C-40/73

JUDGMENT OF 16. 12. 1975 — JOINED CASES 40 TO 48, 50, 54 TO 56, 111, 113 AND 114/73

In Joined Cases

(1) 40/73: Coöperatieve vereniging 'Suiker Unie' UA, having its registered office at Rotterdam, represented by its Board of Directors, assisted by F. Salomonson, Advocate of the Dordrecht Bar, and P. Vogelenzang, Advocate at the Rotterdam Bar,

(2) 41/73: Société anonyme Générale sucrière, having its registered office at Paris, represented by its Chairman and Managing Director, Antoine Bouchon, assisted by Henri Rambaud, Loyrette, Voillemot and Demoyen, Advocates at the Cour d'Appel, Paris,

(3) 42/73: NV Centrale Suiker Maatschappij, having its registered office at Amsterdam, represented by its Managers, W. G. A. Lammers and G. M. L. van Loon, assisted by R. A. Mörzer Bruyns, Advocate at the Gerechtshof, Amsterdam and R. C. Gisolf, Advocate at the Arrondissementsrechtbank, Amsterdam,

(4) 43/73 : Société des raffineries et sucreries Say, which in the course of the proceedings became Société Béghin-Say, a company limited by shares having its registered office at Paris, represented by its General Manager, Jean Bernard, assisted by Bernard Du Granrut, Advocate at the Cour d'Appel, Paris,

(9) 48/73: Société anonyme Sucres et Denrées, having its registered office at Paris, represented by Varsano, Roboh and Coriat, members of its Board of Directors, assisted by Jacques Lassier, Advocate of the Cour de Paris, and Jean-Denis Bredin, Advocate at the Cour d'Appel, Paris,

(10) 50/73: Società SADAM SPA having its registered office at Bologna, represented by its Chairman, Dr. Angelo Maccaferri, assisted by Giorgio Bernini, Professor, Advocate at the Bologna Bar,

(11) 54/73: Süddeutsche Zucker-Aktiengesellschaft, having its registered office at Mannheim, represented by its Board of Directors, assisted by Gleiss, Lutz, Hootz and Hirsch, Doctors of Law, Advocates at the Landgericht, Stuttgart and their partners,

(12) 55/73: Südzucker-Verkauf GmbH, having its registered office at Oberursel (Germany), represented by its Managers, Heinz Brick and Horstmar Stauber, Doctors of Law, assisted by Gleiss, Lutz, Hootz and Hirsch, Doctors of Law, Advocates at the Landgericht, Stuttgart, and their partners,

(13) 56/73: Firma Pfeifer & Langen, having its registered office at Cologne, represented by its partners, Dr Helmut Borner and Joachim Pfeifer, assisted by Dr Werner von Simson, Professor at the University of Fribourg-en-Brisgau, and Dr Ferdinand Hermanns, Advocate at the Amtsgericht and Landgericht, Cologne,

(14) 111/73: Cavarzere produzioni industriali SPA, having its registered office at Padua, represented by its General Manager, Dr Leonardo Montesi, assisted by Giuseppe Celona, Advocate at the Corte d'Appello, Milan and at the Corte di Cassazione, Italy,

— the applicants in Cases 42/73, 45/73 and 46/73: at the chambers of Alex Bonn, 22 côte d'Eich;

— the applicant in Case 56/73: at the office of André Robert, Doctor of Law, 13 rue Joseph Tockert;

— the applicant in Case 111/73: at the chambers of Georges Margue, 20 rue Philippe-II;

— the applicant in Case 113/73: at the chambers of Loulou Beissel-Heyard, 47 rue des Glacis; applicants, v

Commission of the European Communities, in Brussels, represented by its Legal Advisers, Doctors Bastiaan van der Esch, Erich Zimmermann, Antonio Marchini Camia and Jean-Pierre Dubois, acting as Agents, with an address for service in Luxembourg at the offices of Pierre Lamoureux, Legal Adviser to the Commission, 4 boulevard Royal, defendant,

supported in Cases 41/73, 43 to 48/73, 50/73, 111/73 and 114/73, to the extent to which they relate to the complaint of concerted practices having as their object the protection of the Italian market, by:

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

gives the following

JUDGMENT

Facts

The facts, procedure and the arguments area having the largest surplus a target of the parties may be resumed as follows: price and an intervention price for white sugar, and for the fixing of a derived intervention price for other areas. The I — Facts and procedure implementing regulations (cf. for example the first Article and the fourth recital of Regulation No 430/68; Article 1. General Community regulations 2 of Regulation No 432/68): — state that certain departments in the A — On 18 December 1967 the north of France comprise the area Council adopted Regulation No 1009/67 having the largest surplus; which became applicable with effect — have fixed for this area an

from 1 July 1968; the regulation applies intervention price which is 5 % in particular to white and raw beet sugar below the target price; and cane sugar and also to sugar beet and — have fixed derived intervention prices sugar cane (Article 1). The ninth recital for the other areas of the states that, since there have often been Community, which do not differ surpluses of sugar in the Community, it from the intervention price appears to be advisable, for a transitional mentioned above except in the case period, to make provision for measures to of Italy and the French overseas limit production. departments.

offered to them at the intervention price. implement the decision). However no Article 10 provides that they may only refund is granted for the sale of resell their sugar at a price which is quantities exceeding the maximum quota higher than the intervention price, (Article 25 (2)). except in certain circumstances provided for by this article. In order to prevent the chemical industry in the Community, a consumer of sugar, By virtue of the combined effect of from being placed at a disadvantage Articles 4 and 5 a minimum price for compared with its competitors in third beet is fixed each year for each countries or giving preference to sugar beet-sugar-producing area for which an imported from these countries (cf. recital intervention price is fixed, the sugar five), Article 9 (6) provides that a manufacturers having to pay at least this 'production refund' shall be granted on price. sugar used by the said industry; this provision has been implemented in such Article 12 provides that each year a a way that the chemical industry receives threshold price shall be fixed.

countries, the difference between application of the first system have quotations or prices on the world market generally been lower. and prices within the Community may be covered by an export refund (cf. C Under the provisions of Article 4 the below for the measures adopted to purpose of the tender is to determine the

(b) By virtue of Article 5 of Regulation Article 34 of Regulation No 1009/67, an No 839/68, adopted on the basis of article derogating from Article 36, Regulation Nos 1009/67 and 766/68, and authorizes Italy to grant, until the which entered into force on the same 1974/75 marketing year, 'adaptation date as these two regulations, an award is subsidies to its beet growers and to its made to any tenderer whose tender does beet processing industry [that is to say to not exceed the maximum amount, the sugar industry]'. These subsidies must nevertheless a different system is applied not exceed a specific amount per metric if a maximum quantity has been fixed ton of beet or per 100 kg of white sugar; for the invitation to tender. Under the they may only be granted for quantities provisions of Article 6 of this regulation of beet produced within the basic quota. the award shall confer the right to the The fourteenth recital of the said issue of an export licence showing the regulation states on this point 'that... quantity awarded and the amount of the beet and sugar production in Italy is refund. rendered difficult by climatic conditions From the beginning of the 1969/70 and, in the case of beet production, by marketing year under regulations made the additional problems presented by the by the Commission standing invitations application of modern production to tender were opened, in particular for methods', and 'provision should be made white sugar. Under this system of for granting temporary subsidies to both these activities'. invitations to tender undertakings could submit tenders each week mentioning the amount of the refund and the Regulation No 457/68 EEC of the quantity desired; partial awards were Commission of 11 April 1968 (OJ L 91, made once a week. p. 23) relating to the amount of the sugar surplus in Italy provides in its first article From 5 March 1970 Regulation No that Italy should export before 1 July 394/70 replaced Regulation No 839/68. 1969 a specific quantity of sugar to third

countries without export subsidies and costs of Italian sugar included the that for this purpose it could grant a 'imposta generale sull'entrata' subsidy in accordance with national (IGE) relating to the purchase of provisions. beet and the tax on its transportation, which had not B — Content of the Italian regulations been included in the prices fixed by Community regulations; (a) Before 1 July 1968, the date when — that all the 'equalizations which Regulation No 1009/67 came into force, had therefore become necessary the 'Comitato interministeriale dei could be dealt with 'by applying prezzi' (The Inter-departmental Com to sugar a levy (sovrapprezzo) mittee on Prices, hereinafter called 'CIP'): equivalent to the difference — had on many occasions and finally by between the current quotations Order ('provvedimento') No 1119 of 6 (quotazioni) in Italy and the new August 1965 (Gazzetta Ufficiale No Community quotations'; that 197 of 7 August 1965, p. 3762), fixed, under Italian legislation CIP is for sugar intended for food, authorized 'to implement these maximum prices for sales ex-works equalization operations by means by the producer and also for sales for of an equalization fund'; that consumption; 'these equalization measures are — had established by measures in 1948, indispensable for the progressive 1957 and 1963 three 'Casse integration of the Italian sugar conguaglio' ('equalization funds') economy into that of the relating to the transport of sugar, Community'; 'interest payable on sugar' and the — repeals Order No 1119 and specifies price of sugar imports respectively. the intervention prices fixed by the Community (Article No 1 of the (b) On 22 June 1968 CIP issued Order operative part); No 1195 (Gazzetta Ufficiale No 162 of — establishes the Cassa conguaglio 27 June 1968, p. 4057), which: zucchero' (The Sugar Equalization — refers, inter alia, to Regulations Nos Fund, hereinafter called 'Ccz') and 1009/67 and 432/68 of the Council; assigns to it the task of implementing — recites in particular: the equalization operations referred

. . at the made good by the latter; point of delivery of the products for — that the ex-works prices fixed consumption. . .' (also in the event of previously by CIP were higher a sale to the intervention agency) and than the prices fixed by must be paid by the producers; with Community regulations; that in regard to imported sugar the order to meet the higher cost of 'sovrapprezzo' is levied by the Italian sugar and to permit the customs authorities (Articles 4 (a) and necessary adjustments, Article 34 (b) of the operative part); of Regulation No 1009/67 — states (Article 6 of the operative part) authorized Italy to grant certain that the revenue of the fund is subsidies; that the manufacturing intended for the following purposes;

— aid ('integrazione') to producers of — however, 'the introduction of beet and the beet processing imported granulated sugar for use industry 'on the basis of Article by industry can at the moment 34 of Regulation No 1009/67'; only be carried out at prices — aid to all beet processing higher than the national price' undertakings against repayment which would be contrary to the of the IGE on the purchase of objectives of Order No 1195; beet and the tax charged on its — the conditions of equalization transportation; referred to in Regulation No 1195 — aid relating to storage charges of may be achieved if Ccz uses part the surplus production of the of the sovrapprezzo payable on 1967/68 marketing year and to the importation of granulated 'export losses [arising out of the sugar to cover the higher costs of surplus production of white sugar imported sugar'; during the 1967/68 marketing — 'because of the exceptional im­ year] which shall be granted until portance and urgent need of im­ 1 July 1969 (Regulation No ports of granulated sugar, it is ne­ 457/68 of 11 April 1968)'; cessary to impose taxes... provisio­ — aid to sugar producers by way of nally on a flat rate basis, subject compensation for a payment to the right to extend the period which the latter had to make to during which they are charged'; beet producers under a previous — and provides that until 30 June 1969 Italian regulation; 'with regard to agreements to — aid for the financial rationali­ purchase notified to Ccz up to 30 zation (ripianamento) of opera­ April 1969, relating to sugar imported tions carried out by the equali­ from the EEC, subject to any zation fund concerning the price extensions of time being granted by of imported sugar (cf. (a) above); Ccz, the sovrapprezzo [referred to in — aid to exporters of an amount Order No 1195] will be applied up to corresponding to the beforemen­ an amount reduced by a flat rate tioned 'sovrapprezzo' ('surcharge"); (nella misura forfettariamente ridotta) — interest payable on delayed amounting to Lit. 8 per kg net; this payments of aid relating to reduction shall only apply to surplus production (cf. see third granulated sugar, which is not dash above); classified in category I, intended — payment of Ccz's charges. solely for industrial use (Article 1 of the operative part). (c) On 20 February 1969 CIP issued Order No 1210 (Gazzetta Ufficiale No 56 (d) On 21 May 1969 CIP issued Order of 1 March 1969, p. 1381) which: No 1215 (Gazzetta Ufficiale No 130 of — states in particular in its recitals that: 23 May 1969, p. 3080). This order, in — in 1968/69 Italian sugar pro­ particular: duction has fallen short of the — contains recitals similar to those in Italian quota by more than Order No 1210 and in addition 400 000 quintals but recites that the taxes intended to consumption has nevertheless finance Ccz must be fixed, on the increased and the deficit of one hand, at an amount as high as granulated sugar used by the the current regulations permit and, sugar industry should be on the other hand, 'with due regard estimated at 650 000 quintals; to the actual conditions of the market — it is necessary to deal with this in the EEC countries'; situation by means of imports — provides that Ccz 'is authorized to from other Member States; organize open invitations to tender

for import quotas open to all the cover a total quantity of 1 250 000 operators affected, giving them the quintals and were open to the industries opportunity to tender for the amount concerned and any operator who of the sovrapprezzo referred to in intended to supply the sugar awarded Article 4 (b) [of Order No 1195], solely to consumer industries; each relating in the first instance to an tender had to refer to an amount not less amount of 500 000 net quintals of than 11 000 quintals (Articles 1 and 2 of white castor sugar and/or raw sugar the operative part). for refining, to be imported ultimately from EEC countries by Since 'all commercial operators do not operators who are successful.

The lo zucchero) in every part of the amounts for which permission was national territory at prices no higher granted had to be subject to 'the same [than those mentioned in the treatment as the tenders showing the regulation]' and 'with regard to the lowest sovrapprezzo in respect of which destination of the imported sugar to an award was made'. Cf. Article 4 of the comply with the rules which. . . may operative part. be issued by the Ministry of Agriculture' (Article 2 of the (f) On 13 November 1969 CIP issued operative part); Order No 1236 (Gazzetta Ufficiale of 17 — authorizes Ccz, in particular, to fix November 1969, p. 7106) which: the amount (quota parte) of the — recites, in particular, that Community sovrapprezzo at an appropriate figure legislation does not contain any ('prezzo congruo') and to award principles relating to the fixing of import quotas 'according to the price differentials for certain special quantity and the amount which has kinds of sugar, for packing the been tendered' (Article 3 of the product and for trading margins operative part); which must be taken into account in — provides that if the person concerned sales of sugar for consumption; that does not comply with the in order to protect Italian consumers beforementioned conditions the from price increases which are not imported sugar will have to bear the caused by changes in Community whole of the sovrapprezzo (Article 7 prices it was necessary to confirm the of the operative part; the later ceiling fixed previously for the said regulations include the same article). price differentials; — provides that this ceiling is (e) By Order No 1234 of 24 October determined by the alignment of the 1969 (Gazzetta Ufficiale No 273 of 27 prices fixed by Order No 1119, October 1969, p. 6722) CIP made similar which has been repealed, (cf. (a) and provisions for white sugar in Categories 2 (b) above) for sales by the producer and 3 intended for industrial use. The and sales for immediate con invitations to tender provided for could sumption.

In application of Article 19 (1) of For the first time Order No 10/1970 Regulation No 17 and Regulation No (Article 6 of the operative part) provides 99/63 the Commission in a letter of for security (fidejussione) to be given. 24 July 1972 addressed to the This security must be for an amount beforementioned undertakings headed equal to the 'sovrapprezzo' payable plus 'Notification of Objections', 5 %. The operator concerned must — found that these undertakings had provide the security as soon as he is infringed Articles 85 and 86 of the notified that his tender has been Treaty; successful. The security will be released — gave notice that it intended to as soon as he has paid the 'sovrapprezzo'. compel them, by means of a decision, to bring these infringements to an The said Order No 10/1970 again end and to impose fines upon them; authorized (cf. (e) above) Ccz to award — gave the undertakings concerned the import quotas outside the procedure of opportunity of being heard on the invitations to tender, and stated that the matters to which the Commission quantities awarded in this way must be had taken objection within a period intended solely for industrial use and of two months. that 'they must not exceed 10 000 quintals... for each undertaking The undertakings made use of this consuming sugar and, in the aggregate, opportunity.

JUDGMENT OF 16. 12. 1975 — JOINED CASES 40 TO 48, 50, 54 TO 56, 111, 113 AND 114/73

on the market of the Southern part of (a) Summary of the operative part of the Germany and consequently the decision protection of that market ; (5) RT 'has from the 1968/69 marketing The first Article of the decision makes year committed infringements of the following new complaints: Article 86 by bringing economic (1) Eridania, Société generale de pressure to bear on Belgian exporters sucreries, Cavarzere, Industria degli with the object of compelling them zuccheri, Romana, Volano, Emiliana, to restrict their exports'; SADAM and Sermide on the one (6) SU and CSM 'have during the hand and Sucres et Denrées, Béghin, 1969/70 marketing year committed Sucre-Union, Say, Générale sucrière, infringements of Article 86 by Lebaudy-SUC, RT and SZAG on the bringing economic pressure to bear other hand 'have since the end of the on Netherlands importers with the 1968/69 marketing year committed object of compelling them to restrict infringements of Article 85 (1) by their imports'; engaging in a concerted practice (7) SZV 'has from the beginning of the having as its object and effect the 1968/69 marketing year committed control of deliveries of sugar on the infringements of Article 85 (1) by Italian market and consequently the preventing its agents from reselling protection of that market'; sugar obtained from other sources (2) SU and CSM, on the one hand, and and by tying its customers by RT and Pfeifer & Langen on the granting loyalty rebates'; other hand, 'have since the 1968/69 (8) WZV and Pfeifer & Langen 'have marketing year (Pfeifer & Langen from the 1968/69 marketing year only since the 1970/71 marketing onwards committed infringements of year) committed infringements of Article 85 (1) by entering into Article 85 (1) by engaging in a agreements with their agents which concerted practice having as its object restrict their opportunities for and effect the control of deliveries of importing and exporting within the sugar on the Netherlands market Community'; from Belgium and the Western part (9) RT, Say, Béghin, Générale sucrière, of Germany and consequently the Lebaudy-SUC, Sucre-Union and

Western part of Germany and consequently the protection of that Article 2 states that 'the before market'; mentioned undertakings are required to

put an end immediately to the in­ their respective shares of production fringements found as aforesaid'. or marketing which each had acquired and also to the relation Under Article 3 the following fines are between them or between some of imposed: them and third countries; — states 'that there is a special situation — on RT: 1 500 000 u. a. on the Italian market caused not only — on Sucres et Denrées: 1 000 000 u. a. by Community regulations but also — on Say: 500 000 u. a. by special measures taken by the — on Béghin: 700 000 u. a. national authorities' and describes — on Générale sucrière: 400 000 u. a. this situation (cf. 2 above); — on Eridania: 1 000 000 u. a. — states 'that the Community — on Industna degli regulations do not determine the zuccheri: 300 000 u. a. actual way in which prices are — on Cavarzere: 200 000 u. a. established on the markets of the — on Emiliana: 100 000 u. a. various Member States. The possi­ — on Volano: 100 000 u. a. bility of selling to the intervention — on SADAM: 100 000 u. a. agencies, at the intervention price, — on SU: 800 000 u.a. quantities of sugar within the — on CSM: 600 000 u. a. maximum quotas only prevents — on Pfeifer & Langen: 800 000 u. a. selling prices within the Community — on SZAG: 700 000 u. a. falling during a fairly considerable — on SZV: 200 000 u. a. period and to an appreciable extent below the intervention price'; that these selling prices, which where generally below the target price, were (b) Summary of the grounds of the occasionally close to this latter price Decision in the Netherlands and Germany, whereas in the other Member States The Commission: they were on the whole closer to the — finds that the undertakings con­ intervention price. cerned are the principal producers and sellers of sugar in the The Commission then gives a general Community;­ description of the endeavours made by — states in particular that the sugars to commercial operators of the EEC to which the decision relates are raw arrive at a general agreement on the sale sugar and white sugar falling within of sugar on the markets of Member States heading No 17.01 of the Customs and third countries; it mentions inter Nomenclature of the EEC, the first alia: being produced at an intermediate — that the main sugar producers and stage of production and not fit for the representatives of the chief sales human consumption and the second organizations met in Munich on 30 being a finished product; May 1968 for the purpose of — states, with supporting figures that allocating the available quantities there was a surplus of sugar produced both on the market for surpluses and in the Community during the on the market for human 1968/69 and 1971/72 marketing years consumption; with which the decision is concerned; — in July 1968 the French producers — analyses the French, Belgian, Italian, entered into an agreement (which Netherlands and German sugar only came into operation during the markets and in particular refers to the 1968/69 marketing year — which economic situation of the under­ was notified to the Commission and takings mentioned in its decision, the evaluation of which in relation to

Article 85 will be the subject of a (aa) The Commission states that during separate procedure — under which the 1968/69 marketing year certain all sales by French producers of sugar Italian sugar processing industries for export to third countries, for complained of the lack of attractive offers denaturing or for use by the chemical from suppliers in other Member States, industry were made subject to the whereas Belgian and French producers in condition that the sugar delivered was particular had large quantities of sugar in fact to be used for the purposes available. These producers had already envisaged, except in those cases for this marketing year shared out among where a specified price supplement themselves their sales to Italy, was paid; standardizing their conditions of sale and — that during the 1969/70 marketing assuring their Italian producer year cooperation between the sugar purchasers, that any other sales by them producers in the Community was on the Italian market would only be organized on a much wider scale effected at a higher price. being based on the principle which RT on one occassion defined as 'pas At the beginning of the 1969/70 de mouvements de marchandises de marketing year on the occasion of the pays à pays, si ce n'est en conclusion of new sales agreements for concertation de producteur à large amounts between the French and producteur' ('No movement of goods Belgian producers on the one hand and from country to country, save by Eridania acting on behalf of the Italian concerted action between producer purchasers on the other hand, the parties and producer") and which Export met at Paris on 29 July 1969 and at characterized, in a telex sent to RT Genoa on 11 September 1969.

1. Complaint that Eridania, Cavarzere, — an 'importers group consisting Industria degli zuccheri, Volano, initially of the Italian sugar producers Emiliana, SADAM, Sucres et Denrées, who attended the meeting in Genoa, Béghin, Say, Générale sucrière, RT namely Eridania (which was the and SZAG have engaged in a coordinator of the group), Industria concerted practice having as its object degli zuccheri, Romana, Volano, the protection of the Italian market Cavarzere, Emiliana, Sermide, (Article 85) SADAM and certain undertakings,

Moreover producers, who were not It is true that the undertakings concerned Italian, undertook not to sell to any other have argued that this conduct was made Italian purchasers except at increased necessary by the system of invitations to prices, the increase being FF 1·25 per tender adopted by the Italian authorities 100 kg for the 1968/69 marketing year, (cf. 2 above), that it enabled costs to be FF 1-65 for 1969/70 and FF 1-75 for rationalized and did not affect all sales of 1970/71. As a result deliveries to sugar in Italy. independent purchasers remained limited to small amounts. In fact they state that because of the very large quantities put out to tender at the At a meeting in Genoa on 22 September same time foreign suppliers had to share 1970 between the members of the two out the amounts awarded according to groups they reaffirmed the obligations their distributive capability; only the which they had already assumed. In the large Italian undertakings had a 1970/71 and 1971/72 marketing years distribution network capable of the major part of the Italian channelling sales of large quantities of requirements of imported sugar were also imports; deliveries in bulk made it met by deliveries — which were possible to obtain very favourable freight substantial — from producer to producer. rates from the French Railways; finally deliveries were made to independent (bb) The beforementioned operations Italian customers, in particular by amount to concerted practices within the Sucre-Union and Générale sucrière. meaning of Article 85 (1) of the Treaty. However according to the Commission In support of this finding the these explanations are not such as to call Commission in addition to repeating the in question the existence of restrictions developments mentioned above under on competition. In fact under Italian

regulations such a concentration of Netherlands the basic principle is that supply and demand was unnecessary; we do not wish to do anything that although most of the deliveries for Italy would upset Suiker Unie or CSM, just as had been made under invitations to they do not want to do anything which tender for import quotas, they were would disturb us'. In spite of the effected 'within the marketing system existence of large surpluses, especially in implemented by common accord by the Belgium, RT, SU and CSM refused, when producers concerned'. Regulation No 1009/67 entered into force, to supply sugar to customers in In the normal course of events it is not other countries who were not sugar in the interests of a producer to supply producers on the ground that the large quantities to his competitors, amounts available should be reserved for because he can obtain larger profits by the national market.

Netherlands to Export and Hottlet, In addition to other disadvantages it has subject to the condition that these made direct delivery to the said undertakings should only sell to purchasers difficult if not impossible, customers approved by CSM and SU and with the result that after various that they should no longer export to the unsuccessful attempts they resigned Netherlands sugar produced by Belgian themselves to placing their orders with producers independent of the RT group; Italian producers. the producers' justification of the first condition was that they were anxious not

Imports

imported sugar at a price which It is true that the parties concerned have would not be too competitive in pointed out that part of the deliveries by relation to the price of sugar RT to CSM relating to quick melting produced in the Netherlands; sugar is carried out pursuant to an — that the last consignments of sugar agreement entered into between them, imported were to be delivered in 50 because CSM does not have the requisite kg bags and in 1 kg packets bearing plant for manufacturing sugar; other sales the trade-mark SU; by RT help to complete the range of the — that the sugar thus packed was then qualities of sugar sold by CSM. These to be resold to Dutch producers to statements are not however relevant, as enable them to market it themselves. the deliveries by RT to CSM are not restricted to these special qualities and During the marketing years 1969/70 and Netherlands consumers as a whole have 1970/71 more than 14 000 metric tons of no opportunity of selecting their sugar were bought by these producers in supplier. this way at prices slightly lower than the resale prices; these prices were identical The parties concerned have also pointed with the selling prices for sugar produced out that part of the deliveries by RT to in the Netherlands. SU is sugar for denaturing. It is however no less true that the users of sugar for The Dutch dealers had to accept this animal feed find that the number of agreement because certain threats had offers made to them is restricted; further been made especially by SU. only a very small part of RT's sales to SU is sugar for denaturing. From the marketing year 1970/71 onwards SU and CSM made the Dutch SU and CSM have in the main only dealers parties to the agreement they had given their consent to deliveries to the entered into with RT; since then Netherlands milk products industry, deliveries of Belgian sugar have been most of which have no competitive effect made through Belgian and Dutch dealers on the sale of sugar by SU and CSM. in agreement with SU and CSM. Cf. also 5. and 6. below. 3. Complaint that Pfeifer & Langen and RT have engaged in a concerted (bb) The Commission evaluates these practice having as its object the operations and describes their protection of the market of the consequences in a way similar to that Western part of the Federal Republic adopted in its description of the conduct of Germany (Article 85) relating to the Italian market (cf. 2. (bb) above). The considerations which apply (aa) The Commission states that since in particular to the present complaint are 1968/69 Pfeifer & Langen has purchased in essence as follows: The operations in raw and white sugar in increasing

amounts from Belgian and French intra-Community market of sugar competitors, the contracts for its delivery intended for denaturing being sold for having been entered into with RT. In the human consumption. 1971/72 marketing year it bought even larger quantities of raw sugar from During the 1968/69 marketing year some competitors in other Member States. In cases were recorded of refusal to deliver the 1971/72 marketing year it sold a not when sugar was to be delivered to inconsiderable amount to competitors in Germany for human consumption; a other Member States and in particular to German dealer established in the SU WZV and its most important Saarland told a German purchaser that member, Pfeifer & Langen, sold the sugar the German sugar industry had which had been purchased, in some cases instructed his French supplier not to after processing, at the same prices and make any sales on the German market. subject to the same conditions of sale and under the same trade-marks as During the 1969/70 marketing year sales national products. of Belgian sugar were made by dealers subject to the condition that in the event The imports other than those from of resale for human consumption in producer to producer with the Western Germany the consent of Pfeifer & part of the Federal Republic of Germany Langen was to be obtained or the price were on the whole small. To the extent increased by Bfrs 10. to which these imports came from Belgian producers and the sugar was During the 1970/71 marketing year supplied for denaturing or export to third much larger amounts were imported countries, the obligation — compliance from Belgium into Germany, but of with which was strictly observed — was these three-quarters were in the form of usually imposed upon the dealers deliveries from producer to producer. concerned not to sell such sugar for Export, after obtaining RT's opinion human consumption in the Commu either refused to supply German nity, conduct explained by the fact that importers on the ground that RT was not sugar intended for the beforementioned for the time being exporting to that purposes was sold in principle at the destination, or — after close consultation intervention price and therefore more between RT and Pfeifer & Langen — cheaply than sugar for human demanded too high a price calculated consumption in the Member States. The 'after adapting it to the internal price right to resell was only allowed subject to notified by Pfeifer & Langen'.

denaturing. Since then no further relating to the Italian and Netherlands instances have been recorded on the market (cf. 1. (bb), 2. (bb) above). The

In particular it calls attention to the fact The statements of the persons concerned that: show moreover that Pfeifer & Langen — the statements by Export agree with 'tried resolutely to oppose any attempt to those made by RT; trade with its customers'. — the need to obtain the consent of Pfeifer & Langen was provided for in The Commission proceeds to refute the a sales agreement of the arguments put forward by those Moerbeke-Waas company belonging concerned that:

to the RT group; — deliveries from producer to producer — it was in the 1970/71 marketing year, are justified on economic grounds; the period during which most of the — with regard to deliveries of raw sugar documents invoked by the the advantages are obvious, since they Commission were drawn up, that it enabled Pfeifer & Langen to make would have been possible to export to full use of its surplus capacity not Germany on favourable terms, since required for its own production and an increase of selling prices had for this purpose to approach raw

JUDGMENT OF 16. 12. 1975 — JOINED CASES 40 TO 48, 50, 54 TO 56, 111, 113 AND 114/73

sugar factories which were closer than (aa) The Commission states that since the nearest raw sugar factory of the 1970/71 marketing year SZAG and Northern Germany; Franken have bought raw sugar from — the supplier on its part does not Béghin and white sugar from Béghin and therefore have to set up a sales Sucre-Union in increasing quantities. organization in the country of These sugars have been marketed, in destination; some cases after processing, at the same — competition is not restricted as prices, subject to the same conditions of deliveries between producers are not sale and under the same trade marks as exclusive. German sugar.

RT's opportunities for supplying purchasers in Pfeifer & Langen's sales (bb) The Commission evaluates this area other than this firm are restricted situation and describes its consequences by the two facts that RT made large in a way similar to that adopted in its and regular deliveries to Pfeifer & description of the conduct relating to the Langen and could only sell to third Italian and Netherlands markets and the parties with the latter's consent or at Western part of Germany (cf. 1. (bb), 2 prices aligned with those of Pfeifer & (bb), 3. (bb) above). The considerations Langen or WZV. In these which apply in particular to this circumstances such sales do not have complaint are in essence as follows: any competitive effect. In this context it is also important to The concerted practice is evident from take note of the measures taken by the fact that deliveries from France have RT and Pfeifer & Langen with regard been made between producers to prevent to the dealers in their respective German producers losing customers and countries with the object of shares of the market and from the preventing or restricting exports and practice of giving loyalty rebates adopted imports (cf. 5. and 8. below). by SZV (for particulars cf. 7. below). In short the practices to which objection is taken are aimed at From the time the frontiers were opened protecting the Belgian market and by the entry into force of the the Western German sales territory. Community regulation on sugar, French producers, having regard to their large 4. Complaint that SZAG and Béghin surpluses and the higher price level in have engaged in a concerted practice Southern Germany, could have supplied having as its object the protection of sugar in this area and indeed to the market in the Southern part of the purchasers other than their competitors. Federal Republic of Germany (Article Yet in the 1968/69 and 1969/70 85) marketing years, leaving the Saar out of

account, there were hardly any French existence of any restriction on com exports to Germany. The increase in petition, as these suppliers are themselves these exports in the 1970/71 and able to refine the whole of the raw sugar 1971/72 marketing years coincided with which they produce and to process the a noticeable increase of deliveries sugar of inferior quality into liquid sugar. between producers. The concerted practice is also evident The Commission rejects the statements from the fact that SZV has prevented its by the parties concerned that: agents from importing sugar from other — such deliveries are economically Member States and tied its customers by rational as they enable variations in granting loyalty rebates (cf. 7. below for production caused by harvests to be further particulars). offset, permit amounts which are

from Southern German customers show that there is an economic interest in Without contracts including such clauses importing sugar from other Member RT refused to supply sugar to these two States. dealers. They had to accept the beforementioned clauses because there SZAG has itself admitted that the were no other major sources of supply practices to which exception is taken and because RT informed them that were intended to avoid a loss of otherwise it would not supply them with customers. any more sugar, in particular sugar for export to third countries which makes up

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reasons: agreed to import from France in 50 — It alone accounts for 50 % of Belgian kg sacks or 1 kg bags so that SU and sugar production. CSM can sell them on the — It controls or is in a position to con Netherlands market under their own trol — by means of majority holdings trade marks and at their prices; (e.g. Oreye and Moerbeke-Waas) and — not to arrange any more imports of distribution agreements — this kind without the consent of SU approximately 85 % of Belgian and CSM. production and a similar share of the Belgian Luxembourg market, as white During the 1969/70 and 1970/71 sugar is only imported into Belgium marketing years more than 14 000 metric in minimal quantities and the Grand tons of French sugar was purchased in Duchy is supplied by Belgium. this way by SU and CSM and indeed at a Belgian producers controlled by RT price which was slightly lower than the do not as a general rule depart from price at which they resold the sugar. the price policy fixed by RT. — It exercises some influence on the In order to obtain this contract SU and CSM threatened to interfere with their sugar markets of other Member States, in particular France, because of traditional business of importing sugar its participation in Say and Raffinerie for the Netherlands milk products d'Erstein and of its financial links industry by supplying that industry with certain large European sugar themselves on the terms applicable on producers and because of its the world market; these imports advanced technical knowledge and represent a large proportion of the turnover of the said dealers. achievements (cf. also 2. and 3. above).

In fact it may affect trade between Member States in a (bb) SU and CSM have a dominant way which might adversely affect the position on the Netherlands market attainment of a single intra-State market which constitutes a substantial part of the by restricting and in certain cases Common Market: preventing the sale of sugar in other — They are responsible for the entire Member States. production of Netherlands sugar. Their sales represent more than 85 % 6. Complaint of economic pressure of the Netherlands market.

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— They cooperate closely in almost all territories of other operators, it has at their activities. Towards other least 90·95 % of the market, as sales undertakings and particularly towards by 'outsiders' or by German and the beforementioned dealers they foreign factories established outside appear as a single entity. the said sales territory are extremely small with the exception of deliveries (cc) The Commission regards the by French producers to members of operations described (aa) above as an SZV who were producers. abuse and supports its view with arguments similar to those it put forward (cc) The Commission regards the with regard to RT (cf. 5. (cc) above). conduct described in (aa) above as an abuse and supports its view with 7. Complaint that SZV prevented its arguments similar to those it put forward agents from reselling sugar from other with regard to RT (cf. 5. (aa) above). In sources and tied its customers by addition it makes the following granting loyalty rebates (Article 86) observations:

does not depend upon the amount bought but only on the condition that So far as the loyalty rebate is concerned their annual requirements are covered it is an unjustifiable discrimination exclusively by SZV. In some cases at least against buyers who also buy sugar from the loyalty rebate as been abolished or its other sources. Since the buyers depend abolition has been notified when the for at least part of their supplies on SZV, buyer has continued to import sugar the disadvantage of losing the rebate is which has led to the buyers concerned very soon greater than the advantage of ceasing to import. buying from outsiders even if they offer a favourable price, which the Commission (bb) SZV has a dominant position in endeavours to prove with figures. the Southern part of Germany which forms a substantial part of the common The rebate allows the seller to control market: the customers' purchases from foreign — It sells almost all the production of producers, which can be done if he its members and fixes the prices and knows the average amounts bought the sales policy itself. To the extent annually which do not change very to which these members sell much. individually they use the same agents. — In SZV's sales territory, which is The fact that SZV has from time to time clearly divided from the sales granted a rebate even if purchases have

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(aa) The Commission describes the (bb) The beforementioned contracts are terms of the 'commission contracts' and agreements prohibited by Article 85 of the 'trade representation contracts' the Treaty: entered into by WZV and Pfeifer & Langen with operators through whom — They make the agents agree only to these firms sell their sugar and makes the resell the sugar supplied by WZV and following observations: Pfeifer & Langen in a particular territory and to specific customers WZV's sales territory is subdivided into and not to market sugar from any four sales areas; in some of these areas other source. WZV only sells through its four area — In addition they make it more commission agents. In the territory difficult to sell imported sugar in the bordering on NZV's sales area WZV has Western region of the Federal reserved the prior right to sell, which Republic of Germany: means that the commission agent must — They prevent any increase in the notify WZV of all negotiations in number of suppliers of sugar for progress and wait and see whether it human consumption on this exercises its said right. The commission market.

agent undertakes for himself and on — Dealers are only allowed to act on behalf of the firms dependent upon him behalf of other suppliers on this not to sell any sugar in this particular market if their operations are area either for or through other national compatible with the interests or foreign manufacturers or dealers — or which the parties to the contracts even in his own name and on his own have in common.

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an application under Article 85 (3) of the Treaty; even if the question of The concerted action to which exception notification is disregarded the require­ is taken, between large producers from ments for exemption have not been many Member States — France and fulfilled. Belgium, the countries having the largest surpluses in the Community — was 9. Complaint that RT, Say, Béghin, likely to affect trade between Member Générale sucrière and Sucres et States. In fact it enabled the parties to Denrées engaged in a concerted alter the quantities of sugar which each

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the Community. Further the fact that of the objectives of the common under this system of invitations to tender agricultural policy in the sugar sector. the sale of large amounts at an attractive The necessary requirements for attaining profit was guaranteed has been one of these objectives have been fixed by the determining factors in the marketing Regulation No 1009/67 and its of surpluses by the parties concerned. implementing regulations; the practices The concerted action in question in question cannot be fitted into this supplements the other measures taken by context from whatever point of view they the parties concerned to protect certain are examined.

It can therefore a form of sharing out therefore only determine these production between Member States. conditions within the framework of these tenders. Even if for the duration of one Among the objectives of the common marketing year the Commission exercises agricultural policy as defined in Article some general control over the exports of 39 of the Treaty the recitals of the Community, the producers by means Regulation No 1009/67 emphasize the of a concerted action can modify the importance of guarantees relating to the results of the various invitations to employment and standards of living of tender. producers.

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extraneous to these objectives and, far and a slowness to adapt to the from being necessary for attainment of opportunities for free trade offered by the objectives of Article 39, even conflict Community regulations, which with the measures laid down in moreover include restrictions without Community regulations for attainment of thereby eliminating competition. these objectives in the sugar sector. In particular the concerted action in relation With regard to the duration of the to invitations to tender (cf. 9. above) infringements it is necessary to bear in distorts competition between the mind that in general they were spread undertakings concerned which is the over several years. whole purpose of the system of invitations to tender. With regard to the particular situation of each of the said undertakings account must be taken of the nature and duration 11. The principle in accordance with of the infringements in which it which the fines have been imposed participated, the extent of its and the amount thereof participation as well as its position on the market and in relation to its

(aa) With regard to the principle of customers. The Commission then imposing fines the Commission submits examines the individual cases of the that the infringements resulting from the various persons and undertakings to concerted practices have been committed which the decision was addressed and 'either intentionally or at least gives inter alia the reasons why it is negligently', since the parties concerned unnecessary to impose fines upon some knew, or in any case could have known, of them. that the said practices had a restrictive effect. 4. Procedure

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Unione nazionale consumatori, an Italian The Advocate-General gave his opinion association having its registered office at at the hearings on 16 and 17 June 1975. Rome, in Cases 41/73, 43 to 48/73, 50/73, 111/73, 113/73 and 114/73, to the extent to which the said intervention II — Conclusions of the parties supports the conclusions of the Commission relating to the complaint (1) The main or only conclusion of all that the Italian market has been the applicants is that the entire decision protected. should be annulled and some of them state that it should only be annulled so By order of 19 February 1975 the Court far as they are concerned. decided of its own motion to hear the evidence of Messrs. B. Lemaire, R. Dudok Générale sucrière, Say, Béghin, Volano de Wit, E.K.H. Lindeboom and Ch. and Eridania claim in the alternative Sanders, in Cases 40/73 and 42/73 and that the decision should be annulled to on certain questions relating to the the extent to which it imposes a fine complaint that economic pressure was upon them. These applicants with the brought to bear by SU and CSM on exception of Volano claim in the further Netherlands importers. The said alternative that the amount of the fine witnesses gave their evidence before the should be reduced. Second Chamber of the Court on 13 March 1975. SADAM claims 'in the alternative', and The Court invited some of the parties to Industria degli zuccheri 'in any event' answer certain questions and gave the that the fines imposed should be cancelled or reduced. opposite parties the opportunity of submitting their observations on these answers. The answers and the SU, CSM, RT, Sucres et Denrées, Pfeifer observations reached the Court within and Langen, Emiliana and Cavarzere claim, in the alternative, that the fine the time limits prescribed for this should be reduced. purpose.

unfounded and that each of the parties A — Some applicants and the should be ordered to pay the costs of its Commission discuss in more or less detail application. the scope and effects of Community regulations and the trend of the sugar (2) L'Unione, the intervener claims that market during the period in question. Applications 41/73, 43 to 48/73, 50/73, This discussion, which was partly 111/73, 113/73 and 114/73 should be controversial, includes in particular the dismissed, to the extent to which they questions: — whether sales between Member States relate to the complaint that the Italian market is being protected and that these have been small or not and, if the applicants should be ordered to pay the answer is in the affirmative, whether costs. this is caused by fiscal, monetary and administrative obstacles created by Générale sucrierе, Say, Sucres et Denrées, Member States or the Community, or not; SADAM and Eridania, in their replies to the intervener's submissions are — according to the spirit of the said content to stress the merits of the regulations what is the function of arguments which they have developed in the various prices for which it the main procedure without making the provides (threshold price, target price, formal claim that the intervener's intervention price, minimum price to submissions should be dismissed. On the pay to beet producers) and what were other hand Cavarzere and Industria the sale prices which producers in degli zucchere put forward such a claim; fact obtained; in particular whether Industria degli Zuccheri claims that the the intervention price is or is not to intervener's submissions are inadmissable some extent a price 'garanti' and, in the alternative, that they are ['guaranteed"] to the producers, unfounded. Béghin, Volano, Emiliana whether the target price must be and RT made no reply to the considered as being at the same time intervener's statement the 'souhaitable' ['desirable"] market price or not, whether and to what extent it could be in the interests of producers to sell below the III — Submissions and argu­ intervention price; ments of the parties — whether or not the Netherlands are a

consumption and one for denaturing Some of the applicants submit that the and exports to third countries — Commission has either misunderstood producers were entitled to insist that the meaning of the said earlier events or their purchasers do not resell for wrongly come to the conclusion that human consumption sugar supplied they must be taken into account in for one of these two latter purposes; connexion with these proceedings. — whether or not, having regard to the homogeneous and interchangeable RT states that it is 'unrealistic and nature of 'sugar' products, the contrary to the laws of psychology to consumer minds very much whether take the view that undertakings had to he obtains sugar from one source make a mental adjustment in 1968 in rather than another, with the result order to switch suddenly from a national that the promotional function of any system with no competition to a trade-mark has practically no effect: European system of unrestricted com­ whether, having regard to the low petition'. On the other hand Community value of sugar in relation to its weight regulations, which are also intended to and volume, transport costs are or are control the economy, only allow a very not a significant item in the cost of narrow margin for competition, within the product; whether or not these which it is unreasonable to require that facts lead to the conclusion that the undertakings should engage in un­ natural sugar market is the one which restricted competition with each other. is closest to its production centre.

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in a number of conjectures made by the market in question. In this case the undertakings concerning the future Commission passes over in silence the conduct of their competitors; it inference to be drawn from this presupposes in addition 'an act of argument namely that the conditions for communication' fun acte de the application of Article 85 are not communication'). Objection cannot be fulfilled if there is no causal connexion taken to the mere fact that an between the alleged concerted action and undertaking has knowledge of the the ensuing practices, because these conduct of its competitors and reacts practices arise from market conditions, so intelligently; this is also true if the that they would have been the same if parties know that their respective there had been no contact between decisions are complementary and if

It is necessary to proceed on the basis of continuing to act independently, adapts its conduct 'knowingly' ('sciemment') to tangible data, namely specific concerted that of operator B; the two operators actions such as oral agreements, must have a common purpose, which discussions during meetings, prior means that they have notified each other information by an undertaking of its how they will act if each of them adapts future conduct etc. This kind of his conduct to that of the other.

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premeditation. The existence of practices degli zuccheri); which are in fact concerted is sufficient. — an infringement of Article 21 of Commercial transactions between Regulation No 17 relating to the competitors are pre-eminently the means publication of decisions taken by the of adopting a concerted course of Commission (SZAG); conduct on the market. The offer made — an infringement of Article 2 of to a competitor is in many cases Regulation No 99/63 concerning the evidence of the fact that the offeror is not procedure for the notification of anxious to compete with him, and the objections (SZAG). acceptance of such an offer shows that the offeree is contributing to the Eridania calls attention to the fact that establishment of conditions which distort the objections made at the beginning of competition. the administrative procedure and the final decision were communicated to the press before they had even been notified

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It is objections. true that the second paragraph of this Article allows notice to be given in the Official Journal, if this appears (2) Summary of the Defences appropriate from the circumstances of the case; but the exception provided by The Commission replies that it is under a this provision would be undermined if the Commission was entitled to make duty in all important cartel cases to inform the public of the measures which known its objections at press conferences and interviews. it takes: the interest which the public has in this information prevails over the Article 21 of Regulation 17 does not contrary interest of the undertakings provide for the publication of decisions concerned. Moreover, such a way of taken in application of Article 15 of this proceeding is not prohibited by any regulation, that is to say, those imposing provisions, provided that professional a fine; on the other hand it requires, so secrecy is protected and that the requisite far as the decisions adopted pursuant to precautions are taken to make it Article 3 are concerned that they shall be abundantly clear that, until a final

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The Commission disregarded this rule by giving notice of its objections in identical (3) Summary of the replies terms to 48 sugar undertakings, although the facts alleged only affected either one Eridania and Industria degli zuccheri or a limited number of the undertakings state that they do not object so much to to which they were addressed. The the fact that the Commission issued undertakings therefore did not know the press releases as to the time and method specific charges made against them and chosen for this purpose. Industria degli upon what evidence they are based.

This reason the principle laid down by these cannot however justify the fact that its provisions that the parties to a dispute defence has been adversely affected. The attitude of the Commission was must be given the opportunity of being moreover inconsistent, because if the heard, has accordingly made it impossible for the undertaking to defend observations of the other undertakings were confidential the Commission could itself effectively. not make a single decision. Whether this Further, Industria degli zuccheri did not argument is correct or not the Court has know the contents of certain documents held that the Commission can only rely such as the minutes of the separate on the principle of professional secrecy if hearings for which certain undertakings it has asked the undertakings concerned asked and the opinion which the for their opinion, which it did not do in this case. Advisory Committee has to give as provided for by Article 10 of Regulation In accordance with Article 3 of

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objections to SZAG should have been public; therefore the Commission cannot drafted entirely in German. However this be required to notify to a particular communication contained a large undertaking the minutes of the hearing number of documents drawn up in other of another undertaking. With regard to languages, without a translation and the opinion of the Advisory Committee neither prepared by SZAG nor addressed it is given solely for the Commission in to it. It is true that the Commission accordance with Article 10 of Regulation stated (see communication, footnote on No 17.

Article 9 (3) of Regulation No 99/63 to (aa) Industria degli zuccheri, with makes it clear that hearings shall not be reference to its submissions on the main

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(4) Summary of the rejoinder in Case In such a situation the Commission 54/73 should have conducted an inquiry into economic sectors as provided by Article The Commission counters SZAG's reply 12 of Regulation No 17 if certain by stating that a reading of the circumstances 'suggest that in the notification of objections leaves no doubt economic sector concerned competition as to the nature of the infringements is being restricted or disturbed within the imputed to each of the undertakings. common market'. If the Commission had During the administrative proceedings adopted this procedure, in conformity

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Industria degli zuccheri replies that if have applied the principle laid down by there was ever a case which called for a the Court that having regard to the special inquiry under Article 12 of principle of legal certainty cartel Regulation No 17 it was the present case. agreements which do not have to be notified remain valid — and By failing to carry out such an inquiry the Commission denied the undertakings consequently no fine can be imposed in the guarantees to which they are entitled respect thereof — until the Commission and conducted an incomplete inquiry. makes a decision affecting them.

Industria degli zuccheri submits more (d) Eridania, Cavarzere, Industria degli briefly a similar argument. zuccheri and SZAG: Infringement of the procedural rules SZAG submits that the principle of legal of Regulation No 26 and of the certainty, which moreover is mentioned principle of legal certainty in the fifth recital of Regulation No 26,

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In the first place the Regulation No 26 and the measures present case does not fall within the field taken in application of Regulation No of application of Article 4 (2) of 17, it could not in any event impose a Regulation No 17. In the second place fine retroactively. those cases specified in Regulation No 26 when Article 85 does not apply are (2) Summary of the statements of exempted from the application of this defence Article by operation of law, whereas the provisions of Article 85 (3) can only be The Commission replies that Article 2 (2) declared to be inapplicable by the of Regulation No 26 could, to put it at its Commission, which has a discretionary highest, be interpreted so as to mean that power in this respect and can only make it must apply the special procedure for a decision upon application by the which the Article provides, if it has undertakings concerned. occasion to take a positive decision, that is to say to confirm that the conditions When replying in particular to SZAG the for exemption are fulfilled.

thereof. For this reason, to which must by this Regulation must be adopted be added considerations based on the whether the decision to be taken is need to keep the procedural steps down negative or positive. Further if the law to a minimum, it could, to put it at its lays down that, in order to arrive at a highest, be thought that the Commission particular decision, a specific procedure is entitled to confirm, by means of a must be adopted, this procedure should special decision, that a specific practice obviously be adopted whether the cannot come within any of the content of the findings, which it may exemptions in question; it would produce and which the authority does however only be advisable to adopt such not know when the procedure is opened, a procedure if the solution appeared to is positive or negative.

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impose fines. But, if it was essential to submissions first by repeating certain confirm the infringement, it is difficult arguments in the various statements of to understand why this should not have defence. It then states that the decision been done in accordance with the forms was taken after consulting the Advisory and guarantees provided for by this Committee referred to in Article 10 of regulation. Regulation No 17; the Member States represented on the Committee therefore But if it was true that, in order to had the opportunity of defining their establish that this regulation is position on the question whether inapplicable, it is unnecessary to adopt Regulation No 26 applied or not.

It is only after having made this finding that the Commission can act as it did; The unduly short time-limits for the the undertakings which, it can be submission of observations assumed, intended to abandon the said practices could then have limited the (1) Summary of applications consequences which Regulation No 17 attaches to infringement of the rules of Eridania, Industria degli zuccheri, competition. SADAM and SZAG state that in the communication of 24 July 1972 which SZAG expresses the opinion that the reached the persons to whom it was Commission's argument amounts to addressed some days later the saying that it is free to apply the rules of Commission fixed a time limit of two procedure of Regulation No 26 according months for the submission of

observations, which expired right in the Commission. It was however not even on middle of the normal holiday period and that date in a position to give a complete which it refused to extend. Having regard explanation of its conduct. After the to these facts and to the complexity of beforementioned date it came to the the matter, the general nature of the conclusion that it would serve no useful presentation of the contents of the purpose to make any supplementary communication, of its scope, of the need declarations. In fact on the one hand the for each undertaking to take note both of Commission stated in the notice of the the conduct and of the defence of the oral hearing that 'the written part of the other undertakings affected by it and hearing was closed'; on the other hand, finally to the seriousness of the charges during this hearing, the President, Mr made, the Commission in breach of Jaume, called attention to the fact that Article 11 of Regulation No 99/63 failed undertakings 'have a period of 2 weeks to grant the persons concerned sufficient from the date of the hearing to lodge time to prepare their defence. If this with the Commission written statements provision enacts that, in fixing time completing their observations (there is no limits, the Commission shall have regard question of an extension of the time to the urgency of the case, this rule period for delivering a reply)'.

reason put forward for rejecting the application for an extension — namely that the room reserved for the oral (2) Summary of the statements of defence hearing was not available after the dates The Commission replies that under fixed for this рurpose (17 and 18 October 1972) — cannot be taken seriously. Article 11 of Regulation No 99/63 the minimum time-limit is only two weeks. The time-limit of two months granted in SADAM adds that the oral hearing took this case was enough, even if account is place 'in considerable confusion' owing taken of the fact that this period to the number of people taking part and coincided partly with the usual summer that the Commission merely rejected in

The communication This company by a memorandum of 31 expressly invited the parties concerned to examine the documents which it October 1972 made use of its right, mentioned. recognized in the case-law of the Court, to give its opinion in writing after the The parties concerned had the expiry of the time-limit fixed by the opportunity of defending themselves in

writing and during the hearing; some of no indication of their origin or simply them availed themselves of this internal notes from undertakings like opportunity by sending the Commission Export which are not concerned in the voluminous statements. The Commission administrative procedure. duly took into consideration the whole of their arguments, as is shown by the fact Further Eridania asks the Court to order that it changed its position on certain production of certain documents which points, in particular by deciding not to appear to have been taken into impose fines on certain of the parties to consideration by the Commission but whom the communication was addressed. which the latter has not brought to the With regard in particular to SZAG there notice of Eridania, namely: is no evidence to support the assumption — the agreement between French made by this company that, if it had producers notified to the taken advantage of Mr. Jaume's Commission referred to on page 22 suggestion that it should submit (Rt. Col.) of the decision; additional observations, the Commission — the minutes of the separate hearings would not have taken account of them. of some of the undertakings concerned; — the opinion given by the Advisory (3) Summary of the reply of Industria Committee on Restrictive Practices degli zuccheri and Monopolies referred to in Article 10 of Regulation No 17. Industria degli zuccheri merely emphasizes that the refusal to extend the (bb) SZAG calls attention to the fact time-limit for the defence shows that the that according to the decision (p. 24, Rt. Commission in carrying out the Col.) it acted in concert with Italian procedure was activated by a repressive producers so that 'the major part of its attitude. exports to Italy was delivered direct' to the latter. Now in the communication there was no mention of any such (f) Eridania and SZAG: concerted action; on the other hand Infringement of Article 4 of Regu­ the Commission claimed in the lation No 99/63 communication (p. 102) that deliveries to Italian non-producers were made (1) Summary of the applications 'practically impossible'. The decision therefore contains statements which are (aa) Eridania submits that, contrary to not in the communication. the provisions of Article 4 of Regulation No 99/63, the decision was based on facts which were not mentioned in the (2) Summary of the statements of communication (reference to the defence complaints of Italian operators — The Commission replies: decision, p. 23, Rt. Col. — and the amounts up to which foreign producers to (aa) With regard to the reference to agreed to increase their prices for the complaints of Italian operators and to deliveries to independent operators — the make up of the price increase applied decision, p. 24, Rt. Col.). The Com­ in the case of sales to non-producers they mission moreover did not indicate where were not objections raised against the it obtained its evidence on this point undertakings which were criticized, but facts supporting the objections raised The Commission also infringed the against the latter. The communication beforementioned provision and general referred to them as such on pages 51 and legal principles by using documents with 77.

The agreement between French (aa) Eridania, Industria degli zuccheri producers notified to the Commission and SADAM regard the fact that the had no effect on the decision, so far as decision merely summarizes the Eridania is concerned. communication concisely and passes over in silence — or rejects completely With regard to the minutes of the — the observations submitted by the hearings Regulation No 99/63 does not persons concerned as a defect in the provide that they must be communicated statement of the reasons upon which the to other undertakings; on the other hand decision is based. Article 9 of this Regulation provides that hearings shall not be public. With regard (bb) Industria degli zuccheri calls to the opinion of the Advisory attention to the fact that the decision (p. Committee it is given solely for the 19, Rt. Col.) states, without proving this Commission. Moreover these provisions statement, that 'the rest of Italian refer to stages in the administrative production' — that is to say the sugar procedure after the one referred to in produced by undertakings undertakings Article 4 of Regulation No 99/63. which do not belong to the three groups mentioned on the page which has been to (bb) The finding that SZAG acted in quoted — was marketed by these groups. concert with Italian producers was inferred from the deliveries of this The statement that sugar undertakings of company to the latter, which were the Member States sought to implement mentioned in the communication. a common sales policy based on the principles 'chacun chez soi' and 'pas de mouvements de marchandises de pays à pays si ce n'est en concertation de (g) Eridania, Industria degli zuccheri, producteur à producteur' (each in his SADAM, Sucres et Denrées, Say, own home' and 'no movement of goods Générale sucrière and SZAG: from country to country, save by Infringement of Article 190 of the agreement between producer and Treaty producer) (decision, p. 22, Rt. Col., p. 23, Lt. Col.) is meaningless so far as Italy is (1) Summary of the applications concerned. In fact the Italian market has a sugar deficit and the fixing of a Some of the applicants put forward under regional intervention price for Italy the head of infringement of Article 190 excludes a priori any Italian sugar of the Treaty submissions which really exports. relate to the substance of the case and are therefore dealt with under B below. On According to the Commission's own the other hand Industria degli zuccheri statement (decision, p. 44, Lt. Col.' the under the head of infringement both of fact that the sugar market was regulated Articles 19 of Regulation No 17 and up to 1968 by national market Article 4 of Regulation No 99/63 and of organizations 'explains ... a slowness to Article 190 of the Treaty puts forward adapt' to the opportunities of free trade submissions which can be understood as between Member States opened up by amounting to allegations that the Community regulations. Similarly the statement of the reasons upon which the Commission admitted (decision, p. 22, decision is based is defective. This Lt. Col.) that in Italy the ex-works price

was always close to the intervention that a producer 'can obtain higher profits price. These facts conflict with the by supplying dealers and consumers charge made against Italian producers direct' (decision, p. 31, Rt. Col.) — which that they artificially restricted the Italian amounts to saying that such deliveries at import market, in concert with foreign higher prices are justified — and on the producers. other hand to criticize undertakings for having in fact applied such prices when (cc) SADAM takes the view that the they sold to purchasers other than passage in the decision (p. 45, Lt. Col.) producers.

German version). The decision is almost Col.) should have been substantiated in completely devoid of any evidence and often does not even indicate the law and with facts. This statement is inconsistent with the passages (decision, circumstances surrounding the fact upon p. 21, Rt. Col. and p. 22, Lt. Col.) which which it is based; in this way the find 'that there is a special situation on Commission endeavoured unlawfully to the Italian market which is the result not shift the burden of proof.

Sucres et (decision, p. 22, Rt. Col.); Denrées state in particular that the — the passage in the decision claiming Commission cannot raise the objection that 'during the 1969/70 marketing that Italy has infringed Community law year the sales policies of sugar and that the undertakings concerned producers in the Community were cannot take advantage of such an formulated on more general lines' infringement In fact the Commission — (decision, p. 23, Lt. Col.); the notes of which moreover has taken no action Export which are quoted cannot be against the Italian regulations — should used as evidence against SZAG, since the Commission has never prove that they are illegal; further the undertakings should have complied with complained that this firm acted in concert with RT in connexion with

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. . made by this company (b (a) 2). participated in the group of suppliers for the 1969/70 marketing year'. It is true to (ff) The Commission has never that the said statement of reasons goes denied that in order to adduce complete on to say that SZAG 'during the evidence of a concerted practice, the following marketing years, . . . continued same requirements must be satisfied as to supply Italian producers direct with those laid down in national criminal most of the sugar which it exported to procedure. The statements of SZAG do Italy' (loc. cit.); but, as this represented a not prove that this principle has been less serious infringement by SZAG, the overlooked. In particular it does not Commission ought not to have placed matter very much that the decision used the behaviour of SZAG in every respect occasionally the words 'Anhaltspunkte' on the same footing as that of the other ('information' 'renseignements') or undertakings concerned. 'Annahmen' ('assumptions' 'suppositions') instead of using the word evidence. With regard to the examples mentioned (2) Summary of the statements of by SZAG the Commission replies: defence — that the Commission relied on the minutes of the meeting in Munich, to (aa) The Commission replies that it that is to say on the best possible does not have to refute all the evidence; an extract was quoted on submissions made by the undertakings. pages 41 and 42 of the

If by tendering the same amount of any clarification or interpretation is 'sovrapprezzo. necessary, reference must be made to the statement of reasons; in this case this to (dd) There is no such contradiction statement indicates precisely the period as the one alleged. The Commission during which SZAG committed knew that there were certain special infringements.

(3) Summary of SZAG's reply do not make it clear whether in the opinion of the Commission sales from SZAG states in connexion with the producer to producer are ipso facto submission based on a defect in the prohibited or only if they are the result operative part of the decision (1 (ff) in of a concerted practice. Such a failure of fine, 2 to (ff) in fine above) that the clarification is contrary to the principle decision (p. 31, Lt Col, under 1) of legal protection which it is particularly expressly mentions that the company important to apply in a quasi-criminal 'only... participated in the suppliers' matter. If in fact the Commission took group during the 1969/70 marketing the view that such sales are ipso facto year, but did not adduce a single fact or incompatible with Article 85 the piece of evidence relating to the decision should be annulled because it participation of the company in any infringed this provision. infringements which may have been committed during the 1970—71 and 1971/72 marketing years. For this reason (2) Summary of the statement of defence alone the finding that SZAG committed infringements should be annulled to the The Commission replies that it only extent to which it refers to these two regarded as infringements those marketing years. deliveries from producer to producer which fall within the category of the concerted actions which it criticized and (4) Summary of the rejoinder in Case the object and effect of which was to No 54/73 partition national markets. Each time it referred to such deliveries it explained in The Commission's answer to the reply is detail why and how they fit into this that the wording quoted by SZAG is category. immediately followed by part of a sentence worded as follows: 'but during the following marketing years it B — Submissions on the substance of continued to supply its competitors the case among Italian producers direct with most of the sugar which it exported to Italy'. (a) Générale sucrière, Say, Béghin, RT, The 'suppliers' group' referred to in the Sucres et Denrées, SZAG, Eridania, text quoted by SZAG consists mainly of Cavarzere, Industria degli zuccheri, French and Belgian producers as well as Volano, Emiliana and SADAM: the applicant The expression '...' Infringement of Article 85 of the continued to...' could not logically refer Treaty to the 1970/71 and 1971/72 marketing years. (1) Summary of the applications

(aaa) The meaning and application of the subject to the 'sovrapprezzo' imported Italian regulations sugar in Italy is also subject to a series of other duties and taxes some of which are Générale sucrière, Say, Eridania, not levied on national sugar. Cavarzere and Industria degli zuccheri all submit that in order to understand these regulations they should be (bbb) The effect of the Italian measures considered in the light of the economic on competition and on the situation existing in Italy which has the conduct of undertakings

The reasons of Italian beet is very different from put forward in this connexion can be that of beet produced in the divided into two groups, those put Northern parts of the Community. forward by the suppliers who export (suppliers-exporters) and those submitted Production costs are relatively high in Italy. All these facts are likely to by producers who import (producers- reduce the profit margins of the said importers). sugar refineries. Summary of the observations submitted — Italian beet and sugar production falls by non-Italian undertakings (suppliers- short of demand; the deficit increases

Sugar Similarly they are the organizations could only therefore in practice have which always imported sugar. They been exported to Italy by undertakings have to extend their operations to awarded import quotas by Ccz of include marketing in order to make amounts fixed by it under an invitation the best use of their storage facilities to tender. and their administrative departments and to reduce the disproportion For the reasons mentioned below the between the profit which can be Italian system either considered on its made out of the said plants and their own or in conjunction with Community amortization costs. regulations, on the one hand, eliminated any real competition and, on the other Générale sucrière and Industria degli hand, influenced the conduct of the zuccheri state that as well as being undertakings.

By only awarding the 'sovrapprezzo' for 'quota trasporto' and therefore in the limited amounts, corresponding to its price of sugar. It therefore soon appeared requirements Italy harmonized supply to be desirable to concentrate most of the exactly with demand and what is more importing in the hands of Italian sugar on a market with a uniform price. refineries, and this moreover was more or However the nature of the laws of less enforced by the Italian Government. competition is such that a price can only In the meantime the system of change on a market as a result of invitations to tender benefited tenderers demand exceeding supply or supply for large import quotas. exceeding demand.

Only the large level on the internal market. Italian producers had a real interest in taking part in the invitations to tender; The principal Italian sugar refining in fact undertakings apply a system of — There are no independent dis equalization of transport costs which was tributors in Italy. at least strongly recommended by the — Italian industrial consumers only Italian Government They sell free to need small quantities; the system of every Italian destination; for this purpose invitations to tender places them at a the prices include a 'quota trasporto (an disadvantage compared with the item for transport costs'), the amount of purchasers of large amounts. which corresponds, in the case of each — Foreign producers did not tender — undertaking, to the average of the contrary however to Says statement transport costs from its factories to the so far as it was concerned — since purchasers' shops. they could only sell the sugar quota awarded to them at a loss or at However if sugar imports are not effected an unsatisfactory profit or by to a very large extent by Italian producers undertaking sales which were too they are likely to upset these risky: if the 'sovrapprezzo' exceeds

The therefore wrong to state that were it effect of this was an increase in the not for the sales between producers,

the producers of the countries with a French and Belgian producers could only sugar surplus 'would sell their sugar operate within a narrow margin when individually on the Italian market, fixing prices. On the one hand it was not deciding on the quantities, prices and in their interests to sell below the distributive networks' (decision, p. 31, intervention price; on the other hand Lt Col.). they could not sell to Italian importers at a price higher than the maximum price Italian producers found it necessary to fixed by the Italian authorities.

countries. In doing so the Italian deliveries made in bulk. producers only intended to negotiate for large quantities. They instructed Eridania, the only company which was authorized The producers in the Member States to enter into contracts on behalf of all having a sugar surplus had to accept the conditions of the undertakings which Italian producers, to make these had been awarded large import quotas or purchases; this company secured in this abandon trade with Italy. One of these way 80 % of sugar sales in Italy.

subject to the same conditions. The Italian producers are not free: alleged concerted action was limited to a — to produce as much as they want sharing out of the contracts proposed by Sucres et Denrées, which was inevitable because of the system of quotas; — to negotiate the price of sugar beet, as having regard to the large quantities concerned. a minimum price has been fixed for the sale of this product; French and Belgian producers had to fix — to fix their sale prices independently stable prices in order to meet the as they are fixed by CIP uniformly requirements specified by Italian for the whole of Italy;

SUIKER UNIE AND OTHERS v COMMISSION

For these reasons the said producers are The company never refused to sell to placed at a disadvantage compared with individual customers, but — as emerges other Italian operators (dealers or from the figures produced — supplied industries consuming sugar), who are not such customers during the four subject to comparable restrictions and marketing years mentioned by the some of whom are in a very strong decision with more than one third of its position. total sales to Italy. The said figures should moreover be compared with those Italian producers were in a weak position giving the results of the various compared with foreign suppliers for the invitations to tender, which show that, on beforementioned reasons and because each occasion, the Eridania group or the they: three large groups of Italian producers — had to import sugar; saw themselves awarded the largest — were unable to export and therefore proportion of the quantities put up to to compete with foreign producers; tender (for example, 104 400 metric tons — they had to obtain firm offers in out of 127 020 in 1969/70). order to be able to take part in the The undertaking only to sell to tendering procedures without individual purchasers at a higher price running unacceptable risks. did not in fact affect the prices applied by Générale sucrière in such sales. This (ccc) The legality of the Italian measures company states, and supports its statements with figures, that: Générale sucrière takes the view that the — whereas Sucres et Denrées never

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to, operated through Sucres et Denrées is concentrated its sales on purchasers of not true so far as Béghin is concerned, as large quantities, the sole reason for this the latter arranged for its exports in was that such a policy appeared to it to 1970/71 to be handled by an Italian be more profitable. It neither asked dealer. foreign producers for nor received anything from them in consideration for Moreover during this marketing year it not systematically establishing a foothold supplied Italian sugar consumers with in the market for medium and small 50 000 quintals. foreign consumers.

RT states that, since the results of the The main evidence of the concerted invitations to tender cannot affect sale action alleged by the Commission is the

SUIKER UNIE AND OTHERS v COMMISSION

literally. In particular RT, in order to accordance with the instructions of the lower the temperature of the dispute, did exporters and on their account. not wish to explain frankly to Export Therefore, if the suppliers agreed that it was compelled by its commercial between themselves not to sell to Italian interest to eliminate the middlemen in importers other than those represented certain transactions so as not to reduce by Eridania, Sucres et Denrées attached further the return which was scarcely no importance to this fact. equal to the intervention price, although it would have preferred to shelter behind To the extent to which exporters have its foreign associates. used this company they have done so without being under any obligation to Sucres et Denrées submits that the deal exclusively with it. concerted action, to which exception is taken, does not fall within Article 85. In In general Sucres et Denrées only fact it could not modify the geographical forwarded offers and coordinated situation and the regulations which are deliveries and payments. features of the Italian market and did not achieve results markedly different from SZAG submits that it could not attend those which would have arisen if there the meeting in Paris but only the one in had been no such concerted action. Genoa (cf. decision, p. 23, Rt. Col, p. 24,

exception is taken. The documents quoted by the Further, assuming that there can be said Commission do not show that sales by to be any restriction on competition, it SZAG to Eridania are the result of cannot be imputed to Sucres et Denrées concerted action: (which moreover is not a wholesaler but — The mention of the company in the simply a dealer). The telex message sent letters from third parties (notification, by the RT company (cf. communication, p. 57 et seq.) is not conclusive; pp. 57, 60) in which it held itself out to moreover it could at most establish be 'the sole purchaser of sugar with the that SZAG participated in practices group of suppliers and the sole vendor in for sharing out deliveries for October

— More particularly the complete text of The statistics show; that SZAG supplied the telex message of Sucres et Italian producers with less sugar than the Denrées of 1 "October 1969 other purchasers in this country; that since SZAG's share of deliveries from (communication, p. 57) shows that this company had not received from producer to producer fluctuated SZAG any authority to submit a considerably, there was competition tender also on behalf of the latter and between the members of the group called did not even know whether SZAG 'the suppliers'; that German 'outsiders' would send any deliveries to Italy. supplied larger quantities to Italy than — If the telex messages of 9 and 15 SZAG; finally that the company's share October 1969 (communication, p. 58) of the total imports into Italy was too small to shield the Italian market from sent by Sucres et Denrées to Eridania state that 15 % of the deliveries imports from other sources: offered to the latter are 'reserved to — Direct or indirect deliveries by SZAG the German Südzucker group' this to Italian dealers amounted during statement led to a correction by each of the four marketing years in Eridania of 20 October 1969 that question to 3 100, 2 900, 300 and there was no question of a quota of 6 900 metric tons respectively. 15 %, but that the 'Germans' had — SZAG supplied 1 44 %; 8-51 %; made an offer to Eridania of 15 000 1-75 %; 3-8 % respectively of the metric tons. total imports of sugar into Italy — In the telex message of 10 April 1970 during these marketing years. sent by Eridania to Sucres et Denrées — During the 1969/70 marketing year SZAG sold 19 800 metric tons to (communication, p. 64) Eridania informed Sucres et Denrées that 'we Italy (16 900 to producers and 2 900 do not agree with your formula of to dealers); other German factories 85 %' — that is to say the formula supplied 13 600 metric tons, so that the share of 'outsiders' amounted to reserving a quota of 15 % to SZAG — since 'we shall be compelled, as 48-8 % of deliveries from Germany.

11-9 %. order was an independent decision by Eridania and that as well as SZAG — SZAG took part in the Italian there were still other German invitations to tender by delivering suppliers including dealers. Finally in supplies to Italian producers varying from 2-96 % to 9-63 %. this exchange of letters in conjunction with the telex message in Because of the small quantities at the reply to Sucres et Denrées of 22 April disposal of SZAG this company is unable 1970 can be detected a definite

SUIKER UNIE AND OTHERS v COMMISSION

The Commission was wrong to assume to re-establish equality of competition for that 'normally it is not to a producer's the benefit of Italian producers and advantage to sell large quantities of his vis-à-vis the traders and consumers of products to one or more competitors' this country. and that 'he can obtain higher profits by supplying dealers and consumers direct' The fact that Italian undertakings 'by (decision, p. 31, Rt. Col.). A higher price mutual agreement' (decision, p. 31, Rt. would not necessarily lead to a higher Col.) entered into discussions for the profit. As emerges from SZAG's purpose of sugar imports cannot amount calculations the latter regularly obtained to an infringement of Article 85. The a higher profit by selling to producers concerted actions between purchasers than to dealers. were in conformity with Community law, since their aim, which has been attained Even if it was true that suppliers shared in this case, was to obtain lower prices by out between them the amounts to be ordering larger quantities. supplied there is no infringement. The amount awarded in 1969/70 was 110 000 If Italian producers had abandoned their metric tons; none of the parties was able traditional role of sugar importers, to supply such a large amount. However encouraged by the Italian authorities, according to the communication of the there would in fact have been no one to Commission of 29 July 1968 'agreements replace them since there has never been the sole object of which is the formation an independent commercial network in of temporary working groups for the Italy. If it is admitted that producers had purpose of carrying out orders jointly if to import sugar themselves, the fact that the undertakings who are members of they imported direct from foreign the groups ... are unable to deal with the producers is irrelevant for the application orders individually' are not infringe­ of Article 85. ments.

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foreign producers applied a higher price neither been to limit imports nor to in their sales to Italian importers other reduce the participation in imports of than producers there has been no operators who are not parties to the said infringement: practices, nor to increase prices. — The opposite view can also be taken that producers were allowed a The statement that undertakings have discount price. For in accordance operated a general concerted practice, with a universally accepted custom that is to say one which applies to all the reseller is entitled to such a imports into Italy (decision, p. 31, Lt. discount Col.) is contradicted by the telex message — Preferential treatment is only quoted on pages 79 and 81 of the prohibited to the extent to which the communication and also by the groups of contracting parties in documents produced by Eridania during question are in a comparable the administrative procedure. It emerges position. This does not arise in this from these documents that the company case in particular because Italian at each invitation to tender

SUIKER UNIE AND OTHERS v COMMISSION

p. 31, Lt Col.) Eridania states that it is Commission was wrong to regard Italian correct to say that Sucres et Denrées, producers as competitors of foreign during negotiations, sometimes offered producers. Cavarzere states in particular Eridania, acting as 'spokesman' for the that, as the demand for sugar in Italy importers, 'this indirect form of rebate exceeded home supplies, only foreign which consists of applying to other producers were able to make good the prospective contracting parties slightly deficit. Moreover the Italian sugar higher prices'. However no such contract refineries could not export, and indeed it was ever concluded and the preferential was not in their interests to do so, treatment was never accorded; similar because the Italian intervention price was assertions are made by Cavarzere and higher than the market price in other Industria degli zuccheri The Com­ Member States. This situation can be mission has not mentioned any case of described, to put it at its highest, as one an Italian operator other than a producer way competition, to the extent to which being offered a higher price. On the foreign exporters can prevent Italian contrary these operators were able to producers from selling all their products. import, on very satisfactory terms, quantities, which, as they amounted to The 'group of Italian importers confined 30 % of all imports, were very much itself to negotiating, each time and not once and for all, the terms of the larger than in the past. From 1969 to 1971 the percentage of imports of Italian intended sales, and each undertaking was sugar refineries fell from more than free to accept them or not and did not 95 % to a little more than 60 %. have to disregard offers from producers other than their usual suppliers. As the The complaint that telex messages of 2 and 29 October 1970 between Sucres et Denrées and Eridania

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Italian market is meaningless, since Italy are far less serious than the practices is a country with a sugar deficit. which these texts admit are lawful; in fact the said undertakings have not The Commission has overlooked the fact established an organization, an office or a that none of the 'groups', around which company with the object of handling in its view Italian undertakings are imports. polarized, account for more than 5 % of Community production. The statement that sales to independents were only made at a higher price is not The telex messages to which the correct. Commission refers in its communication do not prove that there has been a The independents have absolutely free concerted action but only show that access to foreign production, as emerges undertakings were in touch with others from the documents which the at that time. The fact that there was a Commission itself obtained. They often spokesman who was able to help made direct purchases either from the undertakings to contact each other is foreign producers referred to in the from the legal point of view irrelevant. decision or from other foreign firms. During 1968, 1969, 1971 and 1972, 36 % The complaint that foreign producers of the amounts imported into Italy were 'in respect of the quantities sold to imported by operators other than sugar their competitors ... have given up refineries. independent commercial operations on the Italian market', 'deciding on the Industria degli zuccheri submits that the quantities, prices and distributive documents obtained by the Commission networks' (decision, p. 31 under 2) is relating to the meeting in Paris (cf. incomprehensible. If the said producers decision, p. 23, Rt. Col., p. 24, Lt. Col.) sold individually to Italian consumers, do not establish that foreign and Italian they would not determine such matters producers engaged in a concerted unilaterally but would have to negotiate practice, but, to put it at its highest, that with their partners. In addition Italian there was a concerted action between

the Italian regulations the said producers Emiliana participated in an agreement of have not been able to obtain any this type. advantage from the profit margins which might have resulted from any possible The Commission omitted to state what cartel. the price of sugar would have been if the practices, to which exception is taken, Sales from producer to producer are had not been engaged in. All that can be justified, so far as Italian producers are said is that in such circumstances the

concerned, by a series of objective facts price could have fallen below the relating to the market pattern and Italian intervention price or settled at about this regulations. level.

The requests made by the exporters Volano and Emiliana did not attend the

for the рurposе of obtaining prior meeting in Paris but only the one in commitments as to the quantities for Genoa, and solely in order to take delivery came up against a refusal to do advantage of the offer of the French so by Italian producers, which had always producers made to all the participants emphasized that they were free to buy and making it possible for them to from anyone and on the best terms. obtain a large quantity of sugar on favourable terms. At the last invitation to tender 80 % of the available amounts were awarded to Volano and Emiliana did not authorize Italian operators other than producers. Eridania to act as leader of the Italian Such operators often found that it was importers and cannot do so, because, profitable to import into the frontier unlike Eridania, they do not belong to regions, even if a higher price had to be Assozucchero.

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a common intention to eliminate differentials' maximum consumer prices. competition. The existence of the first of Although these measures were annulled the requirements does not ipso facto by the Conseil d'État, it appears that allow the inference to be drawn that the these prices continue in fact to be other two are present applied.

The Commission has not produced any There are no longer any maximum prices evidence that SADAM was involved in for sales by producers to industrial the cooperation between Italian and consumers or to traders, except the foreign producers. Further the decision indirect limit flowing from the — which does not object to any specific maximum consumer prices. There is conduct on the part of SADAM — does only the intervention price fixed by not contain any evidence to show that Order No 1195 (a price consisting of the the conduct of this company and of the Community intervention price to which other Italian undertaking amounts to is added a 'sovrapprezzo' of Lit. 23), a parallel conduct. This cannot moreover price which can be taken into account by be substantiated, having regard to its producers when fixing their own sale weak position, which makes it impossible prices. for it to influence the price of sugar at all. In the case of the invitations to tender Ccz fixes in secret the minimum SADAM was not represented by Eridania 'sovraprezzo' which it intends to accept in connexion with any of the discussions, ('prezzo congruo'). negotiations or cartels. It is not a member of Assozucchero, the members Once an award has been granted it is in of which, according to the decision (p. the interest of the persons concerned to 36), assigned to Eridania the role of import the amount actually awarded, spokesman. It is therefore not in any way because otherwise they forfeit the connected with the practices, to which security which they had to give exception is taken. beforehand. In these circumstances the

more than 5 % of the amount awarded; The fact that it was possible to establish a in any case the ministry has never availed pattern of imports leading to direct itself of this right delivery to consumers is explained by the facts that it could be in the interests of Imports of Community sugar are free if the latter to import direct against the 'sovrapprezzo' is paid in full; however payment of a relatively high in such a case the final price of imported sovrapprezzo', that they never hesitated sugar normally exceeds the price of to take advantage of every opportunity domestic sugar. which they were offered in this connexion and that their requirements to 1. (aa) (bbb) were large:

The which compelled them to enter into need to create a distributive network contracts providing for the supply of would not have been an obstacle; it only their entire yearly requirements. related to sugar intended for — When a quota outside the invitations consumption in its original state — to tender was established by Order which would only have represented about No 1234 the consumers applied for a quarter of the sugar imported and the maximum permitted quantities could have been met without any (10 000 quintals per undertaking), but difficulty, since the marketing of sugar most of these applications were not does not require the creation of large granted owing to the quota being

The conditions the invitations to tender or by the which have to be fulfilled in order to be consumers who took advantage of the able to take part in the invitations to possibility of importing outside the tender were not such as to embarrass invitations to tender at a reduced consumers, which are for the most part 'sovrapprezzo'. large industries. Finally the existence of a — Italian consumers made use of the maximum price on the Italian market possibility of obtaining their supplies normally led to sugar being supplied from SZAG in 1968/69 and, if the through Italian producers which would occasion arose, from Générale have been 'irrational'. sucrière and Sucre-Union.

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outsiders', to quote the expression intended, namely to make the used by Eridania. participants compete with each other. — During the 1969/70 marketing year SZAG, Say and RT sold to Italian Finally there could have been producers which were not members competition concerning quality, service of the producers' group. to the customers and in particular the — Price competition was also possible. conditions of sale; the correctness of this At the meeting in Paris on 29 July last statement is proved by the 1969 (cf. decision, p. 23, Rt. Col, p. contractual obligations which producer- 24, Lt Col.) RT expressed the fear importers imposed on the processing that since the price level of sugar industry and which a representative of offered on the Italian market had this industry described as 'disastrous' been fixed 'in a somewhat friendly ("ruineuses"). way' it does not 'give foreign offers much chance', which is tantamount to 1. (aa) (ccc) to admitting that if there had been free competition, it would have been The Commission replies that the possible to deliver sugar at lower argument that competition was possible prices. on the Italian market is correct independently of the question whether In the awards to purchasers who are not Italian regulations are in conformity with members of the group the percentage of the Treaty or not. the 'sovrapprezzo offered and paid has in general been higher than that offered to 1. (bb) and paid by the successful tenderers who are members of the group. General considerations

SUIKER UNIE AND OTHERS v COMMISSION

September 1969. October 1969; — a telex message sent by Sucres et With regard to the French producers and Denrées to Eridania on 31 October RT their participation is established by 1969 from which it appears that the their attendance at this meeting and by function of the said undertaking has an internal memorandum which Sucres been to prevent consumers from et Denrées drew up on 13 April 1970. taking part in the invitations to The purpose of this memorandum was to tender; carry out a check of supplies delivered to — price increases applied in fact by Italy by members of the suppliers' group SZAG in 1969/70, when the latter and mentions RT, Générale sucrière and sold through German agents sugar Béghin; the document does not mention intended for Italy; Say although it is however the largest — by the fact that RT disregarded a undertaking of the GISEC group which request for deliveries by a German

sucrière, Béghin, Lebaudy-Sommier, Say and Sucre-Union. In addition the said entered into with Export for distribution is found in the before deliveries to Italy; the meeting in mentioned document of 13 April 1970. Paris on 22 September 1970 took place between the conclusion of the first and second contracts: a telex The percentage reserved to SZAG is mentioned in a series of telex messages message from Export to RT of 24 between Sucres et Denrées and Eridania September 1970 mentions 'fresh

JUDGMENT OF [6. 12. 1975 — JOINED CASES 40 TO 48, 50, 54 TO 56, 111, 113 AND 114/73

. . in our name and other members of the group. In in the name of other sugar particular the Commission makes the companies'; following statements: — the reply by telex of Sucres et — The group of producers-importers Denrées of the same date; included all the Italian undertakings — a telex message sent by Eridania which are applicants. This emerges to RT which mentions the 'group from the telex messages from Sucres of Italian refiners' and the et Denrées to Eridania of 9 and 15 distribution between the com October 1969 asking for confirmation panies in the group; the figures in 'that your group will at least include this telex message indicating the all the Italian companies which amounts bought by this group in attended the meeting in Genoa', of 1970/71 correspond exactly to the 11 September 1969 as well as the aggregate of the amounts awarded reply in the affirmative of Eridania of to members of the group;

When this dispatched by Eridania, which clause was enforced the negotiated them on behalf of all the undertakings which benefited undertakings in the group and were members of the group as is collected the offers on behalf of all of shown by the letters sent by them. This emerges from the telex Eridania to the firms Motta and messages referred to in the preceding Ferrero on 21 September 1970 paragraph, from the telex message and by the letter of Industria from Eridania to Sucres et Denrées of degli Zuccheri of the same date 31 October 1969 and from the telex and referred to in Annex 2, message sent by Export to a German paragraph 2 of the commu wholesaler of 14 September 1970. nication. — The fact that the percentages of the 'sovrapprezzo' offered were identical shows that Italian producers agreed to The concerted action between the act in concert when participating in suppliers' and the exporters' group arises invitations to tender. The aim of this out of the fact that the two groups agreed participation was to make on a com to make joint arrangements for deliveries mon basis a purchase of sugar, which to the Italian market exclusively by had been agreed by and divided members of the suppliers' group and among the members beforehand. only to Italian producers, with the This emerges in particular from: exception of those deliveries which were

effected at a higher price. This is shown group were the subject-matter of an by the following facts: agreement. — The minutes of the meeting in Pans on 29 July 1969, drawn up by RT, The Commission defines its position as show that at this meeting the leading follows on the arguments developed by French and Belgian suppliers each of the applicants with regard to the discussed the conditions of sale to be general evaluation of the course of applied to the Italian group and ways conduct to which exception is taken. of preventing third parties from Reply to Générale sucrière selling on the Italian market. These commitments were examined The volume of 'free' exports effected in in greater detail and finalized at the particular by Générale sucrière and meeting in Genoa on 11 September Sucre-Union shows that the demand 1969, which all the members of the from industrial consumers, in particular group attended. large firms such as Motta and Alemagna, has been able to create an important and

The creation of a commercial network is and 30 April 1970 taking note of the agreements to which RT referred; unnecessary for deliveries to industrial consumers. — the telex messages from Sucres et Denrées to Eridania of 9 April 1970 Générale sucrière cannot put forward the and the telex messages between RT, argument that, foreign producers had to Export and the Gerike-Bahr firm on form a group in order to be in a position 24 September 1970; to offer the amount requested, when at — by the minutes of the meeting in the same time it is this company which Paris of 22 September 1970, which admits that it exported freely large the French and Belgian producers, quantities. Sucres et Denrées and the leading Italian producers attended; it emerges The part played by Sucres et Denrées from the said minutes that the price shows that the concerted action was not increases for the sales to Italian the inevitable consequence of the Italian buyers who are not members of the regulations and of the grouping of

Neither of the two factors which make The Commission does not deny that the up the price increase is justified grouping of supply can reduce transport objectively: costs but such a reduction cannot be — With regard to distribution costs they obtained without the concerted action are the same whether sales are made which is at issue. Sucres et Denrées have to producers or 'outsiders'. In both not shown that these costs represent on cases there are no costs attributable to average 6 % of the price of sugar. commercial networks. By stating that it sold to 'outsiders' without The risks and charges which foreign increasing the price Say has by exporters have to cope with on the implication admitted that the normal Italian market are normal trading risks. price was profitable. — With regard to the security margin The statement that the practices to which this is even more difficult to justify exception is taken have benefited Italian having regard to what has just been consumers is irrelevant, since they have said. not been notified to the Commission.

Reply to Béghin The argument based on the fact that undertakings cannot modify the pattern The price level applied by the companies of the supply of sugar in Italy disregards is unimportant, as the Commission has the fact that the infringement found to not treated any influence which the have existed by the Commission consists concerted action might have on price as of action likely to ensure that the Italian one of the factors constituting the market remains under the control of the infringement producers of this country. Moreover the said argument is incompatible with the Reply to RT statement that the practices to which exception is taken contributed to the The conceited action far from being attainment of the objectives of Article 39 engaged in from one invitation to tender of the Treaty (cf. b. below).

The statement that Italian producers, Article 85 also applies to cartels between since they are at a disadvantage undertakings which are buyers. compared with other operators because they are distributors as well as producers, With regard to the circumstances which have been compelled to react as they did, have been mentioned to confirm the is open to the following objections: legality of the concerted action they — It is incompatible with the statement consist of facts which can only be taken that there can be no competition in into account under Article 85 (3); in the Italy. absence of any notification they cannot — Producers are also distributors be examined. because they have freely chosen this rôle and it does not place them at a The claim that Italian producers are in a disadvantage. weaker position compared with the — The Treaty only provides for suppliers' group is difficult to reconcile derogations from the principle of free with the fact that imports have only been competition which fall within the possible because of the reduction of the exemptions referred to by Article 85 Sovrapprezzo' that the said producers (3), but does not permit 'self-defence' have a commercial organization and that by the use of prohibited methods. they are already established on the — Consumers depend upon producers market in question; moreover it conflicts for their deliveries and had to accept with the statement that the Italian the onerous conditions of sale which market offers no opportunities for were imposed upon them. competition. Such a weak position

cannot either be caused by a system of Price differentiation depended not on the invitations to tender which aims at amount of the purchases but on the preventing operators agreeing beforehand question whether the buyer was a the tenders to be submitted. member of the group of producers- importers or not. The commitments The claim that Sucres et Denrées acted which have been mentioned — the need in the capacity of a vendor is for a commercial organization and the contradicted by this undertaking's obligation to sell at the same price statement and by a series of telex throughout Italy — did not affect sugar messages. intended for industry representing 75 % of total imports. With regard to the said The fact that marketing of sugar has obligation laid down solely by Order No been carried out in the past by Italian 1215 the consumer price applied producers does not imply that it is includes an item for transport costs necessary for imports to be channelled calulated as a flat rate; moreover this through them. On the one hand a obligation is imposed on anyone who distribution organization is not required imports for resale to consumers. for sales to the consumer industry; on the other hand the distribution of sugar The statement that independent does not present any special difficulties, purchasers could have obtained their so that independent commercial supplies from vendors who were not networks of producers could have been members of the suppliers' group but established if there had been free preferred to obtain their supplies on their competition. Even if it was reasonable to own initiative from producers-importers assume that imports had to be arranged in order to secure regular deliveries has through Italian producers, that is no neither been proved nor is such as to justification for them acting in concert. justify the practice to which exception is taken. It does not explain why such The Italian regulations did not make it deliveries could not be guaranteed by necessary for Italian producers to apply other suppliers and is difficult to the same sale prices to imported and reconcile with the complaints of the home produced sugar. With regard to the consumer industries. alleged: absence of any damage suffered by industrial users and consumers it is sufficient to recall the complaints of the Reply to Cavarzere former and to stress that price competition in the long run always In order to show that Italian producers benefits the consumer. do not compete with foreign producers Cavarzere indulged in some artificial distinctions: The concentration of supply by foreign suppliers has been a factor constituting — between the demand for sugar the practice by which they and Italian produced in Italy and for sugar producers have aimed at controlling the produced abroad; Italian market; it is not therefore for the — the supply of sugar to meet each of latter a 'res inter alios acta'. these two different demands.

suppliers would nevertheless have had to of intermediaries can have a favourable negotiate contracts for sale and that they effect on price levels. would not in such circumstances have been able to fix unilaterally the prices The increase has not been small; and conditions of sale it puts cartels and moreover the Commission's finding was contracts for sale on the same footing. not that it was exorbitant but that it was illegal. The previous measures and commu nications of the Council and the The actual application of the price Commisson invoked by Cavarzere increase emerges from the documents referred to situations different from those mentioned in the Commission's general in this case and do not therefore justify observations (cf. above). the finding that these institutions have approved conduct comparable to that of The practices in question have clearly the undertakings to which exception is affected trade between Member States taken. since their object was to influence the

more than 104 000 of the 127 000 metric tons put up to tender, all of It cannot be maintained that foreign which came from the suppliers' suppliers who are not members of the group. group in question could be an alternate — It is true that the telex message sent source of supplies. The producers by Sucres et Denrées to Eridania on 2 belonging to this group controlled 75 % October 1970 complains that the and 85 % of French and Belgian latter had considered offers from 'production.

refers. The yearly contracts entered into with With regard to the price increase if Italian consumers, considered in the light Cavarzere tries to justify the preferential of all the concerted practices, are capable treatment applied to the importers' group of supporting the view that Italian with reference to the part played by each producers control the national market. member of the group as an intermediary, The fact that the consumer industries it has then to concede that the absence complained of the producers' conduct

stocks; in fact since the companies in the this pattern by means of a concerted group of producers-importers took part practice. in the invitations to tender after agreeing — The minimum quantities which had beforehand the sharing out between to be tendered at the invitations to them of the amounts awarded, no tender were not fixed in such a way undertaking which was a member of the that they excluded imports by group ran the risk of being excluded undertakings which did not operate from the invitation to tender. on a large scale. Cavarzere states that there are It is impossible to explain deliveries commercial networks on the Italian between producers by criteria of market which are independent of the commercial convenience, having regard producers, it contradicts the statements in particular to their large size and to the of the other Italian applicants that the fact that the normal functioning of the channelling of imports to producers is market should have produced an entirely due to the fact that the latter have different situation. traditionally been the only undertakings marketing sugar in Italy. The price increases cannot be justified on the ground that producers-importers Reply to Industria degli zuccheri can offer certain guarantees. In fact these prices were not linked legally to these The claim that the bargaining power of guarantees; in addition these guarantees, the Italian producers is weak is both which consisted of the producers- incompatible with the argument that importers having a distribution system there was no competitive relationship covering the whole of Italy, are not between foreign and Italian producers required for sugar for industrial use. and with the argument of the French applicants that it was necessary to In endeavouring to justify the said concentrate supply because of the increases by showing that Italian concentration of demand. producers resold the sugar Industria degli The concentration of demand is justified zuccheri fails to appreciate that the neither by the volume of the amounts producers are criticized precisely because they held themselves out as necessary required, nor by the charges imposed middlemen and concedes that the upon successful tenderers, nor by the absence of such middlemen could have a need to obtain firm offers, because such offers can be made by independent favourable effect on price levels. suppliers to independent importers. The specific invitation to tender to which The reasons put forward by Industria Industria degli Zuccheri refers took place degli zuccheri to justify purchases after the decision was adopted. The large between producers are not valid: amount of sugar imported under this — The production deficit benefits all invitation to tender by operators who imports and does not force producers were not members of the producers- to import themselves. importers group proves specifically that — It is not correct to say that there is no the setting up of import channels leading chance of making a profit The telex direct to consumers is possible and is

The Commission then examines the Say's assertions that it exported sugar individual behaviour of each of the independently of Sucres et Denrées does undertakings in question and the not allow the conclusion to be drawn arguments which they have developed in that it has not engaged in the conceited this connexion. action. It has not been shown that the ultimate recipients of these deliveries Générale sucrière were not members of the importers' group. Moreover Say has not mentioned That this company engaged in the the 1968/69 marketing year; with regard practices, to which exception is taken, is to the other three marketing years it established by the documents already emerges from the documents produced mentioned and also by the telex by Say that it supplied to the messages from Sucres et Denrées to beforementioned group between 54 % Eridania of 9 April and 29 September and 99-94 % of the total amount of its 1970, the first of which mentions the exports to Italy. 'group of French sugar refiners and manufacturers'. The fact that Say engaged in the concerted practice is proved in particular The fact that the company freely by: exported large amounts does not show — the contract for sale entered into on 3

The fact that in addition to deliveries the relation between these two firms and between producers Say exported to third more generally to the concerted practices parties is not sufficient to prove that it engaged in by the producers. It leaves it has not engaged in a restriction on to the Court to evaluate this competition. correspondence.

An examination of the documents Sucres et Denrées produced by Say shows that, during the periods from December 1969 to Sucres et Denrées cannot claim that it September 1970 and from October to merely acted as an intermediary. December 1970, the prices offered According to its Memorandum and to Sucres et Denrées or to the Articles it carries on business as an

producers-importers were in most cases independent trader. In its reply to the lower than the prices applied in free communication it admitted that it is the sales. owner of sugar in which it deals. The beforementioned documents show that it Béghin was the driving force in the concerted action, a part which went far beyond Judged by its turnover Béghin was the invoicing the deliveries. largest company in the group of French and Belgian producers. SZAG

With regard to the correspondence The Commission is entitled to use between RT and Export the Commission against SZAG documents from third has thought fit to regard it as referring to parties or addressed to third parties,

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SZAG cannot challenge the statement The telex messages exchanged by that 'deliveries made to Italy outside the Eridania and Sucres et Denrées and group of suppliers are limited to small quoted by Cavarzere confirm that the

JUDGMENT OF 16.12. 1975 — JOINED CASES 40 TO 48, 50, 54 TO 56, 111, 113 AND 114/73

latter imported sugar through Eridania; (3) Summary of replies they show therefore that Cavarzere did not enjoy any freedom of action to 1. (aa) (aaa) compared with the other members of the importers' group. Eridania repeats and enlarges upon the description of the history of the Volano and Emiliana development of the Italian regulations and the trends of the Italian economic

The possible financial difficulties of situation and emphasizes in particular: Volano cannot justify the infringement — that the price of sugar has always which it has committed. To the been fixed in such a way as not to knowledge of the Commission Volano's offset as a general rule production balance sheet showed, on 31 December costs which are particularly high in 1972, a net profit of more than Lit. 9 Italy; million. — that by Circular No 1237 CIP indicated in substance that it

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No doubt in such circumstances there would have did not exclude competition is inconsistent with the admission made by been competition, but between pur the representatives of the Commission, chasers and with prices rising. that is to say that 'the procedure of invitations to tender in fact encourage . . . A market, where competition is to the concerted action of the Italian prevail, requires a demand, a supply and producers to control all sugar imports'. a price which arises out of the varying relationship between these two factors.

Italy. Foreign producers could not ministration planned to keep as high as guarantee consumers regular supplies, possible. Moreover, this administration since every direct delivery was dependent fixed itself the 'prezzo congruo' which it wishes to obtain. on their being successful, if not at the invitations to tender which they could not attend, at least in being allocated a RT states that when the Commission

important factor, on the ground that acknowledges that it does not regard the deliveries could be made to industrial prices applied by Sucres et Denrées as consumers who did not need such a infringements of Article 85. Further the service, it ignores the many problems maximum consumer price in Italy is which have to be solved by the supplier calculated in such a way that it only in order to be able to meet the exceeds the intervention price by the requirements of foreign customers. amount of the general costs of transportation and sale.

But confronted by regulations producing the maximum Sucres et Denrées states that the distortion of normal competition, it Commission claims, on the one hand, would be lacking in realism to require that the practices to which exception is that undertakings 'continue to carry on taken show that there could have been within the narrow and distorted limits competition and, on the other hand, that within which their own initiative is the fact that intra-Community trade has allowed to operate, according to the rules not developed in the way which could governing the purist classic liberalism'. have been expected if there had been Eridania repeats the enumeration of the opportunities for competition must be facts, set out in its application, which regarded as proof of a concerted action. impeded the freedom of action of Italian 'In other words, according to the producers; it adds to them that the latter Commission, the existence of a were compelled: concerted action raises a presumption — in the event of a later increase of the that there are opportunities for domestic price applied at the time of competition which it removed and an invitation to tender and taken as the presumed existence of opportunities the basis for determining the 'prezzo for competition which it removed congruo', to repay the difference to

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most of the time. This function Economic Cooperation in Agri corresponds to the public interest, as it culture, former Director-General of enables national requirements to be the Ministry of Agriculture and completely met by large imports at prices Forests and, president at the present fixed by the Government The Italian time and when the events in question authorities have always required the sugar took place of Ccz; refineries to import sugar themselves. — to send a request for information to Each time there was a shortage of sugar this Fund, to the Italian Minister of in any region of Italy these authorities Industry or to CIP, on the following got in touch, if necessary by telephone or questions: telegram, with the sugar refineries and Is it correct that it was the aim of the invited them to increase distribution in Italian authorities, in each of the the region in question. years 1968 to 1972, to achieve a uniform price for both home

This the large amount which they intended to system did not enable them to make the import together, they ran the risk, if they fullest use of the favourable geographical did not do so, of seeing this quantity situation of their factories. Had it not reduced as a result of more advantageous been for this system sugar would offers being made by third parties nearer probably have cost less in Northern Italy, the frontier who for that reason incurred but much more in Southern Italy, but much lower import costs. This shows

reasons which the company sets out means by this expression that in detail, with Ccz's calculation. undertakings have to deliver free to However the Commission calculated the consumer or free at destination, the price of French sugar for Milan, without making the purchaser pay for whereas, in the case of Sicily, the service, in practice therefore transport costs were six times as high. unfair competition. — Imported sugar is not less expensive — With regard to competition in if account is taken of the fiscal respect of the sale conditions, the charges imposed upon the imported United Nations have been actively product engaged for decades in producing As a result of the system of standard clauses in agreements for international trade. invitations to tender, imported sugar had necessarily to be sold at the domestic market price, used as a When the Commission states that it was yardstick for establishing the in the interests of foreign producers to increased cost of imported sugar. In export to Italy at a lower price than the fact, if this price increased, Ccz asked intervention price, it recommends for payment of the amount dumping, which is contrary to Article 91 equivalent to the reduction of the of the Treaty. Further, the only effect of difference between the (new) exporting in this way would be that a domestic price and the cost of corresponding amount of domestic sugar, imported sugar which it calculated in which cannot be sold, would have to be this way. By doing this it increased bought by the Italian intervention the cost of imported sugar, made sale agencies. As the Italian intervention price prices on the Italian market fixed is higher than the intervention price laid prices and prevented competition. down for exporting Member States, the FEOGA had for this reason to bear a When the Commission describes the higher charge than that which it would situation which exists when a producer have incurred if the foreign supplier had

offered the sugar in question to the undertakings and traders was limited in intervention agency of its own country. such a way that all that was in practice left for them were the areas furthest away Industria degli zuccheri takes the view from the frontier. Under those that the Commission's opinion is wrong, circumstances they were obliged to offer that there is, in Italy, a 'price bracket' a lower 'sovrapprezzo'. The consumer ('fourchette de prix") the top limit being industries, for whom the 'sovraprezzo' the consumer price and the bottom limit was adapted to the 'sovraprezzo' resulting being the ex-works price, these limits from the invitations to tender, derived a including adjustable factors which allow profit from this which varied according some degree of competition: to their proximity to the frontier, so that — The difference between the maxi the difference in the costs incurred by mum consumer price and

It is wrong to claim that industrial consumers and traders could take part If the invitations to tender did not without experiencing great difficulties in restrict the participation of industrial the invitations to tender and import consumers, the field of activity of sugar direct in this way:

— The statement of the reasons upon accompanied by the high cost of storage. which Order No 1234 of CIP is As exports to third countries are based, states precisely 'that all restricted by the Community authorities, economic operators do not have at the only way out would have been to their disposal an organization capable dispose of the surplus sugar to the of enabling them to take part in the intervention agencies at the intervention invitations to tender ...'. price. As the latter could only resell at a — The Italian system is so organized price higher than the intervention price, that the vast majority of consumers the effect of such a disposal, assuming preferred to obtain their supplies that Italian regulations did not prevent direct from producers and by doing any sale at such a price, would have been so pay a price perhaps lower than that sugar had to be imported into Italy that, which sugar bought direct from at a higher price than that which had abroad would have cost, increased by been in fact applied. transport costs. — The statement that foreign producers Foreign producers in fact found that they could sell direct to consumer could only do business with one industries without nevertheless purchaser. Fixing times for delivery and having to have at their disposal a the date for crossing the frontier required distribution network is incorrect so mutual negotiation. far as the small and medium sized industries are concerned, for they Foreign producers obtained no advantage found that from this point of view from the alleged concerted action. The also it was a very difficult task to prices obtained were, either below the obtain supplies from abroad. This is intervention price, or 0-3 % higher; Say confirmed by the fact that very few of produces the relevant figures. these industries took part directly in the invitations to tender, whereas During the whole of the 1969/70, many of them took advantage of the 1970/71 and 1971/72 marketing years facilities offered by Order No 1234 of direct sales to consumers represented CIP, by proceeding to instruct third 20 % of the amounts exported by the parties to purchase for their account; company to Italy, a percentage which the imports obtained in this way only differed by 5 % from the 25 % outside the invitations to tender fixed by the Italian authorities for sales reached 11-5 %. outside the system of invitations to tender.

namely the Grandi Molini firm, through French producers the Italian group which it arranged all its exports during approached Sucres et Denrées, the largest the 1970/71 marketing year — is business house of Paris and therefore the sufficient proof that there was no best placed, through its contacts with concerted action between Béghin and producers in countries having a surplus, Sucres et Denrées. to get hold of the large amounts which the Italian group required. Sucres et

low. There was therefore effective was subject, varied each time. The competition. price advantage of FF 1-65, compared with the offers which were made to It emerges from the facts mentioned in other Italian importers, only appear the statements of defence and their in the tenders submitted at the first annexes that Italian industrial consumers two invitations to tender. This clause was the consideration for the were not forced to obtain their supplies each time through the Eridania group. undertaking by Eridania not to look To the extent to which Italian for offers elsewhere, For the third invitation to tender Eridania did not regulations allowed, they could attend the invitations to tender and submit give such an undertaking. tenders bases on the offers made to them — At the third invitation to tender the amounts awarded to the by exporters who did not belong to the Franco-Belgian group.

price offered was reduced to FF 117-50 — It was only in the 1969/70 and owing to the possible competition of 1970/71 marketing years that the 'outsiders'. Franco-Belgian group's share of Italian imports exceeded 60 %. Sucres et Denrées states that if, during the At the invitations to tender for which RT operations in question, it became in law submitted a tender jointly with certain an owner, it still maintained its role as a

mere agent, as emerges from the — In the minutes of a meeting held in documents which the Commission itself Paris on 29 July 1969, the has produced. An undertaking in such a authenticity of which cannot possibly situation did not have any interest in a be checked, Sucres et Denrées is partitioning of the national markets or made out to be a company having an the power to bring about such a influential position in Italy. This situation. It is therefore a mistake to statement can only be taken to refer assume that Sucres et Denrées was the to the fact that, during the years 1960 driving force in the concerted action to 1965, a period during which the relating to the Italian market. organization of their national market presented the Italian public The intervention of Sucres et Denrées authorities with many problems, was in conformity with the objectives of Sucres et Denrées was recommended Community policy and that of the Italian

Moreover the Commission managers refused to meet in the same contradicts itself when it states, on the room ; he added that he is 'absolutely one hand, that Community regulations convinced that he made a very great left price fixing to the law of supply and contribution towards renewal of demand and that Sucres et Denrées contacts between the various groups engaged in practices which distorted the and reconsideration of their joint price mechanism on the Italian market, interests'. These statements refer to and when it recognizes, on the other the rôle which the said chairman hand, that it — the Commission — has played during the years 1960 to 1965, not blamed this company for the prices that is to say before the entry into which it applied. force of Community regulations, in order to enable Italian importers to The statement that it would have been secure a more regular and rational possible to supply consumers direct with supply of sugar for their national sugar, apart from being theoretical, has market On that occasion he no relevance so far as Sucres et Denrées therefore suggested that the system of is concerned. As the latter company

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Foreign producers, and in any event Sucres et With regard to the statement that Denrées, are not even potential SZAG's deliveries to German dealers competitors of Italian producers. The Commission fails to understand the consist partially of indirect deliveries to Italian producers SZAG did not know to Italian system, and in particular the whom the dealers resold the sugar; it had obligation to provide security of a large no influence at all on the ultimate amount, when it states that there was no destination of the product. serious obstacle preventing a French undertaking from taking part in the The decision proceeds on the basis of the invitations to tender. In any event, Sucres notion that, for the 1970/71 and 1971/72 et Denrées, in its capacity as a marketing years SZAG did not undertake middleman, could not participate in only to sell to operators other than them or contemplate distributing sugar on the Italian market. Italian producers at higher prices and that it did not come to an agreement SZAG submits that, in its statement of with anybody in this connexion.

The telex message from Sucres et Denrées to Eridania of 1 October 1969 77-40 % and 60-77 % of the amounts does not prove that SZAG engaged in a put up to tender. cartel relating to import quotas. It only The fact that deliveries from producer to contains a proposal in case SZAG producer amounted to much more than receives no order or does not effect any

Eridania calls attention to the fact that producers did not affect trade between the complaint, put forward in its Member States; on the contrary exports statement of defence that undertakings of sugar to Italy increased during the tendered at the invitations to tender period under consideration. The said concerted actions' did not either distort identical rates of the 'sovrapprezzo' is not in the decision. Moreover, the factors competition, within the meaning of taken into account in the calculation to Article 85, because the ultimate object determine the 'prezzo congruo' (the and the effect was the import of sugar at 'appropriate price' were fixed and the reasonable prices, which benefited the consumer. same for all Italian producers with the consequence that whether or not there It emerges from the Commission's own was any concerted action the results of statement relating to the history prior to the calculations made by each operator the events in question, (agreement of had necessarily to be the same. French producers of 1 July 1968, etc.) that the concentration of supply The telex message from Eridania to preceded concentration of demand. Sucres et Denrées of 29 October 1970 (cf. communication, p. 81) shows very clearly With regard to the preferential treatment that the undertakings did not come to an which was reserved by the suppliers' agreement once and for all but group for Italian producers during certain negotiated each individual transaction negotiations, Eridania calls attention to separately. It says in effect that 'we have the following facts: not entered into an undertaking with — No evidential value can be placed on anyone'. The same conclusion is drawn the internal memoranda of Export or from: on this firm's correspondence, — the telex message of Sucres et because it collected them together Denrées to Eridania of 2 October 'somewhat mischievously', and they 1970 (cf. communication, p. 80), have nothing in common with the which states that Eridania, before usual commercial correspondence

and internal memoranda of a cannot be compared with each other, company. results also from the fact that the — Eridania never attached any special former did not buy sugar for use in importance to the preferential plants near to the frontier, but to treatment offered by Sucres et resell it throughout Italy at a uniform Denrées, to such an extent that it price fixed by the authorities. never mentioned it in its correspondence, because of the The object of the right reserved by impossibility in practice of checking producers in the contracts for the the implementation of this offer. delivery of sugar to industry to enable — The analysis by the Commission of part of the delivery to be carried out by Ccz's data relating to imports by other producers, was to guarantee an operators other than producers invites uninterrupted supply of sugar to

consumers. On the other hand, the sugar producers — There is a contradiction between the took the view that the clause in question Commission's argument that foreign was a lawful way of carrying out their suppliers applied the price increases contractual obligations punctually even if in question, on the one hand, and, on there was a temporary shortage of stock. the other hand, the statement of the Ferrero company, in one of the With regard to the annual supply documents produced for the Court's contracts entered into by Italian file by the Commission according to producers with industrial users, the which, since 1968, offers from abroad statements of fifteen of them, produced have ceased. by Eridania to the Commission during — Infringement of Article 85 cannot the administrative procedure, have much result from a mere intention but only greater weight than those of the persons exists if — quod non — the suppliers consulted by the Commission of whom had in fact applied or demanded there seem to have been moreover only

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It is acknowledged by all legal orders that in certain contracts, and never the grouping of purchases is lawful. corresponded exactly with the figure However, there is not even a purchasing offered by French vendors. This organization within the legal meaning of establishes that, if the 'outsiders' had this word. As is clear from the telex to pay a higher price, they were message from Sucres et Denrées to exposed to the effect not of a Eridania of 20 October 1969 each concerted action but of market producer-importer retained the right to conditions. obtain its supplies elsewhere. If the quotas had been allocated in a "With regard to the price increases which different way, or if large amounts of sugar were applied in sales to third parties had been imported outside the Cavarzere makes the following invitations to tender, the result would not submissions: have been an increase in the amount of — The Court has held that sugar available, but, on the other hand, discrimination can only be an increase of prices, for reasons which established if there is a list of fixed Cavarzere mentions in detail.

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confronted foreign suppliers as an the said Association are in disagreement association. with them, because they plan to prevent the latter from operating as middlemen. It is not surprising that the percentage of The accusation made by the sugar the 'sovrapprezzo' offered by the undertakings, that the sugar factories 'Outsiders' was always higher than that 'compelled them brutally' to enter into offered by producers-importers. The contracts with them, is moreover without importers who were not members of the foundation, since they are larger group, while they paid for the sugar at undertakings than those which they say slightly higher prices, incurred in general dominated them. lower costs, in particular transport costs, since they were almost all established According to Industria degli zuccheri, near the frontier. the practices to which exception is taken have not had a negative effect on If one producer approaches another competition, as is shown by the fact that producer in order to buy its product, offers were made also by foreign there is no competition between them, suppliers not belonging to the group in but a conflict of contractual interests. So question. The objection that these far as this transaction is concerned the suppliers were undertakings which were undertaking which is normally a not in a position to export, as they were producer-vendor becomes a purchaser producers of raw sugar and did not have reseller. This dual role is particularly the necessary equipment, 'proves too evident in the case of Cavarzere and the much', since it is tantamount to saying imports of granulated sugar for industrial that the members of the group were the use. The percentage of sugar of this only ones able to export, which also category produced by Cavarzere makes the complaint of infringement of was very small in relation to domestic Article 85 null and void. But the fact is requirements; for this reason competitive that the beforementioned offers were relations with foreign producers was not followed by imports which continually even an assumption which could be increased during the period under contemplated. consideration.

regard to the amounts stipulated in the Emiliana submits that at that time, it contracts the producers could neither be did not have sufficient sugar to meet its certain either of the amount produced customers' requirements. The suggestion nor of the outcome of the invitations to was made that it should buy, on tender. favourable terms, from French producers which it did not know. For this purpose The documents relating to the meeting it was invited to the meeting at Genoa. in Paris of 29 July 1969, in Genoa of 11 Since the conditions of purchase September 1969 and in Paris of 22 appeared to be satisfactory, it bought. September 1970 (cf. decision, p. 23, Rt. The profits made from the resale were Col., 24) do not establish the existence of lower than those which the company a concerted action within the meaning made from the sale of its own sugar. It is put forward by the Commission. To the not understood why Emiliana had to buy extent to which the notes drawn up by from other producers. No purchaser of Export must be considered there is every goods spends time and money on reason for supposing that this firm inviting general and informative bids intended to take the place of Sucres et from the maximum possible vendors. Denrées as middle-man for trade with This is what happens in practice: The Italy. purchaser knows the average prices Industria degli zuccheri does not know applied on the market by reading the whether price increases were applied in very large number of official or unofficial the sales to non-producers. publications; he purchases on the basis of the prices found in these publications If there was in fact any damage, it was and his personal information concerning negligible and was not suffered by any the good quality of the product offered competitor of Italian producers, which is by a particular producer. If he finds, and a decisive factor with regard to the it does not matter how, a good producer application of Article 85. There could be who offers him an advantageous price drawbacks for one or other of the large compared with the average price applied industrialists, who was unable to exploit on the market, after taking into account fully the advantage which he derived freight rates, commissions etc., he from the geographical position of his naturally buys from this producer. factories, or one or other of the large The Commission cannot put on the traders, who could otherwise import same footing undertakings which small quantities for delivery to customers participated in an action with the near the frontier and benefit from the intention of entering into a general favourable freight rates; moreover no agreement for imports and those which wholesaler ever complained of any participated in it for the express purpose disturbance of the market. The industrial of obtaining a product on satisfactory consumers did not compete with terms.

whom, in this case, Emiliana was not Genoa it dissociated itself from the numbered. progress made in the matter and did not — It does not matter that Emiliana sent attend any of the later meetings. Before requests for supplies through the taking part in an invitation to tender it Eridania company, tendered at the asked Sucres et Denrées and other invitations to tender a similar suppliers independently, by telephone, to percentage of the 'sovrapprezzo' as make offers; the amount on offer and the that offered by the other participators, price were also directly negotiated. and resold the imported sugar subject SADAM enumerates, with documents in to conditions of sale which were support, a series of offers made to it, identical to those of the other during the period under consideration, undertakings; this course of conduct by Sucres et Denrées, a German firm was not coordinated but at times Gerike Bahr & Co. and la Société pour identical. If Emiliana acted through l'exportation des sucres. In 1973 SADAM Eridania it was because that was the continued this policy of independent most satisfactory method of obtaining purchasing by contacting, either Sucres supplies and the easiest. The et Denrées, or Béghin, or the Safracom 'sovraprezzi' tendered were always the firm. On another occasion it got in touch same, as the invitations to tender with the Marcel Bauche maison business were 'technically speaking an house in Paris. instrument which amounted only to a simple formality'. SADAM's statements are also proved by — Emiliana did not prevent the telex messages of Sucres et Denrées competition. It did not sell to to Eridania of 29 September and 2 consumers.

In fact an agreement for participating in membership of this association, of which invitations to tender, the conduct of the the other Italian undertakings who are undertakings in this connexion should criticized in the decision were members, not be considered together with the could raise the presumption that it was concerted action which is alleged to exist within the Assozucchero that the between Italian and foreign producers, procedure in question for importing but independently. It is true that sugar was defined. In the communication

As européen de fabricants du sucre (CEFS), of which the Italian member was in fact the price of sugar is in a form which enables its value to be calculated, it is not Assozucchero. difficult to ascertain the price offered by SADAM claims that it played the part of the 'leaders' of the sector; in an 'an outsider'. After the first meeting in oligopolistic market 'price-leadership' is

common and does not ncessarily violate SADAM describes in detail the the rules of competition. considerable economic and financial difficulties with which it had been In any event a possible exchange of familiar since 1966, and which forced it information between the participants to conform, without any question of a cannot come within Article 85, as it does cartel, to a situation characterized by not affect trade between Member States. 'price-leadership.' The profits which it obtained were very modest. That SADAM entered into contracts of the same type with consumers as those entered into by the other Italian (4) Summary of the rejoinders producers is explained by the fact that the company, which only represents 4 to The Commission replies as follows: 5 % or Italian production, had no alternative but to fall in line with the to 1. (aa) (aaa) large producers. The Commission considers that it is The substitution clauses criticized by the Commission were made necessary by the important to stress that, contrary to what is true in the case of sales to the ultimate system of invitations to tender, because the suppliers cannot be certain of being consumer in the shops, sales to industrial awarded a quantity of sugar which they users or to traders are not subject to had agreed in advance to sell. Moreover maximum prices fixed by the authorities; the mere existence of such clauses refutes the producer is therefore free to fix his the Commission's complaint; in fact if own ex-works price, taking into account everything had been concerted these the different taxes and his profit. clauses would have been superfluous. The Commission challenges on many It can be inferred from the case-law of points the description of the Italian the Court that the question whether regulations given by Eridania and conscious parallelism amounts to a Industria degli zuccheri by calling concerted practice is only raised in the attention in particular to the fact that case of oligopolists, but not of small there is no legal foundation for the operators who in any event are not in application of maximum prices in Italy. a position to compete with large This difference of opinion is, however, in undertakings. In a general way in an practice irrelevant, since the Commission oligopolistic market normal competition does not deny that such prices in fact existed and were observed. only occurs to a limited extent, since, undertakings tend to avoid a major struggle. Conscious parallelism of to 1. (aa) (bbb) conduct corresponds to the requirements General observations on the submissions of the normal functioning of such a market of the applicants who are not Italian

consideration of a reduced 'sovrapprezzo' and begged us to be allowed to buy their does not divide the persons taking part sugar from us', and Sucres et Denrées in the invitations to tender into two acknowledge that they refused to sell and distinct and unchanging groups. In fact 'complied 100 % with the rules of the every economic operator, whether cartel game'. producer or consumer, could freely decide to submit, either a tender with the It is significant that the non-Italian object of becoming a successful tenderer, applicants did not investigate the Italian or an application to obtain a quota of the market but preferred in the case of large sugar reserved to undertakings not quantities to 'play it safe'; on the other wishing to take part in the invitations to hand Sucre-Union formed an Italian

regulations'. The latter 'do not explain . . . importance in complying with these everything', indeed they explain even less conditions this problem arose less if the similarity between the practices in between Italian undertakings and foreign question and those in which other undertakings than between large and undertakings engaged in order to protect small undertakings. In general the actual the Netherlands and German markets distinction is not between the 75 % and which are not subject to any specific the 25 %, but between the opportunity regulations, is borne in mind.

applicants certain statements in RT's reply. The fact that the concerted action By quoting the finding, mentioned by prevented consumers from obtaining the representatives of the Commission their supplies direct from producers- that 'the procedure for awarding import exporters emerges from several quotas helps . . . the Italian producers to documents annexed to the statement of control all sugar imports by the defence, and in particular from the telex concerted action', Générale sucrière message of Sucres et Denrées to Eridania omits to mention that the document in of 2 October 1970, according to which question also emphasizes the difficulties 'several industrial Italian consumers came faced by consumers which spring from

the disputed cartel. The Commission by the Italian authorities to calculate the never denied that because of the Italian maximum consumer price were 'fixed regulations consumers' requests had to be sums'; on the contrary these were the reduced, but it denies that they were ever factors, inter alia, which could offer the only obstacle encountered by scope for competition. Sucres et Denrées consumers. The main effect of the admits moreover that 'exporters must do concerted action to which exception is all they can to minimize transport costs, taken was to exclude Outsiders' from the which are the principal variable item'. invitations to tender whether they were exporters or importers; if there had not General observations on the submissions been a concerted action 'Outsiders' could of the Italian applicants have been awarded larger quantities As Article 85 prohibits also concerted compared with producers. practices which only have 'as their object', and not as their effect, the Générale sucrière plays upon words restriction of competition, the when it claims that the 'price' tendered Commission, having produced evidence at invitations to tender is not a sugar of cooperation capable of adversely price but the proportion of the affecting competition and aiming at its 'sovrapprezzo' to be paid by the restriction, does not have to prove that,

This problem is, regard to the economic context sales in however, of secondary importance since the Commission showed that the Italian Italy would have in any case taken place; but if there had not been a concerted system permitted such opportunities. action inquiries from 'outsiders' would have been met on a larger scale. Individual replies to the Italian applicants In reply in particular to Say, the Eridania's argument amounts to saying Commission states competition could that it is natural for undertakings to cover the proportion or the 'sovrap remove the opportunities for competition prezzo to be paid and, once this left by the Italian regulations. — Neither proportion had been fixed, the price to the obligation to produce the quantities be obtained subsequently on the Italian determined by the authorities, or that of

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competition relating to the conditions of that only producers-importers were in a sale is concerned, the desirable position to secure continuous supplies, standardization of the pattern of the does not take into account the possibility forms of contract used for international of storing imported sugar and above all sales, likely to make this trade easier, does not invalidate the argument that the must not be confused with the insertion conditions of sale, the quality and service in these forms of contract of conditions could have been improved by which are too onerous for the competition. co-contractor.

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of defence is untenable, since the that the prices should be compared Commission has not attacked these two contract by contract; Say should produce groupings separately but has challenged all the contracts into which it entered. the concerted action as a whole. Reply to Béghin The Commission enumerates and reproduces some of the documents So far as the size of this applicant is which it regards as being the most concerned the Commission only referred important for the purposes of its case, to it in order to determine the amount of namely: the fine, calculated by reference to the — the minutes of the meeting in Paris total turnover of the company and not to of 29 July 1969; an estimated turnover calculated within — the telex messages after the meeting the context of the practices to which at Genoa of 11 September 1969: exception is taken. Further the — telex message from Sucres et Commission found that the applicant Denrées to RT of 1 October 1969; took part in concerted actions which had — telex message from Sucres et not only as their 'effect' but also as their Denrées to Eridania of the same 'object' the restriction of competition; in date; this connexion it is advisable to consider

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to Italy. This large figure makes it easier brings out certain differences of opinion to understand that this company played between it and Italian producers is the part of the driving force in the further confirmation of the kind of concerted action, which is moreover commercial relations which existed conclusively proved by certain docu between the undertakings concerned. ments annexed to and mentioned in the statement of defence. In these The minutes of the meeting of Paris of circumstances its argument that as a 29 July 1969 show that Sucres et non-producer it was not in its interests to Denrées attended this meeting and came protect the Italian market is unfounded. to an agreement with French and Its position on the sugar market is not Belgian suppliers to sell certain economically different from that of quantities to Italian producers through

taken. But in fact it did participate When the applicant argues that exporters decisively in the supply of almost all the cannot be regarded as competitors of amounts delivered from producer to producers-importers it fails to understand producer. It cannot deny that it had a the nature of the infringement for which financial interest in participating in the it is blamed. The Commission treated the concerted action bearing in mind the deliveries from producer to producer as margins which it obtained. one of many other indications ot the alleged concerted action; for the By stating that it was never approached remaining indications the Commission by any Italian consumer Sucres et refers back to the arguments developed

in the statements of defence from which statement that the Commission drew the it emerges that the group of exporters wrong conclusions from the figures set was economically in competition with out in Annex 9 to the application. SZAG Italian producers in connexion with must produce the corresponding deliveries into Italy. contracts which alone can throw light on the substance of the problem. The conditions for attending the invitations to tender are the same for With regard to the evidence of SZAG's everyone; undertakings which were far participation in the cartel relating to smaller than Sucres et Denrées attended. import quotas, the Commission refers to the proof mentioned in the statement of Reply to SZAG defence; in its reply SZAG did not define its position on the detailed The statement of defence shows clearly particulars supplied by the Commission. why the Commission takes the view that the infringements committed by SZAG The Commission gave the expression covered all four marketing years. 'outsider' its normal meaning by only regarding 'outsiders' supplies as being The argument that the size of the those which producers or agents deliveries to Italian producers is not an delivered to dealers or to the Italian indication of a cartel is based on the processing industry. erroneous view that the Italian system does not allow Italian producers to General reply to the Italian applicants participate in invitations to tender. The Commission deems it appropriate to SZAG cannot gain acceptance for the recall that it does not accuse them of a view that it did not know to whom the concerted practice having as its object German dealers resold the sugar with the fixing of prices.

the destination. The telex message of much wider effect and is in an entirely Eridania to Sucres et Denrées of 10 April different field. Even if it is admitted, 1970 (cf. Communication, p. 64) proves quod non, that the Italian system did not that this undertaking reserved certain permit price variations, the applicants quantities of sugar for German dealers. did not for that reason lose all interest in protecting their market, so that an With regard to the comparison of the argument precluding the existence of a profits which SZAG made respectively culpable practice cannot be based upon from sales to producers and to traders, it such a situation: is necessary first of all to consider that it — So far as producers-exporters are is not normally in the interests of a concerned their interest in avoiding producer to sell his goods to a competition between themselves is competitor, since he transfers to that due to the fact that sales on the competitor a profit which he cannot Italian market offered them prospects make himself.

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In this The arguments which are intended to connexion it must be borne in mind justify the cooperation to which that, during the period in question, exception is taken and not to challenge it imports went up from 15 % to 26 % are unsuitable for proving that there has of consumption, and that this trend is been no infringement, as the practices have not been notified to the capable of increasing in future because of the widening gap between Commission; these arguments can only consumption and production and the be relevant for determining the expiry of the transitional period seriousness of the infringement. provided for by Regulation No Evidence from a source whose interests

evidence upon which the Commission undertakings to which exception is taken bases its case. — in particular the agreement that producers-exporters were only to sell to Reply to Eridania outsiders' at increased prices — were part of a course of conduct amounting to To claim that the 'prezzo congruo' is performance of these undertakings. As ascertained by adding together factors the conceited practice is a form of which are fixed and known, is to deny coordination which has not reached the that the invitations to tender have any stage where an agreement in the proper justification and to ignore the fact that, at sense of the word has been executed, these invitations to tender, offers from indirect proof of the conduct by which foreign undertakings to the group of this coordination was effected can be producer-importers differed as much adduced. from those of the members of the group as they did from each other.

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French and Belgian producers intended to determine the terms to be offered to The percentage of direct imports by the Italian group, the suppliers' group consumers which, for the period from were afraid that the cooperation which 1968 to 1972, was slightly more than had only recently been initiated would 15 %, is additional evidence of the be withdrawn by the importers' group if control of imports by the applicants, the prices which were asked were having regard to the fact that: exorbitant Moreover at the meeting held — the characteristics of the market in Genoa a little later (11 September which, when it functioned normally, 1969), the exporting and importing benefited direct imports; undertakings agreed on the principles — the measures adopted by the Italian which were to govern the sale of sugar in authorities reserved for consumers a Italy (cf. Notification of objections, p. 56 proportion of imports; to 57). — direct imports only increased after this proportion was reserved for them If importers who are not members of the by virtue of this measure; group benefited from the lower costs, — according to Eridania's statements, this advantage should have caused them, consumers' costs were lower than under normal market conditions, to those of producer-importers; increase their share of imports. — the deliveries in question were not, as a general rule, effected by members The application, by producer-importers of the suppliers' group; of onerous conditions of sale to their — a proportion of the imports was customers is not in itself an objection, apparently effected by producers on but part of the evidence put forward in behalf of consumers. support of this objection.

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In it imported. It is sufficient to establish fact the view actually maintained by the that consumers did not benefit from a Commission is that the members of the greater choice of sources of supplies group should have competed with each which was one of the objectives to be other. attained by the Community system for sugar. Further Emiliana made a profit If the telex message from Eridania to from the disputed practices which Sucres et Denrées of 20 October 1969 shielded it from the competition of can show that before Eridania concluded undertakings well qualified to export to a joint purchase it obtained the consent Italy (foreign producers, dealers), and of its principals, this would confirm that which reduced the risk, for Emiliana, of the company negotiated on behalf of all failing to retain its customers. the members of the group.

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it has been in the interest of these Italian market on the applicants' course of conduct. industries to import even on payment of the 'sovraprezzo, which in fact is what happened. Cavarzere emphasizes when Union argues that foreign sugar could be sold in The applicants' argument that Italy below the intervention price, it competition was possible is based on the overlooks the fact that, according to erroneous view that it was not in the CIP's statement, foreign sugar could not interest of foreign producers to sell below be imported into Italy at prices equal to the intervention price. the price of domestic sugar.

Générale Sucrière asserts that the to 1., (aa) (ccc) intervention price is in fact in practice a guaranteed minimum price. Cf. also (b) below.

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Fixing a maximum consumer price is 34 of Regulation No 1009/67 which inconsistent with the system of prices authorizes Italy to grant aids. defined by Regulation No 1009/67. Cavazere also stresses the fact that the Générale sucrière regards Union's Italian regulations do in fact exist. It statement as confirmation of its own points out that only the part of the statement 'However surprising it may sovraprezzo' raised from domestic

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Union importance (the need to submit a submits this argument in detail, minimum tender for 1 000 metric tons; emphasizing in particular that, even the existence of a firm offer from a before the period covered by the foreign producer), but fails to mention its decision, Eridania played a 'leading' role. principal object, namely to obtain quota The disputed cartel is exemplified again restrictions upon imports which are by a letter of the Ferrero company to supported by aids. Union of 20 February 1974 which

during the 1969/70 marketing year mandatory principles which govern the and the estimates of home pattern of the sugar market in Italy' are incompatible with Community law. This production for the 1970/71 mar affords further proof the company cannot keting year Ccz was authorized to be blamed for any irregularity. make good a deficit of granulated sugar intended for processing under to 1. (bb) takings by arranging an invitation to tender for the import of 1 500 000 Union states that the facts put forward by quintals of sugar, together with an and the evidence obtained by the additional amount of 300 000 Commission sufficiently establish the quintals for the requirements of existence of the infringement in consumer undertakings which had,

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Quintals. The consumer industries ducers-exporters. therefore submitted tenders amounting to 410 000 quintals. The Say takes the view that Union's sugar undertakings which at the statement confirms that the grouping of invitation to tender of 10 September Italian producers preceded the action of had a deficit of only 20 000 quintals, foreign producers. The latter found that nevertheless submitted tenders they had to deal with one single demand amounting altogether to 1 100 000 for supplies at a predetermined price.

However account must be Italian producers who were not members taken of this influence in order to of the cartel, or to approach the Italian evaluate the conduct to which exception applicants for quotas by concealing their is taken. actual identity behind figureheads ('prête-noms') which changed each time. Union's detailed explanations contradict the Commission's statement that Sucres By submitting that the course of conduct et Denrées was the driving force in the to which exception is taken should concerted action in question. The

At the first October 1970, as described by Union, invitations to tender after the decision confirms the company's argument that Italian sugar manufacturers only obtained the Italian regulations gave the said a minority of the import quotas. Later

they were even forced not to attend the prohibited by any Community or invitations to tender, as they had not national law. It could at most be said that received any offer from foreign the history traced by Union shows that producers, who on the other hand had the complaint that Italian producers, by supplied large quantities to other Italian means of the course of conduct to which operators. These events gave rise to exception is taken, aimed at adversely serious difficulties in obtaining supplies affecting competition is unfounded. and entailed an increase in prices on the

So far as the second successful tenderers, the result would of the said invitations to tender which have been that the smallest consumer put 600 000 quintals up to tender is firms would have had to obtain sugar concerned, the amounts awarded to from abroad, by paying the whole of the producer-importers, trading companies 'sovraprezzo', which would have had an and consumer industries respectively adverse effect on their trading balances. amounted to 385 965, 70 175 and All this shows that the Commission and 143 860 quintals. Union have proceeded on the basis of an incorrect concept of competition. It is wrong to state that the aim of the So far as the packers are concerned the Italian applicants was to consolidate the sugar imported through the invitations to dominant position of producers beyond tender was for the most part intended for the duration of the provisional industrial use and did not therefore need

Similar con allows the product to be packed by traders whom he can trust. The statement siderations are submitted by Industria that the packers unsuccessfully attempted degli zuccheri to obtain sugar in Italy and abroad is not supported by any evidence. Finally the Cavarzere points out that the agreements, notices of the invitations to tender for which were entered into between Italian imports for industrial use did not allow sugar factories before the period covered by the decision, and part of which relate potential packers to participate. back to the past, are irrelevant in this By appearing to regard it as desirable to case, as these agreements were not prevent Italian producers from importing

sugar Union forgets that, up to 31 sugar intended for industrial uses — December 1972, Italian law favoured some of them moreover, did so —, but direct commercial relations between only in limited quantities either because consumers and national producers of their capacity was less than that of sugar by applying to these direct sales consumer industries, or because the tax known as 'Imposta generale supplying the consumer industry direct sull'entrata', at a rate of 2·30 % instead of by sugar factories was favoured by the 5·30 %. fiscal advantages granted to industrial purchasers who bought direct from the Cavazere develops in detail the sugar industry. The aim of the Italian evaluation which in its view should be given to the contracts entered into fiscal system was in practice to do away with the commercial middleman for by producer-importers and sweet sugar sold to consumer industries.

In The contracts for sale are uniform, substance it consists of blaming them for because it is the common commercial having wished to obtain in their foreign procedure to standardize them. trade the amount necessary to make good the difference between national supply The Ferrero company is not one of the and demand. Moreover such efforts have retail consumers which Union is called nothing to do with any wish for upon to protect. 'protection' or 'consolidation', but are With regard to the invitations to tender only intended to be a way of referred to by Union, Industria degli 'participating in the great game of zuccheri submits observations similar to economic competition'. those of Eridania mentioned above.

SUIKER UNIE AND OTHERS v COMMISSION

Union moreover only regularizing the market in order to produced a single contract entered into guarantee the employment and by SADAM. standard of living of producers. In With regard to the other matters addition they make it possible for SADAM repeats certain statements distribution to be supervised by the mentioned in its previous pleadings. large Italian undertakings, in order to prevent the pressure of competition (b) Générale sucrière, Say, Béghin, RT, by foreign producers making prices Sucres et Denrées, Eridania, In fall below regional intervention

repeated under (2), (3), (4) and (5). Member States, a system of aids, an equalization fund ('caisse (1) Summary of the applications d'égalisation') intended to provide the money for these aids and financed by (aa) The first exception provided for in Article 2 of Regulation No 26 the payment of the 'sovrapprezzo', a system of limiting and sharing out (Article 85 of the Treaty does not imports and the equalization of apply to agreements etc. 'which are transport costs. an integral part of the national — The beforementioned measures are organization of the markets') likely to lead to 'the progressive According to Générale sucrière, Say, integration of the Italian sugar Béghin, Sucres et Denrées, Eridania and economy into that of the Industria degli zuccheri, the Community' (cf. Order No 1195 of Commission is wrong (cf. decision p. 42, CIP, I-2.B.b. above). Rt Col.) to refuse to bring the course of conduct to which exception is taken Sucres et Denrées requests that Professor within this exception on the ground that Albertario, former director at the Italian the common organization of the market Ministry of Agriculture and Forests who, 'left no place for national organizations having been responsible for all matters of the market'. Taken as a whole the arising out of the importing of sugar and argument of these companies can be the invitations to tender, is particularly summarized as follows: well placed to evaluate the objectives pursued by the Italian or public The Italian regulations amount to a authorities, be heard as a witness on national organization of the market certain questions which it has framed.

(bb) The second exception provided for over the need to ensure competition; this in Article 2 of Regulation No 26 priority is also the basis of Regulation (Article 85 of the Treaty does not No 1009/67 and its implementing apply to agreements etc. 'which are regulations, which restrict freedom of necessary for attainment of the competition. objectives set out in Article 39 of the Treaty') Unlike the considerations which apply to the other economic sectors the Générale sucrière, Say, Béghin, RT, applicable provisions in the case of Sucres et Denrées, Eridania and agriculture protect not only the Industria degli zuccheri consider that consumer but also the producer. the two grounds put forward in the decision (page 43, Lt. Col.) for not Competition should procure for the applying me said exception, are wrong. consumer not only the lowest possible They are 'that the practices in price, but 'reasonable prices' (Article question.

Even if it was assumed — quod non — that the Italian regulations left some The effect of the Commission's attitude opportunity for competition which was is to remove any possibility of applying likely to lower prices, such competition the exception in question. In fact, the would be contrary to the objectives of the latter — as emerges moreover from the Italian regulations and also Article 39. In wording of Article 2 of Regulation No 26 fact it would lead to carrying out sales — can only, by definition, be applied to below the target price and even below practices which differ from the means the intervention price; however, ac aid down by Community regulations; a cording to the spirit of Community practice which is designed only to regulations the latter price must be enforce compliance with diese means has reached to enable sugar producers to pay no justification. The Commission's view beet farmers the minimum price laid is also contradicted by the examples down by these regulations. enumerated in the second sentence of the said Article 2 in favour of certain The object and effect of the Italian agreements, etc. of farmers. regulations and therefore the practices to which exception is taken, is to guarantee The third recital of Regulation No 26, the employment and standard of living repeating the idea mentioned in Article of beet and sugar cane producers — 42 of the Treaty, states that the rules of objectives which are given prominence Article 85 are only to be applied 'in so by Regulation No 1009/67 —, to far as their application does not impede stabilize the market, to guarantee security the functioning of the national and continuity of supplies and also organizations of agricultural markets or reasonable prices, that is to say prices jeopardize attainment of the objectives of which do not fall below the regional the common agricultural policy'. It intervention price or exceed the ceiling follows that the objectives referred to in fixed by the Italian Government; Article 39 of the Treaty have priority Industria degli zuccheri states however

It is clear from Articles 43 and 45 of the The uniform system of prices relates to Treaty that the common organization of the consumer price and not the the markets replace the national production price. It is therefore a organizations. The Court held that from guaranteed price which benefits the the beginning of the entry into force of consumer and not the producer. the common organization it is for the Community alone to decide whether to The regulations concerning the maintain, provisionally, any system equalization of transport costs ceased to relating to the products in question remain in force from 1968; the system of (Order of 21 March 1972, No 82/71, equalization which is now applied is Department of the Public Prosecutor of based on the initiative of Italian the Italian Republic (Ministère public de producers. la Républic italienne)/SAIL, Rec. 1972-1, p. 119). The Community decided not to The Italian provisions do not lay down retain the Italian regulations after the that there must be a grouping of supply. entry into force of Regulation No 1009/67; for this reason alone the said The Italian regulations allowed oppor­ regulations cannot be regarded as a tunities for competition (cf. above, (2), national organization of the market. (4))·

It is also clear from Articles 39, 40 and Even if it is assumed that the Italian 43 of the Treaty that three conditions provisions amount to a national

JUDGMENT OF 16. 12. 1975 - JOINED CASES 40 TO 48, 50, 54 TO 56, 111, 113 AND 114/73

organization of the market, the concerted price proved to be profitable as emerges practices in question would not be an from the arguments of the applicants integral part of it For this purpose it is themselves.

So far as the second exception provided Eridania and Industria degli zuccheri for by Regulation No 26 is concerned, infer from Articles 42 and 43 (2) and (3) the third recital of Regulation No of the Treaty that under the latter there 1009/67 shows that it is only intended to is a close relationship between the apply in so far as the application of implementation of the common Article 85 of the Treaty jeopardizes agricultural policy and the application of attainment of the objectives of the the rules of competition, so that the common agricultural policy. The application of these rules to the necessary means of attaining these agricultural sector should take place at objectives have been laid down by the same time as the establishment of Regulation No 1009/67 and its the said policy and more particularly as implementing regulations. The practices the adoption of the basic regulations in question are in no way indispensable relating to the different agricultural for attainment of the said objectives; on sectors. If the said policy is not the contrary, since their aim is to restrict established and in particular if the competition, they run counter to these national organizations are not replaced objectives. by a common organization of the market, the application of the rules of It is not correct to claim that the competition cannot be ordered by the argument put forward by the Council. This interpretation is confirmed Commission removes any chance of the by Article 38 (4) of the Treaty. exception in question being applied. The Commission enumerates certain In these circumstances, the fact that the circumstances in which, in its opinion, Council adopted Regulation No 26 in the exception may apply. 1962, at a time when a common organization had not yet been established The argument relating to the price level for most agricultural products, con­ at which the persons concerned sold in travenes the principle of interdependence Italy fails to take into account the nature between the establishment of a common of the infringement alleged. The decision agricultural policy and the application of is not aimed at the effects which the the rules of competition to the concerted practices may have had on agricultural sector, a principle derived prices, but at the concerted action from the said provisions. Therefore relating to the protection of the Italian Regulation No 26 should be declared to market Moreover the market price which be inapplicable in accordance with is slightly higher than the intervention Article 184 of the Treaty.

The objection cannot be raised that the In short, the Community regulations original invalidity of Regulation No 26 relating to competition do not apply was rectified by the entry into force of during the transitional period. Regulation No 1009/67, since the latter Cavarzere submits considerations which has not established a common for the most part are similar to those organization of the market in sugar. reproduced above and supports them by — It established side by side with quoting several extracts from the case-law definitive arrangements transitional of the Court, the opinions of the Advocates-General and of statements of provisions intended to remain in force the Commission ir its members.

production. The main purpose of all Eridania and Industria degli zuccheri these provisions is to keep the various may together be summarized as follows: domestic markets, at any rate to a certain extent, separate from each other. Within the meaning of the eighth recital of Regulation No 1009/67, 'the — Thus Article 43 (3), subparagraph (b), establishment of a single market. . . of the Treaty states that a system cannot implies the removal, at the internal be regarded as a common organization of frontiers of the Community, of all the market unless it 'ensures conditions obstacles to the free movement of the for trade within the Community similar goods in question'.

That is confirmed regulations permit the free movement of by the fact that a national organization of goods and, as a result, whether they the market in sugar exists in Italy (cf. conform to Community law or not. infra, to 1. (aa)) and also by Article 22 of the said regulation, which after defining The argument that the Community did the rules in Articles 23 to 33 as not decide to 'retain' Italian regulations is transitional, provides that the definitive irrelevant, since almost all the provisions arrangements 'shall not involve any which together make up these re discrimination between Community gulations were issued after 1 July 1968. producers', in this way making it clear The Commission cannot submit that that such discrimination is the these regulations had no purpose after consequence of the before mentioned the establishment of the common transitional provisions. Moreover, under organization. The aim of Order No 1195 Article 40 (3) of the Treaty, the common of CIP is 'the progressive integration of organization provided for by this Article the Italian sugar economy into that of 'must exclude any discrimination the Community', which shows that the between producers or consumers within common organization has not yet been the Community'. established in Italy; Regulation No

1009/67 itself states moreover that the — The revenue from the 'sovrapprezzo' ultimate objective had not yet been has been appropriated to aids attained. If the Community authorities intended, for the most part, to benefit left the Italian regulations in being the these producers. reason could only be they are regarded as a national organization of the market — The objection cannot be raised that or at least as being regulations having the establishment of a single and a equivalent effect as such an organization maximum consumer price does not —, which for the time being is absolutely amount to a guarantee of the standards of

being. Moreover it emerges from Article regular supplies for the Italian market 43 (3) of the Treaty that the common and therefore indirectly to guarantee the organization may, but does not have to, standards of living and the employment replace national organizations. of beet producers and the beet processing industry, but also to provide direct aid to The Court's judgment of 21 March 1972 beet farmers and the beet processing does not help the Commission. In fact, it industry. So far as the single consumer emerges from this judgment that a price is concerned it protects these national organization of the market and a operators from the risks of the market, common organization of the market can enables them to plan ahead and prevents co-exist The judgment finds that, from the moment when such a common them from being placed at a disadvantage owing to their geographical organization enters into force, it is for the

authority. The judgment neither says nor the other Member States, owing to a implies that the retention of a national higher intervention price and the aids organization depends upon an express which the Italian Government was decision by the Community. authorized to grant; The Italian regulations fulfil exactly the — guaranteed the sale of domestic three conditions which, in the view of output by the equalization tax of the Commission, must all exist to create 3·6 % (Law No 570 of 31 July 1954), a national organization of the market. applied to imported sugar until 1 — They comprise a combination of January 1973, and also by the system strict provisions, which are adapted to of invitations to tender which enables Italy and binding. imports to be supervised and — They limit imports and national restricted with a view to preventing demand, by reference to national sales effected abroad under normal production, with the object of market conditions from creating protecting Italian beet producers. disturbances on the national market.

consist of Community regulations only applying to a specific Member State and The practices to which exception is of national rules; this kind of taken were necessary for the functioning combination would be even more likely of the Italian system. But even this factor to amount to a national organization of is not determinative. If a practice is to be the market if, as is the position in this regarded as an integral part of a national case, the national regulations take organization of the market it must either precedence over Community regulations have been 'ratified' by the Member State and combine with the latter to seal off concerned, or there must be a causal the market in question. connexion between the organization and the practice. It is unrealistic to require in Sucres et Denrées adds that it is not addition that the practice is absolutely necessary, in order to establish that a essential for the functioning of the national organization of the market organization, since the latter is in any exists, to show that Community and case administered by the official domestic rules are incompatible. authorities. In this case the fact that the said practices were absolutely essential, or Community and Italian regulations have at least the casual connexion between the the same object, namely to regulate the Italian regulations and them, is based on movement and the price of sugar by a the following facts: combination of provisions providing for — These regulations have as their object protection at the frontiers. It is therefore and effect the grouping of demand; illogical to hold that one of these two the unavoidable result of this has sets of regulations amount to an been the grouping of supply, organization of the market encouraged or at least approved by the Italian authorities. The existence of a national organization — In order to be able to take part in of the market is not revealed by the the invitations to tender and to abide extent of the provisions in question but by the sale price laid down for the by their nature and their effect domestic market, the producers- importers had to have in their So far in particular as the aids authorized possession firm offers, at a reasonable by Community regulations are concerned price, from foreign producers. It was it must not be forgotten that their grant therefore necessary to negotiate is in the discretion of the Italian contracts for large amounts and to Government offer a reduction of the 'sovraprezzo' likely to cover the difference between When the Commission emphasizes that the cost of the imported sugar the Italian system of uniform prices and the sale price on the

domestic market The similarity of — The lump sum for transport costs was the reductions tendered was made necessary by applying a single necessitated by the fact that Ccz fixed price for the whole of Italy; it was a 'prezzo congruo' ('an appropriate one of the factors for the fixing by price') which left a very small profit the Fund of the 'prezzo congruo . margin for the importer. — Sales from producer to producer Some opportunity for competition is not depended upon the size of the incompatible with an organization of the amounts put up to tender and the market; the Commission itself asserts financial guarantees which had to be that the common organization of the given. market in sugar leaves some scope for — In conformity with the wishes of the competition. Italian authorities the price of sugar in Italy had to be uniform and fixed. Cavazere puts forward similar arguments Sugar had therefore to be handed to those of the other undertakings.

It can be — the resale of sugar on identical terms conceded in this case that the application was only the result of the strict of Community rules of competition do regulations to which producers were not impede the functioning of the Italian subject organization so far as supplying — The so-called IGE tax was levied on consumers is concerned; but, to the sugar sold to wholesalers at the rate extent to which the supplying of all of 5 %, whereas, in the case of the consumers and meeting the entire deficit sale to consumers, the rate was 2·3 %. of domestic demands is concerned, the Italian legislation therefore benefits situation is quite different.

SUIKER UNIE AND OTHERS v COMMISSION

However the the objectives of Article 39 of the Treaty purpose of the prohibition in the Treaty take precedence over the concern to of practices restricting competition was guarantee competition. to compel undertakings to sell at lower prices. To admit that the conduct to It is clear from Article 40 (3) of the which exception is taken had no effect Treaty that the common organization of agricultural markets does not necessarily on the price level in Italy, amounts to an have to include all the measures which acknowledgement that the Italian

objectives. In this case, it is for example the common organization of agricultural doubtful whether Regulation No 1009/67 markets on the other hand, as separate was intended to increase agricultural entities. On the contrary this provision productivity. It may be that some makes the application of the rules of agreements or practices, while they competition a part of the common pursue some of the objectives indicated agricultural policy. It follows that any in Article 39, are not in keeping with the discussion to decide whether the

follow or accompany the establishment regulations may be an obstacle to of the common agricultural policy is intra-Community trade, the existence of based on false premises. The Council a national organization of the market is could legitimately consider, as far back as not thereby established. 1962, that 'certain rules of competition must forthwith be made applicable to It emerges from Article 43 (3) of the production of and trade in agricultural Treaty that, when the conditions set out products, in order to eliminate practices in (a) and (b) of this paragraph are contrary to the principles of the common fulfilled, the common organization is market and prejudicial to attainment of deemed to have replaced the national the objectives set out in Article 39 of the organizations. That is the position in this Treaty and in order to provide the basis case. The Italian regulations cannot for the future establishment of a system therefore be regarded as a national of competition adapted to the organization of the market; in any event development of the common agricultural the Commission did not acknowledge policy (Regulation No 26, second that they were such an organization. recital).

. . The fact that no national organization of account shall be taken . . . of the need to the market exists is also shown by the effect the appropriate adjustments by fact that Italy encouraged the import of degrees . . .'. The next point is that the Community sugar, although it could have transitional arrangements established by been very much in its interests to obtain Regulation No 1009/67 are not supplies instead on the world market 'discriminatory'. In fact, to the extent to where, at that time, the price of sugar was which this regulation applies a different appreciably lower than inside the treatment to different situations, this Community. distinction, far from being arbitrary, is justified by the fact that the situations are The applicants cannot either base any not comparable. Finally, it is from the arguments on the introduction of the point of view of the adjustment by 'sovrapprezzo', as the latter, grosso modo, degrees to the conditions of a single promoted imports and did not prevent market that the opportunity given to them. Italy — within the limits fixed by Regulation No 1009/67 — to grant aids The guarantees of the employment and must be evaluated. standard of living of Italian beet to 1. (aa) producers (a higher regional intervention price; aids) are based on Community The Commission takes the view that even provisions and are therefore part of the if some of the provisions of the Italian common organization of the market.

SUIKER UNIE AND OTHERS v COMMISSION

The Commission repeats the argument competition in order to keep the sale that there is only a national organization price below the target price. If, since the of the market if the aim of the system in entry into force of the common question is to protect the sale of home organization of the market, the price of production and a stable level of prices sugar has always been below the target against both the effects of fluctuations price, that is due to the fact that there are of production or national demand. surpluses in the Community and not to Moreover, for reasons which the the application of the rules of Commission states in detail, none of the competition in the Treaty of which the provisions of the Italian regulations contested decision, adopted more than quoted by the applicants fulfil this four years after it entered into force, is condition. the first example.

Générale sucrière, Say and Sucres et to 1. (bb) Denrées together point out that the arguments from which Union infers with The objectives of Article 39 of the Treaty justification the illegality of the Italian are only attained through the provisions system show at the same time that this of Community regulations giving the system is a national organization of the necessary guarantees concerning the market, which may be absolutely employment and standard of living of necessary having regard to local factors. beet producers. The practices in question The fact that the Commission has not are opposed to these objectives: they initiated the procedure against Italy have tended to partition markets, to referred to in Article 169 of the Treaty make it more difficult to supply amounts to a tacit retention of the said consumers, to restrict competition and to organization. increase prices. Cavarzere states that the existence and It cannot be maintained that it is the nature of Italian regulations, in contrary to the policy of Article 39 to use particular so far as the quota restrictions

JUDGMENT OF 16. 12. 1975 — JOINED CASES 40 TO 48, 50, 54 TO 56, 111, 113 AND 114/73

on imports and the system of aids are 2. The complaint of a concerted action concerned, show that Regulation No engaged in by SU, CSM, RT and 1009/67 has not in fact set up a common Pfeifer & Langen for the protection of organization of the market in sugar. the Netherlands market

countries of the Community. It does not having ceased carrying on business on 2 matter very much whether these powers January 1971. SU did not acquire any are only based on Community rules, or business property or cash, as 'Suiker Unie whether they derive simultaneously from Beheer' did not have any to transfer. The national regulations. The object of transfer of the whole of business property is moreover not known under Regulation No 1009/67 is simply to Netherlands law. prepare the setting up of a common organization for the final period. Italian By imposing a fine on SU the regulations do not allow the free Commission therefore infringed movement of goods which, under the Regulation No 17 of the Council, and in provisions of Article 43 (3), is the particular Article 15 (2) thereof. condition precedent to a common organization of the markets. (b) Summary of the statement of defence The Commission replies that the annual Eridania maintains in particular that the report of the Cooperatieve Vereniging concept 'of a national organization of the Suiker Unie Beheer UA, of 1969/70, market' expresses, according to the states as follows: Treaty and Regulation No 26, a concept which is economic rather than legal and The Board of Directors of Suiker Unie that the question whether such an presents its report and that of the organization exists depend on the management for a period of 15 months, question whether the measures that is to say from 1 October 1969 to 31 concerned are incompatible with December 1970 inclusive. This period Community regulations or not. includes the last phase of the merger

between the four sugar cooperatives in change in the legal form of the the Netherlands. In 1966 these cooperative cannot relieve SU's liability companies appointed the cooperative for acts of its predecessor, namely Suiker company Suiker Unie to be the main Unie Beheer UA. cooperative. In the first stage beet producers remained members of one or (c) Summary of the reply more of the associated cooperatives. The SU submits that, when the decision ultimate objective, which has been stated claims that it engaged in the course of publicly, is to replace, before the expiry conduct to which exception is taken, it of a specific number of years determined relies on facts which are incorrect and in advance, the principal cooperative by a the reasons upon which it is based are at cooperative company in which beet the very least inadequate.

For the obligations derived from the decision In a report of the Cooperatieve were not the liability of 'Suiker Unie Vereniging Suiker Unie UA the Beheer' when it was in existence before following is contained: the winding up of this company was The present report relates to the first completed, but, according to the accounting year of the „Cooperatieve decision, the direct liability of SU. Vereniging Suiker Unie UA", formed in Rotterdam on 16 July 1970; it refers to (d) Summary of the rejoinder the period from 16 July 1970 to 30 June The Commission maintains that

as at 1 January 1971'. the Commission for having infringed the The name 'Suiker Unie' therefore still principle of the right to a 'fair trial' covered the same undertakings. The by issuing public statements making latter were managed to a great extent by it appear that the existence of the same persons, and had their infringements by the applicants had been registered office at the same address. The established and what is more by doing so

decision is shown by the fact that, after time limit laid down in Article 2 (4) of hearing the persons concerned, it Regulation No 99/63 at two months, it decided not to impose fines on some of infringed the principle laid down in them and modified its argument on one Article 11 of this Regulation that regard crucial issue, namely proof of a concerted shall be had to the time required by the practice between all the sugar producers party concerned. This time limit of two of the Community. months was too short having regard to the fact that the Commission took two to (3) Summary of the replies three years to conduct its inquiry and, furthermore, part of the period coincided SU considers that it is unrealistic to with the holiday season. The requests for claim that the statements made to the an extension made by SU and CSM were press did not influence the Commission's not granted. final decision. SU complains that, contrary to what is CSM maintains that it was impossible to stated in the second recital of Regulation tell from the Commission's com­ No 99/63, the Commission, instead of munication that it was giving a preli­ keeping in 'close touch' with it, never heard its views before the notification of minary opinion, since the com­ the communication. munication stated that the matter is 'crystal clear'. (2) Summary of the statements of Pfeifer & Langen add that, under all defence advanced legal systems, it is a well-established principle that the judge The Commission replies that as the may not give any publicity to pending administrative procedure was concerned actions, if he wishes to avoid the risk of with the actual conduct of the applicants being challenged on the ground of who can be presumed to be acquainted presumed bias. with it, a period of two months was more

(4) Summary of the rejoinder 40/73 The Commission replies that the main purpose of this submission is to The Commission takes the view that SU's challenge the facts found by the grievance that it had insufficient time is Commission and, to that extent belongs exaggerated. There is hardly any to the substance of the case. According qualitative or quantitative difference to the case-law of the Court the between SU's reply to the notification of Commission does not have to refute, in objections and its submissions during the the statement of the grounds upon which procedure before the Court. a decision is based, all the arguments put forward by the persons concerned. (c) Pfeifer & Langen: infringement of the right to be heard on the matters (d) Pfeifer & Langen: infringement of at issue Article 4 of Regulation No 99/63

(1) Summary of the application (1) Summary of the application

Pfeifer & Langen complains that the Pfeifer & Langen submits that the communication did not distinguish decision contains complaints of which it

JUDGMENT OF 16. 12. 1975 — JOINED CASES 40 TO 48, 50, 54 TO 56, 111, 113 AND 114/73

(e) SU: failure to take into account the (2) Summary of the statement of defence facts put forward by the applicant The Commission replies that the (1) Summary of the application deliveries were mentioned in the communication (cf. p. 48, 84, 112 et seq.) SU takes the view that the Commission and were treated, just as they were in the infringed Article 19 (1) of Regulation No decision, as evidence of the existence of a 17 and Articlel of Regulation No 99/63, conceited practice.

SUIKER UNIE AND OTHERS v COMMISSION

(g) Pfeifer & Langen: infringement of SU and CSM protest against the adoption the established principles for the of a single decision which of necessity taking of evidence contains a large number of facts and accusations which have nothing to do (1) Summary of the application with the applicants. This has made it difficult for the applicants to prepare Pfeifer & Langen state that another and their defences, as they did not know on much more credible interpretation, based what points they had to define their on different reasons, can be given of the position. facts treated as evidence in support of the complaints made against it Therefore the SU goes on to say that it received in Commission either had to continue its addition to the Dutch version of the inquiry or to stop the procedure. To the decision the German, French and Italian extent to which the Commission based versions in breach of Article 3 of the grounds of its decision on the written Regulation No 1. statements, it must be borne in mind that the latter were made by persons who (2) Summary of the statements of were scarcely able to give evidence as to defence the facts but who expressed their opinion on events which took place but which The Commission replies that the decision they did not witness. dealt separately with the facts used against each undertaking and that the (2) Summary of the statement of defence positions taken up by the applicants show that the latter had no difficulty in The Commission replies that it had to identifying the facts which affected them. take into account the documents found at Export's offices, since they were With regard to the language of the directly relevant to the conduct of the decision all that need be said is that the persons involved in the procedure. Dutch version was served upon SU.

(4) Summary of rejoinders SU without referring to Article 190 of the Treaty also protests against what it The Commission claims that the fact that describes as 'a technique of accusations the versions in the three other languages based on unknown facts', which makes it were annexed to the decision in no way impossible for the company to deliver affects the validity of the service of the an effective defence. It quotes the Dutch version. statements that 'dealers and the

CSM's written statements refute its claim processing industry complained of the that it was unable to identify the trend of intra-Community trade' and 'certain restrictive measures' had been complaints affecting it 'noticed on different national markets'

(2) Summary of the statements of basis of the decision which establishes defence that the deliveries between producers constitute the concerted practice The Commission replies that Part I of the (decision, p. 32, Rt. Col.). It referred to decision describes facts whereas Part II the additional measures taken by RT to contains the legal evaluation; a certain make sure that the dealers operations did amount of repetition has therefore been not generate on the Netherlands market unavoidable. However this does not give the competition which it endeavoured to rise to any ambiguity. avoid by supplying the Netherlands producers itself. The actions attributed to the undertakings are clearly set out both in (j) SU, CSM and RT lack of clarity in the communication and in the decision. the operative part of the decision By reason of the very nature of the subject matter of the decision the Preliminary observation: Commission felt it was bound to describe and to evaluate as a whole the mutual To the extent to which the present relationship of the various elements of submission is put forward by RT it is at the concerted practices between several the same time directed against the undertakings. complaint concerning the protection of the Italian market. Reference must The evidence that these practices exist is found mainly in the economic effect therefore be made to chapter 1, A h, above. which it has been possible to determine. In these circumstances it is unnecessary to know, either the time or the place of (1) Summary of the applications the transactions, or the names of the SU states that the Commission has persons. infringed essential procedural require­ (3) Summary of the replies ments and the principle of legal protection by not indicating in the CSM replies that the nullity of the operative part of the decision decision because the grounds upon (subparagraph 2 of Article 1 (1)) the course of conduct which constitutes the which it is based are inadequate, which it alleges, cannot be made good by infringement and to which the applicant supplementary explanations which the is required to put an end under Article 2. Even if the Court were to hold that the Commission submits during the present proceedings. operative part of the decision may refer back to the grounds, their wording does The evidence of the practices infringing not enable SU to discover what it must Articles 85 and 86 put forward by the do in order to comply with the decision. Commission in its statement of defence fis found mainly in their economic CSM puts forward a similar argument effect') is different from the evidence against Article 2 of the decision. It adduced in its decision ('business defines its submission as infringement of correspondence'). Therefore the Com­ the Treaty or of some of its mission replaces an argument which it implementing regulations, in particular should have buttressed with facts by of Article 3 of Regulation No 17. another argument (2) Summary of the statements of (4) Summary of the rejoinders defence

SU states that the Commission came to (3) Summary of the replies its conclusions on the strength of simple SU replies that 'the protection of a statements, supported by no actual facts, or based conclusions which are incorrect market against competition from abroad' and tendentious on the facts. In the first is not a measure, but rather the recital of Part II of the decision a course designation of certain measures. Moreover it is possible to imagine of conduct such as the purchase of sugar methods of protecting a market against from another manufacturer by a producer which cannot meet its orders from its competition which would not fall within the infringements provided for by own production and the sale of this sugar Articles 85 and 86. Taken as whole the at the price prevailing on the market Commission's statement of defence, when it is sold, which is in itself lawful, because of its ambiguous nature and its is presented in an unfavourable light and varying choice of words had made it even as being an instrument for a conspiracy more difficult to understand what the by the sugar industry. SU denies that it concerted practice for which the participated in 'a general agreement applicant was blamed in fact consists of. relating to the sale of sugar intended for human consumption on the various national markets and for the sale of large CSM submits that, in spite of the surpluses, particularly on the markets of explanations given in the statement of third countries' (cf. decision, p. 22, Rt. defence, the decision is not always Col, paragraph 12 of Part I of Section C) sufficiently clear. The Commission SU states that it cannot define its cannot forbid undertakings to take position on a large number of the facts advantage of — this expression of the mentioned in the decision, which only Commission is moreover vague — concern other undertakings, but which measures adopted by other undertakings the Commission, by adopting the including the decision not to compete inadmissible technique of issuing a with them (Statement of defence 42/73, collective decision, seems to use also p. 38). against SU. Owing to its lack of information SU finds that it has no (4) Summary of the rejoinders option but to deny all these facts.

producers and resold it at the same prices SU states that it purchased sugar from and subject to the same conditions of foreign manufacturers in order to make sale as home produced sugar' (cf. good its deficit and denies that it carried decision, p. 32, Rt. Col., paragraph 1 of out any transactions which correspond to Part II Section B). the policy of 'everyone in his own home' ('chacun chez soi'). SU denies that it bought sugar from Pfeifer & Langen to resell it at the same Correcting the figures given by the price and subject to the same conditions Commission in its decision, SU states of sale as the sugar which it produces that imports for the account of the itself in the Netherlands. It bought from Netherlands cooperatives went up from this undertaking, through Limako SA, in 7 009 metric tons in 1968/69, to 2 769 1971/72, 14 990 metric tons of white metric tons in 1969/70 and to 24 399 sugar, with a view to reselling it outside metric tons of sugar (of which it

SU from RT via Jacobson and Limako, had in the Netherlands a sales network 22 500 metric tons of sugar in 1971/72; capable of covering about 70 % of the through the same undertakings the domestic consumption of sugar. In order Netherlands cooperative sugar factories to make the best use of this sales bought 20 000 metric tons from RT network which was large and costly and during the marketing year 1970/71. in order to be able to Took after its own customers, SU had to buy from abroad SU states that there is no agreement and sugar which could be sold within the never has been any between 'RT and the EEC. Netherlands producers' and that a fortiori the Commission is wrong when Article 85 does not prohibit the purchase it states that 'Belgian and Netherlands of this sugar direct from foreign dealers' were later made parties to this producers (and these purchases moreover agreement SU. denies that RT°s conduct only covered small quantities of special at any time towards Export and Hottlet grades of sugar, the rest being imported was caused by 'producers' (and therefore through importers) or the sale of this also by the applicant) being animated 'by foreign sugar in its own packages and at their concern not to disturb the pattern the highest possible price. of the Netherlands market'.

Col.) Exports

statements do not provide such evidence, Article 85 does not prohibit the sale of are purely speculative and do not sugar at a price 'based on competitors' mention any specific facts. It is incorrect prices' (decision, p. 23, Rt. Col.) and it is to state that all the other supplies of wrong to call this price an increased' Belgian sugar to the Netherlands were by price. The Commission failed to mention common accord between producers only that, not only in Italy but also in the delivered to specific purchasers (the Netherlands, it is the national authorities Netherlands milk products industry)'. which fix the consumer price on the The statement in the telex message from basis of the intervention price and after RT to Export (mentioned in p. 33, Lt determining all the other elements in the Col. of the decision) that SU and CSM price which are added to it, such as 'do not want to do anything which would packing, transport costs and the profit disturb us' is a simple conjecture made margins. Maximum prices which the by RT. applicant undertook to charge were higher by about 1/3 to 5/8 % than the The Commission's claim that 'normally intervention price; however, it was not in it is not in the interests of a producer to a position to apply such prices in sell large quantities of his products to

It also denies, so far as it is affected, the example, to convert solid sugar into statement that 'since Community rules liquid sugar, to store sugar which has came into force sugar producers in the been spoilt or to improve sugar of poor quality, and as none of the Netherlands Community have attempted to bring about the conclusion of a general importers are in a position to guarantee regular supplies or have their own agreement . . .' (decision, p. 22, Rt. Col.).

applicant It is tendentious to claim that SU (2) Summary of the statement of defence 'refused to deliver sugar to customers established in the countries of its The Commission states that, since it is competitors' (cf. decision, p. 25, Lt Col.) unable to produce any evidence, it no SU could not have customers in Belgium longer claims that the preparatory work or in Germany so long as the Council on the agreements between European retained a regulation making the sugar producers was carried out after the Netherlands a country with a sugar Munich meeting and reached a successful

SUIKER UNIE AND OTHERS v COMMISSION

based: concerted practice having as its effect the Sugar prices differ from one Member restriction of competition. To this State to another. For example, in 1971/72 evidence must be added the fact that the prices applied in Belgium did not deliveries to non-producers were either exceed the intervention price by more refused, or made subject to the condition than 3 %, whereas in the Netherlands that the purchaser does not sell the sugar they were about 3 to 7 % above this level to customers of the Netherlands and this difference could not be producers without the latters' consent. explained by differences of quality. In Similarly RT granted two Belgian these circumstances there had to be exporters the exclusive right to export to competition in the normal course of the Netherlands, on condition that the events. deliveries were subject to the consent of Netherlands producers.

All these producer established on the same market, practices resulted in the absence of direct he guarantees that this producer can sell contacts between Belgian producers and his products and allows him to Netherlands purchasers who were determine his share of that market. The customers of SU and CSM, whereas such restriction of competition on the contacts are not only normal but also Netherlands market caused by deliveries necessary for attainment of the objectives from Tirlemont to SU arises out of of the Common Market the common intention of the two undertakings and this concerted practice As additional proof of the deliberate cannot be considered as spontaneous influence the Netherlands producers had parallel conduct explained by the on competition the Commission refers to advantages which these two undertakings the extract of the minutes of the meeting derived from it RT°s resolve not to take of the Management Committee of any commercial initiative on the 'Nederlandse Suiker-Raad' of 13 February Netherlands market and SU's decision to 1969.

In order to adduce evidence of the The Commission then deals with certain infringement the Commission does not specific arguments put forward by SU. have to produce express statements of Certain documents establish that the the representatives of each member of the concerted practice which prove that processing industry complained of the each of them was aware that its conduct trend of intra-Community trade and of was against competition. the agreement between the producers in question to find solutions enabling them SU wrongly severs the various elements 'to secure for themselves the sale of their in its policy aimed at the isolation of the entire production both on the domestic Netherlands market, whereas the and the export market'. The actual infringement consists of certain courses conduct of SU was consistent with this of conduct adopted by various objective. undertakings considered in their relation to each other. Conduct which is SU is very well placed to sell sugar in permissible in normal conditions of Germany and Belgium, as some of its competition does not necessarily remain sugar factories are very favourably situated and have first class com­ lawful if these conditions have been munication with some of the frontier deliberately distorted. regions of Belgium or Germany. The course of conduct to which SU's statements contradict each other. exception is taken cannot be justified by On the one hand it states that it neither the fact that the undertakings concerned can nor wishes to have customers in are anxious to defend a sales territory created by the system of walling off Germany or in Belgium and cannot national markets. The very object of the afford to sell to purchasers, who are not common organization of the markets in traditional customers of the cooperatives; on the other hand it claims that it has the sugar sector is to open up domestic markets, the 'traditional sales areas' of quantities of sugar which can only be certain producers. As the Court has sold to the milk products industry and at the same time states later that the offers already held, the Treaty prohibits the consolidation of situations which have it made to this industry were the been established to the prejudice of free consequence of the vigorous sales policy trade in the common market and of free directed by dealers to purchasers who choice by consumers of their suppliers. normally obtain their supplies from SU.

parallelism' implies that there is a The indirect evidence produced by the concerted practice even if there was not Commission is inadequate, because it any closer coordination and even if cannot prove that, having regard to the uncertainty with regard to the future market situation SU's conduct could only conduct of each undertaking had not possibly be explained by coordination. been removed. In the case of a concerted The Commission cannot either prove action it is presumed that in addition to what concerted actions SU performed or a plan, 'there is a form of coordination to which of the concerted actions of its

action. This presupposes an objective act markets would have entailed additional of communication having as its object distribution costs. An even more the furtherance of a common way of thinking, the coordination of the compelling reason was that the sugar quota for the Netherlands created an operations of the undertakings and the artificial deficit there. elimination of uncertainty concerning their future reciprocal conduct If the The only transaction with Pfeifer & Commission's argument that the Langen cannot be regarded as coming concerted action may lie in the parties' within the alleged concerted practice, as awareness of the necessarily com it was an export to third countries.

In addition the economic doctrine that, having regard to the existence of the specific market oligopolistic character of the European sugar market might cause RT to behave patterns, it is unthinkable that the in a somewhat 'friendly' way towards undertakings operating on the market Netherlands producers, lest agressive managed to adopt a parallel (or complimentary) predetermined course of conduct provoked a similar reaction if Netherlands manufacturers receive a conduct, without there having been any larger quota. preliminary coordination.

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conceited action. SU adheres to its assertion that Netherlands prices only exceeded the With regard to the opportunities intervention price by 1/3 to 5/8 %. available to SU to compete with Moreover, even if it is correct to say that Netherlands importers in supplying the Netherlands prices were 4 % higher than milk products industry there is no Belgian prices, such a difference is not contradiction. In fact the sale of 70 000 important. metric tons of French sugar to traditional customers of SU caused it to sell With regard to the argument that RT, corresponding amounts to new customers when it sold to SU, 'guaranteed' the sale such as the milk products industry, of this latter's products, it is necessary to which it had not been in its interest point out that it is only possible to talk formerly to supply because of the price about a 'guarantee' — and, as a result, of then in force. a concerted action — if RT make known to SU that it would behave in the same Export's note of 31 August 1970 is a way in the future; however it never did 'testimonium de auditu' which is not so. admissible as evidence.

another French undertaking. SU denies that together with CSM it was the first undertaking to have sold sugar By relying on a series of unilateral to the Netherlands, and mentions many actions (refusal to sell, deliveries subject undertakings which offered large to a destination clause) performed by amounts of Belgian sugar. persons other than SU, as proof of the participation by the latter in a concerted With regard to the complaint that it did action, the Commission fails to not supply the frontier regions of distinguish between the exact nature of neighbouring countries, the Commission certain courses of conduct and the is not fully aware of the pattern of trade question whether they are the and its influence on the distribution of consequence of a concerted action. sugar. In fact local grocers and small branches of chain stores do not buy After having first of all accused SU of direct from producers but from having taken part 'in the setting up and wholesalers or from purchasing centres

The Commission states that SU's Transactions between producers are, as argument that RT only had the choice of such, the material form of the concerted either doing no business on the practice and at the same time evidence of Netherlands market or setting up a the practice. Further there are numerous distribution network covering the whole indications of a deliberate effort to keep of the market is incorrect RT can supply the Belgian and Netherlands markets practically the whole of the Southern separate. part of the Netherlands by using its Belgian distribution network. It could There is no contradiction between, on also rely on the Netherlands trade the one hand, the Commission's instead of cutting it off from access to explanations that SU 'established' with Belgian sugar. RT a non-competitive pattern of trade on the Netherlands market and, on the Contrary to the opinion expressed by SU other hand, the fact that the Commission it is sufficient to prove that the concerted action of the producers caused the concedes that the national organizations of the market were an obstacle to the isolation of the Netherlands market and, establishment of the common market in thereby distorted the pattern of supply on this market, without it being sugar. This latter consideration refers to necessary to show that there was an the moment when the entry into force of additional concerted action or co­ the common organization of the markets ordination between RT and SU, to made the free movement of sugar implement a 'plan'. SU's policy as a possible. whole was aimed at preventing competition on the Netherlands market By way of additional evidence of the and SU informed RT of this 'by means of efforts made by SU to restrict the transactions carried out with this freedom of dealers who import sugar, the undertaking'. Conversely it emerges from Commission produces statements made the statements made by RT that the by the Jacobson firm of Rotterdam before one of the Commission's latter interpreted all these transactions in the same way. inspectors. The price at which the dealers had to sell the balance of French sugar to The Commission disputes the value of producers show that these transactions comparing the prices applied in the could only have taken place as a result of Netherlands, supplied by SU, because illegal pressure. they were retail sale prices and not producer prices (ex works). It itself The Commission did not intend to produces a table of prices applied by SU, define SU's conduct as being in law that CSM and the Netherlands trade of an exclusive representative, but simply compared with the intervention price. to make a comparison.

The Commission is of the opinion that it (b) CSM: Infringement of Article 85 of is unusual for SU to sell in Limbourg in the Treaty the Netherlands but not in West Flanders, a province which is much (1) Summary of the application nearer. This anomaly can in no way be explained by centralized purchases made CSM states that none of its acts or things by large consumers; further the argument justify the finding of an infringement of put forward by SU does not apply to Article 85 (1).

The Commission quotes relationship with Pfeifer & Langen and several passages from SU's pleadings in has not consulted SU on the question of which it admitted that it adopted such a its imports; there have never therefore course of conduct been any practices involving the four undertakings mentioned in the decision. Even the transaction carried out by SU and Pfeifer & Langen was, so far as its The conduct of CSM as a sugar producer, final outcome is concerned, a form of was in no respect parallel to the conduct cooperation between undertakings which of the sugar producer known as RT.

Col.) is effected on the basis of transactions partly inaccurate. In order to cover its between producers or was subject to deficit CSM never purchased from Pfeifer destination clauses. & Langen but had recourse exclusively to

RT, the sugar it bought from this agreement between Belgian and undertaking amounting. however to only Netherlands producers at the beginning 4 to 10 % of Netherlands imports. of the thirties. The fact that the formula is sometimes still used does not mean The Commission does not seem to object that the agreement was performed. Since to CSM purchasing raw sugar from in both countries there are similar foreign producers (cf. decision, p. 25, Lt guarantees, a system of fixed import Col.). Moreover CSM used granulated quotas, a price level which is almost the sugar, purchased from RT, almost same and public authorities having a entirely as a raw material for the profound influence on prices, such a production of cassonade. concerted action is unnecessary.

Even the distribution network to enable them to sell sugar to the average purchaser. So far Commission's figures show that large as deliveries of lump sugar are concerned quantities were imported by independent they enabled RT to sell on the Belgian producers and German dealers; Netherlands market without establishing there was therefore always the pressure of a sales network; moreover there was competition from abroad. nothing to stop the Netherlands CSM suggests that the Commission consumers from buying lump sugar also provides information concerning the from SU. amounts imported and the respective proportions of exports passing through If there was any parallel conduct, it only the various import channels; it estimates comes within Article 85 if it is the its own share of imports at 10 % at the consequence of a common design or of a most. coordinated policy. In order that the existence of this additional element can In order to determine whether there is an be accepted there must be a strong actual and perceptible influence on presumption of fact, such for instance as conditions of competition the price is raised by the adoption of a uniform trends in particular must be examined.

JUDGMENT OF 16. 12. 1975 — JOINED CASES 40 TO 48, 50, 54 TO 56, 111, 113 AND 114/73

affected the purely commercial guaranteed its supplies, and also refused relationship between CSM and RT in no to sell to dealers who did not undertake way restricted their freedom to trade or not to supply CSM's traditional influenced the pattern of trade. customers.

SUIKER UNIE AND OTHERS v COMMISSION

CSM Netherlands are a region which owing to moreover challenges the accuracy of the its structure always has a deficit an figures submitted by the Commission agreement of this kind would only and states that, insofar as the prices it further the interests of Netherlands sugar applied were above the intervention producers. Moreover it is unthinkable price, the explanation is found in the that RT would come to an agreement factors mentioned in its reply to the with producers without obtaining a quid notification of objections. pro quo.

Even Belgium, West Germany or Northern France. CSM invites the Commission to if RT made a statement to this effect to Export it would have done so to mislead produce all the figures for the trade in the latter undertaking. sugar between the Netherlands and the other Member States; they would show in With regard to the statement that the particular that there is in fact 'free' trade attitude of the persons concerned showed in the frontier region of Belgium and the that RT 'guaranteed' CSM and SU the Netherlands, that is to say trade in which sales of their products in the RT, SU or CSM does not take part. Netherlands, the word 'guarantee' is So far as trade between Member States is deceptive since there was not in this concerned, CSM states that its share of connexion legally any binding promise. imports into the Netherlands only amounts to 4 to 10 % and that there is CSM explained why it is wrong both in law and, on the facts, to compare CSM's undoubtedly competition between the position with that of an 'exclusive various import channels.

JUDGMENT OF 16. 12. 1975 — JOINED CASES 40 TO 48, 50, 54 TO 56, 111, 113 AND 114/73

The price these have as their object the distortion differences between the Belgian and of competition or whether they have this Netherlands markets meant that this was effect although they have a different a profitable operation for both parties: object, it suffices, in order to find that CSM bought sugar and at the same time there has been an infringement of Article peace on the Netherlands market, 85, to establish that there are in fact whereas RT sold sugar without any concerted practices without having to competitive exertion. establish any intention to restrict CSM's statement concerning the relations

In any case measures taken by RT (refusal to supply the deliveries by RT enabled CSM to to the Netherlands and incorporation of cover completely the requirements of its destination clauses in the contracts so-called 'traditional' customers, and at a entered into with Belgian exporters), price which was fixed not by RT but by without which it would have been too itself. In order to support the statements risky, even for Netherlands producers, to concerning the price level in the buy from RT. RT decided not to Netherlands the Commission produces a compete on the Netherlands market, and comparative table of ex-works prices of CSM, SU and the Netherlands trade and CSM offered to cooperate with RT in the implementation of this intention, also of intervention prices.

on paper. In a competitive economy a necessary to include the transactions producer only sells his own production; subject to destination clauses.

(c) RT: Infringement of Article 85 of the the Belgian intervention agency because Treaty of the somewhat unfavourable attitude of the Belgian authorities which were afraid (1) Summary of the application that this would entail administrative complications and cash advances. RT°s arguments relating to this submission also deal partly with the RT does not have a department for the complaint of protecting the Italian sale of white sugar abroad. It came to the market To that extent reference must be conclusion that it did not have to made to the summary under III-1.B.а establish such a department, having

community and domestic administrative for having refused to sell sugar to customers in the Netherlands 'in spite of measures. Since the basic quota and a fortiori the maximum quota exceed the fact that there were large surpluses . . . Community requirements for human in Belgium'. In the notification of consumption, a part of the maximum objections this complaint is supported by quota has to be exported to third two letters from RT, dated August and countries or sold for feeding-stuffs or to September 1968; however, at this

Col.). excess price, to take measures to prevent RT takes the view that the main evidence a purchaser, in breach of the provision in the contract for sale specifying the of a concerted action produced by the destination, from competing with him by Commission, namely the correspondence making use of a price concession granted and memoranda of Export, ceases to be conclusive as soon as it is examined in because of the destination clause and offering an unfair price on the market for the light of the relationship between the human consumption. Article 19 of applicant and Export: as the two firms Regulation No 100/72 provides moreover are controlled by the same shareholders, it was decided, at the end of the war, that for supervision to make sure that the denaturing in fact takes place. in future RT would only be a sugar producer and Export would only be a It is necessary to add that there were sugar merchant This separation of practically no opportunities of selling to functions gave rise to a dispute

concerning Export's wish to be granted Other documents prove that, in some the exclusive right to sell the applicant's cases, RT only agreed to supply Belgian sugar. The replanning of exports, dealers with sugar for export to the following the establishment of the Netherlands on conditions stipulating common market in sugar, led the the destination (the Netherlands milk applicant to make direct commercial products industry, denaturing) or contact with large scale purchasers, excluding human consumption. These thereby emphasizing that its interests letters moreover reveal that RT exercised conflicted with those of Export In these pressure on the Belgian trade to make it circumstances Export sent certain telex accept the control of the Netherlands messages and the fact that the contents market by Netherlands producers (cf. also were very damning for RT, was due to its 6 below). wish to make up a case against it.

The made with its foreign associates. Commission produces figures to support (2) Summary of the statement of defence its view that, concurrently, deliveries from Belgian producers to Netherlands The Commission replies in a statement of producers (or, with the letter's consent, to defence which is for the most part the Netherlands milk products industry) similar to the one delivered in Case went on increasing until they reached 40/73 and which is summarized above, almost 75 % of total deliveries during cf. a(2). the last two marketing years.

industry. This commercial policy was to the Netherlands industry RT later the subject matter of a contract for abandoned an independent commercial sale entered into between Export and a policy and, in agreement with producers Netherlands importer. of the Netherlands, prevented Nether lands consumers and dealers from It appears from other documents that, in obtaining their supplies freely in many cases, Netherlands consumers who Belgium. tried to obtain their supplies from RT, met with a refusal on the pretext that The Commission also points out that they did not have any sugar available. RT°s deliveries to the Netherlands

The separation of the market for human RT brings up again the question of the consumption and the market for evidential value of the documents quoted 'surpluses' is not derived from by the Commission and points out that Community regulations. On the contrary, they are based solely on Export's own some documents, including the minutes statements. With reference moreover to of the meeting in Munich on 30 May its application RT submits that the 1968, prove that it was used by documents produced by the Commission undertakings engaging in the concerted show that, during the period in question, practices as one of the means of walling there was a clear conflict of interest off domestic markets. RT preferred to between the applicant and Export export sugar to third countries or to sell relating mainly to prices. Finally the it for denaturing, with the object of statements made by RT to Export are relieving the intra-Community market of inconsistent with the fact that RT at the amounts which could influence the price same time sold direct to consumers as is level of sugar for human consumption. It shown by a series of contracts produced was this preference, and not the attitude in the annex to the application. of the Belgian authorities, which explains why RT never offered its 'surpluses' to So far as what the Commission wrongly the intervention agency. describes as 'refusals to sell' are concerned, RT submits that its reply to a It is not correct that at the beginning of request for supplies depends, inter alia, the 1968/69 marketing year RT had to upon the price offered and the amount have recourse to Netherlands sugar. At of stock available at the date of the that time Belgian producers had request, account being taken of the sugar re-exported the sugar purchased from reserves intended for long established SU. During the 1968/69 marketing year customers and export contracts already RT sold more than 4 000 metric tons to entered into. Consequently a negative Netherlands producers. answer can only be provisional.

year which runs from October to RT°s transactions on the Netherlands September. The requests from the market stemmed from the company's Netherlands to which the Commission own commercial judgment and not from refers covered granulated sugar. Now, any concerted action. The company's stocks of granulated sugar on 30 conduct on the Netherlands market was September 1968 did not exceed 5 360 in any case the same, because of the metric tons, a very small amount for the problems caused by the existence of large purpose of bridging the gap between the surpluses of raw sugar and of the absence two marketing years, bearing in mind of any commercial organization outside that the consumption of granulated sugar Belgium. RT cannot be blamed for in Belgium increased to 14 925 metric partitioning the markets at a time when tons in the month of October. By exports of Belgian sugar to the refusing to accept the requests from the Netherlands increased more than ten Netherlands in August and September times from 1967/68 to 1971/72. The 1968 RT therefore displayed elementary drop in exports of Netherlands sugar to prudence. A detailed examination of the Belgium and of French sugar to the documents which the Commission Netherlands is the logical consequence produced in order to prove that the of the fact that RT was the producer exports to SU and CSM are evidence that most favourably placed to take an interest there were stocks available for delivery in in the Netherlands market. It is

SUIKER UNIE AND OTHERS v COMMISSION

In particular undertaking having the economic the German processing industry depends strength that RT possesses did not upon continuous supplies and in the consider it necessary to set up a short term on sugar complying with very commercial network on its competitors' precise but often very different standards territory. of quality. However, the experience gained by purchasers at the time of the The Commission does not consider that German organization of the market in the explanation of the refusal to supply sugar showed them that they could be sugar in Holland in the autumn of 1968 certain of being supplied efficiently by

(d) Pfeifer & Langen: Infringement of nevertheless being an unnecessarily Article 85 of the Treaty heavy charge on consumer's income. However the prices applied, with few (1) Summary of the application exceptions, did not reach this price, which shows that there was very great Pfeifer & Langen infers from an analysis competition. of the effects of the previous organization of the market in sugar in Germany and It is wrong to state that intra-Community of Community regulations that the trade was slack and mainly restricted to movements of goods and the conditions sales from producer to producer.

JUDGMENT OF 16. 12. [975 — JOINED CASES 40 TO 48, 50, 54 TO 56, 111, 113 AND 114/73

third countries. This destination is also with national domestic markets. proved by the fact that the sugar was offered in a special packaging. Pfeifer & The Commission also produces a series Langen admit that 2 000 metric tons of of letters from companies purchasing this consignment were later processed foodstuffs which, in its opinion, discloses into liquid sugar and sold within the refusals to supply because of an alleged Common Market. shortage of stock, and also cases of aligning prices on those applied in the Pfeifer & Langen emphasizes that it country of destination.

Pfeifer & Langen reason why Pfeifer & Langen did not contracted with this undertaking, not deliver in regions bordering on Member because it was a Netherlands un States. dertaking, but because it offered a more satisfactory price than German exporters. Pfeifer & Langen is wrong to treat the In order to prove that these statements function of an intervention price in the are well founded, Pfeifer & Langen asks same way as that of a legally guaranteed that a witness nominated by it should be minimum price, because there is no heard. reason why manufacturers should not sell

below the intervention price. It is equally partitioning of sales areas. The letter of wrong to regard the fact that sugar Rewe-Zentralimport, of Cologne, to manufacturers have not succeeded in Général Biscuit, of Herentals, simply reaching the target price as evidence of mentions the existence of long-term the existence of intense competition. contracts entered into with all the large This argument is founded on a German consumers 'in order to control misunderstanding of the function of the the consumption of sugar'; all this is target price, which is to supply a base for mere conjecture. fixing the threshold price, but not to indicate the necessary price level to A more detailed examination of the letter enable processing undertakings to obtain of the GEDELFI, of Cologne, to GEMAS, an adequate profit margin; the marked of Brussels, even discloses that the sender increase in production since the attributes the 'partitioning into areas' establishment of the European organi which it mentions, not to an agreement, zation of the market in sugar proves that but to the advantages arising out of the the intervention price already allows actual location of the factory in question. them such a margin. Pfeifer & Langen denies that it ever With regard to transport costs the map refused to supply a dealer, if it had produced by the applicant giving the sufficient quantities of sugar available geographical situation of the sugar and the terms offered were as good as Factories shows that Pfeifer & Langen's those offered by other purchasers.

It cannot d'alimentation et d'approvisionnement refute this argument in the case of (the European Association of food and long-distance deliveries because the provision merchants) in Brussels, refers distance might be about the same for all to the fact that Pfeifer & Langen competitors as it is in Italy, where on the attributed its lack of interest to the whole the most important consideration impossibility of obtaining better export is that supplies are guaranteed. prices to the Netherlands. The Commission, instead of going into the (4) Summary of the rejoinder merits of this argument, relies on another passage of this letter in which EDAH The Commission maintains that the speaks — without any justification — of arguments put forward by Pfeifer & an agreement between Pfeifer & Langen Langen concerning the importance of and Netherlands manufacturers for the transport are irrelevant.

JUDGMENT OF 16. 12. 1975 — JOINED CASES 40 TO 48, 50, 54 TO 56, 111, 113 AND 114/73

mission's finding that there were no large (2) Summary of the later pleadings sales of sugar across the frontiers of West Germany, Belgium and the Netherlands, The Commission only defines its cannot be validly attributed to the effect position on the present submission in of transport costs. the rejoinder, by submitting, on the one hand, that CSM has not supported its The applicant's statements relating to statement with any specific fact and, on refusal to sell and operations between the other hand, that the payment of a producers are simply intended to reduce price above the minimum price fixed by the importance of these measures. The the Community after taking into account applicant must not merely consider the the various objectives of Article 39 of the documents which are evidence of its own Treaty, cannot, by definition, be regarded refusals to sell. In effect the refusals of its as 'necessary' for the attainment of these partners to accept requests for supplies objectives. from the applicant's sale area are no less apt to prove the existence of a concerted action. The documents quoted by the 3. Complaint that Pfeifer & Langen Commission show that all the producers and RT engaged in a concerted taking part in the conceited action practice having as its object the continually refused the requests for protection of the market of the supplies from their partners' markets. Western part of the Federal Republic of Germany The applicant passes over in silence the fact that, in the beforementioned letter, the GEDELFI firm referred to the A — Pfeifer & Langen and RT: Formal impossibility of importing sugar from and procedural submissions countries in the EEC. The submissions put forward by Pfeifer (e) CSM and RT: Infringement of & Langen and referred to above under Regulation No 26 2.Ba.-c. and g relate in essence also to the present complaint The same applies to RT°s arguments which also deal with the the submission of RT repeated above complaint of concerted actions for the under 1.A.h. Reference therefore must be protection of the Italian market have made to these sections. been summarized; cf. III-1.B.b.

(1) Summary of the application trade. Moreover when the Commission blames Pfeifer & Langen for having Pfeifer & Langen submits that the restricted competition, it refers documents produced for the Court file unequivocally to the market in white show that, having regard to the distances, sugar. if French and Belgian producers supplied the main sales area of Pfeifer & Langen, In these circumstances deliveries of raw they had to incur fairly high transport sugar from one producer to another costs compared with those which Pfeifer cannot have any restrictive effect & Langen had to pay. whatsoever on competition; in determining the volume of sugar

Supplies imported into the Federal Territory and had to be obtained from the nearest in particular to North Rhine Westphalia. factory, not far from Liège, in order to The German producer's share of these cut down transport costs. imports was, from the beginning of the 1968/69 sugar marketing year to the So far as imports of white sugar are 1971/72 marketing year, 6 %, 3 %, 29 % concerned, Pfeifer & Langen makes a and 20 % respectively. The relatively closer analysis of its share in 1970/71 high percentage of 29 vo is explained by and 1971/72.

Out of a total of imports of market in white sugar and stated that 22 900 metric tons it only resold 5 101 after processing by the national industry', metric tons which had not been raw sugar is 'sold on the same market' processed, that is to say 3 % of total (decision, p. 26, Rt. Coll in order to imports into Germany during this support the argument that Pfeifer & marketing year. In 1971/72 out of 21 905

stocked and it is multi-purpose. Raw Commission are not conclusive, at least sugar can therefore only be sold to as against the applicant. Thus the notes refiners, either direct or through the and telex messages of Export quoted on

page 23 of the decision only express the 1970 referred to on page 64 of the opinion of this undertaking and do not communication, which only records the contain any statement relating to the finding that RT proposed to adopt a facts within the direct knowledge of specific policy; the text does not state Export. The applicant moreover never what must be understood by 'RT's had any commercial contact with Export obligations'. and is nowhere mentioned in these documents. The same applies to the The operations which were in fact carried letter from RT to Export mentioned on out on an international level with the page 47 of the communication; trade and other purchasers refutes the moreover, this letter speaks of ‘our statement that RT and Pfeifer & Langen policy' — that is to say RT's policy — on had entered into a reciprocal exclusivity the German market and in no way refers agreement (communication, page 65). to a concerted action.

The particular by its need to export more and Commission cannot be allowed to more raw sugar, whereas Pfeifer & deduce from a telex message sent on 14 Langen's refining capacity was much September 1970 by Export 'to a German greater than the amount of raw sugar it wholesaler' the tenor of a telephone ad available. As the continuous sale of conversation which took place between raw sugar is RT's most urgent problem, RT and Pfeifer & Langen on 11 sales of white sugar surpluses became of September 1970, so long as the identity secondary importance if only because of the persons taking part in this there were better opportunities for conversation has not been disclosed, and

Pfeifer & Langen had nothing to do with Another telex message of Export, of the the drafting of the minutes of 20 April same date and sent to RT (com-

SUIKER UNIE AND OTHERS v COMMISSION

The Commission does not The Commission states that RT to a great deny that, in some circumstances, it can extent kept out of the German market, be in the interest of a manufacturer to although Belgium was an area having a sell to a competitor, but there are no surplus and Germany one having a such circumstances in this case. It is deficit Deliveries by RT to Germany, remarkable that in September 1972, that after being insignificant during the is to say at a time when there was a sugar 1968/69 marketing year, increased from shortage in Germany, RT entered into an the beginning of 1969/70, most of these agreement providing for the sale of large exports consisting of white and raw sugar quantities at a price below that at which purchased by Pfeifer & Langen. Export could sell in Germany and which RT however considered was inadequate The Commission produces a series of (cf. communication, page 75). documents which contain facts directly conforming the existence of an Certain arguments put forward by Pfeifer agreement relating to non-interference in & Langen to justify its purchases from Pfeifer & Langen's national market and RT appear to be artificial.

10 000 metric tons, which is the annual mittel-Filialbetriebe company of Cologne capacity of the nearest factory (at Lierse of 10 March 1972 indicates that requests near Liège), and this fact destroys the for deliveries addressed to manufacturers validity of the argument based on established in other Member States economizing costs. Finally Pfeifer & without exception met with refusals. It Langen buys large quantities of raw sugar appears from other documents that RT manufactured in Lower Saxony at only supplied Germany at prices aligned distances varying between 350 and 400 on the higher German prices. Finally the kilometres; it cannot therefore agree that Commission refers to the contract of such distances are an insuperable sale of 15 September 1969 between obstacle to deliveries of white sugar by Moerbeke-Waas and Export, and also to foreign manufacturers in its sales area. the two telex messages of Export of 14 September 1970 to a German dealer and So far as the distinction drawn by Pfeifer to RT respectively, which are mentioned & Langen between raw and white sugar is earlier under 1. concerned, it does not have to be

mission submits that this company had (3) Summary of the reply very close contacts with RT ana that the documents provide clear evidence of Pfeifer & Langen replies that an RT's conduct towards Pfeifer & Langen. evaluation of all the facts makes it clear It is not difficult to explain why there is that the argument that the markets were a clause subjecting the destination of the partitioned cannot be maintained for sugar to the restrictions in the agreement economic reasons.

SUIKER UNIE AND OTHERS v COMMISSION

relations. The difference between the However it preferred to produce without prices in force on the German market making a profit rather than lose money and those applied on the Belgian market by bringing production in its factories to were never sufficiently large to enable RT a halt. to sell in Germany at a profit, if account is taken of transport costs. Moreover, in The refining capacity of RT did not those areas where the advantages which enable it to process all its raw sugar. Pfeifer & Langen gained from the However, even if RT had not exhausted situation of their respective factories all its opportunities for refining sugar, cancelled each other out (the frontier the Commission cannot base any of its area between Belgium and Germany), argument on this fact because RT would only the intervention price could be have had to process the raw sugar into

Germany. The Commission itself con firms in its statement of defence that a With regard to the evidential value of the documents upon which the Commission delivery of 10 000 metric tons could relies Pfeifer & Langen states that it is lower the price level. RT also had to bear Export — and not a sugar producer — in mind that white sugar intended for which invented and used the formula human consumption could not be 'everyone in his own house' ('chacun transported by the cheap methods of chez soi") (cf. communication, page 66). transport used for raw sugar. Pfeifer & Langen gives an example in The Commission, having discarded the June 1970 to prove that the difference in argument that there is a single market in

raw and white sugar, seeks a way out by (4) Summary of the rejoinder stating that a producer, who sells raw sugar to a competitor, gives up the The Commission takes the view that the opportunity of processing this raw sugar argument based on the absence of any into white sugar and of competing with 'consideration' is invalid; to put it at its this competitor for the sale of this white highest there are grounds for discussing sugar. Although RT sold raw sugar to the whether, having regard to the facts, a applicant it always had white sugar which concerted action between Pfeifer & could be exported on the German Langen and RT with the object of market and this is proved by its exports partitioning the national markets offered to other Member States of the Common any advantage at all. None of the

Both Pfeifer & that the bulk of the sugar trade between Langen and RT avoid any discussion of Belgium and Germany was carried out RT's refining capacity. In fact RT even between producers, so long as it has not buys additional amounts of raw sugar, for challenged the figures put forward in the example from Lierse; on the other hand application showing that the dealers' Pfeifer & Langen was not in a position to share of sugar imports was not less than process the raw sugar delivered by RT 70 % even during the year 1970/71. immediately, but had to store it for several months as a contract dated 25 It is not surprising that RT dealt tactfully with Pfeifer & Langen so as not to run August 1969 discloses. the risk of losing an important long-term outlet for about 10 % of its raw sugar. The favourable freight rates have only That is all the more true because the been proved in the case of deliveries deficit in Germany was not sufficiently from the Lierse factory, that is to say in large for RT to expect to be able to sell respect of 10 000 metric tons, an amount less than one half of total deliveries in sugar there at increased prices.

The Commission's arguments suggesting that With regard to the argument that only Pfeifer & Langen should have obtained Pfeifer & Langen was in a position to their supplies in Lower Saxony, rather make a profit on the German market by than in another Member State, lead to a processing raw sugar into special sugar, denial that there is a common market. the Commission submits that RT is a

large producer of special sugars and is the interest which this undertaking delivered large quantities of them to had in obtaining its supplies in Belgium, Netherlands producers CSM and SU. It is because of the lower transport costs impossible to believe that RT could not compared with those applying to any sell such sugar in Germany under its purchases this undertaking might make own trade-mark. Moreover it emerges in Lower Saxony. As the German market from the documents produced by RT on the other hand is very important for that the latter undertaking delivered the disposal of RT's surplus sugar, it was special sugars to the Federal Republic, natural for the latter to decide, although in reduced quantities. independently and not as a result of any concerted action, to make sure that It is a waste of time to discuss the Belgian traders which it supplied should question whether raw and white sugar not block this outlet by systematic sales belong to one or to several markets, to Pfeifer & Langen's customers. having regard to the fact that according to the statements of Pfeifer & Langen The correspondence reproduced on and RT there was a close connexion pages 71 to 75 of the communication between the deliveries of raw sugar and relating to negotiations for the sale to the decision by RT not to deliver white one German consumer show that RT was sugar to Germany. The argument that the simply anxious to obtain a price as near dealers' share of imports was never less as possible to that which it could get in than 70 %, even in 1970/71, has no Belgium, and not to protect the price relevance because the applicant only level of German producers. When RT took into consideration the relatively was able to obtain a satisfactory price, it small imports of white sugar. in fact sold to Export sugar intended for Germany. If RT happened to refuse to With regard to the evidential value of the accept an offer made by Export this must documents produced, the Commission in no circumstances be interpreted as a submits that commercial undertakings refusal to sell direct to German must be regarded as the most appropriate consumers. Such sales in fact took place witnesses if the conduct of producers has as the 14 contracts which RT produced to be evaluated. for the Court file prove; these sales enabled the company to obtain a higher (b) RT: Infringement of Article 85 of the price than that which it could have asked Treaty for if it had dealt through a business house. RT puts forward this submission in answer both to the present complaint (2) Summary of the statement of defence and to those relating to the protection of the Italian and Netherlands markets. For The Commission replies that RT avoided the arguments submitted by the parties any deliveries of sugar which might within the context of the present disturb Pfeifer & Langen's market as is submission and which apply to the three shown by a telex message sent by Export complaints, reference must be made to to a German dealer on 14 September chapters 1 B a and 2 C c above. The 1970 and also by two telex messages specific submissions relating to the from Export to RT of 14 and 17 present complaint may be resumed as September 1970. follows:

this country were not interested in the that this company did not seek to purchase. That emerges in particular maintain the price level of German from a purchase contract entered into producers. The prices in the sales between Export and the Couplet firm on contracts produced in Annex II of the 17 September 1969 and from certain application were at least the same as or letters exchanged in September and greater than Bfrs 1 100 per quintal, that October 1970 between Export, on the is to say a price which does not call into one hand, and the applicant and the question Pfeifer & Langen's level of Raffinerie Notre-Dame, on the other prices as emerges from telex messages hand. exchanged in September 1970 between RT made Export, Hottlet and other RT and Export and also between the latter and a German dealer.

Some of these given too late, so that this operation was deliveries, which were not very large, never in the end carried out were for WZV controlled by Pfeifer & Langen. Looked at in the light of the (3) Summary of the reply other measures adopted by RT deliveries from producer to producer can only be RT states that the figures produced by explained by the existence of a concerted the Commission are suspect, as is shown action. It was normally in RT's interest to in particular by the disparity between the export to Pfeifer & Langen's sales area, figures put forward respectively in the which was geographically near and an communication and in the statement of area having a deficit where the price level defence for deliveries of Belgian sugar to

SUIKER UNIE AND OTHERS v COMMISSION

conduct on the German market was the the Commission produces corre­ same, taking into account the existence spondence between RT and Hottlet from of large surpluses of raw sugar and the March to December 1969. absence of a commercial set-up outside Belgium. Deliveries from producer to (c) RT: Infringement of Regulation No 26 producer moreover do not in themselves This submission put forward by RT and amount to evidence of a concerted referred to under 1.B.b. above also refers action. RT had to be able to dispose of to the present complaint. Reference must its surpluses by concluding transactions therefore be made to this chapter. with large purchasers without having to deal with the problems of finding and looking after customers and transport 4. Complaint that SZAG and Béghin With regard to the need to break down have engaged a concerted practice the deliveries in the evaluation of the having as its object the protection of deliveries to other producers into raw the market of the southern part of the sugar, special grades of sugar or Federal Repulic of Germany granulated sugar, cf. 2.C.C. (3) above. A — Formal and procedural sub­ RT's reserve on the German market is missions explained by the policy, adopted without consulting anyone else, that it was (a) SZAG: Illegality of the policy undesirable to upset Pfeifer & Langen by adopted by the Commission for an aggressive policy as this firm is the informing the public; defects in the largest purchaser of raw sugar from RT at communication; infringement of the a favourable price. rules of procedure of Regulation No 26: unduly short time-limits for the (4) Summary of the rejoinder submission of observations

JUDGMENT OF 16. 12. 1975 — JOINED CASES 40 TO 48, 50, 54 TO 56, 111, 113 AND 114/73

different complaint, namely that it sold first paragraph under D; p. 44, Rt. Col., raw sugar to German producers, whereas paragraph referring to Béghin), as the it could refine it and send it direct to Commission considered that all Béghin's consumers of this country. deliveries fall within the scope of the SZAG gives the following examples: concerted practice to which exception is — The statement that the numerous taken, that this company, whether or not requests which were usually turned it refines its sugar itself, competes with down from customers in the southern SZAG on the market for refined sugar, part of Germany', showing 'that there and that the two types of sugar together form one market. The object of the is an economic interest in importing information given in the decision (p. 28, sugar from other Member States (decision, p. 37, Lt Col.) is neither in section 16), was simply to give particulars based on accurate data of the deliveries the communication, nor in the documents therein quoted. At the by Béghin to German producers.

SUIKER UNIE AND OTHERS v COMMISSION

(1) Summary of the application SZAG makes no further comment on the submission under (aa) above. With regard (aa) SZAG submits that the statements to the submission under (bb), it states 'were it not for these sales between that the Commission has attempted to

JUDGMENT OF 16. 12. 1975 — JOINED CASES 40 TO 48, 50, 54 TO 56, 111, 113 AND 114/73

bridge the gap between the grounds of September 1970 and 24 July 1974 which, the decision and the operative part by in its opinion, do not contain any clause putting forward the claim, which is open to criticism under the EEC Treaty. entirely incompatible with the decision Béghin's particular interest in these (p. 28, Lt. Col.), that SZAG bought 4 600 contracts lay in the fact that they enabled metric tons of white sugar from it to make daily deliveries which Sucre-Union in 1970 through the eliminated the cost of storing the raw 'Grundstūcksverwaltungsgesellschaft' at sugar. This advantage even induced Oberursel (cf. B. a. (2) below). Moreover Beghin to agree to a price favourable to new facts cannot be introduced during SZAG. the procedure which are not in the decision. When Béghin accepted a purchaser's offer it did not have to concern itself (4) Summary of the rejoinder with the economic position of this purchaser or with the commercial policy The Commission's reply is to refer to the which it adopted on the German market, part of the decision which states that of which it was unaware and which it SZAG and Franken since the 1970/71 never for one moment thought of marketing year bought sugar from their promoting. competitors in France in increasing quantities' (p. 28, Lt Col.). Béghin submits that it did not compete with SZAG for the sale of white sugar to Germany, because it sold elsewhere all B — Submissions on the substance of the white sugar in its possession. The the case Commission's claim that the firm could refine raw sugar produced at Sillery in its (a) Béghin: Infringement of Article 85 refinery at Thumeries and sell it later in Treaty the form of white sugar in Germany is absurd, having regard to the transport (1) Summary of the application costs involved in such an operation.

SUIKER UNIE AND OTHERS v COMMISSION

The distinction between raw 1970/71, 44 500 metric tons in 1971/72), and refined sugar is irrelevant, because by was accompanied by an increase of the supplying a competitor with raw sugar, German producers' SZAG and Franken Beghin decided not to deliver refined share of imports from 54 % to 71 %, sugar on this competitor's market without taking into account sugar in fact Béghin cannot attribute the sales of raw delivered to producers, for example 4 600 sugar to inadequate refining capacity, metric tons supplied by Sucre-Union to because in spite of the continual increase the 'Grundstücksverwaltungsgesellschaft' of the production of raw sugar in its at Oberursel, a subsidiary of SZAG. Sillery factory, the company always had the opportunity of refining the raw sugar A series of documents lead to the which it produced. The large surpluses at conclusion that national domestic its disposal, its geographical situation and producers agreed to protect their the relatively high prices applied in the respective national markets. In this sense southern part of Germany should have the attempt by a trader in the Saar to provided it with the incentive to meet establish commercial relations with a the requirements of white sugar of nearby German customer is significant. customers in the southern part of At the end of June 1968 this trader Germany. However, apart from supplying stated he was ready to supply French SZAG direct, it never sold any sugar in sugar, whereas in August 1968 he had to this region.

and SZAG. Federal Republic (cf. 3.B., a. and b. above), which discloses the general trend The conduct of Béghin becomes even of the sales policy adopted by European clearer if it is placed in the much larger producers. context of the concerted action in which this company and SZAG engaged in The Commission regards the attitude of connexion with deliveries to Italy (cf. 1 members of SZV including SZAG as above). additional evidence of a partitioning of the market They made their dealers Transport costs were not such as to agree not to market sugar from prevent the sale of French sugar from

Béghin replies that the Commission The Commission cannot support its cannot make use of a general argument decision concerning the German market which does not in any way relate to the by considerations relating to the conduct applicant. Thus Béghin is not included of Béghin and SZAG in connexion with among 'the French producers' who exports to Italy; the respective facts and 'continued to supply the Saar'; therefore figures concerning the German and the exchange of letters between a trader Italian markets no less than the practices in the Saar and a German customer adopted on these markets have absolutely no connexion with each other. cannot affect it Similarly it is in no way connected with the policy adopted by With regard to the option clauses they SZAG towards dealers or with the system are in general use and there is no reason of loyalty rebates. Finally the fact that for thinking that any such clause can Sucre-Union may have asked a German enable SZAG to prevent direct deliveries dealer to send its list of customers to from foreign producers to purchasers of SZV (cf. b. (2) to (cc) below) cannot be the southern part of Germany. No used against Béghin, which had nothing importance whatsoever can be attached to do with this. to any such statement, unless it is to show that during the performance of its By describing the distinction between contracts with SZAG Béghin received raw and white sugar as 'unimportant' the offers from German consumers. No such statement of defence contradicts the offers were in fact made. decision, which states that 'a restrictive effect on competition can only be denied (4) Summary of the rejoinder in cases where a producer, who does not have his own refining plant, sells raw So far as Béghin's statement that certain sugar to a refinery;... such a producer of documents do not relate to this company raw sugar does not compete with a is concerned, the Commission submits producer of white sugar' (decision, p. 35, that the latter cannot sever its conduct Rt. Col). The statement that Béghin from the general context in which the could refine its sugar itself has not been Commission has placed it. proved and is inaccurate. For technical reasons it could only do so at Thumeries. The Commission's statement that it was However the refinery at Thumeries was in the interest of French producers to sell in full production and could not absorb white sugar to non-producers established additional quantities of raw sugar from in the southern part of Germany is Sillery without incurring considerable corroborated by the fact that Say, capital expenditure which was not Générale sucrière and Lebaudy regularly sufficiently justified by the difference supplied considerable quantities of white between the prices on the French and sugar to the German market. German markets. Further Béghin's policy has always been to sell the raw sugar The Commission repeats its submission produced in its Sillery factory direct to that Béghin could refine all its raw sugar.

So far as the option clause in the When the Commission submits later contracts with SZAG is concerned, it is (decision, p. 37, Lt. Col.) an uncommon clause enabling SZAG to acquire automatically additional 'that if Béghin and Sucre-Union have quantities at the price already fixed, if from the beginning of the 1970/71 lis company wanted to put a stop to or marketing year, regularly sold an cut down any deliveries by its increasing amount of sugar to their most competitors to its customers. The object important competitors in this sales area of this clause was therefore to protect and thus enabled them to resell the sugar SZAG's market as a domestic product these operations stem from a concerted practice .. .', (b) SZAG: Infringement of Article 85 of the Treaty it only repeats in words, which are hardly different, the claim that there was a To the extent to which the arguments concerted action because the deliveries put forward by SZAG under this head took place between producers. also relate to the complaint concerning the protection of the Italian market (bb) SZAG challenges the Com­ reference must be made to chapter 1. mission's claim (decision, p. 36, Rt. Col., above. p. 37, Lt. Col.) that 'French producers, by reason ... of the good prices obtainable (1) Summary of the application would have been well able to market their sugar individually in SZV's sales (aa) SZAG submits that the Commission area'. The failure by the Commission to has not proved the argument upon which produce accurate figures prevents the the decision taken against it is based, applicant from submitting observations namely that from the beginning of the on the Commission's statements relating marketing year 1970/71 there was a to the level of prices applied in the south concerted practice between the applicant, of Germany, which moreover contradict on the one hand, and Béghin and each other (‘always close to the target Sucre-Union, on the other hand. The price' — p. 36, Rt. Col. — and 'the substance of the Commission's case is target price is applied' — p. 37,

Lt Col.). Moreover the target price and played by freight rates and the operation the intervention price cannot be usefully of the normal market machinery. compared with the market price; on the contrary they should be compared with It is misleading for the Commission to the net proceeds of sales, converted on a claim 'that the quantitative increase of comparable basis. With figures in imports during the 1970/71 and 1971/72 support SZAG maintains that such a marketing years coincides with a calculation makes it appear that the price remarkable increase of deliveries between applied in south Germany was always producers' (decision, p. 36, Rt. Col.), and either close to the intervention price, or it is wrong to say 'that in fact, in even below it, except during the first two comparison with the preceding quarters of 1971. marketing year' — that is to say 1969/70 —, 'much larger quantities were Without saying so in its decision the imported, but of these three-quarters Commission relied on the agricultural were in the form of deliveries from statistics of the Statistical Office of the producer to producer' (loc. cit, p. 27, Lt European Communities (cf. commu­ Col.). From 1969/70 to 1970/71 the total nication page 8); moreover, this Office imports increased by 55 000 metric tons, itself admitted that these statistics were of which only 27 924 metric tons were incorrect deliveries between producers. German operators other than producers increased (cc) SZAG takes great exception to the their imports from 41 861 metric tons in statement (decision, p. 37, Lt. Col.) that 1969/70 to 68 937 metric tons in the small volume of French imports 1970/71; they accounted for 70-2% of 'cannot be attributed to transport costs' the total amount of white sugar imported and 'even over long distances..., these during the 1970/71 marketing year. The costs do not exceed the difference figure of 'three-quarters' put forward by between the intervention price applied in the Commission is not even correct if France and the target price applied in account is also taken of imports of raw south Germany'. The company produces sugar. figures showing, on the one hand, that freight rates for deliveries ex Reims or SZAG is of the opinion that the Tirlemont compare unfavourably with argument based on the fact that French the rates applicable to deliveries from manufacturer supply the Saarland south Germany and, on the other hand, (decision, p. 37, Lt Col.) disregards the the difference between the intervention special situation of the Saar, which SZAG price and the average market price. describes in detail.

When the Commission referred to a to give the impression that such sales can 'remarkable increase' of deliveries from only be explained by the existence of a concerted practice. In this case this producer to producer (decision, p. 36, Rt. argument disregards the fact that the Col.) in 1970/71 and 1971/72, it failed, amounts in question were not considered on the one hand, to state why it either by the vendor or the purchaser to considers this increase is remarkable and, be 'large' and that such operations on the other hand, gave the false enabled the vendor to avoid certain impression that SZAG had bought from additional marketing costs. French producers during the preceding two marketing years. Another reason put forward by the The additional purchases from applicant to justify its purchases from Sucre-Union and Béghin in 1970/71 and other producers is its policy of always in 1971/72 were commercially justified. maintaining the volume of its sales at a They helped to make good a short fall figure above the amount of sugar beet caused by the combined effects of the which its beet growers could be expected bad harvest in 1970/71 and the increase to produce, so that they do not have to in demand. Having entered into modify continually the size of the contracts with its customers for the acreage used for the cultivation of sugar continuous long-term supply of sugar beet Deliveries between producers are and seeing that its stocks had dwindled moreover also customary in other trades. SZAG made direct approaches to producers to obtain the lowest possible The statement that Sucre-Union and

1971/72) and bought no sugar at all from the amounts purchased are concerned', Béghin in 1968/69 and 1970/71. SZAG by absorbing the bulk of the amounts is not the 'most important competitor' of produced by the two French producers Sucre-Union and Béghin, as south intended for the sales area of the Germany only represents one of the southern part of Germany' and by many possible markets of these directing them 'to the usual sales companies and the latter are hardly channels of the domestic market' exposed to competition from the (decision, p. 37, Lt. Col. and Rt. Col.).

It is processed does not weaken the claim that therefore absurd to suppose that the competition was restricted; the suppliers small purchases of the applicant were well able to refine all the amounts prevented Béghin or Sucre-Union from of raw sugar and to process the sugar of ear-marking' all their surplus sugar to inferior quality into liquid sugar and south Germany. moreover did so during the first two marketing years' (decision, p. 37, Rt. In fact it is certain that Sucre-Union and Col.). probably Béghin made a direct appearance on the market like other — So far as Béghin is concerned this French producers such as the suppliers of undertaking does not have the white sugar. requisite plant to produce liquid sugar, and its factory at Sillery, from SZAG produces a long list of firms in which SZAG bought raw sugar, Württemberg which — according to because freight rates were the least the information supplied by Mr unfavourable, had no refining plant Fleischberger the SZV representative in for the production of white sugar. On Stuttgart, to the Commission by letter the other hand if Béghin had of 4 November 1972 — imported transferred the raw sugar to its altogether about 5 000 to 10 000 metric factories at Thumeries and then tons per annum. This list is moreover despatched it to Germany, the imcomplete, as the SZAG sales area does additional transport costs would only not only include Württemberg and Mr have increased the price of the Fleischberger is not aware of all the cases product by about DM 60 per metric which have to be taken into ton. consideration in this case.

All this shows that there never direct intervention of French producers was a concerted action such as the one on the south German market, so far as alleged.

It is evident from the beforementioned already by implication held that letter that other German undertakings restriction of competition cannot be received offers of French sugar which for inferred from the mere fact that no various reasons were not followed up by delivery can be made twice. purchasers. SZAG produces another list When the Commission blamed SZAG of a large number of German firms to which Sucre-Union and probably also for having acted in concert with Béghin made offers in 1970/71 and Sucre-Union (decision, p. 36-37, Section 1971/72. Finally the Commission had to D), and at the same time conceded that consider that, according to its own Sucre-Union's operations were not in accordance with this conceited action findings (decision, p. 45, Rt. Col.), Sucre-Union has 'always, to the extent to (decision, p. 45, Rt. Col.) it is evident that which this was possible, played the part it did not understand the concept of of an "outsider" and ... also undertook, 'concerted practice' which presupposes in addition to selling direct to foreign actual cooperation corresponding to a competitors, sales to dealers and previously agreed concerted action. processing undertakings in the market of Finally it is illogical to start with the the country of destination'. finding that the alleged concerted practice 'is aimed at keeping the market The inaccuracy of the Commission's of the southern part or Germany free additional claim that SZAG had almost from the competition of other bidders' achieved 'the complete protection of the and then to conclude that this practice market of the southern part of Germany' 'may affect trade between Member States' (decision, p. 37, Rt. Col.) stems from the (p. 37, paragraph 3), because that is preceding arguments and also from the tantamount to inferring additional extremely small proportion which objective facts from the description of a SZAG's additional purchases bore to the subjective aim. company's own production, namely, in 1970/71 and 1971/72, 0·05 % and 0·8 % (2) Sum of the statement of defence respectively in the case of white sugar and 2 % and 3 % respectively in the The Commission replies by arguments case of raw sugar. some of which are the same as those which it submitted in connexion with Finally the statement that 'dealers in the Béghin (cf. a. (2) above). It summarizes southern part of Germany are not the facts upon which it relied in its allowed to import sugar from other decision and which, in its view, of Member States' (decision, p. 37, Rt. Col.) necessity leads to the conclusion that disregards the fact admitted in the there was coordination between SZAG decision (p. 28, Rt Col.) that SZAG sells and SZV on the one hand, and the its sugar with the help of commercial French undertakings Béghin and representatives and not independent Sucre-Union on the other hand, which dealers. Moreover, the seventeen regional knowingly substituted practical cooper­ repesentatives were not the only sugar ation for the risks of competition. importing undertakings to be reckoned with. SZAG produces a list of German In giving more direct answers to the firms not tied to SZAG or SZV which arguments developed by SZAG the offered sugar in south Germany. Commission makes the following sub­ missions:

same as or higher than the target price. The fact that many requests from to (a) non-producers were turned down cannot be attributed by SZAG to prevailing Even if the argument that transport costs transport costs, when it admits itself that, were an important factor is in general since 1970/71, they have not been a correct, it does not nevertheless explain determining factor. Further French sugar, the absence of any imports in the regions although in small quantities, was in near the frontier. The figures produced fact supplied to such operators. The by SZAG show that, in the case of Commission has the evidence to support deliveries from Reims to Koblenz or the fact that south German dealers were Freiburg, freight rates were not a serious in a position to sell French sugar in this disadvantage. region. It recalls that Sucre-Union urged its German representative to send SZAG It emerges from SZAG's statement that, or SZV a list of its customers. at least from the beginning of 1970/71, market conditions in every way favoured The evidence proposed by SZAG does French deliveries to South Germany. The not clarify the determinative questions. fact that French producers nevertheless preferred to sell to SZAG and Franken, to (dd) and — as SZAG even admits — at prices particularly favourable for the purchasers SZAG's argument proceeds on the basis is significant that it is for the members of SZV, and not the other producers, to meet the With regard to the increase in French requirements of south Germany. The imports to south Germany from 1969/70 Commission does not deny that it is in

the interest of the applicant not to lose tons for 1970/71 and 21 521 metric tons its customers, but considers however that for 1971/72) are produced by SZAG deliveries from French producers to the followed by the Commission's figures for applicant amount to clear proof of a deliveries to purchasers other than SZAG concerted action. Deliveries of white and Franken, namely 13 350 and 13 050 sugar appear in the circumstances to be metric tons, after adding deliveries of raw

When Sillery to Thumeries before exporting it. SZAG states that it intervened in the competing offers of French producers, it The preceding argument shows that the concedes that French sugar was offered at deliveries, to which exception is taken, lower prices and is inconsistent with its can only be explained by the existence claims that unfavourable freight rates of a concerted action, so that the made it impossible to sell French sugar Commission need only define its in south Germany. position on the main points raised by

The legal form much higher than the level of French adopted by SZV and its members, which prices that the price difference was such control the entire supply of sugar in the as to offset the unfavourable freight rates. southern part of Germany, in order to Moreover SZAG construed the passage make these operators comply with their quoted in the decision (p. 37, Lt Col.) directions and to supervise their activities incorrectly, because all the Commission and in particular to make them agree said was that deliveries from French not to work for other sugar producers, producers prevented their direct was the trade representatives' contract. appearance on the south German market The economic effect was that the 'as far as the purchased quantities are independent trade found it was prevented concerned'. from selling the sugar of members of

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supply such detailed data on the from 0 in 1968/69 to 11 % in 1972/73 customers who received offers of French even though it lost its largest customer in sugar. 1971/72.

. . the competition of other processing sector. suppliers' the Commission based its case not on the objective which it was SZAG again challenges the statement intended to attain but on its objective that the target price was applied in capacity to produce effects which are the Germany and the intervention price in opposite of competition. France. This statement is based on data which the statistical office of the (3) Summary of the reply European Communities itself admitted could not be related to each other. The SZAG replies that the facts produced by difference in price amounting to 2·86 u.a. the Commission can neither justify taken from the statistics in question does separately or as a whole the conclusion not in fact exist; the difference is 0·136 that a concerted action existed between u.a. per 100 kg. Sucre-Union and Béghin, of the one part, and the applicant, of the other part, If from the beginning of 1970/71 the during the 1970/71 and 1971/72 difference between the intervention price marketing years. and the market price was sufficient to offset the transport costs for French The Commission itself found that sugar, this difference did not however consumption and production of sugar always succeed in offsetting the other were in balance in south Germany, that costs to be borne by French exporters. the latter is not one of those areas where This is proved by the fact that no French the normal conditions for trade across producer other than Béghin and frontiers are fulfilled and that large Sucre-Union even exported large imports of sugar to this region cannot amounts of sugar to south Germany. therefore be expected. The fact that south Moreover the Commission did not accuse Germany does not export much sugar to SZAG of having cooperated with other France cannot either be a matter of French producers. surprise for the Commission, having regard to its statement that the price The names were deleted in the level in south Germany was considerably documents produced for the Court file higher than in France. Moreover when by the Commission to prove the the Commission states that the factories circumstances in which SZAG is alleged of south Germany are nearer Alsace than to have imported sugar, namely the French factories it forgets that there is a reciprocal acceptance by undertakings of French sugar factory at Erstein, 20 km their respective sales areas.

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Neither SZAG nor SZV received from difference between the price in France Sucre-Union's representative a list of and south Germany the French customers or information concerning the producers' disinclination to discuss this names of customers. Thus it is clear from market cannot be explained by natural a letter of Sucre-Union to SZAG of 20 factors. June 1973 that the latter never gave its representative instructions of this find. The Commission takes the view that in an open market there should be sales in The Commission still fails to understand both directions across national frontiers, the sales system of SZAG and SZV. It to the extent to which transport costs are loses sight of the fact that these firms no obstacle. There cannot be a 'game sell, through their representatives, inter preserve' for national producers even in a alia to independent wholesalers, that is country having a sugar surplus. For this to say to 1 269 dealers who are not reason it is unusual that SZAG did not subject to any restriction so far as supply any sugar to Alsace. The capacity reselling to other dealers, exporting and of the Alsatian sugar factory at Erstein importing are concerned. It is through does not exceed 15 000 metric tons

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Federal Republic, although only very know that the capacity of this market to small quantities were involved, (about absorb sugar was limited. The advantage 21 000 metric tons in 1970/71 and for French producers was probably due 10 000 metric tons in 1971/72). to the fact that SZAG and Franken had offered them favourable prices. The Commission states that it is ready to produce the originals of the documents 5. The complaint that RT brought from which it had deleted the names, if economic pressure to bear on Belgian the Court requests it to do so. exporters

SUIKER UNIE AND OTHERS v COMMISSION

price offered by Export was too low (in for a German destination, observed the summer 1970). These two undertakings price level (Bfrs 1 100 at least in the case moreover can scarcely be regarded as of sales for human consumption) agreed victims of economic pressure, as is between RT and Pfeifer & Langen, shown by two letters from Export and although the current price was Bfrs from the evidence of Baron Kronacker, 1 086·50 and imposed restrictions with chairman of Export, and Paul Hottlet, regard to the ultimate destination of the managing director of Hottlet sugar (in particular sales for human consumption were subject to the consent (b) Summary of the statement of defence of Pfeifer & Langen). Several contracts with Hottlet contained similar clauses. With regard to the size of the market of Belgium and Luxembourg in relation to Oreye, on its part, ensured that this the Common Market, it must be borne in minimum price for Germany was mind that according to the Commission applied, which led Export to state in a production in Belgium and Luxembourg letter of 5 October 1970 to Oreye that reached 770 000 metric tons in 1971/72, the proposals of this firm were 'the same whereas French, German and Italian as those which the Raffinerie tirlemontoise asks for direct when it production amounted to 3 230 000 metric tons, 2 150 000 metric tons and negotiates commercial transactions with 1 150 000 metric tons and that there is our firm'. It cannot be inferred from the

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price. fourteen contracts entered into between these two firms. RT states that it is unable to give precise information on the specific transactions RT's policy to Export and Hotdet is very carried out by Oreye and Moerbeke-Waas well illustrated by its letter to Export of and in addition to the evidence it offers 24 July 1969 which reads: having to adduce it requests that the Raffinerie previously informed you of our policy Notre Dame (Oreye) be heard by its towards our foreign colleagues and chairman, Augustin Roberti, Esq.

As a result of this notification which we have been notified. . .' it will other undertakings adopted the same cease to have the exclusive right, together price policy towards Export so far as with Hottlet, to sell sugar intended for these sales were concerned. But RT never export by RT. at any time gave instructions either to Moerbeke-Waas or to Oreye on this (c) Summary of the reply point. RT takes the view that even control of In RT's letter to Hottlet of 19 March 85 % of the Belgium-Luxembourg 1969 it seeks to ensure that this firm

6. Complaint that SU and CSM brought statement that the Netherlands sugar economic pressure to bear on market 'constitutes a substantial part of Netherlands importers the Common Market' (decision, p. 38, Rt. Col.). When the Commission states that 'the A — Preliminary submission: SU had two Netherlands sugar producers, SU and no legal existence during the CSM, have a dominant position' (loc. cit.) period to which the present it fails to go on to say whether it complaint refers considers these two companies as a In putting forward this submission single undertaking or whether — and if (summarized in greater detail under so why — it adds the respective shares of 2.A.a. above) against the present the market of each of these companies complaint, SU's main argument is that together. the complaint refers to the 1969/70 marketing year, a period before the Without giving any reasons the Commission states that SU and CSM 'are formation of the applicant company. able to behave independendy and this enables them to act without taking any B — Formal and procedural sub­ particular account of their competitors' missions (loc. cit).

(a) SU and CSM: Illegality of the policy The statement that the two undertakings adopted by the Commission for 'contrôlent' ('supervise') almost all the

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sugar imported into the Netherlands (loc. one for the purpose of applying the cit.) can only be understood if the concept of 'dominant position'. Netherlands verb 'controleren' is given the meaning borrowed from the French (c) CSM: Absence or inadequacy of the verb 'contrôler' and not its normal statement of the reasons upon which Netherlands meaning. the decision is based

The Commission states that as the (1) Summary of the application number of the inhabitants of the Netherlands is known and everyone uses CSM submits that the statements on page sugar to a greater or lesser extent, it did 39 (Lt. Col.) of the decision, which relate not have to give full particulars of the to the 'threats' which CSM is alleged to reasons why it considered that the have uttered against the dealers, are Netherlands market constitutes a incomplete. The Commission fails to substantial part of the Common Market. give particulars of the content, time, place and persons affected by the For the rest of its defence reference may measures to which exception is taken. be made to the Commission's statement on the substance of the case (see C.a.(2) (2) Summary of the statement of defence below). The Commission considers that it (3) Summary of the reply described with sufficient accuracy the practices which it found that CSM had According to SU the fact that the engaged in. In these circumstances it is population of the Netherlands is known unnecessary to know either the time or does not absolve the Commission from place of the action, or the names of the giving detailed reasons for the persons. interpretation which it gives to a judicial concept which has not yet been (3) Summary of the reply examined in detail. CSM submits that, in any case, the With regard to the question whether SU Commission has not adequately proved and CSM must be regarded as a single its claim that CSM and SU must be undertaking for the purposes of applying regarded as forming one unit for the Article 86 the Commission should have purpose of the evaluation of the alleged put forward facts which were specific and pressure brought to bear upon can be checked. Netherlands dealers.

showing clearly, in the operative part of of the allegation that the Netherlands the decision, under what form and in sugar market constitutes a substantial what manner the company applied the part of the Common Market. It seems economic pressure for which it is that the Commission regards the concept blamed. of 'substantial part of the common market' in a purely geographical sense, (2) Summary of the statement of defence whereas there is a case for taking economic factors into consideration as The Commission replies that it emerges well. clearly from the statement of the reasons upon which the decision is based that SU There is no justification for the statement is accused of having used methods which that SU and CSM 'cooperate closely in bear no relation to those adopted in fair almost all their operations' and 'have a competition so as to induce Netherlands dominant position ...'. In contrast to the importers not to give up supplying SU's formula used by the decision according customers; the decision describes this to which SU and CSM 'are able to behave method in detail. independently and this enables them to (3) Summary of the reply act without taking any particular account of their competitors', SU determines its SU submits that when the Commission policy independently of CSM and has to states that the company engaged in take very careful account of the unfair competition, it limits itself to operations of both this society and the evaluating a course of conduct The exporters of other Member States and of decision nowhere explains 'in good its customers' requirements. Dutch' what the Commission regards as SU denies that it ever, either alone, or 'fair' or 'unfair' (‘loyaľ or 'déloyal'). Further, it does not describe, 'in a together with CSM, made dealers agree to detailed manner' the methods employed resell sugar at fixed prices, to resell sugar by SU. to it and not to continue to import into the Netherlands without its consent; similarly it denies having 'threatened' C — Submissions on the substance of importers in any way whatsoever. When the case the Commission says that the 'traditional' imports of its dealers are 'threatened' by Preliminary observation the applicant it implies that importers have the right to be sheltered from any The complaint of economic pressure competition by SU. brought to bear upon Netherlands importers is partly based on the same (2) Summary of the statement of defence fact as those in support of the complaint Cf. first of all B.b.(2), first paragraph of protecting the Netherlands market (cf., above on the one hand the decision, p. 25, Lt Col. to p. 26, Lt Col, p. 33, Rt. Col, on The Commission replies by submitting the other hand, p. 38, Rt. Col. to p. 39, substantive considerations on certain Lt Col.). Reference must also be made to submissions put forward under the head Chapter 2.Ca. and b. above. of defects in the statement of the reasons upon which the decision is based (cf. (a) SU: Infringement of Article 86 of the B.b.(1) above), and makes the following Treaty submissions:

of economic facts. In this case the statement of defence the Commission reasons put forward mentioned in section has discharged the burden of proof 8 of the decision (page 19, Rt. Col. to which lies upon it. It does not have to page 20, Lt Col.) justify the claim that produce as well express statements from SU and CSM together have a dominant the representatives of SU and CSM from position on the market More particularly which it can be inferred that the latter these two companies: were aware that their conduct was against — in practice almost always applied the competition. same prices to the most important products; (3) Summary of the reply — applied to essential trading points conditions of sale which were the SU does not accept the argument that, same or at least aimed at and because the conduct of SU and CSM on achieved the same commercial and the market converges, the influence economic effects; which these two undertakings exerted on — sent, at about the same time, letters the market can also be examined in the same terms to retailers, together.

The similarity in the beforementioned protection of the of these two producers' conditions of sale Netherlands market SU and CSM comes as no surprise since a contract moreover acknowledged that they made for the sale of sugar is relatively simple isolated price concessions in order to tie and its form and content is mainly the their customers, and if such actions are result of modifications arising under taken by undertakings having a Netherlands legislation. The prices in the dominant position, they may also catalogues are in most cases modified by infringe Article 86. rebates granted to customers.

SUIKER UNIE AND OTHERS v COMMISSION

In fact not take adequate note of the arguments small Netherlands consumers preferred developed in these documents it Netherlands qualities and packages and summarizes its version of the facts as large scale consumers preferred stable follows: commercial relations which guaranteed In 1968 a pool of Netherlands importers them regular supplies delivered without could buy 70 000 metric tons of French delay during relatively long periods to commercial relations of short duration. sugar at a price which, having regard to the weakness and the later devaluation of Faced with this situation Jacobson asked the French franc and the financial SU to help importers.

contrary. supplied in the past. SU had in fact to bring down its prices to those offered by At no time did SU know that it was importers. On the other hand Van Nelle accepted the explanation 'that it was only 'backed' by RT's policy. because of the monetary crisis, the measures granting aid for exports and the (4) Summary of the rejoinder unlawful refusal by the EEC to take any The Commission takes the view that the measures' that importers were able for the time being to offer sugar at a price arguments put forward by SU divert lower than the intervention price and for attention from the real problem, namely the relation of the forces of the this reason the excessive profits earned in the past were out of the question.

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It is the Commission's view that, in order to establish a jointly held dominant 7. Complaint that SZV prevented its position, it is only necessary to show that agents from reselling sugar from the economic rôle of the undertakings in other sources and tied its customers by question, their size, their position on the the grant of loyalty rebates market and their conduct have sufficient points in common to justify the conclusion that their position in relation A — Formal and procedural sub­ to certain suppliers, competitors or missions purchasers is not occupied by them as individual undertakings but is a position (a) SZV: Illegality of the policy adopted which they jointly hold. Now CSM and by the Commission for informing the

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public; illegality of the com­ (b) SZV: Infringement of Article 4 of munication; unduly short time limits Regulation No 99/63 for submission of observations (1) Summary of the application These submissions in SZVs application are supported by arguments, the SZV blames the Commission for having substance and wording of which are based its decision on facts which were

SUIKER UNIE AND OTHERS v COMMISSION

. .'; common market'. The expression and that the grant 'by SZV to its 'southern part of Germany' is vague. The customers of a bonus' called a quantity area in which SZV operates is limited to rebate which 'amounts to DM 0-30 per seven of the eleven German Länder in 100 kg' is an abuse. The Commission, in only two of which SZVs share of the its decision, attributed the dominant market corresponds to the figures position to SZV, because it learnt from mentioned by the Commission and in the written observations of the parties only three of which it exceeds 50 %. that SZAG as a shareholder in SZV only This geographical subdivision of a has limited voting rights. SZV markets Member State at least deserved an almost all the production of its members explanation. The production and and has entered into trade representatives consumption of sugar in this area contracts and granted the loyalty bonuses increased to about 10 % only of in question, its position and conduct on Community production calculated up to the market have of necessity to be the 31 December 1972 which is not a evaluated under Article 86. As the substantial proportion. SZV invokes the communication expressly mentioned the communication of 27 May 1970. — operations of SZV, the contents of the Moreover as the decision which was decision could not come as a surprise to made after, 1 January 1973 and also refers the latter, which, moreover, defined its to the future, lays down that the parties position on this point during the concerned must bring to an end the administrative procedure. infringements found to have existed, the Commission should have taken into

based. The arguments put forward in individually they use the same agents' support are the same as some of the (decision p. 39 Rt. Col.) has no arguments put forward by SZAG in the connexion with the existence of a context of the similar submission made dominant position. The crux of the by this company. Reference must argument is, therefore, how the therefore be made to Chapter 1 above Commission intends to show that SZV is and more particularly to Section A.g. in a position to act without taking any particular account of its competitors. Now the Commission mentions first of B — Submissions on the substance of all that it is necessary to evaluate SZVs the case conduct towards its purchasers' (decision,

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towards competitors are therefore imposed by an undertaking having a irrelevant. Moreover, they are not dominant position, an abuse and an accurate. The applicant's share of the infringement of Article 86' (decision, p. market only reached the proportion of 90 39, Rt. Col.) is not supported by any facts to 95 % mentioned by the Commission and is legally untenable. First of all they in two of the eleven German Länder. are not 'middlemen', (‘Zwischenhändler’), Finally 'the continuance of the system of but trade representatives (Handels­ local representatives' and 'the grant of vertreter); the Commission uses in­ loyalty rebates' cannot be considered at appropriate terminology to justify the the same time as causes of the argument that the trade representatives domination of the market (decision, p. agreements in question do not fulfil the 36, Rt. Col.) and as an abuse (decision, p. conditions specified in the notification of 39, Rt. Col.). In fact SZV is exposed to 24 December 1962. competitive pressure in particular from French producers, which, as they are For several decades the sugar industry of compelled to sell their large over the southern part of Germany used trade production, often make offers to representatives to sell its products. This is customers in south Germany and compel due to the fact that SZV and its members SZV to ensure that they are not accepted intended to be responsible themselves for by means of conditions of sales in the functions which, in other economic conformity with the trends of the market sectors, are the typical hallmark of Although SZV may in fact have an independent dealer, namely the succeeded, it cannot be inferred that it is maintenance of stocks and taking 'in a position to act without taking any financial risks linked to supplying particular account of its competitors' wholesalers and large processing factories decision, p. 39, Rt. Col.). The existence direct

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These rejected applications by representatives to examples make it clear that the larger the market special kinds of sugar from other customer's purchases from the third producers, as these marketing operations party the smaller the price advantage did not affect its interests. resulting from the rebate; the rebate is therefore not an appropriate instrument (cc) With regard to the system of for import protection in the case of quantity rebates — which the Com precisely those big customers in whom mission wrongly describes as 'loyalty the applicant and the suppliers of foreign rebates' — SZV first of all states that it sugar are particularly interested. has definitely given up this practice.

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Such a tendency suppliers without losing, nevertheless, cannot be inferred from the subjective their advantages. aim which the Commission attributes to the originators of the rebate; the It is absurd to state 'that the most conclusion on p. 40 (Rt. Col.) of the important aspect of the system of loyalty decision is therefore illogical. rebates lies particularly in the possibility of controlling purchases by customers (2) Summary of statement of defence from foreign producers, which can easily be done by the undertaking granting the The Commission begins its reply with rebate using its knowledge of the average certain general observations, dealing in quantities purchased annually, which do particular with the link which in its not vary much' (decision, p. 40, Lt. Col.). opinion exists between the complaints If control can be exercised 'by reason of' made against SZAG (cf. 4. above) and this knowledge it is not the loyalty rebate SZV with regard to the market of the which allows the control to be effected.

B (b) (2) November 1972 which has already been above. Thus it emerges from the quoted. introductory wording of paragraph 2 of the first article of the decision that the The system of loyalty rebates had already abuse of a dominant position for which been adopted by Franken, a member of SZV is blamed was found to have existed SZV, when the German organization of in the context of the beforementioned the market in sugar was in force, and concerted practices and constitutes in under this system sugar could not be itself an infringement, which is imported. tantamount to saying that SZV has

infringed Article 86 of the Treaty by extends therefore beyond the area adopting the measures referred to in traditionally called 'south Germany', an subparagraph 3 of the said paragraph expression which the Commission agrees independently of the fact that these is vague, and represents 'a substantial measures were intended to permit the part' of the common market even if implementation of the concerted action account is taken of the enlargement of between French and German under the Community on 1 January 1973.

. . . must be considered in order to the market 'where the agreement takes determine the amount of the fines, in effect'. conjunction with the concerted practices in which they engaged'. Subparagraph 4 SZVs share of the market is hardly of Article I (1) of the decision does not less than 90 to 95 %, as the applicant mention SZV among the undertakings itself admits, in Bavaria and Baden- which engaged in the concerted practice Württemberg if account is taken of the relating to the market in south Germany, only parts of the other Länder included as the Commission considered that it in the applicant's sales area. was perfectly proper to regard SZAG and Franken, members of SZV as The alleged competitive pressure from the responsible undertakings. The French producers only led to deliveries Commission nevertheless had to take amounting to 1-5 % of the requirements into consideration that SZV handled the of south Germany (without taking into marketing, in south Germany, of its account deliveries to SZAG and to members products and that the measures Franken), and in no way jeopardized the which it adopted contributed to the applicant's dominant position.

Fleischberger, including the list of the offers from French producers which to (aa) The area where the applicant neither mentions prices nor quantities, has a dominant position is its sales area falls far short of proof to the contrary. which, on its own admission, includes SZVs claim that there was competitive more than one third of the territory of pressure from French producers, is the Federal Republic, namely Bavaria, inconsistent moreover with SZAG's Baden-Württemberg and parts of Hesse, statement in which it endeavours to Lower Saxony and North Rhine- attribute the modest amount of deliveries Westphalia and the Palatinate. This area of French sugar into south Germany to

the unfavourable transport costs payable does not exclude commercial re by French producers and to price presentatives. The general terminology conditions. does not distinguish between Vermittler ('intermédiaire' ‘middleman’) and With regard to the statement that Handler ('négociant' ‘dealer’). imports from France tended and still tend to increase, the data on which SZV If the sugar industry of south Germany relies include deliveries to the Saar and used trade representatives for historical to German producers, which never reasons, the contracts to which exception applied any competitive pressure. is taken date, however, from the period after the establishment of the common There is no contradiction between the organization of the market in sugar. statements in the decision that SZV, on When SZV says that it prefers to assume the one hand, is not subject to any itself the functions which are the competitive pressure and, on the other hallmark in other economic sectors of hand, applies loyalty rebates to prevent the independent dealer, it recognizes that

if imports are small, the grant of the rebate can appear useful for SZV, namely The list of SZVs independent dealers in maintaining imports at a reduced produced by Mr Fleischberger gives a level. false idea of the position, as some of these dealers are linked to NZV or to to (bb) The system, adopted by SZV, of WZV and others can only sell in SZVs selling its production through sales area special kinds of sugar from representatives who had to accept a other German producers. clause in their agreements with SZV prohibiting competition is an abuse of a If there had to be dozens of undertakings dominant position, because its aim is to in south Germany having the necessary eliminate all commercial competition. If, means to negotiate the import of sugar, in principle, each undertaking has the this shows to what extent SZV has right to choose its own marketing eliminated free trade from the system, a different situation applies to an distributive network for its production. undertaking having a dominant position, because in such a case the choice of a SZV does not correctly interpret the marketing system, which limits or decision when it takes the view that, in destroys opportunities for selecting the opinion of the Commission, the dealers and consumers, is an abuse of the abuse consists of SZV not making its paid position. distributive network freely available for its competitors, and submits that there By using the expression 'middleman' is no obligation to promote foreign ('intermédiaire') ('Zwischenhändler'), the competition vigorously.

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In all these circumstances the obser­ its dominant position SZV can only vations relating to German legislation are argue that applying a more favourable irrelevant price is not an abuse of this position.

to (cc) The Commission submits that Under paragraph (c) of the second what the applicant calls an annual paragraph of Article 86 (2), such an quantity rebate is in fact a loyalty rebate abuse consists in 'applying dissimilar granted independently of the amount conditions to equivalent transactions purchased. Therefore there can be no with other trading parties, placing them question of the rebate being regarded as at a competitive disadvantage'. The rebate a way of producing advantages by in this case is an example of such rationalization. In order to realize the dissimilar conditions, because it means importance of this rebate it is only that if two customers purchase the same necessary to compare its rate (0-3 %) amount of sugar the price paid by the with the commission which trade customer, who obtains all his supplies representatives are paid by the applicant from the applicant, is different from the (0-27 %) and to take account of the fact price paid by the purchaser who does that sugar is sold in large quantities. The not.

It is of no importance to know whether to (aa) The Commission cannot claim SZV pursued the aim of preventing that there is a dominant position on a imports, as soon as it was evident that market the territorial boundaries of this was the likely effect of the rebate. In which it cannot demarcate with any view of this effect and having regard to accuracy. The map lodged as an annex to

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Even though competitive pressure is not completely When the Commission takes the view revealed by competitors' shares of the that SZVs trading area constitutes a market, it was nevertheless in their case substantial part of the common market, apparent in the more attractive offers it departs from its proposal for a Council made by SZVs competitors, upon which regulation modifying Regulation No 17 it attempted, sometimes with and (OJ C 92, 1970, p. 17) which originated sometimes without success, to improve. in the idea that, in the normal course of events, the entire territory of Benelux or With regard to the alleged contradiction of each of the Member States constitutes between SZAG's and SZVs respective such a substantial part; however, SZVs arguments relating to the effect of trading area is only about one-third of transport costs, the Commission cannot the territory of the Federal Republic. minimize the competitive pressure from The Commission also contradicts its French producers, as soon as it finds that communication of 27 May 1970 in which transport costs do not prevent French it expressed the opinion that an area with producers from making offers in SZVs a market capacity representing about trading area. (cf. decision, p. 37, Lt.

problem of concentration in the exclusively to wholesalers (about 1 270) common market', ('Le problème de la and to large industrial processing concentration dans le Marché commun', factories (about 730). For this relatively Série concurrence III, Brussels 1966, modest number of purchasers a sales p. 25, No 22), which it applied in the service which is not too elaborate is decision it adopted in the Continental sufficient, consisting partly of salaried Can Case (OJ L 7, 1972, pp. 25 and 35). staff and partly of trade representatives.

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sales service. The decision to hand over clause. In another of these contracts the the responsibility for sales to members of rebate was conditional on the volume of its own staff or to trade representatives purchases being approximately the same depends on the amount of costs which as in the preceding year. Three of these will be incurred in either case. contracts do not contain a clause of this type. If in its communication The assertion that SZV denied free trade the Commission found that the access to its production, apart from being confirmations of purchases include an inaccurate, has no connexion with the item 'JmR' (Jahresmengenrabatt = earlier complaint set out in the decision, rabais annuel de quantité) ('annual namely that SZV prohibited the sale of quantity rebate') of DM 0-30, it is clear sugar by its representatives from other from these confirmations that the grant sources without its consent.

In fact the that this should be done. dealers, that is to say the wholesalers, are free to choose both their suppliers and According to the Commission the their buyers. French producers do not applicant only availed itself of the depend therefore on the seventeen disputed clause 'in certain cases' representatives of SZV for the sale of (decision, p. 29, Rt. Col.). The four sugar in the southern part of Germany. documents cited in pages 92 to 93 of the Even if they wish to operate through a communication and produced for the commercial échelon which in the sugar Court's file by the Commission do not cycle comes before that of wholesalers enable any general opposite conclusions supplied by SZV, they can find dozens of to be drawn. One of these documents undertakings capable of engaging in the even shows that an employes of one of sugar trade at this level. The majority of the trade representatives of SZV spoke of firms set out in Mr Fleischberger's list are the imminent abolition of this rebate to a neither tied to NZV or to WZV, nor customer in the Spring of 1972, when limited to selling special kinds of sugar the applicant in fact intended to do so. from other German producers. SZV however took no such action until it was notified of the communication to (cc) In leaving open the question because a conversation with the whether the applicant in specific cases Commission left it with the impression abolished the rebate or granted it either that the latter did not regard the rebates at once, or only at the end of the year, as a fundamental issue. the Commission removes the whole basis of its decision in which it said without The rebate has nothing to do with the any qualification that the applicant tied control of customers' purchases.

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If confirm that the purchasers have met all SZV has trade representatives at Koblenz, their requirements from the applicant. Trier or in the Saar they are to be treated However the Commission takes this as exceptions. finding as the starting point of its argument. The proposal — which was not adopted The Commission cannot claim that the — for a Council regulation amending Regulation No 17 cannot be interpreted rebate is illegal under Article 86 (c). The fact that two customers are dealt with in as meaning that the Commission only intended to regard the territories which it a different way does not automatically mentions as a substantial part of the mean that one of them, by comparison common market. SZVs sales area, to the other and on the level of the moreover, is the equivalent to the whole commercial échelon to which the two of Benelux, as consumption in these two customers belong, is placed at a regions is 900 000 metric tons and competitive disadvantage. For Article 86 950 000 metric tons respectively per to apply it is necessary that a annum. Further, the fact must be borne disadvantage has actually occurred, which in mind that sugar is a transport costs the Commission has not even tried to intensive product. prove.

. . from the considerable extent 5 % of that of the adoption by SZV of a system of loyalty common market. rebates' (p. 36, Rt Col.) and that 'SZVs operations must also be evaluated in the If a share of between 30 and 50 % of the aforesaid context' (that is to say in the market does not allow the conclusion to context of SZAG's behaviour; p. 45, Rt. be drawn that there is ipso facto a Col.). dominant position, the situation is quite to (aa) So far as the de-limitation of different in the case of a share of the SZVs sales territory is concerned, the market of between 90 and 95 % which

unquestionably enables the holder 'to act of the disputed rebate immediately from without taking any particular account of the contract price was not conditional its competitors'. upon the annual requirements being met solely from SZV, as convincing. It is very Even a considerable increase in French unlikely that the applicant granted a imports does not threaten the applicant's rebate which had not been agreed. It dominant position. If French producers appears likely to be another way of are able to make good any shortfall in settling loyalty rebates. the production of manufacturers in south Germany, which is what happened in The applicant's assessment of the effect of the rebate is not in accordance with 1970/1 and in 1971/72, when the price

. . . are concentrated . . . in the processing 8. Complaint that Pfeifer & Langen sector, the applicant excluded the entered into agreements with its wholesale trade from a particularly agents restricting their opportunities important sector. The applicant can only for importing and exporting within put an end to the abuse of its dominant the Community position by granting independent wholesalers direct access to its production. There is no evidence that A — Formal and procedural sub such a modification of the sales missions organization would necessarily entail an increase in marketing costs. (a) Pfeifer & Langen: Premature publication a breach of The Commission adds that the many the principle that everyone has the other dealers mentioned in Mr right to a fair trial'; Unduly short Fleischberger's list are dealers to whom time-limits for the submission of the applicant does not sell sugar direct observations and whose commercial operations are limited to dealing with small processing These submissions raised by Pfeifer & businesses and the retail trade. Langen refer, in essence, also to the other complaints made against this to (cc) The Commission does not company. Reference must, therefore, be consider the argument that the deduction made to Chapter 2.B (a) and (b), above.

always tend to settle at the same level. — The same page of the com­ However, the classification of an agent in munication (cf. also decision, p. 27, one or the other category must be done Rt. Col.) states that Pfeifer & com­ in accordance with legal criteria which, munication 'made' its middlemen in the absence of any Community agree not to sell without its consent provisions dealing with the matter, can imported goods which if sold on the only be found in national law. This was free market might affect competition. also the point of view adopted by the Commission in its Communication of 24 The Commission seems to proceed December 1962. In this case the on the basis that Pfeifer & Langen provided for this clause with a view to Commission however disregarded preventing international trade. German Law, when it proceeded on the However, the Commission itself false premise that the middleman is an quotes (Communication, p. 89), as an independent dealer from the moment he example of a trade representatives ceases to work exclusively for his contract, an agreement entered into principal, whether or not the latter has in 1948 when, even if there had been given his consent. no such clause, inter-Community trade was impossible. The Commission seems to rely on German case-law under which the (2) Summary of the Statement of Defence obligation placed upon the trade The Commission replies that this representative to show good faith in his submission concerning the evaluation of dealings with his principal, includes,

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independent. The Bundesgerichtshof important member, covers four sales conceded that an operator may at the sectors in each of which a dealer same time act as a representative and as operates having, in relation to WZV, an independent agent. the position of a regional commission Pfeifer & Langen gives in detail the agent acting on behalf of WZV. reasons why the economic position of These dealers are large undertakings in the food trade who also trade for this company's agents is markedly different from that of independent their own account.

This prevented effective competition at the sales level Even if this was not the case, Article 85 for sugar in the territory assigned to does not apply as the restriction of Pfeifer & Langen. Further, German competition stemming from the disputed sugar manufacturers control sales of clauses is not 'appreciable'. In fact the sugar from other Member States. large number of independent sugar In direct reply to Pfeifer & Langen's dealers in Germany makes it quite arguments, the Commission makes the impossible for Pfeifer & Langen, which following submission: only has a small number of agents, to keep imports out of the German market. The fact that undertakings act as trade representatives for Pfeifer & Langen and (2) Summary of the statement of defence as regional agents for WZV is only explained by a cartel to which members The Commission begins with its findings of WZV belong, pursuant to which the relating to the organization of sugar distribution of all the sugar produced in distribution in Germany. In this the western part of the Federal Republic connexion it makes the following has been entrusted by all the members observations: exclusively to the said undertakings.

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This is also the position with regard to possible to understand what kind of the contracts in this case. The before operator the Commission had in mind if mentioned undertakings are not agents it is remembered that it did not

integrated in Pfeifer & Langen's sales recognize as a trade representative a party organization but are large firms which, in to a contract who has undertaken to addition to the transactions carried out maintain a warehouse, provide an for Pfeifer & Langen and WZV, do a important service or fix prices applicable large amount of business on their own in commercial transactions. The dealers account. Therefore they can be clearly in question in this case do not distinguished from the normal trade correspond at all to the kind of operators representative, who has to comply with referred to in the said communication; instructions covering the whole extent of their economic position is similar to that his operations and acts exclusively in the of an independent dealer. Their turnover name and for the account of his is very large; they carry out a large employer. Pfeifer & Langen took account number of important transactions on of this situation, by giving its agents their own account, including the supply authority to act as commission agents for of sugar for denaturing or for export to other sugar manufacturers as well as third countries and also the sale of other WZV. products.

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It is incorrect to claim that Pfeifer & Langen Even if these contracts are considered and WZV used the same undertakings to separately, they do not come within sell their products. Pfeifer & Langen Article 85. The classification of the gives the names of the various firms with contractual relations between Pfeifer & which it entered into representation Langen and its agents is a legal question agreements, of certain undertakings with which must be answered under German which it cooperated without entering law, before it is possible to decide into any firm agreement, and of WZV's whether Article 85 applies. This decision regional commission agents; it emerges cannot be determined solely on the facts. that there is overlapping of territories in A producer can use either independent only three cases. The decision nowhere dealers, commission agents, or trade confirms the existence of an agreement representatives for the organization of his between Pfeifer & Langen and WZV to

It which carry out a 'large' number of supposes that the parties concerned transactions, for their own account and wanted to benefit from these agent's are different from 'normal' trade knowledge of the markets. representatives. The question arises what is the figure for turnover above which a In any case there can be no question of firm must be regarded as 'large'. an appreciable restriction of competition.

Pfeifer & Langen never witheld its which have arisen in these proceedings consent to requests by its representatives (large commercial undertakings, which to act for a third party or to carry out also carry on business, to a great extent as transactions such as exporting, which independent dealers and work partly as were extraneous to the relations between commission agents or trade re itself and its representatives. The same presentatives for the organ of the cartel applies to WZV. of which the principal is a member and also for the other members of this cartel). (4) Summary of the rejoinder In order to ascertain, for the purpose of The Commission recalls what the applying Article 85, whether an decision says about the connexion undertaking acting as a trade between the concerted practice for the representative for a specific principal, is protection of the market of West 'large' and does a 'large amount of Germany, on the one hand, and the business' on its own account, the disputed contracts, on the other hand. turnover figure is irrelevant; all that Experience showed that concerted needs to be known is whether the re actions between producers intended to presentative is or is not integrated in the partition the markets are ineffective if principal's firm as an auxiliary organ. steps are not taken to ensure that they

Pfeifer & Langen undertaking for a half clear that the Commission presumed day's work thus leading a 'double life'. there was an agreement between WZV and its members. Pfeifer & Langen It does not matter whether the applicant cannot claim that they did not know why entered into the contracts in question in WZV and 'third undertakings' — in fact 1948; it is sufficient to bear in mind that the other members of WZV — entered the latter contracts were in force during into contracts with the applicant's agents, the period from 1968 to 1972. as the latter is the largest member of WZV and as its agents must obtain its The fact that a contract has to be consent before they can act for other regarded, in the light of the national law producers. governing its provisions, as a trade representatives contract does not mean The statement that, if there was any that it ipso facto falls outside the field of restriction of competition it had no application of Article 85. appreciable effects, is vague, as Pfeifer & Langen never refused to give its consent The Communication of 24 December to transactions being effected by its 1962, which makes the function actually agents with third parties.

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therefore did not conclude any its arguments is justified (cf. B (a) 2. transactions with third parties. If, on the below). other hand, Pfeifer & Langen means to say that it never refused any requests for to (bb) The Commission refers to its submissions on the substance of the case its consent, it would be advisable for it to indicate how many requests of this type (B (a) 2. below). were made and which foreign producers they concerned. (c) Summary of the replies

Générale sucrière states that even if the 9. The complaint that RT, Say, Béghin, explanations supplied in the statement of Générale sucrièrе et Sucres et Denrées defence are in fact true they have been engaged in a concerted practice in delivered too late and cannot therefore connexion with the invitations to cure the defect in the statement of the tender for export refunds grounds upon which the decision is based which makes the decision unlawful. For the remaining observations A — A single formal and procedural of Générale sucrière and Sucres et submission Denrées, cf. B (a) 3. below. Générale sucrière et Sucres et Denrées, one submission: B — Submissions on the substance of Infringement of Article 190 of the the case Treaty (a) RT, Say, Béghin, Générale sucrière et (a) Summary of the applications Sucres et Denrées:

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Sucres et Denrées maintained at a level enabling this price admits 'that at certain invitations to to be obtained, which moreover is the tender it could be foreseen that a objective of Community regulations. particular undertaking would tender for a particular quantity'. Générale sucrière and Sucres et Denrées deduce from a detailed analysis of (bb) All the applicants submit that the Community regulations: practices to which exception is taken did not have the effect inside the — that the system of levies and refunds eliminates the operation of the law of Community specified in Article 85 of the supply and demand and brings about Treaty. a sharply defined separation of the All the applicants object to the world and the Community markets; importance attached by the Commission — that the purpose of the refunds is to to the fact that the invitations to tender promote exports and that the aim of 'allow the export of sugar produced the measures adopted by the Council inside the Community' (decision, p. 42, is to guarantee their effective Lt.

third countries; question affects the functioning of the — that Article 5 (1) of Regulation No intra-Community market. 839/68 limits the scope of competition between the bidders by All the applicants criticize the Com providing that 'the award shall be mission's statements (loc. cit.) relating to made to any bidder whose tender the effect of the alleged concerted action does not exceed the maximum on the amounts of sugar sold by each of amount of the refund'. the parties concerned on the domestic

be offset. On several occasions it even specific quantity of sugar on the refused to make an award on the ground world market'.

— According to Say and Béghin the market or on the basis of this price exports in these proceedings had no — or in relation to the prices applied influence on the amounts sold on the on the common market. It emerges home market as it had a sugar from Article 17 of Regulation No surplus. The effect of any restriction 1009/67 that the export fund could at of exports was the disposal of more most have brought about an sugar to the intervention agencies alignment of the export price on the which, because the domestic market Community price. had reached saturation point, had to export the amounts which they Moreover the fund granted to Générale

Community territory. The alleged period of time. However in this case concerted action could not change there was no such agreement or the total amount referred to above, as concerted action. If, when there was an the amounts to be exported were invitation to tender, it was decided in fixed by the Commission. advance that a certain undertaking would — According to Générale sucrière the tender for a specific amount, that amount Commission proceeded on the basis was freely determined by the under of the view that the conduct to which taking, according to the contracts for sale exception is taken allowed an into which it had entered previously.

To the extent to organization of the market in sugar. which the Commission wishes to say that The export price obtained thanks to there was a change in the patterns of the export fund in question was not trade between Member States by reason abnormal, either in relation to the of a kind of agreement to substitute world market — where the sugar tenderers, it disregards, on the one hand, which was exported was of necessity the fact that although producers sold at the price prevailing on this conferred together at each adjudication to

— Sucres et Denrées argues on partly Say and Béghin emphasize that their similar lines. Apart from the fact that conduct could have no effect on prices fixing an abnormally high export price within the Community. In fact, these did not entail any restriction of prices were always below the target price, competition within the Community the and the prices obtained on the world export prices obtained were not market were below the intervention abnormal. These prices tend inevitably to price, and, therefore, the prices applied align themselves on the prices applied on in the Community. the world market. As the Commission has the right to fix the maximum All the applicants dispute the finding amount of the refund, any concerted that the powers conferred on the action relating to the fund could not Commission by Community regulations produce unduly high prices. are not sufficiently wide to 'alter the conclusion that the concerted action No reduction of supply within the described above may affect trade between common market capable of restricting Member States' (decision, p. 42, Rt. Col.). competition has been found to exist. In fact these powers, of which it made considerable use, give it complete control The concerted action did not have as of exports. They allow it in particular its object or effect an appreciable to determine the frequency of the modification of the patterns of supply invitations to tender, fix the maximum of the producers concerned. The amount subject to the tendering Commission has not showed that the procedures as well as the maximum amounts exported to third countries amount of the export fund and could be marketed on the territory of the discontinue an invitation to tender. It common market was thereby able to prevent the volume of exports from disturbing competition When the Commission states that on the common market and affecting 'according to the results of the invitations inter-Community trade. to tender, certain producers rather than others have to sell surplus amounts Sucres et Denrées adds that, although it is in the other Member States of the true that the Commission has to exercise Community', it is not referring to a its powers on the basis of the tenders scarcity of supplies on the common which it has received, it should also take

(cc) RT states that Article 85 is also The Commission produces a series of inapplicable because it only refers to the documents which show that the market for the product and not to the applicants conferred together in 1970 at 'market' for export licences. the time of the invitations to tender concerning the amount of the export (dd) Say, Générale sucrière and Sucres refunds for which application had been et Denrées submit that, in contrast to made and also the amounts tendered, what is stated in the decision (p. 42, Rt. within the framework of what Export's Col.), without, it must be added, any internal memoranda calls 'the Paris justification, there is no connexion consortium' or again 'the Paris concerted between the practices which are the action': subject-matter of this complaint and the complaints relating to the protection of — In a telex message to Export of 23 certain national markets. Sucres et July 1970, RT refers to 'our efforts', the Denrées also emphasizes that, since it is main object of which is the 'abolition of an independent dealer, it does not carry competition for refunds so that each on any domestic business, so that it producer will be guaranteed at least the cannot be said to have endeavoured to intervention price' and, 'consequently protect national markets. abolition of the struggle to sell amounts on the domestic market were the price is (2) Summary of the statements of more certain rather than having to export defence (this applies particularly to France)'.

members shall tender, any necessary The parties concerned therefore sub reconciliation of the tenders submitted stituted conscious cooperation for the taking place during multilateral risks of competition, whereas a system of discussions. This 'concerted action' is invitations to tender is pre-eminently the invoked and explained also in Export's place where it must be possible to note of 26 March and 21 May 1970 and generate competition. in the minutes of the decisions taken by This concerted action restricted com Export's Managing Board on 17 February 1970. petition within the common market.

. .'. were to be exported to third countries in order to avoid depressing the level of — A telex message from Export to RT domestic prices. The Commission of 19 August 1970 speaks of the policy to therefore has not traced the restrictive be adopted for exports to the effect solely to the fact that the sugar in Netherlands and Italy before continuing question was produced inside the as follows: 'Refund: taking into account common market, but in particular to the our participation in the points above, and fact that the concerted action withdrew in principle, whatever may be the quantities of sugar from free competition formula drawn up in Paris, we advocate within this market. that Export and RT actually work together in connexion with third Even if, contrary to what the countries and this cooperation must Commission thinks, the effects of the normally result in a concerted action on concerted practice were not immediately the level of refunds, account being taken unfavourable, it could call in question of the manufacturers' policy'. the normal trend of trade between Members States. These documents show the link between, on the one part, the concerted action The Commission then makes replies relating to the amount of the refunds and individually to the applicants' arguments. also to the amounts tendered at thé invitations to tender and, on the other to (aa) By submitting that the aim of hand, the concerted actions to which the the concerted action was to ensure that participating undertakings engaged with undertakings would at least obtain the the object of partitioning national mar intervention price (RT), that the

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Sucres et Denrées forementioned documents and, in particular, by Export's note of 17 The decision did not blame the February and 21 May 1970, where these applicants for applying abnormal export undertakings are expressly mentioned, prices but for having prevented pricing Sucres et Denrées sometimes in the from being established freely. With person of Mr Varsano. regard to the statement that the course of to (bb) Replying to all the applicants conduct to which exception is taken, did the commission states that if, in earlier not make sugar scarce within the decisions' relating to restrictions on Community it must be pointed out that competitions relating to exports, it found there was a large demand in other countries of the common market. that these restrictions were not likely to affect trade between Member States, this finding was always based on the facts in With figures in support the Commission the particular case of which it had argues that the sum of the maximum knowledge.

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Within the framework of this general cartel provision was made for Générale sucrière, Say and Béghin add specific quantities to be exported to third that the Commission has the power: countries in order to prevent excess — to refuse to accept all tenders if it is supply causing prices to drop within the of the opinion that even the lowest Community. Moreover the total volume tender is not satisfactory; of exports to third countries and the — to limit exports, by fixing a amount of the surpluses followed a maximum figure, to an amount

April 1973, the Commission states that 'in practice the refunds determined by Générale sucrière (and — using identical periodic fixing are fixed systematically at language — Say and Béghin) as well as a level which is clearly lower than the Sucres et Denrées submit that it emerges refunds resulting from invitations to from Article 4 of Regulation No 766/68 tender in order to allow the Community that although the tenders received serve authorities to excercise continuous as a 'basis' for determining the maximum supervision over sugar exports'.

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As each marketing year the amount of the the export prices obtained by the stocks which shall be available on the applicants never exceeded the in common market at the end of the tervention prices, there was under marketing year, thereby determining in Community regulations no advantage at great measure the total volume of the all to be derived from a general surpluses intended in particular for concerted action for the purpose of export. fixing the amounts to be exported. On the other hand producers were forced to Générale sucrière, Say and Béghin are of engage in a concerted action in order to the opinion that the reason why the meet the requirements of their foreign Commission did not use its powers in markets at each invitation to tender, 1970, is that it thought that neither the without the applicants' freedom of action quantities offered for export, nor the being restricted either in the common prices obtained by producers, were likely market or on the world market. to endanger effective competition within the common market. Moreover if the Sucres et Denrées takes the view that the powers conferred on an authority are Commission has neither shown that the sufficient to prevent any effective amount alleged to have been withdrawn concerted action, there cannot in law be from the intra-Community market could a concerted action deserving censure. have been sold there, nor that, even on this purely theoretical assumption, the RT calls attention to the fact that it is of intra-Community market would have little moment to know whether the operated in a different way.

This fact, practices in question had the effect particularly if it considered in the light of referred to in Article 85, the applicants the fact that during the marketing year make the following submission: covered by the proceedings, a certain amount of sugar could be denatured on Générale sucrière, Say and Béghin reply the initiative of the Community to the statement, that the parties authorities, removes all foundation from

the Commission's argument In addition Générale sucrière, Say and Béghin the Commission has admitted that, criticize the Commission's figures on the during the marketing year under ground that they do not take certain consideration, the Italian market was costs into account. Further they call supplied in a perfectly satisfactory way. attention to the fact that the complaint that they obtained a price which was not RT submits that the argument, that the arrived at by free market forces cannot be concerted action in question had an made against either the world market effect on the amounts to be sold within price — and it has never been suggested the Community, comes up' against the that this price is arrived at otherwise than fact that the objective of the parties by competition — or the amount of the concerned was, not to increase the refund which cannot from the nature of volume of exports but to obtain the things be arrived at 'freely'.

this statement is wrong. The table Community law. produced by the Commission in support of its statement sometimes takes the Sucres et Denrées submits that the 'Paris price' and sometimes the futures complaint that it applied an export price price as the intra-Community reference which was not fixed by free market price according to the requirements of forces is neither relevant nor well- the case. Further it gives a false idea of founded. On the one hand the Com export costs; they amount to 7 % mission has not shown that any obstacle whereas, according to the figures to the free determination of this price produced by the Commission, the could have any effect on the exporter is left on average with 2-38 % to intra-Community trade.

In these circumstances no cost of packing, transport and shipment complaint can be made against Sucres et RT produces a note from Export which Denrées, for the very good reason that it in its opinion makes good these could not obtain a price above the omissions. intervention price. It is no good

objecting that the machinery of the did not produce the effects referred to in invitations to tender was designed for the Article 85; at least, the effects on the case where it is possible to export with a intra-Community market were neither refund lower than that which results appreciable nor prejudicial. Tenderers from the preceding considerations. This can only interchange to a limited extent, argument only applies to those since sugars exported to third countries, invitations to tender which are described because they are geographically located as special and which in fact have never near to ports, cannot be replaced by taken place; further the Commission has others. not shown that Sucres et Denrées was in a position to export with a refund lower Générale sucrière, Say and Béghin do than that which was awarded. not deny that the effect of each invitation to tender, treated separately, could be the With regard to the alleged opportunities replacement of tenderers. But this effect for exporters to 'speculate' on prices it must be borne in mind that in could not be found to exist throughout

the following observations. between undertakings, such as those Sucres et Denrées state that even if in fact revealed by the documents produced for tenderers took each other's places, that the Court file by the Commission, are

customary on the sugar market 'where acknowledged that apart from these business has always been transacted in concerted actions, there was 'lively public and gives rise to publicity through competition to obtain refunds', between circulars from the exporting companies undertakings. The Commission quotes and above all through telegrams from the example of a decision taken by a specialist agencies'. Such an exchange of French authority according to which a information does not adversely affect 'concerted action relating to the tenders undertakings' freedom of action; it does at an invitation to tender was considered not in itself deserve censure. On the as a restriction on competition. other hand, the fact that Sucres et Denrées is an international dealer and The argument that if the amounts of knows the markets of third countries sugar in question were not exported to explains why it was consulted. third countries they could be offered to intervention agencies which could only RT points out that according to the sell them inside the common market at a Commission's statement, the concerted price at least equal to intervention price, action relating to exports to third is no answer to the Commission's countries was restricted to the year 1970, finding that the concerted action served whereas the concerted action relating to to relieve the intra-Community market the internal markets continued beyond and prevent any pressure on the this year; for this reason the alleged link domestic price level.

The exceeding the maximum amount fixed German and American legislative by the Commission. The concerted systems, in particular, apply the rules on action between the applicants before the competition to export cartels, taking into submission of tenders concerning the account their effect on the domestic amounts and the amount of the refunds market. Sucres et Denrées' reply misses restricted competition precisely at the the point of the Commission's argument point where there should be competition when it states that 'exports cannot have between producers, so that the as their effect the alteration of intra- Commission could no longer come to a Community market conditions'. decision with full knowledge of all the circumstances on the basis of objective The argument based on meeting the

SUIKER UNIE AND OTHERS v COMMISSION

definite period. In this connexion the shipment are only incurred in the case of Commission calles attention to a double transport by boat and these costs are not contradiction which the applicant's incurred in the case of sales to arguments bring to light: first the claim Switzerland. By way of example the that they had commitments outside the Commission produces a contract entered Community is inconsistent with the into by Export on 8 April 1970. In its argument that it was in the interests of reply to all the applicants the producers to sell their surpluses to the Commission adds that the undertakings intervention agency rather than to export have a period of several months during them to third countries in consideration which they can export sugar so that they of a return which 'never reached the could therefore speculate by waiting for intervention price level. Finally the latter the moment when the world price was argument is inconsistent with the most favourable. In its reply to RT the economic interests of producers to Commission refers by way of example to export, which is shown by the large the beforementioned contract in which amount of sugar exported. the time for delivery was fixed at 'April/August 1970, at the option of the So far as the export price level is purchaser. concerned the Commission's reply to Sucres et Denrées is that there can be no Finally, the applicants fail to understand question of 'new positions' taken up by the function of the intervention price the Commission, simply because some which is only 'guaranteed' to the extent only of the facts mentioned in the to which the goods are offered to the notification of objections were used in intervention organs. A wider 'guarantee' connexion with this point in the cannot be inferred from the fifth recital decision. and Article 3 of Regulation No 766/68.

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Similarly whether tenderers in fact change places with Infringement of Article 190 of the each other — a criterion which the Treaty Commission has not followed — is of no importance because it is sufficient that (1) Summary of the applications such an interchange may arise. Finally Sucres et Denrées cannot rely on the The beforementioned applicants submit allegedly very small volume of the that the decision, in so far as its amounts of sugar concerned, because the considerations justifying the principles invitations to tender for exports covered, upon which fines are based and their in 1970, 133 000 metric tons of white amount (page 43 et seq.) are concerned, is sugar and 60 000 metric tons of raw defective because of the inadequacy or sugar, almost all of which came from contradictory nature of the grounds upon France or Belgium. which it is based. Some applicants claim in a general way that the imposition of (b) RT, Say and Générale sucrière: such big fines should be accompanied by Infringement of Regulation No 26 a very carefully prepared statement of the reasons upon which they are based.

Générale sucrière, Say and Pfeifer & Langen take the particular view that the Commission should have stated the exact 10. The fines degree of blame which it found to exist. The aim of these submissions is to show, SU also states that the Commission failed either that Article 3 of the Decision to show whether the disputed contracts should be annulled even if the Court had as their 'object' or only as their finds that the alleged infringements have 'effect' the restriction of competition, been committed or that the amounts of which is an important matter since in the fines should be reduced. In addition the latter case negligence is the to the submissions summarized below, exception. The Commission should have

should either have imposed the fines sentence 'With regard to the duration of separately in respect of each in­ the infringements, it must be stated that fringement or at least indicated the in general they cover serveral years' (loc. factors relating to each infringement cit.), is inconsistent with Article 1 (3) of the decision which states that the which led to the fixing of the whole amount of the fine. practices relating to the invitations to tender for export refunds only took place in 1970. (cc) Générale sucrière, Say, Béghin and Pfeifer & Langen blame the Com­ (ii) Industria degli zuccheri calls mission for having failed, when it fixed attention to the fact that the decision the amounts of the fines, to state in itself states (loc. cit.), that 'it must be detail and evaluate how seriously each of borne in mind that the production of the undertakings concerned participated and trade in sugar were regulated up to in the concerted actions compared with 30 June 1968 by national market their co-participators. organizations, which even provided for sales territories for marketing of sugar, (dd) Pfeifer & Langen states that by basing the seriousness of the in­ this explains 'a tendency to stick to old fringements solely upon the fact that practices and a slowness to adapt to and they 'were drastic and are clearly contrary take advantage of the opportunities that to the objective of integrating the the Community organization of the sugar markets envisaged in the Treaty' market has openend up for free (decision, p. 44, Lt. Col.) the Commission intra-Community trade'. This finding — which is correct — is inconsistent with made a finding and not a statement of the reasons upon which the fines were the large amount of the fine. Further it is difficult to reconcile it with the fact that based. the duration of the infringements is (ee) According to Sucres et Denrées the treated in the decision (loc. cit.) as an Commission should have accounted for aggravating circumstance; in fact a three the fact that this undertaking does not year period for adapting to the control any part of the European Community organization cannot be markets. regarded as a long period.

The infringements in fact covered several In reply to Pfeifer & Langen the years except in the case of the concerted Commission states that, if the general action relating to the invitations to finding of the decision is that the tender for export refunds, which the undertaking concerned committed the Commission found to have existed in infringements intentionally or, at least, 1970 only. negligently, the eason for this that the undertakings concerned have not all to (1) (ii) been found guilty of an intentional infringement Pfeifer & Langen, however, The decision expressly indicated that the carried out intentionally the practices common organization of the market in proved against it; this finding must sugar promoted competition by opening therefore be applied to the infringement national frontiers. The practice, to which as a whole. exception is taken, was likely to prevent the market from adapting itself, even to (1) (bb) to (ff) slowly, to the requirements of the said organization. The decision sets out exhaustively the factors taken into account to determine (3) Summary of replies exactly how serious was the conduct of each of the respective undertakings to (1) (aa) concerned. So far as the Italian market in particular is concerned, it showed that Pfeifer & Langen replies that by stating there were opportunities for competition now that this company was one of the there. With special reference to Sucres et companies which intended to act as it Denrées it called attention to the decisive did, it is attempting to justify a role played by this company in the posteriori. The Commission's statement concerted action concerning this market. makes clear once more the weakness of the procedure adopted by the Since each applicant therefore was aware Commission of making a collective of all the factors taken into consideration decision covering a large number of for fixing the fine imposed upon it, the undertakings.

The Commission replies as follows: (b) SZAG and SZV: Infringement of Articles 15 (2) and to (1) (aa) 18 of Regulation No 17 and of the rules governing the juridisdiction of the Court In reply to Pfeifer & Langen the Com­ mission says that the finding that Pfeifer & Langen intentionally committed the (1) Summary of the applications infringements found to exist against it SZAG and SZV take the view that the can automatically be inferred from the fact that the Commission did not reasons stated in the decision why the apportion the fine between the various Commission blamed Pfeifer & Langen infringements which it found to have for having committed these in­ existed (cf. (a) (1) (bb) above), is an fringements. Moreover Article 15 of infringement of Article 15 (2), of Regulation No 17 does not draw any Regulation No 17, a provision which distinction between infringements uses the expression 'infringement' in the committed intentionally and negligently. singular. Further if the Court, having held that only part of the infringements to (1) (bb) to (ff) alleged have been established, were to consider that it must annul part of the In reply to Générale sucrière, Say, Béghin fine, it would have to decide the amount and Sucres et Denrées, the Commission which must be retained; however, such says that the applicants were aware of all a decision would not amount to a the facts upon which the Commission reduction of the fine but to its relied for the рurpose of determining the determination, ab initio, which is not amount of the fines. The Commission within its jurisdiction. had the right to punish by a single fine the participation of the applicants in Articles 15 (2) and 18 of Regulation No several concerted actions having sub- 17 only refer to units of account; the

The Commission states that according to So far as the practices relating to the case-law of the Court it has the right the Italian market (cf. 1 above) are to punish with a single fine one concerned, Générale sucrière, Say and undertaking's participation in several Béghin submit that, having regard to the infringements having the same objective. national regulations applicable to this market, it could never have occurred to So far as SZV in particular is concerned them that the distribution of the orders, this company's infringements were evaluated in relation to the concerted which was suggested to them, might in practice which had as its effect the fact restrict competition. The good faith protection of the market of south of the undertakings concerned is also Germany (cf. p. 45 of the decision); it is illustrated by the moderate prices impossible to split up the practices obtained from their sales, in Italy. engaged in by this company which SZAG submits that it had no means of deserve censure into separate trans­ actions. knowing that the Commission would regard deliveries between producers, The unit of account is not a currency and which had been customary in Germany the fine must be paid in national long before the entry into force of currency. The Commission has hitherto Community agricultural regulations and always allowed undertakings to pay fines in other branches of trade for decades, as in one of the currencies of the Member concerted practices. States. But it has to ensure that the decisions imposing fines may if Industria degli zuccheri states that the necessary be enforced. That is why the undertakings concerned, which were fines are also determined in national working towards legitimate aims, did not currency. Moreover the advantage of this intend that their transactions should have solution is that all the undertakings upon the effects which the Commission which findes have been imposed are considers were caused by the practices to treated in the same way, in that they which exception is taken. have to pay in national currency the equivalent value of the unit of account at So far as the practices relating to the the date when the decision was adopted. Netherlands market are concerned (cf. 2 above), SU states that it made the B — Submissions on the substance of disputed purchases in order to make the case good a deficit in sugar, so that these transactions could not possibly have had (a) Eridania, Industria degli zuccheri, as their object but at most as their effect Sucres et Denrées, Béghin, Say, restriction of competition and such an

effect would moreover have been against customary in trade representatives the wishes of the company. The contracts and were acknowledged to be Netherlands text of the decision (p. 43, admissible in the communication of 24 Rt Col.) moroever states that the December 1962. interested parties acted 'opzettelijk of althans uit grove nalatigheid' ('inten With regard to the loyalty rebates, SZV tionally or at least with gross never linked then with intra-Community negligence'), so that the fine cannot be trade. When the company learnt that upheld if the Court has to find that there they were being investigated by the was no such gross negligence; the Commission, it asked for and obtained Commission has not found that SU acted an interview with the Commission's 'onachtzaamheid' ('negligendy'). representatives which took place on 29 May 1972 and during which the latter CSM states that it had reason to believe did not indicate that they had any that its commercial course of conduct is objections to make against them. normal and economically justified.

interests. Sucres et Denrées state that, taking into account the context in which sugar is So far as the practices relating to the exported — namely through institutions markets of the western and southern — and the Commission's supervisory parts of Germany are concerned and the powers in this field, it could never have economic pressure alleged to have been occurred to them that the concerted brought to bear upon Netherlands action to which exception is taken could importers is concerned (cf. 3, 4 and 6 have the effect of eliminating above), reference is made to the competition within the Community. arguments of Pfeifer & Langen, SZAG, Furthermore it was the intention of the SU and CSM repeated above. undertakings to attain the objectives fixed by Community regulations.

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from notification must be treated in the in absolute terms but in relation to other same way as agreements which have to Italian sugar undertakings, as the be and have in fact been notified. As decision itself admits (p. 19, Rt. Col.). provided for in Article 4 (2) subparagraph (1) of Regulation No 17 the disputed (bbb) Générale sucrière, Say and contracts were exempted from Béghin take the view that the statement notification, since they 'do not relate that the serious nature of the practices to either to imports or to exports between which exception is taken is due to the Member States'. fact that 'the effect of every such practice is to reduce to the minimum the

SUIKER UNIE AND OTHERS v COMMISSION

Even if SU did not intend to restrict adopted by SZV. There is no implication that the acts amounting to an competition the fact that an undertaking infringement of Article 86 are acts which operating on such a large scale was not are also illegal under another provision, aware of the restrictive effect of such a in this case Article 85. It is not important course of conduct as the one in question therefore to know whether the said amounts to gross negligence. contracts had to be notified or not. Similarly SZV fails to understand that The Commission's reply to CSM is that, the contracts entered into with the having regard to the nature of the purchasers and containing a clause practices in question, it is reasonable relating to the loyalty rebate were not to hold that the company could not evaluated under Article 85 but under 86; be unaware that it countinually measures amounting to an abuse of a endeavoured, with the help of non dominant position do not have to be and competitive means, to restrict the cannot be notified. potential competition of imports from other Member States.

JUDGMENT OF 16. 12. 1975 — JOINED CASES 40 TO 48, 50, 54 TO 56, 111, 113 AND 114/73

SUIKER UNIE AND OTHERS v COMMISSION

wrong. According to the case-law of the Béghin, surrounded by well informed Court an agreement which, considered legal advisers, could be blind to the fact as a separate agreement, does not that competition is assumed to be a contravene Article 85, could nevertheless fundamental condition of the common be prohibited if it forms part of an actual organization of the market in sugar. So system of agreements which restricts far as the Italian market is concerned, the competition appreciably. According to evidence of the concerted action and of this case-law agreements forming part of its restrictive nature justifies in itself the a system and the system as such can be rejection of their argument; nor, with notified by completing the simplified regard to the invitations to tender for form for a notification of a standard form import quotas, have the applicants been of agreement (cf. Regulation No 27 of able to shut their eyes to the fact that the the Commission, of 3 May 1962, OJ concerted action restricted competition p. 1118, and the forms annexed thereto). just at the point where it should have been exerting its influence. Comparable considerations apply so far as the contracts providing for a loyalty In reply to Pfeifer & Langen, the rebate are concerned. Contracts can Commission refers to the passage in the always be notified however they are decision (p. 43, Rt Col.) which states that interpreted under substantive law. If SZV 'the measures taken by the various had notified the said contracts, the undertakings concerned with regard to provisions of Regualtion No 17 would their agents.

JUDGMENT OF 16. 12. 1975 — JOINED CASES 40 TO 48, 50, 54 TO 56, 111, 113 AND 114/73

fact that Article 85 prohibits concerted impose a fine or to determine the practices even if they only have as their amount thereof it treated them more effect the partitioning of the markets. severely than other undertakings in a The acts to which exception is taken, by similar situation: their very nature, could only have been (aaa) Générale sucrière, Say, Béghin, RT carried out intentionally. Confronted and CSM call attention to the fact that with transactions between producers who the fines imposed in previous cases were are potential competitors, which took, for much lower. RT and CSM add that, in example, the form of sacks bearing the name SU, which the latter had sent in those cases, the infringements were more serious than those which were found to advance to RT, being filled by RT, exist in this case. it is difficult to accept that there was no intention to eliminate (bbb) Certain applicants draw com­ competition. SU knew that RT's sugar parisons between the way in which the enabled it to meet a demand which Commission treated other sugar would otherwise have been met by other undertakings, and in particular Sucre- suppliers. — The evaluation of SU's Union which was not fined. conduct, as described in the decision, is — SZAG states that so far as its supplies not in any way a new departure. In fact to Italy are concerned it played the the fine does not punish the purchase of part of an outsider. sugar as such but the change for the — Industria degli zuccheri emphasizes worse of the pattern of supply on the that the Commission only made one Netherlands market which, in this case, complaint against Italian producers is indissolubly linked to this purchase. and did not blame them for infringing Article 86 of the Treaty. to (1) (bb) — Eridania criticizes the Commission

SUIKER UNIE AND OTHERS v COMMISSION

The Commission were justified by the fact that at that time should have taken this factor into RT, being out of stocks, had itself to account when it fixed the amount of the import sugar from the Netherlands. fine. It is true that the Court has already rejected this argument; such a view (ccc) Sucres et Denrées submits that however only appears to be justified if there was not much interference with the fines are low which they are not in competition. Further, so far as sales in

However, an attempt, which was the fine can only be fixed according to moreover abortive, cannot be punished; the profits made out of the unlawful at least the fine should be reduced, as the behaviour. SU adds that this link stems concerted action has not had any serious from the connexion established by consequences. Article 15 of Regulation No 17 between the turnover of an undertaking and the (cc) Certain applicants state that the amount of the fine. Sucres et Denrées also fine bears no relation to their economic argues that Italian consumers actually position. benefited from the practices to which exception is taken, because its operations (aaa) Volano bases its argument on the enable freight rates to be reduced and fact that it is only a small undertaking

which was faced with difficulties during responsible for the practices relating the whole of the period covered by the to the Italian market; similarly, the decision. Commission is responsible for the practices relating to the export (bbb) Sucres et Denrées calls attention refunds, because it tampered with the to the fact that it is not a producer and machinery for granting these refunds. that, having regard to its share of the — Cavarzere requests the Court to market, the fine is unjustified. consider also the 'particular circumstances in which the Italian (ccc) SADAM states that it only market operates'. Industria degli controls a very small part of the Italian zuccheri states that, if there had not market and is not therefore able to been an Italian regulation, the acts to restrict competition. which exception is taken would not have taken place. (ddd) Similarly, Cavarzere submits that — CSM submits that Community it is a small undertaking compared to the regulations did not aim at promoting majority of Italian producers. as lively competition as possible and increasing trade between Member (eee) CSM takes the view that the fine States to the maximum possible is excessive if account is taken of its extent. share of the market and of the comparative influence it exerts on the (bbb) RT states that its conduct was Netherlands market prompted by the size of its surpluses and the absence of any commercial (fff) Pfeifer & Langen is of the opinion organization abroad. that the finding that this company 'because of its production and influence (ee) RT and Eridania, with reference to within WZV is the largest undertaking in Article 15 (2) of Regulation No 17, the western part of Germany' (decision, submit observations on the way in which p. 45, Lt Col.) gives a false impression of the turnover of the undertakings the actual size of this company. concerned should be calculated for the purpose of determining the fine. (dd) Several applicants regard the institutional or economic circumstances RT states that the Commission can only surrounding these acts which are critized base its argument on the volume of the as amounting at least to attenuating disputed transactions; there is therefore a circumstances. case for excluding from sales by this company those relating to raw sugar or (aaa) RT, Sucres et Denrées, Cavarzere, effected on the Belgian and Italian Industria degli zuccheri and CSM markets and also on the markets of third submit that these acts, which are countries. criticized should be considered in the light of the scope and effect of Eridania submits that, to the extent to Community regulations and, if need be, which the Commission determined the national regulations. fine with reference to the turnover of this — RT and Sucres et Denrées argue that company, it should take account of: under the interventionist system, — a senes of heavy tax burdens imposed which both the Community and Italy upon Italian undertakings, but not, or have adopted, there is very little only on a smaller scale, upon other competition left which can be Member States; restricted. — the fact that the turnover of the said Sucres et Denrées adds that the undertakings is artifically inflated by Commission and Italy are jointly the 'sovraprezzo';

— the fact that Eridania also carries out fines, which are for the most part well operations in sectors other than the within the maximum amounts sugar sector and that in this case such authorized by Article 15 of Regulation operations cannot be taken into No 17. In particular: consideration. — the fines imposed on Générale sucrière, Say and Béghin are in each (ff) RT, Industria degli zuccheri and case less than 1 % of the turnover of SZV state that the Commission could the company concerned; the fine have attained the objective sought by the imposed upon RT is only 2 % of the decision by adopting less drastic turnover; methods: — the fines imposed on Générale sucrière, Say and Béghin were fixed RT submits that before the Com­ at amounts, which are much lower munication the Commission never once than the fine imposed on RT; the sent it any warning, although it asked it Commission thus took account of the — without success — for an interview fact that the responsibility of the first with the object of obtaining the three companies was not so great and, Commission's policy directives. so far as Générale sucrière is concerned, that this company also Industria degli zuccheri takes the view exported sugar to Italy for that the Commission could merely have independent purchasers; ordered that the practices to which — the fine imposed on CSM would exception is taken should be probably have been even higher if the discontinued and that fines would be Commission had taken into account imposed in case of non-compliance with the damage caused by this under­ such an order. taking to consumers; — the fine imposed upon RT was fixed SZV calls attention to the fact that, even with reference to this company's before the adoption of the decision, it heavy responsibility in the had definitely decided not to continue to implementation of the practices to grant loyalty rebates. which exception is taken throughout the entire territory of the common (gg) RT requests the Court to order market, to the economic importance production of the minutes of the of the firm and the dominant meeting of the Advisory Committee position which it has in a substantial referred to in Article 10 of Regulation part of the common market. No 17 with the object of ascertaining whether this committee was consulted on to (1) (αα) (bbb) the amount of the fine and what opinion it gave in this connexion. The Commission's reply to SZAG is that its infringement is particularly serious (2) Summary of the statements of since it prevented the free movement of defence goods within the common market With regard to Sucre-Union's conduct, it was to (1) (aa) (aaa) evaluated as a whole; in its commercial operations in Italy and the Netherlands The Commission replies that it imposed this undertaking acted to some extent the first fines in July 1969. In the independently. meantime the moment had come to make it clear that it intended henceforth The Commission's reply to Industria to punish infringements of the rules of degli zuccheri is that it had to take into competition severely. Nevertheless, in account the seriousness of this these proceedings, it only fixed moderate company's infringement, which is due to

the fact that the customer attaches tendering — except in the case of one special importance to sugar and that the tender — the same proportions of the said infringement impeded the 'sovraprezzo' as those of the other attainment of one of the fundamental undertakings of the said group. Its award objectives of the Treaty and caused was about 5 % of the total amount damage to consumers, in particular by awarded to the members of the group. cutting down their freedom of choice. The fine which was imposed upon it is The fine imposed upon Industria degli less than 1 % of its turnover. zuccheri is less than 1 % of its turnover. The Commision's reply to RT and Sucres The Commission's reply to SU is that the et Denrées is that the decision puts in partial effect of the questionable dealings perspective the argument that these of this company was to maintain for no companies did not obtain the good reason the price of sugar in the intervention price when they exported. Netherlands at a level higher than that in the adjoining region which had a Regulation No 17 does not provide that surplus; the advantages which SU there should be any link between the obtained from this situation were bound amount of the fine and any profit made to be substantial. from the illegal course of conduct; only the seriousness of the infringement is The Commission's reply to CSM is that important the proportions which the fines imposed on the various undertakings bear to each The Commission's specific reply to other was determined with the greatest Sucres et Denrées is that it is useless to care and the greatest possible degree of assert that consumers did not suffer any objectivity. damage as a result of the concerted practices relating to the Italian market, to (1) (aa) (ccc) because these practices were not notified to the Commission. The Commission did not have to take into account the way fines are treated for With regard to the arguments put tax purposes in the various Member forward by SU cf. to (1) (aa) (bbb) above, States. The case-law of the Court reply to SU. mentioned by SZAG and SZV applies irrespective of the amount of the fine. So far as CSM's arguments are concerned, cf. to (1) (aa) (aaa) above, reply to CSM. to (1) (bb) (aaa) The Commission's specific reply to The Commission's replies to Emiliana, Pfeifer & Langen, is that, as the fine Industria degli zuccheri and Pfeifer & imposed on this company is between Langen are similar to those reproduced 0-1 % and 1 % of its turnover, it is very above, to (1) (aa) (bbb), reply to Industria much less than that imposed upon RT, degli zuccheri. which shows that the Commission considered that Pfeifer & Langen was less In its reply to Emiliana the Commission to blame. calls special attention to the fact that this firm always associated itself with the to (1) (bb) (bbb) operations of the importers group by taking advantage, although to a lesser The Commission replies that it also degree than Eridania, Industria degli produced ample evidence of the zuccheri and Cavarzere, of the results of infringements found to have been the invitations to tender in which it committed by RT for the 1968/69 participated on all but two occasions, by marketing year (concerted practice

The Commission states that the fine SADAM's economic position on the imposed on Sucres et Denrées, which is Italian market gave it the chance to less than 1 % of its turnover, is much exploit the opportunities for competition lower than the fine imposed on RT; the on this market. The company always Commission therefore took into account associated itself with the operations of the fact that Sucres et Denrées was less to the importer's group and took advantage, blame. although to a lesser extent than Eridania, Industria degli zuccheri and Cavarzere, of The part played by the undertaking in its the results of the invitations to tender in capacity as an independent dealer in which it participated, except on one sugar is very important So far as exports occasion, by tendering the same to Italy are concerned it is estimated that proportions of the 'sovraprezzo' similar as it deals in about 250 000 metric tons per those of the other members of the said annum. As Sucres et Denrées indicated group. in its reply to the Communication that these exports cover 15 % of its turnover, The amount of sugar which it was it can be inferred that the total amount awarded represented 6-3 % of the total amount awarded to members of the which it deals in annually amounts to at least 1 700 000 metric tons. Further, it is group. The fine imposed on SADAM is less than 1 % of its turnover. one of the largest dealers in foodstuffs in the world. to (1) (cc) (ddd) to (1) (bb) (ddd) The Commission submits arguments similar to those put forward to (1) (cc) The Commission repeats the consider­ (ccc) above, by stating that Cavarzere was ations upon which it based its argument awarded 14-1 % of the amount allocated in the decision in order to justify the to members of the group in question. principles in accordance with which the The Commission did not attribute the fine was imposed on SADAM and the amount whole of the production and operations of the 'gruppo padano' to Cavarzere. to (1) (bb) (eee) to (1) (dd) (aaa) Cf. (1) (aa) (bbb) above, reply to SZAG. The Commission's reply can be inferred from its arguments which are summar­ to (1) (cc) (aaa) ized above.

In its reply to RT the Commission calls (3) Summary of the replies attention to the fact that Article 15 of Regulation No 17 refers especially to to (1) (aa) (aaa) 'turnover in the preceding financial year of each of the undertakings participating With regard to the reasons which the in the infringement'. Commission put forward to justify the large fines imposed in this case to (1) (ff) compared with the fines in previous cases the applicants define their positions In reply to RT the Commission submits as follows: that the investigations carried out by its inspectors, on the basis of Article 14 of According to Générale sucrière, Say, Regulation No 17 and in the presence of Béghin and Sucres et Denrées, it is only two of RTs senior managers, began on right that the punishment for 12 January 1971 at the Company's place infringements of a serious and similar of business. The authorization specified character should be the same. There are the subject matter and purpose of the many other ways in which the investigation by expressly referring to Commission can make its intentions Articles 85 and 86 of the Treaty. By its clear; the method it chose meant that it decision of 28 July 1971 the Com­ was imposssible to distinguish between mission imposed on RT a fine for having the warning and the punishment produced incomplete documents at the time of the said investigations. By letter Industria degli zuccheri states that, as of 31 May 1972 the Commission the Commission itself admits, fines in informed RT that it had initiated against the earlier cases were imposed for the it the procedure specified in Article 3 (1) first time in 1969; moreover the period of Regulation No 17. In its letter of 20 of time taken into consideration in the August 1971, RT asked the Commission present cases began to run in 1968. to consult with the officials responsible for our policy for the sugar trade within Pfeifer & Langen submits that the the Community with a view to settling earlier fines were imposed on much the problems with which the Com­ larger undertakings than Pfeifer & mission appears to be concerned'. The Langen. Furthermore the freedom of Commission however did not have to action of these undertakings was not cut comply with such a request It carried down by regulations similar to those out the procedure within the framework which are a feature of the common and the limits prescribed by Regulations organization of the markets in the sugar No 17 and No 99/63. sector.

CSM states that the arithmetical ratio to (1) (bb) (ccc) between the fines imposed respectively on SU and itself is 4 to 3, whereas these Sucres et Denrées replies that the figures two companies' shares of the market mentioned by the Commission, which were 63 % and 37 % respectively. moreover fail to justify the amount of the fine, are inaccurate or have been Eridania states that its arguments misinterpreted. During the marketing developed under 1 above should at least years under consideration, the amounts lead to a reduction of the fine. of sugar intended for the Italian market, the deliveries of which were centralized to (1) (bb) (aaa) and coordinated by Sucres et Denrées, ranged from 65 000 to 200 000 metric Emiliana states that it is a victim of and tons. The figure of 1 700 000, is also not a party consciously engaging in the incorrect; further the Commission concerted practices. During the period omitted to mentioned that most of the under consideration it was only a small operations carried out by the company undertaking. have nothing to do with the common market RT submits that, in the Commission's first report on its competition policy, it to (1) (cc) (aaa) indicated that undertakings engaging in practices designed to eliminate Volano states that, although it in fact competition and thus causing serious accepted the proposal of Eridania and damage to the interests of consumers other producers to use the supply must expect heavy fines. Having regard channels in question, it only used them to the size of the fine imposed upon RT now and then and to an extent which full particulars of the damage caused to was limited but vital until its failure to consumers was therefore to be expected. make a profit led it to terminate its sugar But no such particulars were given for operations. the very good reason that no such damage was caused. to (1) (cc) (ccc)

of the opportunities for competition to (1) in general which there are said to be on this market It also refutes the Commission's The Commission's reply to the complaint of Eridania, Cavarzere, allegations relating to its 'common interest' with the importers' group and Industria degli zuccheri, SADAM and the profit which it is said to have made Emiliana, that the fines imposed are from the invitations to tender. heavy is that the fine plays a major part, not only as a sanction, but also as a Its situation is very uncertain for reasons deterrent. This is particularly true in the which this society explains in detail. Community; in fact the means at its disposal for keeping the conduct of The amount of the fine is considerably undertakings under constant and close higher than the net profit margins supervision are much more limited than obtained by the company through the those available to the authorities import operations in question. It is unfair responsible for ensuring compliance with to compare the fine with the invoice the rules of competition on the United price, instead of taking into account also States market, the only one which is reorganization costs, current amortization economically the same size.

to (1) (aa) (aaa) (4) Summary of rejoinders In reply to Générale sucrière, Say, Béghin The Commission replies as follows: and Sucres et Denrées, the Commission

submits that, as undertakings became the opinion 'that account must be more familiar with the rules of taken... of the fact that the product competition, infringements such as those concerned is of particular importance to committed in this case will be less easy the consumer' (decision, p. 43, Rt. Col.). to justify and therefore more serious. With special reference to RT, the Decisions rather than declarations of Commission states that the complaints principle will be the ideal way of which were found to exist 'are not to be applying the said rules. Moreover the evaluated in terms of price competition Commission imposed in other cases fines but ... may have a considerable long- exceeding 1 % of the turnover of the term effect on the price level'. undertakings concerned, so that the fines in this case appear to be relatively low. In reply to CSM, the Commission explains why, in its opinion, the The Commission's reply to Eridania Netherlands price level would have and Industria degli zuccheri is that the followed the trend of Belgian prices if first fines which it imposed in July 1969 RT had competed in the normal way. were in respect of infringements commenced several years before. On the In reply to Emiliana the Commission other hand, the infringement committed calls attention to the fact that this by the applicants originated at the end of company cannot be regarded as a small the 1968/69 marketing year, that is to say undertaking. In fact, during the 1971/72 in 1969, a time which cannot be re­ marketing year it was on its own the garded as an 'initial' period. seventh largest of the 21 Italian sugar factories; further, if the production of the to (1) (aa) (bbb) undertakings which it controls is added to its own production the final figure is The Commission's reply to SU is a 694 752 quintals. detailed statement of the reasons why it adhers to its assertions relating to the to (1) (bb) (ccc) price level applied in the Netherlands and Belgium. As Regulation No 17 does not establish any link between the amount of the fine The Commission's reply to CSM, is that, and the profits made from the concerted although an undertaking's share of the practices, Sucres et Denrées' argument market and its influence on the market ased on the way it is remunerated is are factors to be taken into account irrelevant.

to (1) (gg) 40/73 (SU), 42/73 (CSM), 50/73 (SADAM), 54/73 (SZAG), 55/73 (SZV), The Commission is under a duty to keep 56/73 (Pfeifer & Langen), 113/73 the minutes of the meeting of the (Industria degli Zuccheri) and 114/73 Advisory Committee confidential; it will (Eridania). only produce them if the Court was to order their production. The Commission produced a chrono­ logical table containing the particulars IV — Summary of the parties' which had been requested. It emerges replies to certain questions from them that, so far as all the raised by the Court, of beforementioned applicants are con­ the observations of the cerned, the inquiry was opened on 21 opposite parties on these May 1969; that the notification of replies and of the hearing objections was sent to these applicants of the witnesses on 24 July 1972 and was received by them between 25 July 1972 (SZAG) and After the end of the written procedure 1 August 1972 (SZV); that the said the Court, within the context of one or applicants replied by letters dated more of the nine complaints raised by between 26 and 29 September 1972, the contested decision, asked certain receipt of which was noted at the record applicants and the Commission a series office of the competent department of of questions, giving the opposing parties the Commission between 27 and 4 each time the opportunity of submitting October 1972; that the hearing of the their observations on the replies to the persons concerned took place on 17 said questions; October 1972; that Eridania (on 30 Further, within the context of the sixth October 1972) and SZAG and SZV (on 31 October 1972) sent letters containing complaint, the Court ordered that four observations supplementary to those persons be heard as witnesses; made at the hearing of 17 October 1972, The said replies and observations as well 'in accordance with the right granted to as the statements of the witnesses may be undertakings heard by Mr Jaume (cf. p. 6 summarized as follows: of the minutes)', whereas the other applicants simply requested — by letters of 9 to 21 November 1972 — that the 1. The first complaint (concerted draft minutes of the hearing drawn up by practices for the protection of the the Commission's departments be Italian market; cf. III 1. above) amended; finally all the beforementioned applicants signed the minutes of the A — Within the context of this hearing between 8 and 30 November complaint — and of the second to the 1972. fourth and the sixth to the eight complaints — the Court invited the SU defines its position to this Commission to give in chronological information and states that there is order full particulars of the various stages nothing in the minutes in the hearing of of the administrative procedure so far as 17 October 1972 to justify the inference the applicants referred to below are that the undertakings had the concerned and in particular to give the opportunity, or that their attention was

drawn to the opportunity, of submitting 2. The second complaint (concerted new arguments after the hearing. practices for the protection of the Netherlands market; cf. III 2 above) Pfeifer et Langen emphasizes that the period óf two months which the A — Within the context of this applicant is allowed in order to define its complaint and also of the sixth position on the notification of objections complaint, the Court invited SU, the is out of all proportion to the period applicant in Case 40/73, and the approximately three years during which Commission to make their submissions the inquiry lasted. for or against the economic continuance, B — Within the context of Case 48/73 from July 1968 onwards, of the different associations the names of which include (Sucres et Denrées), the Court invited the the words 'Suiker Unie'. Commission to give it particulars of the stage reached in and the object of the SU takes the view that two different proceedings for failure to fulfil an cooperative societies which used or still obligation under the Treaty which it has use the name 'Suiker Unie' must be brought against the Italian Republic in distinguished. The first was formed in relation to certain parts of the Italian 1966 by four cooperative societies which,

incompatible with Articles 9 or 95 of the to take over all their assets and liabilities. Treaty. The Commission in fact takes the view that the special tax called As the object of 'Suiker Unie Beheer' was 'sovrapprezzo' which is used to finance attained when the four cooperatives the aids authorized by Article 34 of merged, it was liquidated in 1971 Regulation No 1009/67 is, either a without there being any legal successor. charge having equivalent effect to a The Commission summarizes and customs duty, or an example of taxation clarifies the arguments developed in its imposed upon the products of other pleadings by a chronological table.

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and Pfeifer & Langen during the text of the decision, and it was the administrative proceedings, from which French version which was served on RT, it emerges that the companies defined contains, in the first article of the their position on Pfeifer & Langen's deliveries to Netherlands producers. operative part, the finding that the market of the western part of Germany The Commission states that these two was protected 'for the marketing years undertakings did not expressly define 1969/70 onwards'; the same mistake is their positions during the administrative found in the statement of defence in proceedings on the question of these Case 47/73.

Netherlands market. The company produced a list of its exports, which also RT takes the view that it is justified in included the disputed deliveries, solely keeping to the text of the decision which for the purpose of attacking the it received. With regard to the evaluation Commission's argument that the sugar of the documents in question it refers trade between Member States was very back to the pleadings which it delivered small. in the written procedure and, especially in connexion with the obligation to denature sugar, to its explanations

SUIKER UNIE AND OTHERS v COMMISSION

(a) The following are the questions (5) State why, in your opinion, systematic which RT alone was asked to answer: sales in Germany would have been (1) How much raw sugar was produced conditional on the setting up of a by RT? commercial organization, even (2) What happened in the end to all this though the export dealers Export and raw sugar? Hottlet appear to have been in a Give separate answers showing how position to procure German much raw sugar was: customers for you and sugar is mainly a homogeneous product. — processed by your undertaking into white sugar; — sold to other refiners (give the RT's replies and, where necessary the nationality of the purchasers, Commission's observations may be distinguishing in the case of resumed as follows: Germany sales to Pfeifer & Langen or WZV and to other refiners); to (1) to (3) — used for other purposes (what purposes?) or stocked because it could not be sold? RT produces the following figures for its (3) How much raw sugar have you financial years which are closed on 15 bought from other Belgian September each year (whereas the producers? decision refers to marketing years, within (4) what was your refining capacity? the meaning of the agricultural Support your figures with appropriate regulations, ending on 30 June each technical data. year):

(In metric tons)

1966/67 1967/68 1968/69 1969/70 1970/71 1971/72

Stock brought forward 25 022 19 965 15 857 29 655 18 934 24 476

Production + purchases during the financial year — Production of RT's factories 89 646 136 282 128 340 144 301 131 458 205 744

Stock carried forward 19 965 15 857 29 655 18 934 24 476 19 420

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The applicant states that the so-called 'tra­ selling it direct to consumers or ditional' purchases were made at sugar fac­ distributors, such a sale of necessity tories producing raw sugar only which they implies the setting up of a commercial traditionally place at the disposal of RT. organization in that country. Export and to (4) Hottlet did not procure German customers for RT but bought from it RT on the basis of detailed calculations sugar for resale in Germany. In the puts its annual capacity of white sugar at majority of cases Export and Hottlet's about 200 000 metric tons. This capacity German customers were themselves the should be compared, not only with the importer-exporters, so that there can be amounts of raw sugar mentioned in the no question of systematic sales by the table above, but also with the large said Belgian dealers. amounts of syrup (the 'effluent' of a sugar factory) accumulated in the various sugar The Commission replies by referring factories of its industrial group. It back to arguments developed during the produces figures relating to the amounts written procedure and in particular of these low quality products at its recalls attention to the fact that many disposal and to the amount of white requests from German dealers met with refusals. sugar which they yield. Taken together these figures show that the company's (b) The following are the questions available supplies were so much in excess which Pfeifer & Langen alone was asked of its refining capacity that it found itself to answer:

SUIKER UNIE AND OTHERS v COMMISSION

It points that it refined itself the whole by Pfeifer & Langen to show that of its production of raw sugar. purchases of raw sugar from RT were in the interest of the purchaser? The Commission points out that the (2) Explain why, in your opinion, RT figures are misleading, as those given for could not sell in Germany the special the production of white sugar only qualities of sugar which it could correspond to that part of white sugar obtain from processing raw sugar, produced in one operation and to which whereas it appears that it exported must be added white sugar produced by such qualities to the Netherlands. refining the abovementioned quantities (3) Clarify and support with figures the of raw sugar (own production and assertion that transport facilities for purchases). Thus, if the 1971/72 raw sugar are less expensive than marketing year is taken as an example, those to which recourse must be had

(c) The following questions were put to to (2) RT and also to Pfeifer & Langen: RT replies that the 'special qualities' (1) Is not the statement that RT would referred to by the question are essentially have run the risk of losing Pfeifer & lump and pearl sugar. The reason why it Langen as a customer for raw sugar if was able to sell lump sugar in the it had supplied large quantities of Netherlands is that its purchaser in this white sugar to the German country, namely CSM, does not have the company's customers inconsistent necessary equipment to manufacture with the many reasons put forward these qualities; on the other hand; Pfeifer

JUDGMENT OF 16. 12. 1975 — JOINED CASES 40 TO 48, 50, 54 TO 56, 111, 113 AND 114/73

& Langen does. Further there is a expensive. Nevertheless this fact is in technical difference between the German itself no answer to the question whether and Belgian lump sugar, the former RT succeeded in selling, in competition consisting of lumps weighing 4 g sold in with Pfeifer & Langen, white sugar on 1/2 kg boxes, and the latter being the latter's market; the effect of transport manufactured in lumps weighing 6 g and costs is not so marked in the case of a sold in boxes of 1 kg. more expensive product.

SUIKER UNIE AND OTHERS v COMMISSION

JUDGMENT OF 16. 12. 1975 — JOINED CASES 40 TO 48, 50, 54 TO 56, 111, 113 AND 114/73

. .) to effect traditional imports on a the import operations which these duty-free entry basis, as the sugar was to commercial houses dealing in French be re-exported after processing, by granulated sugar agreed with Sucre- meeting himself the requirements of the Union Paris (the trading company of the said processing industry on the terms French sugar-beet cooperatives) to carry prevailing on the world market. out for the 1969/70 marketing year. The Netherlands trade has not yet These import operations were made decided how to reply to this threat. possible by changes in the value of the French franc before the devaluation of On the contrary it sought together with the latter in August 1969. These the Netherlands sugar industry to find operations initially covered 30 000 metric out whether the Netherlands import tons of white French sugar, Holland requirements, of about 80 000 metric quality, and subsequently increased to a tons could be met from the other EEC total of 70 000 metric tons. countries and at the EEC price for the Having regard to the size of these 1970/71 marketing year. operations a special agreement was entered into between the Netherlands The Netherlands sugar manufacturers did not react to this invitation from the trade and the sugar manufacturers of this country, under the terms of which the import trade but intimated, in fine, that traders agreed to maintain a domestic it might consult the trade, at the proper sales price which was not to place sugar time, on these questions. manufacturers at a disadvantage when they marketed their sugar. (a) The evidence of Mr Lemaire may be summarized as follows: This is why Netherlands traders could not later on take any interest in our The beforementioned note repeats business of importers of Belgian sugar to exactly and completely the content of the Netherlands, the price of which was one or more conversations which he had lower than the internal Netherlands price at the time with Mr Dudok de Wit.

SUIKER UNIE AND OTHERS v COMMISSION

The statement in the note that Mr 'annoyed for the following reason: the Netherlands industry is a large [potential] Lindeboom 'requested' the Netherlands threat to the Netherlands trade because it trade 'to refrain from undertaking such is going to import itself. import operations' for the 1970/71 marketing campaign, 'as otherwise he (c) The evidence of Mr Sanders, deputy would make it impossible for the director of the Jacobson firm, may be Netherlands processing industry (milk, summarized as follows:

JUDGMENT OF 16. 12. 1975 — JOINED CASES 40 TO 48, 50, 54 TO 56, 111, 113 AND 114/73

As they had world markets. It may be that during a to sell this part quickly and only the conversation someone said in the heat of Netherlands industry was able to the moment 'if you do not stop purchase the relatively large quantities at importing we shall do this or that'; but short notice, the dealers attempted to sell such remarks were not likely to make 15 000 metric tons to this industry and any impression on dealers who did not succeeded in doing so. The producers feel that they were immediately were not probably very enthusiastic about threatened. Moreover the producers could this transaction whereas the dealers were not be certain that such imports would 'very pleased with the sale'. be possible in the future as Community regulations relating to sugar imports There would have been no point in the coming from third countries can be Netherlands industry insisting that the modified from one marketing year to dealers cease importing specific another. quantities of sugar; in fact if this sugar had not been imported by dealers it (d) The evidence of Mr Lindeboom, would have been imported by others. director of SU, may be summarized as The producers may have told the dealers follows: that they did not approve of these imports but the dealers could not stop He did not ask dealers not to undertake doing their job. such import operations during the When Mr Lemaire was asked about the 1970/71 marketing year.

SUIKER UNIE AND OTHERS v COMMISSION

. . Wolf firms), to the The nature of the threat attributed to SU extent to which these contracts is 'laughable', because, if SU intended to contain clauses of the type compete with importers to the referred to in the contested condensed milk industry, it would have decision (prohibition, without done so with its own sugar instead of consent, of the sale of sugar from preventing its sale by importing sugar other producers; the obligation from the world market. only to resell Pfeifer & Langen's When Mr Lindeboom was asked whether sugar within a specific area and to the dealers promised on their own specific categories of purchasers); initiative to give up such imports in — or only one or more of these future he replied in the negative. agreements, if the remaining Moreover, since he took up his contracts are drawn up in terms employment with SU he has only had similar to the contracts produced for the Court's file; if this is the business talks with Mr Kopmels but never with Mr Sanders or Mr Dudok de case, Pfeifer & Lagen shall Wit indicate, by giving the name of each agent concerned, to which Mr Lindeboom finally challenged that contracts produced for the Court's part of Mr Lemaire's note concerning an file the contracts which have not undertaking by dealers to adhere to a been produced are similar;

partners; (c) to answer the following questions: 6. The eighth complaint (agreements (1) Do your agents also work for entered into by Pfeifer & Langen other sugar producers? with its agents restricting their (2) If your answer to this question is opportunities for importing and in the affirmative, who are these exporting within the Community; cf. producers (WZV, members of III 8 above) WZV, other firms)? (3) (The following question is only Within the context of Case 56/73 (Pfeifer asked to the extent to which the & Langen) the Court invited: answer is not found in the

— to clarify the complaints it makes on Edeka centres whose place of business is the one hand against Pfeifer & in a territory for which another re­ Langen and, on the other hand, presentative has been granted selling against WZV. In particular: did not rights the representative shall pass on the only WZV but also Pfeifer & Langen whole of the commission relating to these deliveries, less the advance for make its agents undertake only to sell to wholesalers, he processing industry advertising costs, to the representative in and similar undertakings (cf. decision, that territory...' p. 27 to 28, 40), and forbid them to Point 6 sell outside the respective areas which WZV had assigned to them? The representative shall not represent other sugar factories, except with the to A (a) written consent of Pfeifer & Langen, nor deal in sugar from the Pfeifer & Langen Pfeifer & Langen states that the relations undertaking or elsewhere, for his own between itself and the representatives account.' mentioned on pages 48 and 49 of its reply were governed, until 13 June 1970, The applicant points out that, in order to by a contract in standard form drawn up understand this contract in standard

SUIKER UNIE AND OTHERS v COMMISSION

Clause 2 The applicant also produces a copy of a standard form contract which it entered The right to represent Pfeifer & Langen into with the beforementioned represen­ is granted for the territory designated by tatives from 2 January 1973 and which Pfeifer & Langen as: [for example: no longer contains a clause prohibiting, Territory 72 Düsseldorf]. So far as the without consent, the sale of sugar from boundaries of this territory are other sources. concerned, reference must be made to the plan attached to this contract and to A (b) referred to as Annex 1.' Pfeifer & Langen cooperated, without Clause 3 any written representatives contract or any correspondence on the question of 'Pfeifer & Langen grants the the terms of such a contract, with the representative the exclusive right to sell Gebrüder Lück, Emil Meyer's Sohn and in the designated territory and, Hunekuhl undertakings. It produces consequently, territorial protection for its however two contracts entered into with range of sugar for consumption. Certain Emil Meyer's Sohn in January 1966 and

JUDGMENT OF 16. 12. 1975 —'JOINED CASES 40 TO 48, 50, 54 TO 56, 111, 113 AND 114/73

In these circumstances there was no reason for the responsible Although therefore at the time when the members of the applicant's staff to pay events in this action occurred there were any particular attention to the no written representatives contracts with applications for consent or to make Luck, Emil Meyer's Sohn and Hunekuhl, written entries in connexion with them. the terms, of verbal agreements corresponded however in essence to the The Commission points out that the clauses in the written representatives applicant has not stated whether the contracts.

The Commission does not find the To Pfeifer & Langen's knowledge only statement that the applicant never the Hunekuhl firm also acted for other refused its consent convincing. The sugar producers, either as a trade applicant has not said whether the third representative, or as a commission agent parties for whom these operations were for the Nordzucker company. carried out were WZV, the other members of WZV, the other German On the other hand, the applicant's producers or producers from other representatives sold, as independent Member States. The Commission is not dealers, sugar which came from other convinced either that the only purpose of producers and, so far as the applicant is the exclusivity clause was to check that aware — was intended for human the applicant's representatives devoted

third party. It did not incorporate the prohibited sales by them outside the clause at issue in these proceedings in territories which they had been assigned. the 1970 contracts in order to prevent its representatives from selling sugar coming The agreements entered into by WZV from other sources, but to make them with its commission agents contain

restrictions relating to the territory in information which the Court requested. which the commission agents could The comparison between its sales and operate, to the customers with which those of WZV proves nothing since it they were authorized to effect has no influence on the conduct of this transactions and to the sale of sugar firm; it only owns 20 % of its share coming from other producers (cf. capital and cannot decisively influence Annexes I 134 to 136 to the statements its decisions. Moreover it has ceased to be of defence). The contracts entered into by a member of WZV, so that now there is Pfeifer & Langen with its trade no connexion between the two under­ representatives contained express takings. restrictions relating to the territory in which the said representatives could operate and to the sale of sugar coming 7. The ninth complaint (concerted from other producers. practices at the invitations to tender In order to make clear the nature of the for refunds on exports to third complaints which it makes against countries; cf. III 9 above) Pfeifer & Langen, on the one hand, and against WZV on the other hand, the Within the context of the ninth Commission describes the system of complaint, and of Cases 41/73 (Générale marketing adopted by WZV and its sucrière), 43/73 (Say), 44/73 (Béghin), members. Further it states, with figures 47/73 (RT, and 48/74 (Sucres et Denrées), in support, that Pfeifer & Langen was the Court invited: responsible for more than 50 % of the (1) Générale sucrière, Say, Béghin, RT production of all the members of WZV, and Sucres et Denrées and the but that — compared with other Commission to give particulars, members — this undertaking sold a giving separate figures for white and smaller proportion of its production raw sugar, of the amounts which each through WZV. The Commission of the said applicants exported to concludes from this that there is a 'closed third countries during the year 1970 system' which makes it possible to (not during the 1970/71 marketing prevent the commercial undertakings year) following awards made at the concerned from exporting WZVs or invitations to tender; Pfeifer & Langen's sugar and from (2) the Commission to give particulars, importing into their sales territory sugar giving separate figures for white and coming from producers established in raw sugar, of the total amount other regions of the common market. exported to third countries in 1970 Moreover, when the Commission refers by other undertakings or organs of to its pleadings, it shows that it blamed the Community; both WZV and Pfeifer & Langen for (3) the Commission to state why, in its preventing the import and export of opinion, the practices relating to sugar in this way at the commercial level export refunds affected appreciably and in WZV's sales territory. trade between Member States and The fine was imposed on Pfeifer & competition within the Common Langen not because the agency Market.

Applicants Applicants' figures figures Amount Amount Amount Amount

exported awarded exported awarded

(1) Générale sucriere 8 938 0 0 57 222 34 608 33 000

(2) Say 15 292 0 0 42 437 16 256 15 500

(3) Béghin 0 0 0 39 852 18 899 18 000

(4) RT <apnote>1</apnote> 9 275 0 0 45 873 59 431 56 650

1 — With regard to RT°s exports of white sugar, it gives two sets of figures; one showing the amount of sugar covered by the export licences which it was granted (25 499 metric tons) and the other showing the amount of sugar covered by the export licences granted to Belgian dealer-exporters Export and Hottlet (20 374 metric tons); these two figures added together amount to 48 873 metric tons.

The Commission states that its figure of 56 650 metric tons showing the amounts awarded 'to RT included; — 21 150 metric tons awarded to Export from March 1970 onwards and it was from this month that Export 'had to follow RT at the invitations to tender' (cf. Annex I 74 to 78 to the statements of defence; Annex II 17. 18 to the statement of defence in Case 47/73); — 3 000 metric tons awarded to the French company Erstein which is a subsidiary of RT.

When the Commission comments on the (241 350 + 60 000 =) 301 350 out of figures which it has produced it 456 950 metric tons, that is to say about emphasizes that the undertakings two-thirds of the amounts awarded. It affected by the decision were awarded adds that the French and German

SUIKER UNIE AND OTHERS v COMMISSION

However the figures produced by both sides are on the same scale. B — In answer to the Commission's reply the applicants define their to 3 positions as follows: The Commission recalls the decision's RT protests against the fact that the findings on the economic importance of Commission credits it with 3 000 metric the applicant undertakings. Almost all tons of white sugar which were in fact the amounts awarded in 1970 went to exported by Erstein by submitting that it Belgian and French undertakings.

It and not the date when the sugar was must therefore be admitted that, if there actually exported, it misses the point of had been no concerted action, there the question put by the Court Sucres et would have been a marked difference Denrées add that, just as export licences between the competitive situation of the obtained during the year 1970 could be applicants; in fact, because the used for exporting sugar in 1971, from undertakings in this case were not certain the beginning of 1970 sugar could be how much they would be awarded, some exported on the basis of licences issued of them had to consider the possibility of in 1969. The company moreover states finding outlets within the common that, according to the Commission's market. As is shown by Annex I 77 to figures, it was the only successful the statements of defence RT itself tenderer for raw sugar. declared that the concerted action had as its object the 'abolition of the struggle to Générale sucrière states that for the sell quantities of sugar on the domestic purpose of assessing the present market'. complaint the amounts exported by Sucre-Union, Lebaudy-SUC, Erstein and RT replies by reminding the Com Export cannot be imputed to the mission again of the possibility that it applicants. The company also calls can discontinue an invitation to tender. attention to the fact that the volume of sugar exports, which it has notified, Générale sucrière challenges the include amounts exported following not argument that the concerted action only the tendering procedures for sugar ensured that undertakings were certain to on the free market but also the tendering be awarded specific amounts; the

2 Article 1 of the decision makes nine complaints spread over the 1968/69 to 1971/72 sugar manufacturing years relating each time to one or more of the beforementioned undertakings. They together blame each of the latter undertakings for having committed one or more infringements of Article 85 of the EEC Treaty, of Article 86 thereof or of both of the said Articles.

3 Subparagraphs 1 to 4 of the said Article 1 (1) refer to four concerted practices which had as their object and effect, in breach of Article 85, the protection of the sugar markets of Italy, the Netherlands, the western and southern parts of Germany respectively.

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4 Paragraph 2 of this Article states that 'in the context of the abovementioned concerted practices' the Commission found that certain 'measures constitute in themselves infringements of Articles 85 and 86'.

5 Paragraph 3 of Article 1 finds that the undertakings to which it refers, in breach of Article 85, engaged in concerted actions, at the time of the invitations to tender for refunds on exports to third countries, in connexion with the amount of the refunds for which applications were made and also the quantities which were offered.

6 Article 2 requires the undertakings to which the decision is addressed to 'put an end immediately to the infringements found as aforesaid'.

12 Before dealing with each of the nine complaints separately it is advisable to consider a general question, namely whether, as several applicants assert, the

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common organization of the sugar market is arranged in such a way that it eliminates any effective competition.

13 The provisions relating to this organization provide in particular for the fixing of a minimum price to be paid by sugar manufacturers for the purchase of sugar beet, a threshold price, a target price and intervention prices at which national agencies have to buy the sugar which they are offered, the collection of an import levy and the grant of export refunds, of denaturing premiums and, for the chemical industry, refunds to producers.

14 The common organization of the sugar market unlike those of the other agricultural markets also provides that each Member State shall fix, on the basis of the quantity allocated to it for each factory or undertaking producing sugar in its territory, a basic quota and a maximum quota, it being understood, on the one hand, that Member States shall collect from the manufacturer a production levy on sugar which is outside the basic quota but within the maximum quota and, on the other hand, that the quantity of sugar in excess of the maximum quota shall not be disposed of on the domestic market.

15 From the economic point of view the main features of the sugar market are that sugar is for the most part a homogeneous and standardized product, that transport costs of sugar are relatively high and that freight rates make the transportation of sugar beet over long distances out of the question.

19 However the Community system also contains elements which either promote the development of trade between Member States and, consequently, effective competition, or at least are likely to moderate the opposite effects arising out of the beforementioned facts.

20 In the first place the distinctive feature of this system — which moreover has allowed areas having a surplus as well as areas having a deficit to continue in being — is the disappearance of intra-Community barriers.

21 Further the 'prices' fixed or provided for by the Community system are not sale prices for dealers, users and consumers and, consequently, allow producers some freedom to determine themselves the price at which they intend to sell their products.

22 Moreover there is a good deal of evidence on the Court's file, including statements by several applicants, to show that, when the opportunity presented itself, the sale price, far from appearing to the persons concerned to be a value predetermined in practice by Community rules, was the subject of tough negotiations.

23 Finally the common organization of the market has no appreciable effect, even indirect, on certain matters which are also capable of being the subject of, or ensuring effective competition, such as the volume of demand and conditions of sale other than those relating to the price or quality of service.

24 Whatever criticisms may be made of a system, which is designed to consolidate a partitioning of national markets by means of national quotas, the effects of which will be examined later, the fact remains that if it leaves in practice a residual field of competition, that field comes within the provisions of the rules of competition.

Chapter 1:

Complaint of a concerted practice having as its object the protection of the Italian market

29 Under subparagraph 1 of Article 1 (1) Eridania, Zuccherifici, Cavarzere, Industria degli Zuccheri, Romana, Volano, Emiliana, SADAM, Sermide, on the one hand, and Sucres et Denrées, Béghin, Sucre-Union, Say, Générale sucrière, Lebaudy-SUC, RT and SZAG, on the other hand, are blamed for having since the end of the 1968/69 marketing year committed infringements of Article 85 (1) by engaging in a concerted practice having as its object and effect the control of deliveries of sugar on the Italian market and consequently the protection of that market.

SUIKER UNIE AND OTHERS v COMMISSION

I — Summary of the relevant statements of the decision and of the main arguments of the parties

30 The Commission takes the view that the conduct of the applicants amounts to a concerted practice prohibited by Article 85 of the Treaty in that 'all competition on the Italian market between the beforementioned French, Belgian and German suppliers and the group of Italian importers was eliminated'.

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II — Examination of the submission

36 It is advisable to examine first of all what effect the Italian rules and other measures adopted by the Italian authorities have on the evaluation of this dispute.

37 1. During the years in question the 'Comitate interministeriale dei prezzi' (Comité interministériel des prix, Interdepartmental Committee on prices), an Italian public body, (hereinafter called 'CIP') adopted a series of orders ('prowedimenti') including the grant of aids intended mainly to benefit Italian operators (sugar beet producers, sugar factories, sugar exporters) and payable by the 'Cassa conguaglio zucchero' (Sugar equalization fund), an Italian public body (hereinafter called 'Ccz', which under the relevant legislation was assigned the task of arranging 'the requisite equalizations with a view to integrating by progressive stages the Italian sugar economy into that of the Community in order to attain a common market in the sugar sector'.

38 These aids are financed by a levy ('sovrapprezzo') of Lit. 23 per kg, which was equivalent to the difference between the prices applied in Italy and the Community derived intervention price applicable in this country and was imposed upon national as well as imported sugar. However the levy on imported sugar was reduced for the purpose of offsetting the cost of foreign sugar, to the extent to which it exceeded the cost of national sugar and thus facilitating imports up to the amount considered necessary to make good the amount by which national production fell short of demand.

43 Since 'all commercial operators cannot have an organization which enables them to take part in open tenders', CIP authorized Ccz to allow not more than 1 000 metric tons to be imported outside the invitations to tender and in consideration of a reduced 'sovrapprezzo', provided that, if the total amount for which applications were made in this way exceeded 10 000 metric tons, the quantities for which each applicant applied were reduced in proportion.

44 Order issued at a later date stated that the amounts imported outside the invitations to tender were be to reserved for industrial consumers and were

not to exceed in the aggregate 20 % — later 25 % — of the maximum amount fixed for each invitation to tender.

45 The clear objective of the invitations to tender and imports outside these invitations to tender was only to permit the quantity of sugar to be imported which was absolutely necessary to make good the amount by which national production fell short of demand.

46 After having abolished the system of maximum consumer prices in force before the establishment of the Community system the Italian authorities 'in order to shield Italian consumers from increases which are not due to

variations of Community prices' issued in 1969, Order No 1236, which in fact achieves this result by means of a decision under which the maximum limits of the 'price differentials' for the various qualities and kinds of sugar, of the charges for packaging the product as well as the trading margins on the sale of this product to the consumer must remain 'those which are determined by

51 In the first place in the enumeration of the particulars of this complaint the Commission refers, inter alia, to the invitations to tender organized by Ccz and records in particular 'that ... the importers' group took approximately 75 % of the total amount of imports put up for tender (decision p. 24 under C 13), all the sugar taken by Eridania or any other member of the group was supplied by the suppliers' group (loc cit.) and that the concerted action between producer-importers is evident... from the fact that they offered similar rates of the "sovrapprezzo" at the invitations to tender (in practice from the fact that they made joint purchases pursuant to agreements and distribution arrangements agreed upon beforehanď) (statement of defence in Case 114/73, p. 58), a practice which had the effect that 'invitations to tender [were unable] to play the part assigned to them' (loc. cit. p. 42).

52 Further the Commission blames the applicants in a more general way for having 'made use of the Italian rules in order to restrict opportunities for

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competition' (rejoinder in Case 48/73, p. 17) and asserts that these rules 'do not explain everything' (loc. cit., p. 19), which is tantamount to an admission that they at least explain certain aspects of the applicants' actions.

53 Moreover a 'report on an investigation into invitations to tender, Annex No 16 to the Statement of Defence in Case 44/73, drawn up by agents of the Commission (Directorate-General for Competition) states inter alia that 'the procedure in fact adopted at invitations to tender undoubtedly encourages the concerted action by Italian producers to control all imports of sugar'.

57 B — Apart from these considerations the said regulations — together with the influence exerted by the Italian authorities on the operations of the producers concerned — were in many respects likely to bring

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about the concentration of demand in Italy in the hands of the large producers and the formation of groups of producer-importers and also of supplier-exporters.

58 First of all quota restrictions on imports benefiting from a reduced 'sovrapprezzo' considered together with the risks attaching to the invitations to tender were likely to induce the persons concerned to share out the supply as well as the demand and to come to an agreement on the amount of the 'sovrapprezzo' to be offered, with the object of preventing one or the other of them from being excluded from the supplies in question, because the amount of the 'sovrapprezzo' which he offered was too low.

59 This is in particular what happens, on the one hand, to foreign suppliers forced to sell large surpluses and, on the other hand, to small Italian producers who cannot deal in large amounts.

6o Further, fixing large minimum amounts (1 000 metric tons) for each individual tender submitted for an award — together with the absence of any independent distributive network and the fact that it was almost impossible for industrial consumers, who have no storage facilities and more often than not have to obtain their supplies on a day to day basis, to take part in the invitations to tender — of necessity resulted in Italian producers, in accordance with the wish of the national authorities, alone being able to attend the invitations to tender and this was bound to make foreign suppliers offer the said producers a large proportion of the sugar which they intended to export to Italy.

65 3. All these considerations show that Italian regulations and the way in which they have been implemented had a determinative effect on some of the most important aspects of the course of conduct of the undertakings concerned which the Commission criticizes, so that it appears that, had it not been for these regulations and their implementation, the cooperation, which is the subject-matter of these proceedings, either would not have taken place or would have assumed a form different from that found to have existed by the Commission.

66 It emerges from the contested decision that the Commission has not made sufficient allowance for the effect of those regulations and has consequently overlooked a crucial factor in the evaluation of the infringements which it alleges.

67 4. Further the object and effect of Italian regulations and the way in which they have been implemented was to match supply exactly with demand and thereby remove a vital element of normal competition.

68 Furthermore the system described above has substantially reduced the opportunities available to the parties concerned to negotiate a price which would have resulted from the free market forces of supply and demand.

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69 In addition, the Italian regulations impeded, indirectly but fundamentally, the buyer's freedom to choose his supplier and vice versa.

74 Subparagraph 2 of Article 1 (1) of the contested decision blames SU and CSM, on the one hand, and RT and Pfeifer & Langen, on the other hand, for having 'since the 1968/69 marketing year (Pfeifer & Langen only since the 1970/71 marketing year)' — that is to say from the 1968/69 to the 1971/72 marketing year — 'committed infringements of Article 85 (1) by engaging in a concerted practice having as its object and effect the control of deliveries of sugar on the Netherlands market from Belgium and the western part of Germany and consequently the protection of that market'.

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Section 1: Preliminary submission: the 'Cooperative Vereniging Suiker Unie (UA' (SU) was not a legal entity during part of the period to which this complaint refers

75 I — SU submits that it only commenced business on 2 January 1971 so that there is no foundation for the finding in the decision that the applicant committed infringements 'from the 1968/69 marketing year'.

76 Similarly the Commission infringed Regulation No 17, and in particular Article 15 (2) thereof, by imposing on the applicant a fine for an infringement which it could not have committed during most of the period under consideration.

77 The Court file shows that in 1966 four Netherlands sugar producing cooperatives, the members of which were beet growers, formed an association known as 'Coöperatieve Vereniging Suiker Unie UA', hereinafter called 'the former association', having as its object, in particular, the coordination of the operations of the said cooperatives which had to carry out the instructions of the association, especially for making the best possible use of plant, investments and prices.

83 Even if it must be treated as the legal successor of the former association, there is a case for taking account of the fact that this association was not liable for the obligations arising out of the decision, which were the direct liability of SU.

84 II — As the applicant assumed all the rights and liabilities of the four cooperatives of the old association, it must be treated as the economic successor both of the old association and of its members, which indeed is what those members intended.

85 The applicant moreover does not deny that the name 'Suiker Unie' always covered the same undertakings, which were run for the most part by the same persons and had their registered offices at the same address.

86 It does not even claim that its conduct on the sugar market differed from that of the former association.

87 In these circumstances, so far as the sugar market is concerned, the main feature of the conduct of the applicant and its predecessor was its obvious continuity, which means that the whole of this behaviour must be attributed to the applicant.

88 Therefore this submission is unfounded.

91 There is nothing in the Court's file to support the presumption that the contested decision would not have been taken or would have been drawn up in a different way, if the public statements which are the subject-matter of this submission had not been made, whether or not they are open to criticism under another legal head.

92 Moreover the decision has not upheld all the complaints set out in the notification of objections.

93 This submission must therefore be dismissed.

2. Unduly short time-limits for submission of observations

94 SU, CSM and Pfeifer & Langen submit that by granting the undertakings concerned a time-limit of only two months for submission of their observations on the notification of objections the Commission infringed Article 11 of Regulation No 99/63 under which in fixing the time-limits provided for by this regulation 'the Commission shall have regard to the time required for preparation of comments'.

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loo SU submits that the Commission infringed Article 19 (1) of Regulation No 17 and Article 1 of Regulation No 99/63, when a member of the Commission stated at a press conference on 18 December 1972 that none of the undertakings affected by the decision had submitted that it fixed the price of sugar in agreement with the competent authority of the respective Member State, even though SU expressly stated in the administrative procedure that it had done so.

SUIKER UNIE AND OTHERS v COMMISSION

101 These articles show that, before taking a decision and consulting the Advisory Committee on Restrictive Practices and Monopolies, the Commission is under a duty to give undertakings concerned 'the opportunity of being heard on the matters to which the Commission has taken objection'.

102 SU's statements show that it had the opportunity of defining its position on the point in question.

103 If a member of the Commission has given the press incorrect information concerning statements put forward by an undertaking during an administrative procedure, this does not prove that the Commission did not take the said statements into consideration.

104 The submission is therefore unfounded.

II — Submissions relating to the drafting and notification of the decision

1. Infringement of the right to defend by the adoption of a single decision; infringement of the first paragraph of Article 191 (2) of the Treaty and of Article 3 of Regulation 1(1)

109 A — SU and CSM blame the Commission for having infringed their right to defend themselves by adopting a single decision, although it was taking action relating to a large number of undertakings and a series of alleged infringements which were not connected with each other.

no This procedure left the undertakings to which the decision was addressed uncertain as to the exact nature of the complaints made against each of them individually and might lead to the infringements which an undertaking may have committed being attributed to another undertaking as well.

111 There is no reason at all why the Commission should not make a single decision covering several infringements, even if some of the undertakings to which it is addressed are unconnected with some of these infringements, provided that the decision permits each addressee to obtain a clear picture of the complaints made against it.

112 As the contested decision fulfilled this requirement so far as SU and CSM is concerned, this submission is unfounded.

117 SU and CSM submit that some of the assertions in the statement of the

reasons upon which the decision is based are too vague to fulfil the requirements of Article 190 of the Treaty.

118 Even if it is assumed that the passages to which SU and CSM have drawn attention were not drawn up with the accuracy to be desired, this fact has neither prevented the applicants nor the Court from grasping the nature and extent of the complaint made by the Commission and from determining whether it is well-founded or unfounded, so that there can be no question of an infringement of any essential procedural requirement within the meaning of Article 173 of the Treaty.

119 To the extent to which this submission aims at disputing the facts alleged by the Commission or their evaluation by the latter it belongs to the substance of the case.

120 Therefore it cannot be upheld.

3. Lack of clarity in the operative part of the decision

125 This submission must be rejected.

Section 3: Submissions on the substance of the case

I — Infringement of Article 85 of the Treaty

126 The essence of the submissions put forward by SU, CSM, .RT and. Pfeifer & Langen is that, in the absence of any concerted action, the courses of conduct for which the applicants are blamed do not amount to concerted practices, so that by applying Article 85 of the Treaty to these courses of conduct the Commission was in breach of this provision.

1. Summary of the relevant statement in the decision

127 The practices, for which the applicants or some of them are blamed, can be subdivided into three groups of actions or omissions.

(a) The evidence

(aa) The evidence relating to the actual conduct of the applicants

1. Channelling of Belgian exports to specific consignees or destinations

131 It is clear from several documents on the Court's file that RT and other Belgian producers which it controls (Raffinerie Notre-Dame at Oreye; Sucreries des Flandres at Moerbeke-Waas), in general and in connexion with specific deliveries to Netherlands customers other than SU or CSM systematically laid down that Export and Hottlet should only deliver the amounts in question to certain groups of consignees or certain destinations.

132 Thus RT in a letter to Export of 24 July 1969 (Annex 1 43 to the statements of defence), after having reminded this firm that it 'informed it earlier of our policy towards our foreign colleagues' forbids them to export to the Netherlands, for the consumer market, the amounts of sugar originally sold for denaturing but which can no longer be used for this purpose because of the abolition of the denaturing premium.

133 The minutes dated 23 April 1970 of a meeting between this company and RT on 20 April 1970 (Annex I 74 of the statements of defence) which Export drew up, state that 'Mr Rolin of RT took exception to Export's operations during the 1969/70 marketing year in the Netherlands and to the purchases from independent manufacturers not long before the commencement of the sugar marketing year'. This passage can only be understood in the context of the other documents on the Court's file as meaning that RT blamed Export for having supplied, possibly with the help of Belgian manufacturers independent of RT, Netherlands customers other than those to which RT intended to restrict its exports.

137 A confirmation of purchase from Export to RT of 5 October 1970 (Annex I 128 to the statements of defence) reads: 'Destination: Holland, in principle only the milk processing industry, sugar intended for the ultimate takers-purchasers-consumers which the Netherlands sugar industry permits to be supplied ...'.

2. Refusal to supply

138 Some of the documents confirm this description of RT°s restrictive policy because they show that they sometimes refused to accept offers to purchase from Netherlands operators other than sugar producers and the milk products and chemical industries.

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139 Thus either RT or Export or the sugar marketing organization (le Comptoir sucrier) of Antwerp, by letters of 14, 23 August, 2 and 3 September 1968 (Annexes I 44 to 47 to the statements of defence), acting in accordance with instructions from RT or other Belgian producers controlled by RT refused offers to purchase from such operators, on the ground that the amounts available left no scope for export.

140 Export confirms in an internal memorandum of 23 April 1970 (Annex I 75 to the statements of defence) that 'the refiners' policy makes it impossible' to take advantage of the opportunities to export 'on the frontier regions of Benelux' in spite of the fact that there is a large demand in the Netherlands.

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beforementioned arrangements that you will refrain from making any other initiatives on the Netherlands market so that the pattern of this market is not disturbed'.

144 Export replied by a telex message of 20 August 1970 (Annex I 83 to the statements of defence) giving particulars of the terms of the arrangements made as follows: 'Export confirms that it agrees to follow RT... in working out an agreement with SU and CSM ... for the 1970/71 sugar marketing year upon the following lines:

1. Export gives up dealing in Belgian sugar with Netherlands purchaser-consumers in connexion with what we call the particular requirements in the Netherlands, that is to say, on the one hand, for sugar in its original state for human consumption and, on the other hand, for sugar for the factories manufacturing sweets to be consumed in the Netherlands ... This sweet manufacturing industry does not include the milk processing industry. The denaturing trade and the chemical industry are also excluded from the trade which Export has given up.

2. Giving up this trade by Export is linked ... so far as the Netherlands import requirements of EEC sugar are concerned ... with the condition that the deliveries to be carried out between Belgian and Netherlands sugar manufacturers in order to supply this Netherlands market shall be effected through the long established Belgian and Netherlands trade ...'.

145 With regard to the relations between SU and CSM, on the one hand, and the Netherlands dealers, on the other hand, a note of 3 September 1970 sent by Mr Kronacker of Export to Mr Rolin of RT (Annex I 86 to the statements of defence) refers to a statement of Mr Rolin that 'the three traditional Netherlands importers gave an undertaking to SU and Centrale [CSM] not to import sugar for consumption in the Netherlands except with their consent' and, on the other hand, that 'he [Mr Rolin] was given an undertaking by CSM and SU that, if there is any demand for sugar for consumption, these firms will approach RT in order to ensure that this demand is met and RT undertakes to do business through us', that is to say through Export.

150 In a report by Export dated 6 May 1970 of the discussions between representatives of the same firms on 30 April 1970 (Annex I 76 to the statements of defence) there is the sentence The basic principle about which Mr Maisin' of RT 'is adamant is the following one: Export must adopt RT°s policy towards its European partners. He defines this policy as follows: no movement of goods from country to country save by agreement between producer and producer'.

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151 A telex message from RT to Export of 20 August 1970 (Annex I 84 to the statements of defence) states that: 'In the case of the Netherlands import requirements of sugar for consumption in the Netherlands, you cease to deal with any transactions other than the requests made by the Netherlands sugar industry which intends to keep control of this market. The Netherlands sugar industry, as you moreover have confirmed to us, told us that at present the situation in the Netherlands does not justify import operations. Since we do not intend to do anything at all in connexion with consumption in the Netherlands which is not approved by our Netherlands colleagues, there is no need to examine at the moment transactions in Belgian sugar for these outlets ... supplying the milk products industry is another matter ...'

152 RT points out to Export in a letter of 31 August 1970 (Annex I 85 to the statements of defence) that 'so far as the Netherlands are concerned we do not want to do anything which might upset SU or CSM, just as they do not want to do anything which would disturb us'.

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channel, and anyway waiting for Netherlands sugar manufacturers eventual demands'.

155 Further the existence of a concerted action between RT and the Netherlands

producers is also supported directly and indirectly by certain other documents (letter from the sugar marketing organization of Antwerp (Comptoir sucrier d'Anvers)) to a Netherlands customer of 3 September 1968; internal memorandum of Export of 23 April 1970; telex message from Export to RT of 20 August 1970; telex message from Export to RT of 20 August 1970; memorandum from Export to RT of 3 September 1970; telex message from Jacobson to Export of 24 and 30 September 1970; telex message from Export to RT of 14 and 17 September 1970; telex message from Export to Jacobson of 1 October 1970; confirmation of a purchase by Export to Naveau of 31 July 1970: Annexes I 47, 75, 83, 86, 87, 89, 90, 108, 112, 128, 129 to the statements of defence).

(b) Evaluation of this evidence

(aa) Its evidential value

160 Although the documents in question as well as the other documents produced for the Court's file by the Commission show that RT and Export disagreed on the extent of the area in which the latter was to be allowed to operate and on how much freedom of action it should be permitted to enjoy, it is difficult to accept that RT simply invented what it said or wrote concerning its relations with SU and CSM.

161 So far as what RT calls the 'naivety' of any written admission of having engaged in a concerted action and endeavoured to implement it, attention must be drawn to the fact that it would be even more unusual for a very large producer to simulate in letters and documents conduct likely to lay it open to sanctions, merely in order to reassure a dealer who economically almost wholly depends upon it.

162 Further the summary assertion that the statements in issue must not be taken 'literally' leaves wide open the question to what extent RT intends to admit or deny the truth of these statements, and consequently, does not even amount to a serious attempt to reject this evidence adduced by the Commission.

163 Further it is useless to deny the evidential value of the documents in question on the ground that Export recorded or kept them for the sole purpose of rendering RT liable to be proceeded against by the Commission.

164 Contrary to the view of SU and CSM there is no reason why the Commission and the Court should not accept as evidence of an undertaking's conduct correspondence exchanged between third parties, provided that the content thereof is credible to the extent to which it refers to the said conduct.

169 Large amounts were channelled in this way to a restricted number of consignees or destinations as is shown by the actual figures produced by RT in Annex 4 to its reply.

170 These figures, which even though they are sometimes higher and sometimes lower than those mentioned by the Commission, are nevertheless of the same order of magnitude, show that RT, during the whole of the four marketing years to which the decision refers, supplied SU, CSM and the Netherlands milk processing industry respectively with 40 741, 35 099 and 48 000 metric tons of refined sugar, in the aggregate with 123 840 metric tons, which are large figures even if the 10 587 metric tons of granulated sugar which CSM consigned to RT for processing and which RT later re-exported to the Netherlands as refined sugar are deducted from these figures.

171 It emerges from the statistics submitted by the Commission (Annex I to the rejoinder in Case 47/73, table VI) that the 'controlled' deliveries — that is to say the deliveries from producer to producer, to the milk processing industry, for denaturing or export at a later date to third countries — increased respectively during each of the four marketing years in question to 70 %; 28-4 %; 79-3 % and 70 % of the total amount of Belgian exports to the Netherlands; the Commission states that the relatively low figure of 28-4 % is explained by the fact that in 1969/70 two-thirds of these exports were effected by Belgian producers who were not dependent on RT.

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176 Therefore the applicants' argument cannot be upheld.

177 SU and CSM also submit that because their conduct on the market

corresponded to the habitual attitude adopted by a producer in their situation, it does not amount to a concerted practice.

178 RT submits a similar argument but in more specific terms, namely 'that ... an important element in the legal concept of a "a concerted practice" is the

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causal connexion which must exist between the alleged concerted action and the practices which were adopted' and which is absent 'if these practices are the natural consequence of market conditions which would have been the same even if there had been no contacts between producers'.

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185 The documents quoted show that RT forced Belgian dealers to adopt its policy of channelling Belgian exports to the Netherlands, with the result that the participation of these dealers in all or part of the contested deliveries cannot modify their evaluation.

186 4. SU and CSM submit that they were never asked to approve the destination of Belgian sugar to be exported to the Netherlands.

187 This argument, as is shown by the documents quoted, disregards the fact that RT and the Netherlands producers agreed on the basic criteria to be applied in concert when selecting the consignees or destinations of Belgian deliveries to the Netherlands and in fact adopted them.

188 5. The argument of SU and of CSM that not inconsiderable quantities of Belgian sugar were imported into the Netherlands outside the supply system which is criticized, such as supplies negotiated by a German firm and coming from the production of Belgian manufacturers other than RT, cannot either be taken into consideration.

189 The fact that such deliveries took place, which moreover the Commission does not dispute, in no way defeats the argument that RT, the only Belgian producer blamed in the decision, as well as SU and CSM engaged in a concerted practice concerning the destination of the Belgian company's production.

193 The concerted practices in question have affected trade between Member States because they were related to sales of sugar between Belgium and the Netherlands.

194 Their object and effect is to ensure that sugar manufactured by RT or by Belgian producers, which this company controls, was only exported to the Netherlands in such a way that it did not compete there with sugar manufactured by Netherlands producers.

195 The object and effect of the said practices which limit or control markets and also share markets within the meaning of Article 85 (b) and (c) was to interfere with competition.

(dd) The question whether the concerted practices affected trade between Member States and interfered appreciably with competition

196 With regard to the question whether the concerted practices in question affected trade between Member States and interfered appreciably with competition it is advisable to ascertain whether there are grounds for assuming that, if the said practices had not been carried out, a large proportion of the very big amounts, which RT channelled or got the Belgian dealers to channel to the consignees and destinations referred to above, would have been supplied to other customers established in the Netherlands in competition with Netherlands producers.

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202 These documents relied on by the Commission in the present context to prove the refusals by Pfeifer & Langen to supply Netherlands customers who were not producers, only refer specifically to the relations between Export and RT and also between Belgian operators, on the one hand, and possible French, German, Netherlands and Italian customers, on the other hand, and do not refer at all to the course of conduct adopted or to be adopted on the Netherlands market by German producers.

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203 To the extent to which the said documents refer to cooperation on a much larger scale throughout the whole of the Community the expressions used by Export 'the concerted action between European refiners' and 'Tirlemont entered into an agreement with the other refiners of the common market under which they granted each other exclusive rights, and this agreement shows that marketing in the country of destination is reserved to the refiners of that country' — without prejudice to their possible relevance in other contexts, — appear to be too vague and general even to constitute evidence of a practice between Pfeifer & Langen and SU or CSM and especially as the Commission has itself expressly stated that it dropped its original argument that there was a general concerted action between all the large Community sugar producers and only found that there were a series of infringements in specific localities.

204 (b) With regard to the sugar supplied by Pfeifer & Langen to the Netherlands the Commission has not challenged the figures produced by Pfeifer & Langen which show that during the 1970/71 and 1971/72 marketing years the latter only supplied large quantities (altogether 15 000 metric tons) to the Limako undertaking, a subsidiary of SU, whereas the amounts supplied during this period to CSM (1-4 metric tons) and to third parties (1-05 metric tons) were minimal.

209 In these circumstances it may not have been in the interests of Pfeifer & Langen to investigate the Netherlands market in order to sell sugar there on an occasional and sporadic basis instead of continuing to supply its long established customers who usually provided it with a guaranteed market.

210 The effect of all the preceding arguments is that, since the Commission has not adduced adequate evidence of the infringement for which it blames Pfeifer & Langen under subparagraph 2 of Article 1 (1) of the contested decision, this provision must be annulled to the extent to which it states that Pfeifer & Langen, on the one hand, and SU and CSM on the other hand, engaged in a concerted action.

II — Infringement of Regulation No 26 of the Council

211 CSM and RT submit that, even if it is assumed that the courses of conduct to which exception is taken are concerted practices within the meaning of Article 85 of the Treaty, they are none the less lawful because they come within the second exception specified in the first sentence of Article 2 (1) of Regulation No 26, according to which Article 85 (1) of the Treaty shall not apply, inter alia, to concerted practices which are 'necessary for attainment of the objectives set out in Article 39 of the Treaty'.

212 1. CSM submits that without the purchases from RT its plant and distributive network would not have been fully utilized, so that it would not therefore have been able to offer beet growers a price above the minimum price laid down by Community rules.

213 The contested decision therefore wrongly failed to apply the beforementioned provision of Regulation No 26.

219 In fact RT was unable to obtain the intervention price by selling sugar to the Belgian intervention agency, as the Belgian authorities informed it that they did not want such sales.

220 In these circumstances the applicant found that it was forced, on the one hand, to prevent customers, to which it had sold sugar for denaturing and at a relatively low price, reselling it on the market for human consumption at a price lower than the intervention price and, on the other hand, to refuse to accept offers to purchase at a price which was too low, when it could obtain a better price by selling direct to certain large purchasers.

221 As provided for in Article 9 (1) of Regulation No 1009/67 the intervention agencies 'shall be required' to buy in the sugar offered to them and the producer concerned can insist that this requirement is observed.

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222 So far as sugar sold at a relatively low price for denaturing is concerned, a producer, acting independently, may be justified in endeavouring to prevent this sugar being sold at too low a price on the market for human consumption, but the objectives of Article 39 of the Treaty do not however in any way require that this producer pursues this aim by means of concerted practices.

223 With regard to RTs preferential treatment of 'large producers' its argument is tantamount to saying that direct sales to Netherlands consumers, in competition with Netherlands producers, could enable the latter to obtain more advantageous prices, so that RT°s policy was at least not designed to further and certainly not 'necessary' for the attainment of the objective set out in subparagraph (e) of Article 39 (1) of the Treaty, namely 'to ensure that supplies reach consumers at reasonable prices', which is just as important as the objective of ensuring a fair standard of living for the agricultural community.

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other hand, are blamed for having committed 'from the 1968/69 marketing year onwards infringements of Article 85 (1) by engaging in a concerted practice having as its object and effect the control of deliveries of Belgian sugar on the market of the western part of Germany and consequently protection of that market'.

228 In its written reply to the questions put by the Court the Commission admitted that 'in the French version of the contested decision sent to RT°, it pointed out that the infringement in question only commenced in 1969/70.

229 The Commission asserts that this was due to a mistake, whereas RT states that it abides by the text of the decision of which it was notified.

230 On the one hand the notification of objections indicated with sufficient clarity that the Commission intended to find that the applicant had engaged in a concerted practice having as its object the protection of the western part of Germany, which began during the 1968/69 marketing year.

231 On the other hand the pleadings produced by the applicant during the written procedure and in particular pages 4 and 12 of and Annex 5 to the reply show that this is also the interpretation which the applicant placed on the contested decision.

II — Infringement of the right to defend

235 Pfeifer & Langen submits that the reasons for certain statements in the notification of objections are either not given or the statements themselves are inaccurate.

236 The examination of the question whether the Commission has or has not proved the infringement alleged is part of the substance of the case.

III — Infringement of the accepted principles for the taking of evidence

237 Pfeifer & Langen complain that the Commission based the complaint made against it upon facts which cannot justify the conclusion that there was a concerted practice but which can be explained by reasons in no way connected with any concerted action.

238 Further the Commission cannot be permitted, for the purpose of proving an infringement, to rely on statements of persons who are not parties to the proceedings and are not in a position to give evidence as to the facts which they allege but can at best express an opinion on events in which they have not taken part.

I — Summary of the relevant statements of the decision

241 The practices for which the applicants are blamed are made up of four groups of actions or omissions.

242 They are first of all blamed for having channelled most of the exports of white sugar coming from the RT group into the western part of Germany to specific consignees, namely Pfeifer & Langen or, for specific purposes, namely denaturing or subsequent export to third countries.

243 With regard to the relatively small volume of Belgian exports to the beforementioned region, which were not channelled in this way, the RT group is blamed for having compelled Belgian dealers, and in particular Export, only to undertake such exports with Pfeifer & Langen's consent or by applying a price aligned on the German company's price.

244 Further RT instructed Export to refuse, openly or covertly, offers from German non-producers wishing to import Belgian sugar.

245 Finally, the Belgian company supplied Pfeifer & Langen with very large quantities of raw sugar instead of refining it itself and exporting the white sugar refined in this way to the German firm's sales area.

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Case 47/73) show that these dealers undertook only to resell the sugar purchased under these transactions for denaturing.

247 RT, in a letter of 24 July 1969 to Export (Annex I 43 to the statements of defence) — after confirming that Belgian sugar is at the present time exported to Germany for human consumption whereas it was originally sold for denaturing — states that 'these deliveries for human consumption ... are only possible at prices less than those for which German producers ask; the latter consequently deeply deplore the pressure brought to bear on their market by Belgian sugar', and goes on to say: 'Having informed you earlier of our policy towards our foreign colleagues and having received your assurance of sincere cooperation, I must now insist that the operations now being carried out in Germany be concluded as soon as possible and that in any event no new business of this kind be initiated ...'.

248 When Hottlet purchased from RT and sold to a customer two consignments of sugar and the customer later requested Hottlet to release it from the obligation only to use this sugar for denaturing, RT witheld its consent and claimed compensation from Hottlet, because as a result of these events the latter did not take delivery from RT of the remainder of the said consignments (cf. in particular letter of RT to Hottlet of 16 December 1969, Annex I 42 to the statements of defence).

249 Export, in a report of 20 April 1970 recording a conversation between RT and Export (Annex I 74 to the statements of defence), after referring to 'RT°s obligations undertaken in the context of the rationalization of the European sugar industry' and of the 'concerted action between European refiners' records that 'in this way a series of direct transactions between refiners to the producer' — the last two words should probably read 'or producers' — cease to form part of the business relations between RT and Export in ... Germany (trade with Pfeifer & Langen)'.

253 Export in a telex message to a German dealer of 25 September 1970 (Annex I 143 to the statements of defence) complains that another German firm which bought sugar from RT through Hottlet did not honour its undertaking not to resell this sugar in North-Rhine Westphalia.

254 2. According to the statistics produced by the Commission in Annex 1 to the rejoinder in Case 47/73 the pattern of Belgian exports of white sugar to Germany during the period covered by the proceedings, expressed in metric tons, is as follows:

'Controlled' exports

Deliveries Deliveries for Marketing Total Deliveries to made with denaturing Deliveries at year exports Pfeifer & the agree­ or export an adapted Total Langen ment of to third price or to WZV Pfeifer & countries Langen

1968/69 23 800 800 — 19 400 — 20 200

1969/70 23 800 900 700 11 700 — 13 300

257 It must moreover be borne in mind that in this connexion it is more

important to know the pattern of sugar exported by RT, or by the producers which it controls, direct or through the dealers Export and Hottlet, than the volume of exports by Belgian producers independent of RT.

(bb) The obligation imposed on agents only to undertake free exports of sugar with the consent of Pfeifer & Langen or by applying a price aligned on the German company's price

258 Export in a letter to Moerbeke-Waas of 15 September 1969 confirming a purchase of 5 000 metric tons of sugar (Annex I 54 to the statements of defence) states under the heading 'destination': 'Sales to the Federal Republic of Germany for human consumption shall be subject to the approval of the Pfeifer & Langen firm'.

259 Export states in a report of 30 April 1970 on discussions which took place between Mr Maisin of RT and a representative of Export (Annex I 76 to the statements of defence): 'The basic principle upon which Mr Maisin is adamant is as follows: Export must adopt RT°s policy towards its European partners. RT defines its policy as follows: No movement of goods from country to country, save by agreement between producer and producer'.

260 When a German dealer, on behalf of a customer established at Aix-la-Chapelle, asked Export by a telex message of 11 September 1970 (Annex I 106 to the statements of defence) to make him an offer of 15 000 metric tons at the price of BFrs 1 095-93, Export in a telex message in reply of 14 September 1970 (Annex I 107 to the statements of defence) — after

— After long discussions an agreement was concluded between Export and RT on the basis of BFrs 1 100, but it came too late with the result that the deal never materialized.

— With regard to RT Export refers to its 'successive refusals based on the principles it has adopted for intra-Community sales of sugar' and also to its intention 'already mentioned by Mr Rolin to Baron Kronacker [of Export] (memorandum on the conversation ... of 31 August 1970 on the agreement by German manufacturers — Pfeifer & Langen Köln — not to buy sugar beet from the Belgian sugar factory at Liers) and to Mr Lemaire not to do anything which may disturb the pattern of the German sugar market'.

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— Export complained that, following information which reached it from Germany, RT had in the meantime sold to Pfeifer & Langen at a price below that offered by Export.

262 It is evident from a series of confirmations of or offers to purchase sent either by Export or Hottlet to Belgian producers (RT, Couplet, Oreye) or by Oreye to Export (Annexes I 55, 91, 92, 113, 119 to the statements of defence) between 17 September 1969 and 7 October 1970 that these producers asked in the case of sales to Germany a higher ex works price than that which they were willing to accept in the case of sugar to be sold elsewhere (BFrs 1 100 per 100 kg instead of BFrs 1 092-50 according to a letter from Oreye to Export of 7 October 1970).

(cc) Refusal to sell

267 A German firm in a letter to Export of 11 November 1970 (Annex I 118 to the statements of defence) which also confirms this situation, after stating that it entered into several large contracts — probably with German business houses — goes on to say that during the negotiations preceding each of these agreements 'we consulted you but unfortunately — and we must repeat this — we did not receive any offers from you which arrived in sufficient time and at a sufficiently interesting price to enable us to compete. Now it is only a question of meeting possible additional requirements which will happen from time to time'.

270 Further, the . Commission submits that RT°s reserved attitude towards prospective German purchasers other than Pfeifer & Langen cannot be due to a decision which the Belgian company took independently in accordance with its objective interests, since the large Belgian sugar surplus (174 000, 251 000, 193 000 and 277 000 metric tons respectively during each of the four marketing years in question; cf. Annex 1 to the rejoinder in Case 47/73, table I) compared with the by no means inconsiderable demand from the Western region of the Federal Republic of Germany ought in the normal course of events to have provided RT with an incentive to compete with Pfeifer & Langen on the market of the said region

B — The evaluation of the evidence

271 (a) With regard to the evidential value of the documents which have been quoted RT and Pfeifer & Langen put forward arguments similar to those submitted by RT, on the one hand, and SU and CSM, on the other hand, in relation to the same or other documents prepared by Export or to the documents sent to Export by RT in the context of the second complaint; these arguments were set out in Chapter 2 and must be dismissed for the reasons therein stated.

272 More particularly Pfeifer & Langen's argument that Export's statements are not credible, as the interests of this firm conflicted with those of RT, cannot be upheld.

273 Although it is true that the effect of RT°s sales policy was that many transactions in which Export wanted to participate did not take place or were effected without Export's participation, this conflict of interests does not alter the fact that, according to RT°s own statements, Export has correctly recorded the statements which the latter made to it and that, for the reasons given when considering the second complaint these declarations must be regarded as truthful.

279 (c) 1. Pfeifer & Langen submits that RT°s statement in its letter of 24 July 1969 'that German producers deeply deplore the pressure brought to bear in this way on their market by Belgian sugar' does not mention it by name.

280 Nevertheless there appears to be no doubt that this firm, which is expressly mentioned in other documents which have been quoted, was one of the producers which made such complaints, in particular because, taking into account the relatively short distances, Pfeifer & Langen's sales area was the most suitable of all the various German regions for exports of Belgian sugar.

281 Pfeifer & Langen seeks to minimize the significance of RT°s statement by calling attention, on the one hand, to the fact that, if 'German producers were not pleased with foreign imports, their reaction was not surprising' (application in Case 56/73, p. 30) and, on the other hand, to the fact that it

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'never attempted to exert any influence on RT when it was deciding what it intended to do' (loc. cit., p. 31).

282 However the beforementioned letter shows clearly that the German producers to which it referred — among whom Pfeifer & Langen must be included for the reasons which have just been mentioned — never at any time kept their dissatisfaction to themselves but told RT about it.

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directed against competition, which is a classic example of practical cooperation which the parties concerned knowingly substituted for the risks of competition.

289 3. RT°s argument that the practices complained of '[were the consequence of] market conditions and therefore would have been the same even if there had been no contact between producers' has already been rejected in Chapter 2 hereof.

290 4. RT refers to certain of its deliveries to non-producers established in the Rhineland in order to prove that it never systematically adopted a policy directed against competition.

291 However, in order to establish that there are concerted practices within the meaning of Article 85 of the Treaty, it is sufficient to show that competition has been restricted and it is unnecessary to prove that it has been prevented.

292 Furthermore, RT did not seriously deny that the volume of these free deliveries was small.

296 The essence of the Commission's argument is that RT was able to refine these amounts itself and that it was in its interests to do so in order to supply the German market with the amounts of white sugar which it produced.

297 Moreover the figures produced by Pfeifer & Langen show that its own production of raw sugar together with additional purchases from producers in North Germany would have been sufficient to utilize to the full this company's refining capacity, which on a proper evaluation is estimated at 180 000 to 200 000 metric tons per annum.

298 According to the table which Pfeifer & Langen has produced the large amounts it purchased in north Germany varied very little in quantity so that it cannot be accepted that purchases from RT were intended to fill a gap.

299 In fact Pfeifer & Langen bought RT's raw sugar at such a high price that it could not even obtain the normal processing margin.

300 The Commission therefore takes the view that the conduct of these applicants cannot be regarded as the usual course of conduct adopted by economic operators in competition with each other and can only be explained by their common wish to make Pfeifer & Langen absorb the amounts of raw sugar in issue, in order to ensure that, after they have been processed into white sugar, they do not compete in Pfeifer & Langen's sales area with the white sugar produced by this firm.

301 The documents referred to earlier only deal with white sugar so that, so far as transactions in raw sugar are concerned, it is necessary to consider whether the conduct which the Commission alleges and regards as a constituent part of the concerted practice can only reasonably be explained by the existence of a concerted action.

305 The concerted practices in question affected trade between Member States, because they affected the sugar trade between Belgium and the Federal Republic of Germany.

306 Their object and effect was to ensure that the sugar manufactured by RT or by Belgian producers which it controls was in most cases only exported to Germany in such a way that it did not compete with the sugar manufactured by Pfeifer & Langen.

307 The object and effect of the said practices, which limit or control markets and also share markets within the meaning of Article 85 (b) and (c) of the Treaty, was to interfere with competition.

зов For similar reasons, mutatis mutandis, to those given when dealing with the second complaint, it must be held that the concerted practices in question affected trade between Member States and interfered appreciably with competition.

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309 The consequence of these considerations is that, since the Commission has proved that RT and Pfeifer & Langen have committed an infringement, this submission must be rejected.

314 The Commission argues that its intention to make this complaint also against SZV is indicated, on the one hand, in the statement of the reasons upon which the decision was based and, on the other hand, in the introductory part of Article 1 (2) of the decision.

315 For the purpose of determining the persons to whom a decision, which finds that there has been an infringement, applies, only the operative part of this decision must be considered, provided that it is not open to more than one interpretation.

316 Subparagraph 4 of Article 1 (1) sets out clearly the undertakings blamed for the infringement, namely Béghin, Sucre-Union, SZAG and Franken.

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317 Therefore there are grounds for finding that this subparagraph does not apply to SZV.

I — The actual conduct of the applicants

320 A — In the case of Béghin it is not denied that it did not supply such operators.

321 B — In the case of Sucre-Union, although the parties agree that it did supply such operators, the figures on the Court's file do not however enable the volume to be calculated accurately and it is all the more difficult to do so because the information supplied by the Commission is contradictory.

322 In fact, on the one hand, the Commission states (Statement of defence in Case 44/73, No 43) that Sucre-Union supplied 'in 1970/71 larger amounts' — that is to say larger amounts than in the previous marketing years — 'to independent middlemen, but much less in 1971/72', in other words that it made other deliveries during each of the two marketing years in question.

323 On the other hand the statistics for French imports into Germany in Annex 4 of the rejoinder in Case 44/73, in so far as Sucre-Union's other deliveries are concerned, only expressly records 4 000 metric tons supplied in 1970/71 'to a

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German dealer, which suggests that this company did not effect any other deliveries in 1971/72.

328 A German dealer sent Sucre-Union on 23 August 1971 a telex message (Annex I 156 to the statements of defence) in which he said: 'Nach heutiger telefonischer Rücksprache mit obiger Firma' — that is to say with a German firm which had bought or contemplated buying from SZV — 'stellte ich fest, daß die von mir unterbreiteten Preise für Mainz und Kempten/Hegge von anderer Seite billiger offeriert wurden. Die Preise sollen in jedem Falle under den Basispreisen liegen, die die Südzucker-Verkaufs-GmbH aufgegeben hat. Ich konnte noch nicht in Erfahrung bringen, ob die aufgegebenen Preise

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tatsächlich von der Südzucker-Verkaufs-GmbH sind oder von einem anderen

330 The Commission infers from this letter that Sucre-Union, at the request of SZAG or of SZV, required its German representative to send the list of its customers to one or other of these companies.

331 Finally, in a letter of 10 March 1972 the German firm GEDELFI informed the Belgian firm GEMAS (Annex II 9 to the statements of defence in Cases 54 to 56/73) that 'In den letzten 4 Jahren ist von der GEDELFI kein Zucker aus EWG-Ländern importiert worden. Unsere vergeblichen Versuche vor einigen Jahren sind Ihnen aus unseren Gesprächen bekannt. Damals haben wir auf unsere Anfragen Offerten genannt, die sich aber aus Frachtgründen und deshalb Preisgründen nicht realisieren lassen'. ('During the last four years

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GEDELFI has not imported any sugar coming from EEC countries. Our discussions have made you familiar with the unsuccessful attempts we made some years ago. At that time our requests were not followed up by any offer. At the present our enquiries produce offers, which for reasons connected with freight and therefore prices are not acceptable').

332 (b) The applicants in general do not consider that any of the documents produced are conclusive.

333 So far in particular as the letter of 29 September 1971 is concerned Béghin states that the facts set out therein did not apply to it.

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Es wäre deshalb verständlich gewesen, wenn wir eine gewisse Einteilung des Arbeitsbereiches der einzelnen Verkäufer vorgenommen hätten'. ('Herewith we enclose a copy of a letter which [X] produced in Brussels and which was apparently addressed to us. We have not been able to find any trace at all of it among our papers. What is more we have no idea what it means. Account must obviously be taken of the fact that it is dated a long time ago. It appears however to have been drafted with a specific object in mind ... We had to break off contractual relations with [X] because he owed us a very large sum of money and owing to his financial situation we were afraid that the deficit would get larger. Moreover he has not paid his debt. With regard to the list of customers we do not think that we ourselves made one. We cannot find any copy either. We nevertheless regret that we did not do so. We received at that time some very unpleasant complaints, because [X], who did not have the exclusive rights for Germany, made offers to customers who already bought sugar from us through three other sale channels:

(1) Sucre-Union as a direct vendor,

(2) the Schlüter & Maack undertaking, Hamburg (as a dealer),

(3) our representative G. Baus, Homburg/Saar.

It would therefore have been understandable if we had proceeded to some partitioning of the field of operations of individual vendors').

340 Sales of raw sugar cannot be justified by insufficient refining capacity, since Béghin could have refined in its factories at Thumeries in the north of France all the raw sugar produced at its factories at Sillery near Reims, which indeed is what it did before the two marketing years in question.

341 Béghin's argument that freight rates made such an operation uneconomic comes up against the fact that, on the one hand, Sillery is further away from SZAG's refineries than from Thumeries and, on the other hand, that, the company, instead of transporting the raw sugar to Thumeries and then exporting it, could have found another way of selling sugar to south Germany.

2. The evaluation of this evidence

A — Béghin's deliveries

342 It is first of all held that the letter of 29 September 1971 deals with events with which Béghin was in no way connected.

343 (a) Béghin's deliveries of white sugar to German producers were restricted to 286 metric tons supplied to SZAG and this operation is so small that it cannot, constitute evidence of a concerted action designed to protect the market of south Germany.

348 On the other hand, so far as the interests of SZAG are concerned, it is not denied that the purchases in issue followed a well established practice, as the previous purchases from other producers were even larger than those from French producers.

349 Nor is it denied that SZAG found that the price it paid to Béghin was favourable, whereas the opposite should have been expected if the object of the contested deliveries had been to protect the market in south Germany.

350 Moreover in this case the statement in the decision that 'normally' it is not in the interest of a producer to sell to a competitor, since he could obtain a more favourable price if he supplied dealers and consumers direct, can be partly turned against the author, since it suggests, or at least does not deny, that in the nature of things it may very well be in the interest of the producer-purchaser himself to make additional purchases.

351 In fact large fluctuations of the harvest yields, which may force a producer to have recourse to the production of one of his counterparts in order to be able

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to perform his obligations under long term supply contracts with his customers, are peculiar to the sugar market.

357 This fact is likely to raise doubts as to the existence of a concerted action between the undertakings concerned and in any case of a concerted action which was in fact implemented.

358 Further, certain considerations mentioned in connexion with Béghin's deliveries also apply in this context, in particular the fact that the Commission has been unable to mention a single instance of a refusal by Sucre-Union to sell to a German non-producer, the fact that it could be in

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the interests of SZAG and Franken, even if they acted independently, to make additional purchases and finally the conclusions to be drawn from the fact that as a rule the market of south Germany was in equilibrium.

359 (b) There still remains for consideration the question whether, notwithstanding these facts, the letter of 29 September 1971, which is said to have been sent to Sucre-Union by its German representative X, having regard to the pattern of Sucre-Union's exports to south Germany, can prove that the infringement in question was in fact committed.

360 With regard to the question whether there ever was such a letter and, if so, whether its contents are true, X's statements conflict with those of Sucre-Union and SZAG.

The complaint that RT brought economic pressure to bear on Belgian exporters

365 Subparagraph 1 of Article 1 (2) of the contested decision blames RT for having 'from the 1968/69 marketing year onwards committed an infringement of Article 86 by bringing economic pressure to bear on Belgian exporters with the object of compelling them to restrict their exports'.

I — Summary of the relevant statements of the decision

366 The Commission takes the view that RT brought economic pressure to bear on the Belgian dealers Export and Hottlet, hereinafter called 'the dealers', with the object of compelling them only to resell the sugar supplied to them to specific customers or destinations and to impose these restrictions on their own customers.

367 This pressure consisted 'in refusing to sell sugar to these two dealers, in particular for exporting to third countries — and such sales represent a large proportion of their turnover — if this sugar is resold for the purposes which it [RT] has not authorized'.

368 RT occupies a dominant position on the Belgo-Luxembourg sugar market which is a substantial part of the common market.

372 So far as sugar in particular is concerned it is advisable to take into consideration in addition to the high freight rates in relation to the price of the product and the habits of the processing industries and consumers the fact that Community rules have consolidated most of the special features of the former national markets.

373 From 1968/69 to 1971/72 Belgian production and total Community production increased respectively from 530 000 to 770 000 metric tons and from 6 800 000 to 8 100 000 metric tons (cf. contested decision, p. 18, paragraphs Nos 3 and 5).

374 During these marketing years Belgian consumption was approximately 350 000 metric tons whereas Community consumption increased from 5 900 000 to 6 500 000 metric tons (cf. loc. cit.).

375 If the other criteria mentioned above are taken into account these market

shares are sufficiently large for the area covered by Belgium and Luxembourg to be considered, so far as sugar is concerned, as a substantial part of the common market in this product.

2. The question whether RT occupies a dominant position on the Belgo-Luxembourg sugar market

381 In these circumstances RT was able to impede effective competition on the market in question.

382 Consequently during the period which has to be considered it occupied a dominant position on this market.

3. The question whether there was an abuse of the dominant position

A — The evidence

383 (a) In order to show that RT has in fact committed the infringement for which it is blamed the Commission relies first of all on a series of documents

which it produced at the same time to prove that there were concerted practices designed to protect the Netherlands or the west German market and which have been mentioned above (Chapters 2 and 3).

— subsequently Hottlet asked RT to release the said customer and itself from this obligation which could no longer be complied with because the denaturing premium had been abolished;

RT nevertheless insisted on absolute performance of the clause in question and in the end required Hottlet to pay Bfrs 1 250 000 by way of damages, because Hottlet, as a result of the events which have just been described, did not take delivery within the prescribed time of 2 500 metric tons of the amount covered by the before mentioned contracts.

388 An internal memorandum of Export 'on the opportunities for cooperating with RT' of 23 April 1970 (Annex I 75 to the statements of defence) after complaining that 'the refiners' policy' does not permit Export to supply the frontier regions of the Netherlands, France and Germany ends as follows: 'It is doubtful whether we can get a quota, because RT will not wish to underwrite a policy running counter to the agreements which it has entered into with other refiners'.

389 Another internal memorandum of Export relating to a discussion which its representatives had on 17 February 1970 with Mr Maisin of RT (Annex I 78 to the statements of defence) reads as follows:

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'Raffinerie Tirlemontoise plans to export about 9 000 metric tons of raw sugar which will be delivered to Tate. RT suggests that Export acts in this operation as broker. If Export does so it should abide by the common policy laid down for invitations to tender.

390 On the same date Export's Managing Board made a decision concerning the same questions (Annex II 17 to the statement of defence in Case 47/73) which inter alia states 'We agree in a conciliatory spirit and as an indication that we wish to be cooperative not to tender for a refund on raw sugar at the standing EEC invitations to tender which will take place once a week on and after Wednesday 18 February, so that such applications for refunds do not compete with the applications of Franco-Belgian refiners and in particular of Raffinerie Tirlemontoise. (It must be noted that this was a purely formal gesture because, unless Export's supplies of raw sugar were guaranteed by Tirlemont, the only possible Belgian undertaking, it could not reasonably be expected to tender at the invitation to tender for raw sugar: the risk being that if it was a successful tenderer it would be unable in practice to cover its position)'.

391 Baron Kronacker, Chairman of Export, in a memorandum of 26 March 1970 (Annex II 18 to the statement of defence in Case 47/73) wrote as follows: 'It is my wish that we keep in step with Tirlemont. If we do so, we sacrifice our principals, we agree to reduce the amounts in respect of which we attend the invitation to tender for Export and, although we have no say in the matter, we

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agree to adopt the prices of the Paris consortium. This of necessity implies that Tirlemont only takes part in the invitations to tender through us ... As compensation for our sacrifices we must be granted a commission of 3/ 4 % on all transactions.'

On the other hand, if the Netherlands sugar industry were to ask us to supply its own requirements, any Belgian sugar which might be exported would be handled with the help of our business houses.

It follows from the beforementioned stipulations that you will refrain from taking any kind of initiative on the Netherlands market so that its pattern is not disturbed.'

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394 Two telex messages of 20 August 1970 exchanged in similar circumstances (Annexes I 83, 84 to the statement of defence) read as follows:

Export's telex message: 'Export records its agreement to join RT as a manufacturer of Belgian sugar in working out an agreement with Suiker Unie and Centrale Suiker Maatschappij as manufacturers of Netherlands sugar for the 1970/71 sugar marketing years upon the following terms:

1. Export gives up dealing in Belgian sugar with Netherlands purchaser-consumers in connexion with what we call the particular requirements in the Netherlands, that is to say, on the one hand, for sugar in its original state for human consumption, and, on the other hand, for sugar for factories manufacturing sweets to be consumed in the Netherlands, the other EEC countries and third countries. This sweet manufacturing industry does not include the milk processing industry.

to sell its granulated sugar for export from Belgium to the long established Belgian sugar traders' — namely Export and Hottlet — then emphasized 'the essential requirements of RT's general commercial policy which have been defined for us, namely that it does not intend to undertake any business for the Netherlands which is not approved by ... SU and CSM' went on as follows: 'We consider... that we must draw your attention expressly to this commercial policy of our principal suppliers, the Tirlemont group, since it cannot approve any transaction in Belgian sugar falling outside this policy and the consequence of any such transaction is that we lose the exclusive rights in question ... above'.

B — The evaluation of the evidence

396 It appears to be quite clear from the documents mentioned, if they are evaluated together with the factors set out in Chapters 2 and 3, that RT either expressly or impliedly told the dealers, or deliberately created in their minds the impression, that it would not supply them with sugar or would not supply them with all the quantities for which they applied, unless they complied with its restrictive export policy as applied to the Netherlands or west German markets or deliveries to third countries.

397 The words used in some of its statements are indeed so peremptory that they call to mind instructions to a trade representative rather than negotiations on a footing of equality between a producer and an independent dealer.

398 By compelling dealers to channel their exports to specific consignees or destinations and to impose these restrictions on their own customers RT has restricted the outlets of the dealers and indirectly of their purchasers, which is a practice expressly mentioned by Article 86 (b).

The complaint that SU and CSM brought economic pressure to bear on Netherlands importers

403 Subparagraph 2 of Article 1 (2) of the contested decision blames SU and CSM for having 'during the 1969/70 marketing year committed infringements of Article 86 by bringing economic pressure to bear on Netherlands importers with the object of compelling them to restrict their imports'.

404 SU and CSM jointly threatened the Netherlands dealers Jacobson, Dudok de Wit and Internatio that they would prevent them from continuing to import sugar for the purpose of supplying the Netherlands milk processing industry unless they gave three undertakings:

— not to apply too competitive a price when reselling French sugar to Netherlands third parties;

— to resell, under specific conditions, part of this sugar to two Netherlands producers;

— not to effect 'such imports' — which expression must be understood as meaning imports intended for supplying long established Netherlands customers of SU and CSM — without the latters' consent.

407 The Commission's main evidence for this statement is an internal memorandum of 8 June 1970 drawn up by Mr Lemaire, a director of Export, reporting a conversation which the latter had with Mr Dudok de Wit, at that time director of the firm having the same name (Annex I 133 to the statements of defence), which included the following passages: 'The Netherlands sugar industry (Suiker Unie & CSM) through Mr Lindeboom, sales manager of Suiker Unie, approached the long established Netherlands sugar trade (Dudok de Wit & Internatio & Jacobson) with the object of making representations in connexion with transactions for importing French granulated sugar concluded by these business houses with Sucre-Union Paris (the trading company of the French sugar beet cooperatives) for the 1969/70 marketing year... In view of the importance of these transactions a specific agreement was entered into between the Netherlands trade and the sugar manufacturers of this country under which ... This agreement also provides that... When Mr Lindeboom of Suiker Unie had this discussion with the

Netherlands import trade he requested that in future, for the 1970/71 marketing year, it should refrain from effecting similar import transactions: if it did not do so, he would make it impossible for them to carry on their traditional business of importing sugar under temporary arrangements by himself meeting the requirements of the processing industry (milk, etc.) on the terms prevailing on the world market.'

408 With a view to checking, inter alia, whether this threat was in fact uttered the Court heard the evidence of Messrs. Lemaire, Dudok de Wit, Sanders (at that time the authorized representative and now deputy director of Jacobson) and Lindeboom.

414 Their resale did not bring the producers or the dealers any financial advantage.

415 With regard to the question whether SU and CSM uttered the threat in relation to the dealers which is mentioned in the decision the witness Mr

Dudok de Wit replied:

— 'the way in which Mr Lemaire describes the matter is incorrect. The alleged intention of the Netherlands sugar industry to import itself was also not new and, particularly in this case, was implemented by progressive stages ... That constituted in itself a threat but it was not uttered only at that time. This threat was in existence before ... The basis of Mr Lemaire's and my own reasoning is approximately the same; the only difference is that Mr Lemaire's memorandum gives the facts as he saw and interpreted them. Basically it is his interpretation which is faulty ... In fact there was talk of industry increasing its imports ... it is the word "threat" to which I take exception. The situation was a threat to trade but Mr Lindeboom did not specifically describe it in terms of a threat by saying for example: if you continue to import I will make importing impossible.' — if Mr Lemaire had the mistaken impression that there was coercion by the producers, it would be 'very possible' that this misunderstanding was due to the fact that the witness Mr Dudok de Wit, with the aim óf not

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offending Mr Lemaire by telling him openly that it was not in the interest of the dealers to buy Belgian sugar, deliberately expressed himself in rather vague terms.

— 'In the heat of a conversation concerning the conclusion of an agreement allowing us to sell part of our French sugar ... it may have been said: 'if you do not discontinue these imports then we shall take this or that step'. Whether such steps can have any effect is another matter. We can say: If you do not stop this practice we will take such and such a step, but obviously it must be possible to do so. The following year we imported Belgian sugar. It is rather difficult to say 'we shall import sugar from third countries' when the following year new regulations are adopted which make it impossible to import sugar from third countries.' — There may have been such a statement. I must say to you that I am not certain. In any case such a statement carries little weight, because, if it is said that the requirements of the processing industry will be met on the terms prevailing on the world market, that means that both parties will make purchases on world markets and, as the dealers can buy on these markets, the latter in any case claim, perhaps wrongly, that they can do this better than the industry which is more geared to marketing its sugar.'

417 In connexion with the same point the witness Mr Lindeboom stated that:

— during a period which began before 1961 and ended in 1967 he was employed by Internado and became friendly with Mr Kopmels who was attached to the Jacobson firm and died some years ago.

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— Following the import of French sugar which is the subject-matter of these proceedings he had one discussion, which moreover was friendly, with Mr Kopmels on the impact which such imports would have on the Netherlands market but he never had any discussion with Mr Dudok de Wit and Mr Sanders;

420 Since therefore the facts alleged by the Commission upon which it based this complaint have not been sufficiently proved, subparagraph 2 of Article 2 (2) of the contested decision must be annulled.

Chapter 7

Complaint that SZV prevented its agents from reselling sugar from other sources and tied its customers by the grant of loyalty rebates

421 Subparagraph 3 of Article 1 (2) of the contested decision blames SZV for having 'from the beginning of the 1968/69 marketing year onwards

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committed infringements of Article 86 by preventing its agents from reselling sugar from other sources and by tying its customers by granting loyalty rebates'.

424 None of the documents mentioned in the notification of objections to justify the complaint that it engaged in a general concerted action based on the principle 'chacun chez soi' ('each in his own home') which was also made against the applicant, emanated from SZV or was sent to it.

425 Since it consequently feared that the replies given by the other undertakings would be construed against it, SZV requested the Commission to send it copies of them, which the Commission refused to do on the ground that it was under a duty to respect the principle of professional secrecy.

426 This complaint, which is the only one made against the applicant by the contested decision, is not that SZV engaged in a concerted practice but that it abused a dominant position.

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427 This complaint has been clearly and accurately formulated on pages 91 to 93, 107 to 108 and 121 to 123 of the notification of objections and supported by documents emanating from SZV or which explicitly mention SZV.

428 The submission must therefore be rejected.

434 SZV submits that the decision is defective because there has been an

infringement of Article 4 of Regulation No 99/63 under which the Commission 'shall in its decisions deal only with those objections raised against undertakings and associations of undertakings in respect of which they have been afforded the opportunity of making known their views', since the notification of objections only attributed a dominant position to SZAG, whereas the decision found that SZV occupied such a position.

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435 It emerges from pages 122 and 123 of the notification of objections that the Commission blamed SZV for having abused the dominant position of SZAG, whereas according to the decision SZV abused its own dominant position.

436 However SZV has not denied that it defined its position during the administrative proceedings on the complaint made against it under Article 86.

437 The Commission stated, without the applicant raising any objection, that it changed its mind simply because it learnt from the observations of the undertakings concerned that SZAG only has limited voting rights in SZV.

441 1. It is clear from the statement of the reasons upon which the decision is based (p. 20 to 21, paragraph 9, p. 28 under paragraph 16) that when the Commission refers to 'the southern part of Germany' it means the area which

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it regards as SZVs sales territory as opposed, on the one hand, to the sales territories which it considers belong to NZV and WZV, two companies, of which the sugar producers of the southern and western regions of the Federal Republic of Germany are members and, on the other hand, to the Länder of Berlin and the Saar, which it states are for the most part supplied by sugar coming respectively from the Federal Republic of Germany and the French Republic.

442 The Commission produced for the Court's file a map (Annex II 10 to the statements of defence in Cases 54 to 56/73) 'based on' the maps annexed to the contracts of WZVs commission agents, which marks the boundaries of the latter's sales territory and bears the letters 'NZV' (in the north) and 'SZV' (in the south), but does not however indicate with any accuracy the boundary between the respective sales territories of these two marketing organizations.

443 If this map is examined in the light of the parties' statements, to the extent to which they agree, it shows clearly that the territory within which SZV carries on business, that is the 'southern part of Germany', within the meaning this expression is given in the decision, includes the whole of Bavaria and Baden-Württemberg, part of the Land Hessen bordering on these two Länder, which takes in more than half of Hesse as well as certain parts adjoining the Rhine-Palatinate, the Saar, North Rhine-Westphalia and Lower Saxony which are regions of insignificant size compared with the other sectors of SZV's sales territory.

448 If these figures are compared with the corresponding figures relating to the whole of the Community set out in Chapter 5, the 'southern part of Germany', within the meaning which this expression is given in the decision, is found to be sufficiently large, so far as sugar is concerned, to be considered having regard to the other criteria mentioned in Chapter 5 as a substantial part of the common market in this product.

449 3. SZV submits that for the purpose of determining whether the area in question is a substantial part of the common market the statistical data relating to this area should not only be compared with the corresponding data relating to the common market as it was when the facts giving rise to these proceedings existed but also with the data relating to the Community of 'Nine' in its present form.

450 Article 86 of the EEC Treaty clearly refers in each case to the position occupied by the undertaking concerned on the common market at the time when the latter acted in a way which is alleged to amount to an abuse.

451 For this reason alone SZV's argument cannot be upheld.

II — The question whether SZV occupies a dominant position on the sugar market of the southern part of Germany

452 SZV does not deny that in the two principal regions of the area in question, namely the Länder of Bavaria and of Baden-Württemberg, its share of the market is approximately the 90 % to 95 % share mentioned in the contested decision (p. 39, paragraph No 3) for the whole of its sales territory.

III — The existence of an abuse

458 The complaint made by the Commission against SZV consists of two distinct parts. The first relates to the applicant's sales organization and in particular to the obligation imposed on agents not to resell sugar from other sources without its consent and the second to the fact that the applicant tied its customers by loyalty rebates.

1. The obligation imposed on agents

A — The Commission's view

(a) In its decision the Commission states that, in order to distribute within its sales territory the sugar produced by its members, SZV used primarily

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465 The fact that an undertaking occupying a dominant position imposes on its agents an obligation such as the one in question amounts to an abuse of this position within the meaning of Article 86 of the Treaty.

466 (b) During the proceedings the Commission made the following complaint.

467 The system, which it criticizes, implies that the 1 270 wholesalers, who have their places of business in SZV's sales territory and supplied small industrial

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consumers and retailers, do not have the opportunity of obtaining sugar direct from the applicant but must apply to one of SZV's seventeen regional representatives.

468 Such a system does not guarantee the development of competition at the commercial level so that SZV must either replace its regional representatives by independent wholesalers or at least give not only the said representatives but also independent dealers direct access to the production which it sells.

474 (a) 1. With regard to the prohibition of competition stipulated in these contracts it must be noted that an undertaking or association, in order to ensure that the goods which it or its members manufacture are distributed, can choose either to use commercial employees — that is to say persons

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bound to it by a contract of employment — or traders with whom it enters into contracts of a different kind.

475 So far as the legal position of these traders and the terms of these contracts are concerned, the laws of the Member States and economic practice have developed a great variety of forms of agreement which distinguish in particular between those where the intermediate trader negotiates with customers or comes to an agreement with them in his own name and for his own account, or in his own name but for the account of the principal, or again in the name and for the account of the latter.

476 If the contracts on the Court's file, which are at issue, are examined they are found to be in law trade representatives contracts, in particular because they expressly confer upon the intermediaries the attributes of a trade representative within the meaning of German law and because under their terms the representative is under a duty to negotiate or conclude sales of sugar in the name and for the account of the principal, to carry out the latter's instructions and look after his interests and finally because they allot them specific territories where they are to act as representatives.

477 It is agreed that, without prejudice to certain small differences, German law, which governs the contracts in dispute, proceeds on the basis of the principle that such trade representatives are prohibited, even if there is no stipulation in the contract to that effect, from competing with their principal without the latter's consent and that any infringement of this prohibition of competition may even render the representative liable to an action against him for damages.

482 The position is different if the agreements entered into between the principal and his agents, whom the contracting parties call 'trade representatives', confer upon these agents or allow them to perform duties which from an economic point of view are approximately the same as those carried out by an independent dealer, because they provide for the said agents accepting the financial risks of the sales or of the performance of contracts entered into with third parties.

483 In fact in such a case the agents cannot be regarded as auxiliary organs forming an integral part of the principal's undertaking with the result that, if a clause prohibiting competition is agreed between principal and agent and the principal is an undertaking occupying a dominant position, that clause may constitute an abuse within the meaning of Article 86 as it is likely to consolidate that dominant position.

484 However the Commission has not alleged and the agreements produced for the Court's file do not disclose that the relations between SZV and its agents included the conditions which have just been mentioned, that is to say stipulations which enable the conclusion to be drawn that the agents have in relation to the applicant a position very similar to that of an independant dealer.

485 In particular the Commission has not denied that the trade representatives in question were mainly concerned with distribution for the account of the applicant without acting at the same time as independent dealers to any great extent.

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486 2. However even clauses prohibiting competition imposed by an undertaking occupying a dominant position on trade representatives may constitute an abuse, if foreign competitors find that there are no independent operators who can market the product in question on a sufficiently large scale, and are in practice forced to apply to the said undertaking's trade representatives if they wish to sell this product in the latter's sales territory, or if the said undertaking enlarges the scope of the prohibition of competition to such an extent that it no longer corresponds to the nature of the legal and economic relationship in question.

492 If the producer avails himself of an agent who is an auxiliary organ forming an integral part of his undertaking, purchases from this 'representative' are in fact direct purchases from his principal.

493 Therefore such conduct can neither be an abuse nor evidence thereof.

494 With regard to the fact that SZV supplied certain large consumers direct through its trade representatives without making use of dealers there was nothing to prevent these consumers from buying from independent dealers instead of applying to the applicant's representatives or these dealers from selling to the said industrial consumers.

495 The view can therefore be taken that sugar was not supplied in this way because of any pressure brought to bear by SZV but as a result of decisions taken freely by the consumers in question who could see that this system of supplying direct offered advantages.

496 Moreover the Commission has not blamed SZV for having acted in a discriminatory manner in choosing which large industrial consumers to supply direct.

497 All these considerations show that an abuse within the meaning of Article 86 of the Treaty has not been proved.

501 In some cases at least the rebate was discontinued or its discontinuance

notified if the buyer went on importing sugar and these steps induced the buyers in question to stop importing, even though offers from abroad were DM 10 to 20 per metric ton below SZV's offers.

502 The grant of such a rebate placed customers who also buy sugar from other sources at an unjustifiable disadvantage and enabled SZV to 'control' the volume of supplies to its customers by foreign producers.

503 As SZVs purchasers depend at least in part on SZV's deliveries because their storage facilities were inadequate and they needed regular supplies, the disadvantage of losing the rebate, although it appears to be relatively small, would very soon outweigh the advantage of buying sugar from third parties, even if the latter were to make offers at more favourable prices.

504 The fact that in certain cases the rebate was granted even though sugar was purchased from foreign producers does not alter the fact that the notification alone of its discontinuance or the mere risk of it being discontinued prevented customers from importing sugar in large quantities systematically.

sos If such a rebate is granted by an undertaking occupying a dominant position with a view to restricting further opportunities for importing and to consolidating this position, this rebate amounts to an abuse of this position within the meaning of Article 86 of the Treaty.

509 The applicant, without seriously calling in question the truth of the statements in these documents, objects however to their use as evidence on the ground that they have been made partly anonymous, and claims that they are not a suitable basis for any generalisation, since the company's customers numbered approximately 2 000.

B — The evaluation of the facts

510 (a) It is agreed that the clause in issue as described in the contested decision was incorporated in a large number of sales contracts concluded by SZV without however having been inserted in all of them.

511 There is no need to ascertain the number of contracts which have this clause and the number which do not.

512 In fact the Court's file shows that in any case the effect of the clause was in practice by no means negligible since it was incorporated in contracts for large quantities (cf. the contract of 9 December 1970 being Annex I 146 of the statements of defence and having as its object the sale of 30 000 metric tons).

513 Moreover, as the Commission has argued, when examining this complaint the cases where the rebate was immediately deducted from the invoice price must

518 This way of conceiving a rebate disregards the fact that the rebate at issue is not to be treated as a quantity rebate exclusively linked with the volume of purchases from the producer concerned but has rightly been classified by the Commission as a 'loyalty' rebate designed, through the grant of a financial advantage, to prevent customers obtaining their supplies from competing producers.

519 2. The parties cannot agree whether the Commission is correct when it states that the system to which exception is taken enabled SZV to 'control' the volume of sugar supplied to its customers by foreign producers.

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520 In particular SZV denies that it was able to find out the entire requirements of all its customers.

521 This argument is not relevant, since it is unnecessary to know to what extent the application of the said system was capable of providing SZV with complete particulars of the volume of imports in its sales territory but necessary to find out whether this system was likely to dissuade the company's customers from obtaining their supplies also from producers established in the other Member States and this question has already been answered in the affirmative.

522 3. As the Commission has emphasized the effect of the system complained of was that different net prices were charged to two economic operators who bought the same amount of sugar from SZV if one of them purchased from another producer as well.

528 Having regard to all these circumstances this submission must be rejected to the extent to which it is designed to annul the finding that SZV has abused its dominant position by tying its customers by granting loyalty rebates.

Chapter 8

The complaint directed against Pfeifer & Langen; that it entered into agreements with its agents which restrict their opportunities for importing and exporting within the Community

529 Subparagraph 4 of Article 1 (2) of the contested decision blames Pfeifer & Langen for having 'from the 1968/69 marketing year onwards committed infringements of Article 85 (1) by entering into agreements with their agents which restrict their opportunities for importing and exporting within the Community'.

I — Summary of the relevant statements in the decision and of certain additional information supplied by the applicant

530 The Commission submits that the sales territory of WZV, of which Pfeifer & Langen is the principal member, is subdivided into several areas and in some of them WZV only sells through regional commission agents with whom Pfeifer & Langen entered into 'trade representatives agreements' which included, on the one hand, a prohibition on the sale of sugar from other sources without Pfeifer & Langen's consent which was only granted for the sale of special qualities of sugar or of sugar for denaturing and, on the other hand, the obligation only to resell the sugar supplied by Pfeifer & Langen in a specific territory and to specific customers.

— assign each agent a specific territory in which he is to act as representative and grant him, as the 1970 contract expressly states, 'the exclusive right to sell in the territory assigned to him and, consequently, territorial protection for its entire range of sugar for consumption' and it is not denied that these clauses imply a prohibition on sales outside this area.

535 These contracts contain clauses which prohibit any trading in sugar from other sources without the consent of Pfeifer & Langen. They are expressed in the following terms in the 1948 contract and 1970 contract respectively.

The 1948 Contract

The representative shall not represent other sugar factories except with the express written consent of Pfeifer & Langen, nor deal in sugar from the Pfeifer & Langen undertaking or elsewhere for his own account'.

The 1970 Contract

The representative undertakes ... not to sell in the specific territory in which Pfeifer & Langen is interested any other sugar for consumption coming from a domestic or foreign source. Every derogation from this undertaking must be limited in time and confirmed in writing by Pfeifer & Langen. This exclusivity agreement does not apply, unless and until this clause shall be cancelled, to the transactions carried out by the representative for the benefit of the "Nordwestdeutsche Markenzucker-Vertriebs-GmbH & Co. KG", at Bielefeld/Cologne and [WZV] at Cologne'.

540 In these circumstances incompatibility with Article 85 is not simply due to the fact that the principal forbids such an auxiliary to trade without his consent in products which might compete with his own products.

541 The position is different if the agreements entered into between the principal and his agents, whom the contracting parties call 'trade representatives', confer upon these agents or allow them to perform duties which from an economic point of view are approximately the same as those carried out by an independent dealer, because they provide for the said agents accepting the financial risks of the sales or of the performance of contracts entered into with third parties.

542 For in such cases the agents cannot be regarded as auxiliary organs forming an integral part of the principal's undertaking, so that a clause prohibiting

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competition which they entered into may be an agreement between undertakings which is prohibited under Article 85.

543 The Commission submits that in this case the assumption that the agents were merely auxiliaries, forming an integral part of the undertaking cannot be made good.

548 When Article 85 (1) not only prohibits agreements, decisions or practices having regard to their object but also to their actual effects in the field of competition, it implies that these effects must be considered in the context in which they take place, that is to say in their surrounding economic and legal

SUIKER UNIE AND OTHERS v COMMISSION

circumstances within which they may, together with other factors, have a cumulative effect on competition.

549 In order to determine whether an agreement is caught by Article 85 (1) it cannot therefore be severed from this context and, in particular, the existence of similar contracts may be taken into consideration to the extent to which these kinds of contracts are in general likely to restrict free trade.

550 When the applicant adopted the policy only to sell the sugar it produces for human consumption in a particular sector of the common market through undertakings such as those appearing in this case, which had entered into trade representatives contracts granting them the exclusive right to sell in a specific territory in consideration of the obligation not to sell in this territory any other domestic or foreign sugar for consumption, it in fact restricted competition, particularly in the field of prices.

551 By setting up this marketing network which moreover overlapped in some places that of other producers, to whom the prohibition on sales by the representative of sugar coming from other sources did not apply, the applicant has in fact, so far as the sugar which it produced in accordance with the quota it was awarded by the common organization of the market in sugar is concerned, restricted free trade.

556 Although the applicant must have known that the organization of its marketing network on the basis of agency agreements entered into by it with commercial undertakings which were not simply ordinary auxiliaries was likely to restrict competition, the possibility that the wording of the said communication could induce the belief that such a practice was accepted as being compatible with the Treaty cannot nevertheless be ruled out.

557 Therefore this infringement cannot be taken into consideration for the purpose of fixing the amount of the fine.

Chapter 9

The complaint of a concerted action in connexion with the invitations to tender for refunds on exports to third countries

558 Article 1 (3) of the contested decision blames RT, Say, Béghin, Générale sucrière et Sucres et Denrées — as well as Lebaudy-SUC and Sucre-Union which have not lodged any application with the Court — for having 'committed in 1970 infringements of Article 85 (1) by engaging in concerted actions, at the time of the invitations to tender for refunds on exports to third countries, in connexion with the amount of the refunds for which applications were made and also the quantities which were offered'.

559 The Commission's main submission is that a system of invitations to tender must be regarded as an ideal way of generating competition and that competition within the common market is impeded if the tenders submitted by the participants at an invitation to tender are the result of prior knowledge of the tenders of the other participants and of concerted action between them.

563 The decision (page 42, third paragraph under Letter F) goes on to state 'that according to the results of the invitations to tender some producers rather than others would have to sell surplus quantities in the other Member States of the Community' and 'that the concerted action was likely to bring about a change in the quantities marketed within the Community by the principal producers in France and Belgium'.

564 All these factors show that in the Commission's view, on the one hand, all the measures to which exception is taken were designed to achieve the common purpose of protecting the respective markets of the producers concerned and, on the other hand, the concerted action relating to the invitations to tender in question affected trade — and consequently competition — within the common market.

565 As the statement of the reasons upon which the decision was based is adequate this submission is unfounded.

Section 2: Substantive submissions

I — Infringement of Article 85 of the Treaty

566 The applicants take the view that the Commission has infringed Article 85 of the Treaty either because it based its decision on statements of facts which are

During this meeting the amounts of the refunds for which tenders will be submitted was the subject of an agreement. Tate will be the principal ultimate purchaser of these lots.

Raffinerie Tirlemontoise plans to export about 9 000 metric tons of raw sugar which will be delivered to Tate. RT suggests that Export acts in this operation as broker. If Export does so it should abide by the common policy laid down for invitations to tender.

When invited to clarify this last point Mr Maisin admits that this commitment also covers invitations to tender for the export of white sugar...

During the exchange of views which followed we asked Mr Maisin how this conceited action worked in practice. We learnt that:

— the participators were Say, Béghin, Lebaudy, Commerciale Sucrière (Bouchon-St-Louis) [an expression referring to Générale sucrière], Sucre-Union, Raffinerie tirlemontoise and Sucres et Denrées.

It must be noted that Sucres et Denrées attends the meetings. Because it is so far away Raffinerie tirlemontoise rarely attends but keeps in touch by telephone ... These meetings are held on Tuesday evenings at about 17.00 hrs. The discussions at these meetings are about

It is implied that Raffinerie tirlemontoise refuses to offer us raw sugar which we are free to sell wherever we like'.

568 Another of Export's internal memoranda (Annex II 17 to the statement of defence in Case 47/73) shows that this firm's Managing Board on 17 February took the following decisions, 'after considering the proposal (Mr Maisin of RT] on the question of Export sharing in the profits arising out of the sale of Tirlemont raw sugar, [proposal] subject to communication by Export of its tenders in answer to the EEC invitations to tender for white sugar':

'A — We agree ... not to tender for a refund on raw sugar at the standing EEC invitations to tender which will take place once a week on and after Wednesday 18 February, so that such applications for refunds do not compete with the applications of Franco-Belgian refiners and in particular of Raffinerie tirlemontoise. (It must be noted that this was a purely formal gesture, because, unless Export's supplies of raw sugar were guaranteed by Tirlemont, the only possible Belgian supplier, it could not reasonably be expected to tender at the invitation to tender for raw sugar: the risk being that if it was a successful tenderer it would be unable in practice to cover its position).

B —

C — So far as the tenders for refunds at the invitation to tender for white

sugar are concerned the basic ideas of a general proposal made by Export to Raffinerie tirlemontoise are as follows. They were com­ municated ... by Mr Kronacker to Mr Rolin and then to Mr Maisin.

(5) Concurrently with the meetings in Paris relating to the concerted action at which the French discuss their applications for refunds Mr Kronacker asks that a small joint RT — Export committee be set up to determine the position in Belgium

569 Baron Kronacker states in an internal memorandum 'on the question of RT°s negotiations on 26 March 1970' (Annex II 18 to the statement of defence in Case 47/73)

'It is my wish that we keep in step with Tirlemont. If we do so we sacrifice our principals, we agree to reduce the amounts in respect of which we attend the invitation to tender for Export and, although we have no say in the matter, we agree to adopt the prices of the Paris consortium. This of necessity implies that Tirlemont only takes part in the invitations to tender through us. This should also imply that we attend the Monday meetings in Paris

570 Export states in an internal memorandum headed 'Observations on the oral answer by Mr Rolin on 20 May to Baron Kronacker's written proposal of 20 May relating to relations between Export and RT for the 1970/71 marketing year' (Annex I 131 to the statement of defence)'. In addition Mr Rolin of RT still restricts our freedom of action and our opportunities for applying for refunds.

Such applications according to him should be made after their amount and level have been coordinated with Mr Bernard, Chairman and Managing Director of Say within the framework of the concerted action agreed in Paris, (Say, Béghin, Varsano [de Sucres et Denrées], Sucre-Union etc ...)';

571 The minutes of a meeting held on 17 July 1970 by RT's Board of Directors (Annex II 19 to the statement of defence in case 47/73 state: 'For next year we would like to try to avoid cut price refunds. For this purpose the managing director has submitted a preliminary draft of a plan for pooling exports.

2. To come to the crux of the problem I want to sell through Export but I would like to arrange for applications for refunds to be harmonized. Having regard to the importance of our French interests it seems to me to be necessary to prevent Tirlemont from appearing to support an agreement between the French when it works at rue Veneau and to undermine the same agreement when it supplies Export. The observations which I made on your observations of 20 May are based on this wish to find a formula for the concerted action in connexion with applications for refunds. As soon as a solution has been found we can complete the terms of the option which I mentioned to you'.

573 Export in a telex message to RT of 19 August 1970 (Annex I 81 to the statements of defence), having recorded its acceptance of the 'plan' proposed by RT for arranging deliveries to the Netherlands and suggested that a 'similar plan' be worked out for deliveries to Italy, deals with the question of refunds as follows:

Taking into account our participation in the points above, and in principle, whatever formula is adopted in Paris, we advocate that Export and RT actually work together in third countries and this cooperation must normally result in a concerted action on the level of refunds, account being taken of the manufacturers' policy'.

JUDGMENT OF 16. 12. 1975 — JOINED CASES 40 TO 48, 50, 54 TO 56, 111, 113 AND 114/73

574 B — It has already been stated that the evidential value of these documents, to the extent to which they emanate from Export or are addressed to this firm by RT, cannot be called in question and that these documents may also be used as evidence against applicants other than RT.

A — The question whether these practices might affect trade between Member States and whether their object or effect was to impede competition within the common market

579 (a) The telex message of 23 July 1970 quoted by RT stating inter alia that 'elimination of competition for refunds' could and was intended to 'result' in

SUIKER UNIE AND OTHERS v COMMISSION

'ending the struggle to sell amounts on the domestic market' proves that the undertakings concerned have themselves established a link between the practices in question, on the one hand, and the competitive situation of these undertakings on the common market, on the other hand.

580 Further, as the undertakings concerned had their place of business in France and Belgium, which are countries having a large sugar surplus, there is no doubt that, had it not been for the concerted action at issue, some at least of these undertakings would have been awarded smaller quantities than they were in fact awarded and would thus have been induced to sell more sugar in the other Member States, and these sales could not only modify the pattern of intra-Community trade but also intensify competition within the common market, the very result which the undertakings wished to prevent as is shown by the telex message which has been quoted.

581 (b) The applicants submit that Community regulations relating to the invitations to tender for refunds on exports to third countries gave the Commission such wide powers that it could prevent the conduct complained of from producing the effects referred to in Article 85.

587 (c) RT submits that with reference to Article 184 of the Treaty, the Community regulations which established the system of invitations to tender are inapplicable, since they are contrary to one of the fundamental objectives of Regulation No 1009/67, namely to ensure that when sugar producers sell they will at least obtain the intervention price.

588 In fact the effect of this system was to force producers to be satisfied with a return less than the said price.

589 Although under Article 9 of Regulation No 1009/67 the intervention agencies of Member States shall buy in the sugar offered to them at the intervention price, there is nothing in this regulation to justify the assertion that this price is also 'guaranteed' to producers for sugar which they supply to other producers.

590 So far in particular as exports to third countries are concerned Article 17 (1) of the regulation provides that the difference between the quotations and prices on the world market and prices within the Community 'may' be covered by an export refund 'to the extent necessary to enable the products to be exported'.

591 This wording shows that Community institutions were not required to introduce a system of export refunds and still less to fix the amount thereof in such a way that if sugar producers export they obtain the intervention price.

592 RT's submission cannot therefore be upheld.

596 In reply to the questions put by the Court the applicants calculated that the sugar which they exported in 1970 as a result of the invitations to tender amounted altogether to 89 821 metric tons of raw sugar and 248 833 metric tons of white sugar, whereas the Commission estimated these amounts to be 60 627 and 207 239 metric tons respectively and went on to say that Sucre-Union and Lebaudy-SUC had exported 28 332 and 17 125 metric tons of white sugar respectively.

597 According to the Commission's statistics (tables III and IV of Annex I to the rejoinder in Case 47/73), to the extent to which they are based on the data supplied by France and Belgium, the following amounts were exported by these two Member States within the common market:

1969/70 1970/71

Raw sugar White sugar Raw sugar White sugar

France 1 800 298 600 74 700 524 300

Belgium 13 900 87 100 21 100 91 100

б02 All these considerations lead to the conclusion that the submission based on

infringement of Article 85 of the Treaty must be rejected.

II — Infringement of Regulation No 26

603 If the Court finds that the disputed practices 'helps to bring about the protection, inter alia, of the Italian market' Générale sucrière and Say submit that they ought to benefit from the exceptions specified in Article 2 of Regulation No 26.

604 This submission is without purpose, since the Court does not take the view that the immediate result of these practices was the protection of the Italian market.

605 RT's submission based on the fact that the Commission was wrong not to apply the second exception specified in Article 2 of Regulation No 26 to the applicants' case, which is also put forward in connexion with the second complaint, must be rejected for the reasons given when the complaint was examined.

II — The fines imposed by Article 3 of the decision

608 Article 3 of the decision must be annulled to the extent to which it imposes fines on Volano, Emiliana, SADAM, SZAG, Cavarzere, Industria degli Zuccheri and Eridania (Cases 45/73, 46/73, 50/73, 54/73, 111/73, 113/73 and 114/73), since the Court has not found that these applicants committed any infringement.

609 With regard to the fines imposed on the applicants SU, Générale sucrière, CSM, Say, Béghin, RT, Sucres et Denrées, SZV and Pfeifer & Langen (Cases 40 to 44/73, 47/73, 48/73, 55/73 and 56/73), against which the Court has only upheld part of the infringements alleged by the Commission, it must first of all be noted that the Commission has stated that it did not punish the infringements set out in Article 1 (2) and (3) of the decision directly with a fine but took these infringements and the infringements set out in paragraph 1 of the said article into account when fixing the amount of the fines which it imposed.

610 This method leads to the conclusion that in appropriate cases the fines must be considered as having also been imposed by reason of the infringements found in Article 1 (2) and (3) of the decision.

б11 It appears from the considerations set out in the preceding chapters that all the infringements upheld by the Court have been committed intentionally or

JUDGMENT OF 16. 12. 1975 — JOINED CASES 40 TO 48, 50, 54 TO 56, 111, 113 AND 114/73

616 In these circumstances each producer was of necessity inclined to seek a profit not by increasing his production and, therefore, his share of the market, but by selling his production at the highest possible prices.

617 However, there were limits to the higher prices which producers could hope to get caused by the surplus production of sugar in the Community and in some Member States by maximum consumer prices which were fixed or at least strongly recommended by the national authorities.

SUIKER UNIE AND OTHERS v COMMISSION

618 It was therefore in the interest of producers not to disturb existing price levels in the various Member States and they must have known that by intervening in any way on their competitors' traditional markets they ran the risk of bringing down the price level on these markets and therefore of reducing the profit on their own production.

619 The common organization of the market in sugar, which moreover is tending to emerge from its initial transitional phase and for the reasons which have just been given only left a residual field available for competition, has therefore helped to ensure that sugar producers continue to behave in an uncompetitive manner.

620 Although this situation cannot lead to acceptance of practices which are likely to make still worse what are, from the point of view of the Treaty, the disadvantages of such a system, it nevertheless means that the behaviour of the parties concerned cannot be regarded with the usual severity.

625 Under Article 69 (2) of the Rules of Procedure the unsuccessful party shall be ordered to pay the costs if they have been asked for in the successful party's pleading, whereas, where there are several unsuccessful parties the Court shall decide how the costs are to be shared.

626 Under paragraph 3 of this Article, where each party succeeds on some and fails on other heads or where the circumstances are exceptional, the Court may order that the parties bear their own costs in whole or in part.

(a) The costs in the main action

627 In these proceedings, as the Commission was unsuccessful in Cases 45/73, 46/73, 50/73, 54/73, 111/73, 113/73 and 114/73 (Volano, Emiliana, SADAM, SZAG, Cavarzere, Industria degli Zuccheri and Eridania) it must be ordered to pay the whole of the costs in these cases account being taken of the fact that these applicants have either expressly or by implication asked for them in their pleadings.

628 As the applicants and the Commission have succeeded on some and failed on other heads in Cases 40 to 44/73, 47/73, 48/73, 55/73 and 56/73 (SU, Générale sucrière, CSM, Say, Béghin, RT, Sucres et Denrées, SZV and Pfeifer & Langen), in these cases the parties shall bear their own costs.

(b) The costs of the intervention

631 The witnesses were examined by the Court in Cases 40/73 (SU) and 42/73 (CSM) and also in connexion with the complaint that economic pressure was brought to bear on Netherlands importers (subparagraph 2 of Article 1 (2) of the decision).

632 Since the Commission failed on this head it must be ordered to pay the costs of examining these witnesses.

On those grounds,

THE COURT

hereby:

(1) Annuls the following parts of Article 1 of Commission Decision No COM(72) 1600 of 2 January 1973:

JUDGMENT OF 16. 12. 1975 — JOINED CASES 40 TO 48, 50, 54 TO 56, 111, 113 AND 114/73

(b) Reduces the fines imposed by Article 3 on the other applicants.

— in the case of Suiker Unie (Case 40/73) to 200 000 u.a. (FL 724 000);

— in the case of Générale Sucrière (Case 41/73) to 80 000 u.a. (FF 444 335-20);

— in the case of Centrale Suiker Maatschappij (Case 42/73) to 150 000 u.a. (FL 543 000);

— in the case of Say (Case 43/73) to 80 000 u.a. (FF 444 335-20);

(5) (a) In Cases 45/73, 46/73, 50/73, 54/73, 111/73, 113/73 and 114/73 (Volano, Emiliana, SADAM, Süddeutsche Zucker AG, Cavarzere, Industria degli Zuccheri and Eridania) orders the Commission to pay the whole of the costs of the main proceedings.

(b) In Cases 40 to 44/73, 47/73, 48/73, 55/73 and 56/73 (Suiker Unie, Générale sucrière, Centrale Suiker Maatschappij, Béghin, Say, Raffinerie tirlemontoise, Sucres et Denrées, Südzucker-Verkauf GmbH and Pfeifer & Langen) orders each of the parties to bear the costs which it incurred in the main proceedings.

(c) So far as the costs of intervention are concerned orders the applicants concerned, the Commission and the intervener to bear their own costs.

SUIKER UNIE AND OTHERS v COMMISSION

(d) Orders the Commission to bear the costs of examining the witnesses.

Lecourt Monaco Kutscher Donner Mertens de Wilmars

Facts

I — Facts and procedure 1671

1. General Community regulations. 1671

2. Specific Community and national regulations relating to the Italian sugar market 1673

A — Content of the Community regulations 1673

B — Content of the Italian regulations 1674

2. Complaint that SU, CSM, RT and Pfeifer & Langen have engaged in a concerted practice having as its object the protection of the Netherlands market (Article 85) 1682

3. Complaint that Pfeifer & Langen and RT have engaged in a concerted practice having as its object the protection of the market of the western part of the Federal Republic of Germany 1683

4. Complaint that SZAG and Béghin have engaged in a concerted practice having as its object the protection of the market of the southern part of the Federal Republic of Germany (Article 85) 1686

5. Complaint that RT brought economic pressure to bear on Belgian exporters (Article 86) 1687

6. Complaint of economic pressure brought to bear upon Nether­ lands importers (Article 86) 1688

7. Complaint that SZV prevented its agents from reselling sugar from other sources and tied its customers by granting loyalty rebates (Article 86) 1689

4. Procedure 1693

II — Conclusions of the parties 1694

III — Submissions and arguments of the parties 1695

General observations . 1695

1. Complaint of a concerted practice having as its object the protection of the Italian market 1698

A — Formal and procedural submissions . 1698

(g) Eridania, Industria degli Zuccheri, SADAM, Sucres et Denrées, Say, Générale Sucrière and SZAG: Infringement of Article 190 of the Treaty 1708

(h) RT : Lack of clarity in the operative part of the decision 1711

B — Submissions on the substance of the case 1711

(a) Générale Sucrière, Say, Béghin, RT, Sucres en Denrées, SZAG, Eridania, Cavarzere, Industria degli Zuccheri, Volano, Emiliana and SADAM : Infringement of Article 85 of the Treaty 1711

1. Summary of the applications 1711

(aa) On the Italian regulations relating to the sugar market (meaning application, effect, legality) 1711

(bb) On the relevance and evaluation of the facts upon which the complaints against the applicants are based 1715

2. Summary of the statements of defence 1724

to 1. (aa) (aaa) 1724

to 1. (aa) (bbb) 1725

to 1. (aa) (ccc) 1726

to 1. (bb) 1726

to 1, (bb) 1744

4. Summary of rejoinders 1754

to 1, (aa) (aaa) 1754

to 1, (aa) (bbb) 1754

General considerations on the submissions of the non-Italian applicants 1754

Individual replies to certain non-Italian applicants 1755

General reply to the Italian applicants 1760

Individual replies to the Italian applicants 1761

5. The argument between the intervener and the applicants 1764

to 1. (aa) (bbb) 1764

to 1. (aa) (ccc) 1765

to 1. (bb) 1767

to 1. (aa) 1773

to 1. (bb) 1774

3. Summary of the replies 1774

Preliminary considerations 1774

to 1. (aa) 1775

to 1. (bb) 1779

A — Preliminary submission : Before 2 January 1971 SU was not an undertaking within the meaning of Articles 85 and 86 1782

B — Formal and procedural submissions 1783

(a) SU, CSM and Pfeifer & Langen : Premature publication a breach of the principle that everyone has the right to a 'fair trial' 1783

(b) SU, CSM and Pfeifer & Langen: Unduly short time limits for the submission of observations 1784

(c) Pfeifer & Langen: Infringement of the right to be heard on the matters at issue 1785

(d) Pfeifer & Langen : Infringement of Article 4 of Regulation No 99/63 1785

(j) SU, CSM and RT: Lack of clarity in the operative part of the decision 1789

C — Submissions on the substance of the case 1790

(a) SU : Infringement of Article 85 of the Treaty 1790

1. Summary of the application 1790

2. Summary of the statement of defence 1792

3. Summary of the reply 1794

(c) RT : Infringement of Article 85 of the Treaty 1803

1. Summary of the application 1803

2. Summary of the statement of defence 1804

3. Summary of the reply 1805

4. Summary of the rejoinder 1806

(d) Pfeifer Sc Langen : Infringement of Article 85 of the Treaty 1807

A — Pfeifer Sc Langen and RT: Formal and procedural submissions 1810

B — Submissions on the substance of the case 1810

(a) Pfeifer & Langen: Infringement of Article 85 of the Treaty 1810

1. Summary of the application 1811

SUIKER UNIE AND OTHERS v COMMISSION

2. Summary o£ the statement of defence 1813

4. Summary of the rejoinder 1819

(c) RT: Infringement of Regulation No 26. 1819

4. Complaint that SZAG and Béghin have engaged in a concerted practice having as its object the protection of the market of the southern part of the Federal Republic of Germany 1819

A — Formal and procedural submissions 1819

(a) SZAG: Illegality of the policy adopted by the Commission for informing the public ; defects in the communication ; infringement of the rules of procedure of Regulation No 26; unduly short time-limits for the submissions of observations 1819

(b) Béghin and SZAG : Infringement of Article 19 of Regulation No 17 and of Articles 1, 2 and 4 of Regulation No 99/63 1819

4. Summary of the rejoinder 1824

(b) SZAG : Infringement of Article 85 of the Treaty 1825

1. Summary of the application 1825

2. Summary of the statement of defence 1829

3. Summary of the reply 1832

4. Summary of the rejoinder 1833

(d) Summary of the rejoinder 1837

6. Complaint that SU and CSM brought economic pressure to bear on Netherlands importers 1837

A — Preliminary submissions: SU had no legal existence during the period to which the present complaint refers 1837

B — Formal and procedural submissions 1837

(a) SU and CSM: Illegality of the policy adopted by the Commission for informing the public; unduly short time-limits for the submission of observations; adoption of a single decision 1837

(b) SU: Absence or inadequacy of the statement of the reasons upon which the decision is based 1837

3. Summary of the reply 1840

4. Summary of the rejoinder 1841

(b) CSM : Infringement of Article 86 of the Treaty 1842

1. Summary of the application 1842

2. Summary of the statement of defence 1842

3. Summary of the reply 1842

2. Summary of the statement of defence 1844

(c) SZV : Infringement of Article 190 of the Treaty 1845

SUIKER UNIE AND OTHERS v COMMISSION

B — Submissions on the substance of the case 1845

1. Summary of the application. 1845

2. Summary of the statement of defence 1848

1. Summary of the application 1856

2. Summary of the statement of defence 1856

B — A single submission on the substance of the case: Pfeifer & Langen: Infringement of Article 85 of the Treaty, 1856

1. Summary of the application 1856

2. Summary of the statement of defence 1857

3. Summary of the reply 1858

B — Submissions on the substance of the case 1861

(a) RT, Say, Béghin, Générale sucrière and Sucres et Denrées: Infringement of Article 85 of the Treaty 1861

1. Summary of the applications 1861

2. Summary of the statements of defence . 1865

JUDGMENT OF 16. 12. 1975 — JOINED CASES 40 TO 48, 50, 54 TO 56, 111, 113 AND 114/73

3. Summary of the replies 1868

2. Summary of the statements of defence 1875

3. Summary of the replies . 1876

4. Summary of the rejoinders 1877

(b) SZAG and SZV: Infringement of Article 15 (2) and 18 of Regulation No 17 and of the rules governing the jurisdiction of the Court 1877

1. Summary of the applications 1877

2. Summary of the statements of defence 1878

(b) All the applicants: Unfairness of the fines having regard to the principle in accordance with which they have been imposed or to the amount thereof 1884

1. Summary of the applications . 1884

2. Summary of the statements of defence 1887

3. Summary of the replies 1890

4. Summary of the rejoinders 1892

IV — Summary of the parties' replies to certain questions raised by the Court, of the observations of the opposite parties on these replies and of the hearing of the witnesses 1894

6. The eighth complaint (agreements entered into by Pfeifer & Langen with its agents restricting their opportunities for importing and exporting within the Community; cf III 8 above) 1905

7. The ninth complaint (concerted practices at the invitations to tender for refunds on exports to third countries ; Cf. III 9 above) 1909

Law

General 1912

Chapter 1: Complaint of a concerted practice having as its object the protection of the Italian market 1916

I — Summary of the relevant statements of the decision and of the main arguments of the parties 1917

2. Unduly short time-limits for submission of observations, 1927

3. Failure by the Commission to have taken into account certain facts put forward by the applicant. 1928

4. Infringement of Article 4 of Regulation No 99/63 1929

II — Submissions relating to the drafting and notification of the decision 1930

1. Infringement of the right to defend by the adoption of a single decision; infringement of the first paragraph of Article 191 (2) of the Treaty and of Article 3 of Regulation 1 (1) 1930

2. Infringement of Article 190 of the Treaty 1931

A — The relations between RT, on the one hand, and SU and CSM, on the other hand 1933

(a) The evidence 1933

(aa) The evidence relating to the actual conduct of the applicants 1933

1. Channelling of Belgian exports to specific consignees or destinations 1933

2. Refusal to supply 1934

3. The obligation imposed by RT on Belgian dealers and by SU and CSM on Netherlands dealers to adopt the policy described above 1935

B — The relations between Pfeifer & Langen, on the one hand, and SU and CSM on the other hand 1946

II — Infringement of Regulation No 26 of the Council 1948

Chapter 3: The complaint of a concerted practice having as its object the protection of the market of the western part of the Federal Republic of Germany 1950

Section 1: Procedural and formal submissions; submission on the substance of the case that Regulation No 26 of the Council has been infringed 1951

I — Submissions already dealt with in the second chapter 1951

II — Infringement of the right to defend 1952

A — The evidence 1953

(a) The evidence of the actual conduct of the applicants 1953

(aa) Channelling of Belgian exports to specific consignees or particular destinations 1953

(bb) The obligation imposed on agents only to undertake free exports of sugar with the consent of Pfeifer & Langen or by applying a price aligned on the German company's price 1956

(cc) Refusal to sell 1958

(b) The evidence relating to the question whether the conduct referred to above was concerted 1959

1. The evidence 1968

2. The evaluation of this evidence 1972

A — Béghin's deliveries 1972

B — Sucre-Union's deliveries 1974

Chapter 5: The complaint that RT brought economic pressure to bear on Belgian exporters 1976

I — Summary of the relevant statements of the decision 1976

JUDGMENT OF 16. 12. 1975 — JOINED CASES 40 TO 48, 50, 54 TO 56, 111, 113 AND 114/73

Chapter 6: The complaint that SU and CSM brought economic pressure to bear on Netherlands importers 1984

Chapter 7: Complaint that SZV prevented its agents from reselling sugar from other sources and tied its customers by the grant of loyalty rebates 1988

Section 1 : Procedural and formal submissions 1989

I — Submissions already dealt with in Chapter 2 1989

II — Submissions based on defects in the notification of objections 1989

1. The obligation imposed on agents 1994

A — The Commission's view 1994

B — The evaluation of the Commission's view 1996

2. The loyalty rebate 2000

A — The Commission's view 2000

B — The evaluation of the facts 2002

I — Infringement of Article 85 of the Treaty 2011

1. The truth of the facts alleged 2012

SUIKER UNIE AND OTHERS v COMMISSION

2. The question whether these practices fulfil the conditions laid down in Article 85 of the Treaty 2016

A — The question whether these practices might affect trade between Member States and whether their object or effect was to impede competition within the common market 2016

B — The question whether the concerted practices had an appreciable effect on intra-Community trade and competition within the common market 2019

(b) The costs of the intervention 2024

(c) The costs incurred in connexion with the examination of the witnesses 2025

Operative part of the judgment 2025

Contents 2028

Abbreviations 2042

JUDGMENT OF 16. 12. 1975 — JOINED CASES 40 TO 48, 50, 54 TO 56, 111, 113 AND 114/73

Générale sucrière = Société anonyme Générale sucrière (41/73)

Hottlet = SA Hottlet & Cie., Edegem (Belgium) (exporter)

Industria degli zuccheri = Società Italians per l'Industria degli Zuccheri (113/73) Internatio = NV Internatio Produkten (Netherlands importer)

Jacobson = Leonard Jacobson en Zonen (Netherlands importer)

Lebaudy-Sommier = Société Nouvelle de Raffinerie Lebaudy-Sommier SA Neuilly-sur-Seine*

Lebaudy-SUC = Groupement d'intérêt Economique Lebaudy-SUC, Paris*

SADAM = Società SADAM (50/73)

Say = Société des Raffineries et Sucreries Say (43/73)

Sermide = Zuccherificio di Sermide S.p.A., Genoa*

Société générale de sucreries = Società Generale di Zuccherifici (Société Générale de Sucreries), Brussels*

SU = Coöperatieve Vereniging Suiker Unie UA (40/73) Sucres et Denrées = Société Anonyme Sucres et Denrées (48/73)

Sucre-Union = Sucre-Union SA, Paris (Marketing organization)* SZAG = Süddeutsche Zucker-Aktiengesellschaft (54/73)

Regulation No 17 = EEC Council Regulation No 17 of 6 February 1962; First Regulation implementing Articles 85 and 86 of the Treaty (OJ, 1962, p. 204; OJ (English Special Edi­ tion) 1959-1962 p. 87)

Regulation No 26 = EEC Council: Regulation No 26 of 4 April 1962 applying certain rules of competition to production of and trade in agricultural products (OJ, 1962 p. 933; OJ (English Special Edition) 1959-1962 p. 129)

Regulation No 99/63 = Regulation No 99/63/EEC of the Commission of 25 July 1963 on the hearings provided for in Article 19 (1) and (2) of Council Regulation No 17 (OJ, 1963 p. 2268; OJ (English Special Edition) 1963-1964 p. 47)

Regulation No 1009/67 = Regulation (EEC) No 1009/67/EEC of the Council of 18 December 1967 on the common organization of the markets in sugar (OJ, 1967, p. 308/1; OJ (English Special Edition) 1967 p. 304)

Regulation No 430/68 = Regulation (EEC) No 430/68 of the Council fixing prices in the sugar sector for the sugar marketing year 1968/69 (OJ, 1968 L 89 p. 2)

Regulation No 431/68 = Regulation (EEC) No 431/68 of the Council of 9 April 1968 determining the standard quality for raw sugar and fixing the Community frontier crossing point for calculating cif prices for sugar (OJ 1968 L 89 p. 3; OJ (English Special Edition) 1968 (I) p. 71)

Regulation No 2049/69 = Regulation (EEC) No 2049/69 of the Commission of 3 October 1969 laying down general rules on the dena­ turing of sugar for animal feed (OJ 1969 L 263 p. 1; OJ (English Special Edition) 1969 (II) p. 441)

Regulation No 224/70 = Regulation (EEC) No 224/70 of the Commission of 5 February 1970 on a standing invitation to tender to determine the export refund on raw beet sugar (OJ, 1970, L 29 p. 27)

Regulation No 394/70 = Regulation (EEC) No 394/70 of the Commission of 2 March 1970 on detailed rules for granting export refunds on sugar (OJ 1970 L 50 p. 1; OJ (English Special Edition) 1970 (I) p. 132)

Regulation No 100/72 = Regulation (EEC) No 100/72 of the Commission of 14 January 1972 laying down detailed rules on the denaturing of sugar for animal feed (OJ 1972 L 12, p. 15; OJ (English Special Edition) 1972 (I) p. 21) Communication of the = Communication of the Commission of 24 December Commission of 24 December 1962 1962 relating to exclusive representation agreements entered into with trade representatives (OJ 1962 No 139 p. 2921)

Communication of the = Communication of the Commission of 29 July 1968 Commission of 29 July 1968 concerning agreements, decisions and concerted prac­ tices in the field of cooperation between undertakings (OJ, 1968 C 75, p. 3) Communication of the = Communication of the Commission of 27 May 1970 Commission of 27 May 1970 concerning minor agreements which are not covered by Article 85 of the Treaty (OJ, 1970 C 64, p. 1)