose if those persons do not take part.

12 The complaint as to illegality put forward by the applicant is therefore unfounded.

15 This submission is therefore unfounded.

The submission as to the limitation period

16 The applicant argues that the contested decision is contrary to the Treaty and to the rules relating to its application because the Commission, in commencing on 31 May 1967 proceedings concerning the price increases of 1964 and 1965, exceeded any reasonable limitation period.

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

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

The fixing of their duration and the detailed rules for their application comes with­ in the powers of the Community legislature.

20 That decision states that prima facie evidence that the increases of 1964, 1965 and 1967 took place as the result of concerted action is to be found in the facts that the rates introduced for each increase by the different producers in each country were the same, that with very rare exceptions the same dyestuffs were involved, and that the increases were put into effect over only a very short period, if not actually on the same date.

It is contended that these increases cannot be explained simply by the oligopolistic character of the structure of the market.

It is said to be unrealistic to suppose that without previous concertation the principal producers supplying the Common Market could have increased their prices on several occasions by identical percentages at practically the same moment for one and the same important range of products including speciality products for which there are few, if any, substitutes, and that they should have done so in a number of countries where conditions on the dyestuffs market are different.

The Commission has argued before the Court that the interested parties need not necessarily have drawn up a common plan with a view to adopting a certain course of behaviour for it to be said that there has been concertation.

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.

21 The applicant argues that even if the facts set out by the Commission were accurate, the conclusions which it draws from them are inaccurate and are based on the

The concept of a concerted practice

22 Article 85 draws a distinction between the concept of 'concerted practices' and that of 'agreements between undertakings' or of 'decisions by associations of undertakings'; the object is to bring within the prohibition of that article a form of coordination between undertakings which, without having reached the stage where an agreement properly so-called has been concluded, knowingly substitutes practical cooperation between them for the risks of competition.

By its very nature, then, a concerted practice does not have all the elements of a contract but may inter alia arise out of coordination which becomes apparent from the behaviour of the participants.

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.

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.

23 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.

As regards speciality products, the market tends in certain cases towards an oligopolistic situation.

Since the price of dyestuffs forms a relatively small part of the price of the final product of the user undertaking, there is little elasticity of demand for dyestuffs on the market as a whole and this encourages price increases in the short term.

Another factor is that the total demand for dyestuffs is constantly increasing, and this tends to induce producers to adopt a policy enabling them to take advan­ tage of this increase.

25 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.

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.

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 'price-leader', who in some cases is the largest producer in the coun­ try concerned, and in other cases is a producer in another Member State or a third State, acting through a subsidiary.

The first announcement was made by BASF, on 14 October 1964, followed by an announcement by Bayer on 30 October and by Cassella on 5 November.

These increases were simultaneously applied on 1 January 1965 on all the markets except for the French market because of the price freeze in that State, and the Italian market where, as a result of the refusal by the principal Italian producer, ACNA, to increase its prices on the said market, the other producers also decided not to increase theirs.

ACNA also refrained from putting its prices up by 10% on the German market.

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.

29 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.

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

26 The increases of 1964, 1965 and 1967 covered by the contested decision are inter­ connected.

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.

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.

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.

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

27 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.

31 The fact that this conduct was not spontaneous is corroborated by an examination of other aspects of the market.

In fact, from the number of producers concerned it is not possible to say that the European market in dyestuffs is, in the strict sense, an oligopoly in which price competition could no longer play a substantial role.

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.

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.

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.

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The fact that the price increases announced were not introduced in Italy and that ACNA only partially adopted the 1967 increase in other markets, far from under­ mining the conclusions, tends to confirm it.

33 The function of price competition is to keep prices down to the lowest possible level and to encourage the movement of goods between the Member States, thereby permitting the most efficient possible distribution of activities in the matter of productivity and the capacity of undertakings to adapt themselves to change.

Differences in rates encourage the pursuit of one of the basic objectives of the Treaty, namely the interpenetration of national markets and, as a result, direct access by consumers to the sources of production of the whole Community.

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 porportion of the cost of the

BASF v COMMISSION

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.

36 Therefore, and without prejudice to the question whether and in what circum­ stances the Community may exercise control over prices when applying the rules on competition, the above-mentioned submission is unfounded.

The fine

37 The applicant puts forward the alternative argument that the Commission's objective could have been attained by the application of Article 3 of Regulation No 17/62, without its being necessary to impose fines.

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It is argued that since the fines authorized by Regulation No 17/62 are not of a criminal law nature, they should be imposed not in order to punish infringements which have already occurred, but in order to prevent their recurrence.

Furthermore, it is said, the contested decision does not adequately justify the amount of the fine, and in particular it fails to examine the true gravity of the conduct complained of.

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

The applicant has failed in its submissions.

Therefore it must be ordered to bear the costs.

On those grounds,

Upon reading the pleadings; Upon hearing the report of the Judge-Rapporteur; Upon hearing the parties; Upon hearing the opinion of the Advocate-General; Having regard to the Treaty establishing the European Economic Community, especially Article 85 and 173; Having regard to Regulation No 17/62 of the Council of 6 February 1962

BASF v COMMISSION

Delivered in open court in Luxembourg on 14 July 1972.

A. Van Houtte R. Lecourt

Registrar President

OPINION OF MR ADVOCATE-GENERAL MAYRAS

(See Case 48/69, p. 665)