C-55/69

CASSELLA v COMMISSION

freedom of consumers to choose their tion of the whole Community. suppliers. 11. Although every producer is free to 10. The function of price competition is change his prices, taking into account to keep prices down to the lowest in so doing the present or foreseeable possible level, and to encourage the conduct of his competitors, neverthe­ movement of goods between the less it is contrary to the rules on Member States, thereby permitting competition contained in the Treaty the most efficient possible distribution for a producer to cooperate with his of activities in the matter of produc­ competitors, in any way whatsoever, tivity and the capacity of undertakings in order to determine a coordinated to adapt themselves to change. course of action relating to a move­ Independent and non-uniform con­ ment of prices and to ensure its duct by undertakings in the Common success by prior elimination of all Market encourages the pursuit of one uncertainty as to each other's conduct of the basic objectives of the Treaty, regarding the essential elements of that namely the interpenetration of national action, such as the amount, subject- markets and, as a result, direct access matter, date and place of such move­ by consumers to the sources of produc- ments.

In Case 55/69

Cassella FARBWERKE MAINKUR AG, having its registered office in Frankfurt- Fechenheim, 526, Hanauer Landstrasse, assisted and represented by H. Hellmann and K. Pfeiffer, Advocates at Cologne, with an address for service in Luxembourg at the offices of E. Graf von Carmer, Counsellor (First Class) at the German Embassy, 20-22 rue de l'Arsenal, applicant,

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

gives the following

JUDGMENT

Issues of fact and of law

CASSELLA v COMMISSION

— Industria Electro-Chimica Bergamasca, — Badische Anilin- und Soda-Fabrik AG, Bergamo (Italy), — Farbenfabriken Bayer AG, — Farbentabriken Bayer AO, Leverkusen — Farbwerke Hoechst AG, (Federal Republic of Germany), — Societe Francaise des Matieres Colo­ — Farbwerke Hoechst AG, Frankfurt am rantes SA, Main (Federal Republic of Germany), — Ciba SA, — Badische Anilin- und Soda-Fabrik AG — J. R. Geigy SA, (BASF), Ludwigshafen (Federal Re­ public of Germany), — Sandoz SA, — Cassella Farbwerke Mainkur AG, — Imperial Chemical Industries Ltd. Frankfurt am Main (Federal Republic of Germany), and that a fine of 40 000 u.a. be paid by — Société Française des Matières Colo­ Azienda Colori Nazionali Affini S.p.A. Cassella Farbwerke Mainkur AG lodged rantes SA (Francolor), Paris (France), an appeal against this decision at the Court — Fabriek van Chemische Produkten Registry on 4 October 1969. Vondelingenplaat NV, Rotterdam (Netherlands), — Ciba SA, Basel (Switzerland), II — Conclusions of the parties — Sandoz SA, Basel (Switzerland), The applicant claims that the Court should: — J. R. Geigy SA, Basel (Switzerland),

JUDGMENT OF 14.7.1972 — CASE 55/69

Further 2. Complaints concerning the course of the more, the applicant stresses that the notice administrative procedure of objections, containing a reference to Article 15(2) of Regulation No 17, is (a) The applicant argues that the Com signed only by the Director-General for mission infringed Article 19(1) of Regula Competition. tion No 17 and Regulation No 99/63 Moreover, the question arises whether it is, in that it continued its inquiries concerning in principle, permissible to combine a the price increases of 1964 and 1965 after procedure under Article 3 with a procedure sending the notice of objections, and only under Article 15, for in doing so it is commenced its inquiries on the increase of possible, in the applicant's view, to evade 1967 after sending that notice. the provisions of Article 21(1) of Regula The defendant replies that the sole purpose tion No 17, which exempts decisions im of the inquiries in question was to check posing fines from the rule that decisions the accuracy of certain statements made by must be published. those concerned, either orally in the The defendant objects that the decision of presence of officials of the Commission, or 31 May 1967 whereby the administrative in written statements in reply to the notice procedure was commenced was taken in of objections. Some of the undertakings application of Regulation No 17 as a whole, claimed that every time there was a general not solely on the basis of Articles 3 and 9. increase prices slid quickly downwards as The fact that that decision referred a result of discounts given to certain cus 'especially' to Article 3 of Regulation No tomers.

CASSELLA v COMMISSION

The Commission portunity of acquainting themselves more did not even ask for the opinion of the closely with those facts, and thus of dis undertakings concerned on the necessity of cussing them. This applies in particular maintaining secrecy over the content and to the dates on which the various under tenor of the letters in which it has found takings against which proceedings were supposed similarities, thereby deducing the taken allegedly sent instructions to their existence of a concerted practice. More subsidiaries, and to the supposedly com over, the Commission has contradicted parable wording of those instructions. itself because it has produced some of the Furthermore, it is argued that the contested letters as an annex to its statement of decision has an entirely new factual basis defence. compared with the notice of objections as The defendant takes the view that in re regards the circumstances which accom quiring the Commission to put forward panied the price increases, such that there evidence at the time of notification of the was an infringement of Article 4 of objections, the applicant is confusing the Regulation No 99, which provides that obligations which Article 19(1) of Regula the Commission shall deal only with those tion No 17 imposed on the Commission objections in respect of which undertakings for the purposes of the administrative have been afforded the opportunity of procedure with the obligations which are making known their views. incumbent upon it as a defendant before The new factors in the decision consisted in the Court of Justice. particular, it is said, in precise information concerning the moment when some of the (c) The applicant argues that in giving producers, not including the applicant, unjustifiably short notice of the hearing have instructions to their Italian sub (12 days) and in rejecting, without sufficient sidiaries concerning the increase of 1964, reasons, a reasoned request for postpone and in the assertion that the concertation ment of the date fixed, the Commission at issue took place between 10 named infringed the rights of the defence in that undertakings, chosen from nearly 50 under it was not given the opportunity and the takings which had been referred to in the possibility of developing its point of view notice of objections, although the contested orally, taking into account the absence decision did not make it possible to under of the sales director responsible and of the stand the reasons for that choice. applicant's advocate at the time of the The defendant replies that according to the hearing.

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(d) Finally, the applicant argues that the 3. Complaints concerning the reasons stated Commission further infringed the rights for the decision of the defence in that the contested decision mentions the decision of the Bundeskartell­ The applicant complains that the reasons mat of 28 November 1967. Yet on the one stated for the contested decision are hand this was not mentioned in the notice wholly inadequate, particularly in that the of objections, and on the other hand the decision does not specify the facts which Commission did not have the right to take are imputed to each of the undertakings note of the results of investigations which proceeded against. As regards the applicant it had not carried out itself. Finally, the in particular, it is unable to glean from the Commission should have known that an context of the decision the facts on which appeal had been lodged against that deci­ the Commission is relying so as to deduce sion of the Bundeskartellamt and that its participation in the alleged concerted therefore there could be no question of practice. The only statement which the attributing any conclusive value to it. It is exposition of the facts contains on this argued that the fact that the said decision subject is the finding that the applicant was annulled by the Kameergericht Berlin increased its prices in the same way as the confirms the soundness of the complaint other undertakings. However, this is a thus made. finding which the Commission also reaches The defendant replies that the reference to as regards other undertakings which have

not been fined. The fact that the contested force in the national laws on the subject decision repeatedly resorts to very general of the limitation of actions. It is for the statements has the effect of making it Court, by means of interpretation, to fill wholly impossible for those concerned to the silence of the law by setting a period investigate them. of limitation falling between the two Finally, there is, it is argued, a fundamental extremes represented by the three year omission in the statement of reasons, be period for which German anti-trust law cause it only sets out the factors alleged provides and the 18 month period laid against the undertaking concerned and down by Italian criminal law in respect of fails to mention certain facts which fines. Whatever period is thus set, the tell in its favour. Yet in a procedure adoption of these criteria has the result, pursuant to which fines may be imposed, it is said, that proceedings regarding the particularly where the evidence is circum price increase of January 1964 are out of stantial, the Commission has a duty to time. A further reason for holding that take favourable facts and elements into proceedings relating to facts occurring so consideration as well. long ago are out of time is the unavoidable The defendant, in its statement of defence, uncertainty regarding a complete recon observes that the fact that the under struction of facts of this kind. takings did not all announce the increases The defendant objects that the three of 1965 and 1967 at the same moment does uniform increases of January 1964, January not mean that they had abandoned the 1965 and October 1967 are the result of a concerted practice which was at the basis continuous concerted practice which ex of the increase of 1964. They merely took tended over the whole period from January care to act with circumspection. 1964 to October 1967.

However, as the Commission constantly referred to a regards putting that principle into practice single concerted practice, and it observes there are important differences. In view of that in any event this legal description is this disparity the Commission reaches the only of importance to the question as to conclusion that it is impossible to discern when the limitation period commenced. any precise criteria and that therefore as regards limitation periods for infringements 4. The period of limitation of the provisions of Article 85 of the Treaty it is the needs of Community law alone The applicant observes that for want of an which should be taken into consideration. express provision of Community law, it is Even if it were accepted that each of the necessary to refer to the principles in three successive price increases occurred by

reason of a new concerted practice, this view amongst academic writers, a practice would not mean that the limitation period may be considered to be continuous if had expired because it has been suspended that practice simply displays certain ex on several occasions since 1964 by written ternal characteristics and if there is requests for information made under negligence. Article 11 of Regulation No 17 and by The investigations carried out in Italy at investigations carried out by officials of the the premises of SASEA were directly con

sidered as appropriate in cases of infringe ment of the Community's rules on com petition. B — On the substance The applicant replies that the proposition that the Commission has a discretionary 1. The concept of a concerted practice power concerning periods of limitation is in contradiction with the purposes for The applicant takes the view that the inter which limitation periods have been created, pretation which the Commission puts upon and in particular with the requirements of this concept would appear to be the correct legal certainty. The proposition that the one, since it starts from the idea that activity was continuous is not, it is said, conscious parallelism is not sufficient to substantiated in the contested decision, and establish the existence of a concerted is, moreover, incorrect in fact.

premises. The investigations carried out at concertation, at the other end of the scale the premises of SASEA, a commercial the parties concerned need not necessarily agent which is legally and financially have drawn up a common plan with a independent of the applicant, cannot view to adopting a given course of be possibly constitute a measure interrupting haviour. It is enough that they let each the limitation period as against the ap other known beforehand what attitude they plicant. intended to adopt, so that each of them The defendant objects that since all the could regulate his conduct, safe in the undertakings in question had been affected knowledge that his competitors would act by the constant fall in prices, they had a in a similar fashion. continuous and collective interest in The application is of the opinion that this changing from a relatively low level of concept of a concerted practice, which the prices to a higher level. Although the Commission put forward for the first time operative part of the contested decision in its statement of defence, has an ex speaks of 'concerted practices' this is be tremely wide scope, and that there is no cause the decision was addressed to ten precedent for it in legal doctrine or in

CASSELLA v COMMISSION

a common plan. The applicant cannot for its application are not met in the ap now be blamed for having placed reliance plicant's case. For not only did the appli on this concept. cant publish its own price increases with furthermore, the commission has not out informing its competitors in advance, even attempted to apply to the facts of but it also decided to put these increases the case the factors substantiating the into effect only after other undertakings had existence of a concerted practice, as con already announced them publicly. tained in the definition which it gives of Finally, the applicant asserts that publica

the daily press. Furthermore, customers of the EEC Treaty is one of the constituent insist on being informed in advance of elements of the infringement listed in the imminent price increases. Yet according provision, whereas 'concerted action' con to the Commission, when this information stitutes a particular case, elaborated by results in identical conduct, it is not only American case-law, of 'conspiracy' as evidence of prior concertation, but is also forbidden by the Sherman Act, which the decisive criterion of substance, the very presupposes that the undertakings con essence of the concerted practice. However, cerned are acting with a common will.

parallelism. Thus, in the thinking of the that there exists conscious and purposeful Commission, any increase in prices which cooperation between several undertakings, is general and therefore necessarily public, without its being necessary that there be a and which is followed by the producers common plan consisting in prior consulta constituting the oligopoly, is ipso facto tion. a concerted practice. This, it is asserted, The citations from American case-law are is tantamount to saying that in an oligopoly said to prove that the question whether a in which reactions are interdependent any given business action is taken pursuant to a general increase in prices is prohibited. common will is a question of evidence, and Therefore the Commission's definition of a that a uniform action constitutes a concerted practice is incompatible with sufficient indication of evidence, and that a

uniform action constitutes a sufficient a concerted practice for the purposes of indication of the existence of such a Article 85. In the present case the Com common will when that conduct is not the mission has proved that as regards prices necessary consequence of the structure of the dyestuffs manufacturers in question the market. On the concept of a concerted behaved in a uniform way. This means practice, the defendant also refers to an that it has adduced sufficient proof that article by Tolksdorf, annexed to the concerted practices existed. Furthermore,

The index from the legal concept of 'conspiracy'. of the applicant's prices, calculated from a Nor, moreover, is the concept of an base of 100, fell to 85 for the first half of 'agreement' the right concept for describing 1967. It is said that this unfavourable cooperation between several undertakings evolution of prices is confirmed by an by way of concerted practices. A con OECD report. On the other hand, costs certed practice within the meaning of that are said to have increased. Expenditure on

For this consists in the fact that, by reason of the purpose, discounts of a general nature common will, each of the participants can would not yield any results because they rest assured that the others will adopt would immediately call forth counter- either a uniform or a different course of measures from competitors already in very conduct according to an allocation of strong positions on this oligopolistic roles worked out in advance. Therefore market. Price competition takes place it is not necessary to show that the mainly through individual arrangements participants have collaborated or drawn up made by the producer with certain cus a common plan in order for there to exist tomers for given products.

CASSELLA v COMMISSION

general price war. Competitors react by conduct on its part would have been making similar individual arrangements irrational. If it had announced its increase with other customers. In each case it is only at a later date it would still not have necessary to weigh up the risk that an been able to profit from the short period individual arrangement will come to the during which its prices would have been notice of other customers and thus release more competitive, because it did not have general pressure on the level of all prices. large extra stocks available and increases There is no way of arriving at general in production only produce their effect rules for deciding the moment from which after several months. Furthermore, the

on other markets. It is usually the case in its prices or why it should have chosen a the market at present under consideration different time or a different rate or different that the result of competition is not products, it would have found that in general falls in prices, but individual the actual situation on the market there exceptions which, as they become more was no convincing reason for adopting a numerous, bring about a progressive course other than that of parallel conduct. erosion of the prices. From its examination of the competitive Having thus explained its view of the situation and of the market the applicant evolution of prices and costs, together draws the conclusion that the so-called with the competitive situation on the proof by circumstantial evidence, such as dyestuffs market, the applicant states the the Commission seeks to adduce in the reasons for its decisions to raise prices. contested decision, is not of a conclusive It observes that costs had risen considerably nature. It points out that nowhere in the and a continuation of this strong upward decision are reasons given for the Com trend was foreseeable, whilst receipts from mission's fundamental proposition, which sales had gone down considerably and a is that the price increases in question can number of factors suggested that they not be explained by the oligopolistic struc would continue to do so.

The applicant's knowledge of the price theory employed in the analysis of

parallel conduct. These factors are not Furthermore, even if the case of homo applicable in the case of the dyestuffs geneous products, where the prices actually industry. charged usually differ from the prices The defendant observes that the modern publicly quoted, conduct can no longer theory of oligopolies starts from the automatically be absolutely parallel. principle that in the oligopoly situation The High Authority of the ECSC also there are many ways of arriving at prices, adopted the principle that homogeneity of and that it would certainly not be right to products is not of itself a bar to supposing equate the oligopoly situation with con that a uniform increase in prices made by sciously parallel conduct by participants. several undertakings constitutes a con The theorists accept that undertakings certed practice within the meaning of knowingly adopt parallel conduct only in Article 65(1) of the ECSC Treaty, as respect of oligopolies involving a very high appears from the fines which it imposed on degree of interdependence between under certain steel works by a decision of 4 takings, such that one undertaking February 1959, which was not contested cannot take a measure without its com by the parties concerned. petitors being immediately and con

increase. Therefore, even when the degree the dyestuffs industry, dated 21 January of interdependence is very high, the un 1969 annexed to the statement of defence, certainty in which an undertaking in from the opinion of Professors Bombach creasing its prices is placed as to whether and Hill annexed to the statement of the others will follow does not auto defence, from documents produced during matically disappear. In order for there to the preparatory inquiries by the under be conscious parallelism it is necessary for a takings ICI, Geigy and Sandoz and from certain number of factors to be present. various statistical data produced by the These include: a limited number of sellers, Commission (tables annexed to the state high costs, high mobility of demand, ment of defence). homogeneity and transparency of prices, The market for the products in question lack of ability to adapt capacity at short covers about six thousand different pro notice, little elasticity of demand com

The degree of notable increases in demand. similarity varies considerably: it runs from In America both the textbook writers and a fairly high degree of comparability in the case-law attribute a leading role to standard dyestuffs to the existence of near homogeneity of products in deciding if monopolies, often protected by patents, conduct is consciously parallel. According for products having special characteristics. to several writers, when the products are Furthermore, the competitive position of diversified the effects of changes in prices the various dyes and the extent to which are much slower and much less foreseeable. one can be substituted for another are

constantly undergoing rapid change be turers is intense and undertakings are cause of technical progress. A notable constantly trying to increase their share feature of the market for the products in of the market, they find it necessary to question is a low level of transparency build up their stocks in such a way as to mainly owing to the large number of be able to take advantage of all chances of products involved, the differences between selling their products. It is relatively easy them and the variety of users (textile, for them to adapt themselves in the medium leather, paper, food, rubber and synthetic term by changes in the production pro materials industries and manufacturers gramme because the production plant of paints, ink, cosmetics and so on). A can be used for many different purposes. further reason is the fact that technical In view of the particular conditions on the services are provided for purchasers, market, the situation of manufacturers which differ in degree according to the differs from one undertaking to another.

Thus German manufacturers are undertakings, nor even amongst the pur benefiting from the constant increase in the chasers themselves, as ICI has agreed. value of goods produced, according to Therefore changes in prices introduced by information supplied by Cassella and one manufacturer are only imperfectly Hoechst, whereas, for example, ACNA is known on the market or only become going through a crisis (declining work force known long after the event. between 1964 and 1967, closure of one of As for the rate of expansion of the market, its factories). which constitutes another test for deciding This disparity between undertakings means whether conscious parallelism can exist, it that there are important differences as appears that on the whole the dyestuffs regards costs. industry is expanding at a fast rate, ap This necessarily results in differences in proximately corresponding to that of profits. The widest profit margins are expansion in the chemicals industry as a obtained with speciality products, so long whole. as they remain so.

JUDGMENT OF 14.7.1972 — CASE 55/69

Yet and rapid technical progress, a general in the new version the Commission has alignment of price increases, announced simply removed the names of the other without prior concertation, would not be parties while leaving its exposition un possible for interchangeable products. The changed, and has even partly retained defendant refers to the example of ACNA, quotations from the pleadings of other which for the most part manufactures parties, without citing their names. Further standard types and which, after eight of more, the Court cannot accept production the ten undertakings in question had an of Report No 100 of the British National nounced a general increase in prices of Board for Prices and Incomes, annexed to pigments and had begun to apply this the statement of defence, because that increase as from 1 January 1965, did not document has been produced in English. fall in line with this increase in prices, so Finally, the statistical tables appearing in that thereafter the other undertakings Annexes VII, VIII and IX to the statement withdrew their increases. This shows, in of defence are inadmissible as evidence, the Commission's view, that even in the because they do not comply with the con case of products towards which sellers ditions required for a judicial review react in a sensitive way, interests are so capable of guaranteeing the rights of the varied on the dyestuffs market that parallel defence. Indeed, the data necessary for action does not take place automatically. checking the statistical calculations are not In these circumstances it is inconceivable furnished by the defendant. that one undertaking would decide uni As to the substance, the applicant replies laterally on a large general increase in that if, in accordance with the Com prices without first consulting its com mission's argument, the oligopolistic nature

the best results. In order to prevent com products in question are homogeneous it petitors from immediately withdrawing flatly contradicts itself, because it admits their increase, each undertaking would at that 'lively and intense' competition exists the most have had to tell purchasers of as regards the prices of dyes, which totally interchangeable products that it was necessarily presupposes that those pro falling in line with this increase as regards ducts are comparable or interchangeable. these products, but this would not have The applicant also stresses that speciality been necessary for all the other products dyes account for less than 5 % of its total since, because of the lack of transparency production, and therefore not a third, as of the market for those products, the the Commission claims. various purchasers would not immediately As for the lack of transparency on the have been able to react to the new prices. market, the applicant does not deny that The applicant objects first of all to the transparency is guaranteed with regard drafting of the statement of defence which to an increase where there is a general

increase in prices, since the latter is neces allow themselves to be guided by rational sarily known universally. As regards the economic criteria, nevertheless such market size of stocks, the Commission has mis forces do not exist for producers of understood the information supplied to dyestuffs because the structure of the it on this subject. The figure of 95% of market is looser and the interests of the products to which it refers can only relate undertakings differ. to the fact that the undertaking concerned In these circumstances, the purely theoreti stocks 95% of the different kinds of pro cal possibility of parallel conduct on the duct in its production range, but in minimal dyestuffs market does not offer sufficient

As proof of the of his competitors had introduced a price accuracy of the content of those tables, increase. Furthermore, the fact that eight the defendant states that it is willing to of the ten undertakings involved which had produce the original documents and copies announced a general price increase in of the invoices on the basis of which the Italy in 1965 had to withdraw those in tables were prepared. creases because ACNA did not follow In answer to the applicant 's criticism that the increase shows that the reactions of instead of furnishing proof, the Com

and legal aspects of the case. In particular, the occurrence of parallel conduct, or the the Commission may not be prohibited accuracy of its account of the circum from referring to the files concerning stances which must be fulfilled in this con parallel cases and to produce evidence from nexion, as set out in its statement of them in support of its arguments. defence. As for the fact that the report of the As for the structural factors characterizing British National Board for Prices and this market, the defendant observes that Incomes is in English, the defendant the small number of sellers and the observes that the Court acceded to its existence of fixed costs and high costs of request to exempt it from having this entering or leaving the market are of document translated into one of the little importance.

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an annex. However, despite its special geneity of products, the defendant says situation, no pressure is exerted on the that although the coefficient of com Italian market, as is shown by the example parability is relatively high for standard of the price increase of January 1965 in products, those products are nevertheless Italy. This also shows that interdependence constantly subject to modifications, and is not the only criterion which determines it is this which constitutes the characteristic the conduct of producers on the dyestuffs trait of their heterogeneity on the market. market. The numerous differences existing Contrary to the applicant's supposition, between producers of dyes as regards the heterogeneity of dyes does not result in rate of growth, the extent to which plant is the disappearance of competition.

loose. The proportion of one third which lack of transparency of the market. This it has cited was taken from the English fact, together with the strong position held report annexed to the statement of defence. by certain undertakings on markets in The defendant observes that the arguments different products, gives them a certain which the applicant puts forward on this latitude in their pricing policy. Therefore, point would have the effect of eliminating taking into account the relatively large any examination of the situation on the number of producers, the mutual inter market once parallel conduct has occurred, dependence is, it is argued, sufficiently loose

to permit normal competition. takings on the afternoon of 9 January In the countries of the EEC and for the proves one thing, namely, that those years 1965 to 1967, the average prices of an undertakings learned of the announce undertaking for the principal products ment of the increase at the same time as the showed variations of up to 40% from applicant, and that since Ciba had an country to country as a result of competi nounced its increase on 7 January with

3. The factual evidence by its customers several weeks previously, and more particularly on 14 October, The applicant argues that the circumstances that its competitors had the intention of in which the price increases were brought taking similar measures. The forthcoming about and to which the decision refers do increase had even been announced in the not constitute grounds for the conclusion press. The fact that the increase was that there was a concerted practice. introduced on the same date was deter As regards the uniformity of the rates mined by the oligopolistic nature of the applied when the increases took place market. The same is true of the increase and of the products to which they were of 1967. The applicant also points out on applied, the applicant observes in particular this subject that the Commission admits that the Commission contradicts itself on that in the latter case the dates on which this subject and is inconsistent because it the increase was introduced differed from did not complain of this same conduct in producer to producer. respect of other producers of dyestuffs As regards the alleged similarity of content which aligned their prices on those of the of the announcements of the increases, producers against which it has brought the applicant observes that the contested proceedings. decision does not specify which increase As regards the allegedly simultaneous was, in the Commission's opinion, an timing of the announcements of the in nounced in a similar way. It is asserted creases, the applicant points out, first, that the interested parties were not sup that the Commission only supplies precise plied, even during the procedure before the evidence on this point as regards the Commission, with the texts in which the increase of 1964, which does not justify Commission sees the alleged similarities. drawing conclusions concerning later in Therefore, in the absence of any sub

JUDGMENT OF 14.7.1972 — CASE 55/69

assertion to the effect that the parties the contested decision to have been identi­ stated that they had aligned their conduct cal and of which some even followed the for the sake of convenience. The applicant increases announced sooner than the also denies the accuracy of the statement applicant. Since the contested decision is contained in the decision according to based on the idea that the uniform conduct which it increased its ex-works prices by a of the producers of dyestuffs was in­ percentage lower than that by which it conceivable without prior concertation, the increased its resale prices to users. It also question arises, it is said, as to why the asserts that it did not require its Italian Commission treated differently under­ representative to refuse to issue antedated takings whose conduct was the same. bills and to cancel all current offers. The defendant replies, as regards the finally, as regards the meetings tor the similarity of the orders to increase prices exchange of information between pro­ sent by the producers to their subsidiaries ducers of dyestuffs, mentioned by the or representatives in 1964, that the in­ Commission in the statement of the facts struction to put the increase into force in its decision, the applicant observes that immediately appears in 13 of the 14 there is a legitimate need for the ex­ orders, the instruction to cancel current change of information and of experience offers appears in 12 of those 14 letters and gained on problems of business policy of a the prohibition on making out antedated general interest, as was indeed confirmed bills appears in 8 of these 14 orders, this in the order, already mentioned, of the number being explained by the fact that Kammergericht Berlin. the prohibition in question was already The announcement of an increase made by implicit in the order to make an immediate an undertaking during such a meeting is and eeneral increase.

CASSELLA v COMMISSION

decided that the defendant should lodge 2. The parties may, by agreement be­ separate statements of defence without tween themselves, propose the name of reference to the other cases pending on the an expert to the Court before 1 October subject of dyestuffs. 1970.

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nounced by a competitor. Both as takings concerned is very low. However, regards the producer who determines the results of the study show that the the price and as regards those who distinction is of but little use in assessing follow him, the conclusion to be drawn the facts envisaged. is that during the period in question the advantages to be obtained from a Observations on the experts' report were general and uniform increase in prices lodged at the Court Registry on 3 July were greater than the disadvantages. 1971 by the applicant and on 21 June 1971 by the defendant. — The appropriate answer to Question (c) On 28 September 1971 the experts named is that the degree of interchangeability by the Court took the oath in accordance of dyestuffs varies: it ranges from pro­ with Article 49(6) of the Rules of Proce­ ducts which are perfectly interchangeable dure. to products for which to all intents and The parties presented oral argument at the purposes there is no substitute. If, for hearings on 28, 29 and 30 September 1971 the purposes of the question asked, and on 2 May 1972. speciality dyestuffs are those which are During the course of the procedure Mr not interchangeable for practical pur­ Advocate-General Mayras replaced Mr poses, it can be said that the proportion Advocate-General Dutheillet de Lamothe, that they represent of the total produc­ deceased. He delivered his opinion at the tion of dyestuffs in each of the under- hearing on 2 May 1972.

Grounds of judgment

1 It is common ground that from January 1964 to October 1967 three general and uniform increases in the prices of dyestuffs took place in the Community.

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.

It therefore imposed a fine of 50 000 u.a. on each of these undertakings, with the exception of ACNA, for which the fine was fixed at 40 000 u.a.

3 By application lodged at the Court Registry on 4 October 1969 the undertaking Cassella Farbwerke Mainkur AG has brought an application against that decision.

Submissions relating to procedure and to form

The delegation of such authority constitutes a measure relating to the internal organization of the departments of the Commission, in accordance with Article 27 of the provisional Rules of Procedure adopted under Article 16 of the Treaty of 8 April 1965 establishing a single Council and a single Commission.

6 Therefore this submission is unfounded.

(b) The complaint relating to the disparities between the 'notice of objections' and the decision to commence administrative proceedings

7 The applicant claims that the notice of objections refers to the possible imposition of fines, although the decision to commence proceedings only referred to proceed­ ings to establish infringements.

8 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.

Moreover, 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.

That is not the position in the present case.

12 This submission is therefore unfounded.

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

13 The applicant argues that the period of twelve days within which it was required to appear before the Commission was not long enough to enable it to put forward its points of view orally, taking into account the absence, at that time, of the sales director responsible and of the undertaking's advocate.

14 Taking into account the time which had elapsed following communication of the notice of objections, it does not appear that the abovementioned period of notice was of a nature such as to jeopardize the defence of the undertakings concerned.

Although the applicant may have been prevented from ensuring that it was re­ presented before the Commission on the date fixed by the latter, the number of persons summoned on that occasion would have made it difficult for the Com­ mission to fix dates for the hearing so as to suit the particular requirements of each of the interested parties.

17 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.

It appears from the text of the notice of objections that the facts taken into consideration against the applicant were clearly stated therein.

That notice contains all the information necessary for deciding as to the objections put forward with regard to the applicant, in particular the circumstances in which the increases of 1964, 1965 and 1967 were announced and implemented.

Amendments included in the contested decision concerning the precise course of the facts, which were made pursuant to information furnished by the interested parties to the Commission during the course of the administrative procedure, can by no means be relied upon to support this complaint.

18 Finally, the applicant complains that in the contested decision the Commission mentioned the decision of the Bundeskartellamt of 28 November 1967, although it did not have the right to take into consideration the result of investigations which it had not itself carried out.

19 Although the interested parties are entitled to dispute the facts as alleged by the Commission in support of its objections, there is nothing to prevent the latter, in applying the Community rules on competition, from using the results of investiga­ tions carried out by national authorities.

CASSELLA v COMMISSION

The Commission is under no duty, in stating the reasons for its decisions, to adopt an attitude on all the arguments which the interested parties may raise in their defence; it is sufficient that it should set out the facts and the legal considera­ tions having decisive importance in the context of its decision.

23 Therefore this submission is unfounded.

The submission as to the limitation period

24 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 increase of January 1964, exceeded any reasonable limitation period.

25 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.

27 The applicant complains that the Commission has not proved the existence of concerted practices within the meaning of Article 85(1) of the EEC Treaty in relation to any of the three increases mentioned in the contested decision.

28 That decision stated 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.

JUDGMENT OF 14.7.1972 — CASE 55/69

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 also said that dyestuffs for which there are no substitutes form only a small part of the producers' turnover.

Taking these market characteristics into account and in view of the widespread and continuous erosion of prices, each member of the oligopoly who decided to in-

CASSELLA v COMMISSION

crease his prices could, it is argued, reasonably expect to be followed by his com­ petitors, who had the same problems regarding profits.

Finally, it is asserted that no reasons are stated anywhere in the contested decision for its fundamental proposition, according to which the price increases in question cannot be explained by the oligopolistic structure of the market.

The concept of a concerted practice

The characteristic features of the market in dyestuffs

32 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 manu­ facture these products together with other chemical products or pharmaceutical specialities.

JUDGMENT OF 14.7.1972 — CASE 55/69

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

The total number of dyestuffs is very high, each undertaking producing more than a thousand.

The average extent to which these products can be replaced by others is considered relatively good for standard dyes, but it can be very low or even non-existent for speciality dyes.

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 sub­ sidiaries established in the different Member States and maintain a network of

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

CASSELLA v COMMISSION

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.

Although the foremost reason why producers have acted in this way is in order to adapt themselves to the special features of the market in dyestuffs and to the needs of their customers, the fact remains that the dividing-up of the market which result tends, by fragmenting the effects of competition, to isolate users in their national market, and to prevent a general confrontation between producers through­ out the common market.

It is in this context, which is peculiar to the way in which the dyestuffs market works, that the facts of the case should be considered.

35 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.

JUDGMENT OF 14.7.1972 — CASE 55/69

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.

With minor differences, particularly between the price increases by the German undertakings on the one hand and the Swiss and United Kingdom undertakings on the other, these increases concerned the same range of products for the various producers and markets, namely, most aniline dyes other than pigments, food colourings and cosmetics.

36 As regards the increase of 1965 certain undertakings announced in advance price increases amounting, for the German market, to an increase of 15 % for products whose prices had already been similarly increased on the other markets, and to 10 % for products whose prices had not yet been increased. These announcements were spread over the period between 14 October and 28 December 1964.

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.

CASSELLA v COMMISSION

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

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 respectively, announced their intention 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.

By means of these advance announcements the various undertakings eliminated all uncertainty between them as to their future conduct and, in doing so, also eliminated a large part of the risk usually inherent in any independent change of conduct on one or several markets.

This was all the more the case since these announcements, which led to the fixing of general and equal increases in prices for the markets in dyestuffs, rendered the market transparent as regards the percentage rates of increase.

Therefore, by the way in which they acted, the undertakings in question temporarily eliminated with respect to prices some of the preconditions for competition on the market which stood in the way of the achievement of parallel uniformity of conduct.

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.

40 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.

As regards the increases of 1965 and 1967 concertation took place openly, since all the announcements of the intention to increase prices with effect from a certain date and for a certain range of products made it possible for producers to decide on their conduct regarding the special cases of France and Italy.

In proceeding in this way, the undertakings mutually eliminated in advance any uncertainties concerning their reciprocal behaviour on the different markets and thereby also eliminated a large part of the risk inherent in any independent change of conduct on those markets.

The general and uniform increase on those different markets can only be explained by a common intention on the part of those undertakings, first, to adjust the level of prices and the situation resulting from competition in the form of discounts, and secondly, to avoid the risk, which is inherent in any price increase, of changing the conditions of competition.

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 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.

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 fine

42 The applicant complains that the contested decision did not take into account the fines which had been imposed upon it by the Bundeskartellamt by its decision of 28 November 1967.

43 Since the decision of the Bundeskartellamt has been annulled, this submission has become devoid of object.

Therefore it is not necessary to examine the substance of it.

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 Articles 85 and 173; Having regard to Regulation No 17/62 of the Council of 6 February 1962; Having regard to Regulation No 99/63 of the Commission of 25 July 1963; Having regard to the Protocol on the Statute of the Court of Justice of the Euro­ pean Communities; Having regard to the Rules of Procedure of the Court of Justice of the European Communities,

THE COURT

hereby:

1. Dismisses the application;

2. Orders the applicant to bear the costs.

(See Case 48/69, p. 665)