C-136/79

THE COURT

composed of: H. Kutscher, President, A. O'Keeffe and A. Touffait (Presidents of Chambers), J. Mertens de Wilmars, P. Pescatore, Lord Mackenzie Stuart, G. Bosco, T. Koopmans and O. Due, Judges,

Advocate General: J.-P. Warner Registrar: A. Van Houtte

gives the following

JUDGMENT OF 26. 6. 1980 — CASE 136/79

JUDGMENT

Panasonic's company object is the distri- bution in various countries (the United II — C o n c l u s i o n s of the p a r t i e s Kingdom, including the Channel Islands, Ireland and Iceland) of electrical and electronic goods produced by other Panasonic requests the Court: undertakings of the Matsushita group. "(a) To declare this application admissible; On 27 June 1979 at approximately 10 (b) To annul the Commission Decision a.m. two officials of the Commission, 22 June 1979 "concerning an duly authorized agents, arrived without investigation to be made at prior notice at Panasonic's sales offices National Panasonic (UK) Limited, in Slough and notified the directors of Slough, Berks., pursuant to Article the undertaking of a Commission 14.3 of Regulation No 17 (Case AF decision of 22 June 1979 authorizing an 420)"; on-the-spot investigation of all the company's documents. The assistant to (c) To order the Commission to Panasonic's managing director asked comply with the order of this Court those officials to await the arrival of the by undertaking's solicitor who had to travel from Norwich and they replied that they (i) returning to National Pana- had full authority to commence the sonic all National Panasonic's investigation immediately. The inspection documents copied by the therefore began at 10.45 a.m. in the officials of the Commission or absence of Panasonic's solicitor who by destroying such copies, only arrived three hours later and the inspection lasted approximately seven (ii) destroying all notes made by hours. At about 5.30 p.m. the the officials at the time of or

(iii) undertaking not to make any further use of such documents (b) to take copies of or extracts from the or notes or information ob­ books and business records; tained during the course of the unlawful investigation; (c) to ask for oral explanations on the (d) To order the Commission to pay spot; National Panasonic's costs." (d) to enter any premises, land and The Commission of the European means of transport of undertakings. Communities contends that the Court should dismiss the application and order Panasonic to pay the costs. 2. The officials of the Commission authorized for the purpose of these investigations shall exercise their powers upon production of an authorization in III— Submissions and argu­ writing specifying the subject-matter and m e n t s of t h e p a r t i e s purpose of the investigation and the penalties provided for in Article 15 (1) In support of its conclusions, Panasonic (c) in cases where production of the puts forward four submissions, two of required books or other business records which (failure to comply with the is incomplete. In good time before the procedure laid down in Article 14 of investigation, the Commission shall Regulation No 17/62 and infringement inform the competent authority of the of fundamental rights) relate to general Member State in whose territory the questions, whereas the others (failure to same is to be made of the investigation state the reasons upon which the decision and of the identity of the authorized was based or an insufficient statement of officials. those reasons and infringement of the principle of proportionality) refer to the facts of the case. 3. Undertakings and associations of undertakings shall submit to inves­ tigations ordered by decision of the The procedure laid down in Article 14 of Commission. The decision shall specify Regulation No 17/62 the subject-matter and purpose of the investigation, appoint the date on which Article 14 of Regulation No 17/62 it is to begin and indicate the penalties provides as follows: provided for in Article 15 (1) (c) and Article 16 (1) (d) and the right to have " 1 . In carrying out the duties assigned the decision reviewed by the Court of to it by Article 89 and by provisions Justice." adopted under Article 87 of the Treaty, the Commission may undertake all necessary investigations into under­ According to Panasonic, this article on its takings and associations of undertakings. proper construction provides for an To this end the officials authorized by obligatory two-stage procedure and does the Commission are empowered: not therefore permit the Commission to

carry out an investigation at an under- latter after consultation with the taking on the basis of a decision without European Parliament, it is necessary to previously trying to do So by virtue of a take into account both the Commission's simple authorization. statements and the reports by the Par- liament. However, during the debate which took place in the European Par- Within the context of Regulation No liament on the proposal for Regulation 17/62, Article 14 is in fact structured in No 17/62, both Mr Deringer, in the the same way as Article 11 concerning report of the Committee on the Internal the requests for information which the Market of the Parliament, and Mr Von Commission may send to undertakings. der Groeben, a member of the It first gives the Commission and its Commission of the European Com- authorized officials certain powers of munities, made statements (which informal investigation and secondly it Panasonic quotes in extenso) which show empowers the Commission to take a clearly that both had no doubt that that decision requiring undertakings to proposal provided for an obligatory two- submit to investigation. Both articles stage procedure also as regards therefore provide for a two-stage investigations. procedure. This is also evident from the wording of Article 13 (1) which distinguishes between investigations Once more, if Article 14 were ordered by the Commission informally interpreted as meaning that it did not and those ordered by means of a require a two-stage procedure, it would decision. However, as there is no doubt deny those concerned the "right to be that the procedure laid down by Article heard" which, as a fundamental right, 11 is obligatory, it is necessary to forms an integral part of Community acknowledge that Article 14, although it law. does not contain similar words, also requires an obligatory two-stage procedure. Finally, the practice followed hitherto by the Commission and of which Panasonic If that were not the case, the quotes several examples, has always been Commission, by taking a decision under to give undertakings an opportunity of Article 14 (3) and by requiring in the being heard before any decision to course of the investigation "such expla- compel investigation was taken with nation regarding the subject-matter of regard to them. the investigation as the said officials may require" (see Article 1 of the Decision of 22 June 1979), could avoid the necessity The Commission contests the statement of making use of Article 11 with regard that Article 14 is drafted in the same way to requests for information and deprive as Article 11. It claims that there is the undertakings concerned of their nothing in Article 14 which requires the rights under that article. Commission to seek to carry out an investigation with a written authorization before adopting a decision. That Moreover, in construing a measure, it is procedure may in fact be used but it is relevant to consider the intentions and not obligatory. On the contrary, Article objectives of the authors thereof. In the 11 provides expressly that the present case, since it is a rule which as Commission may take a decision only if such was proposed by the Commission to the undertaking does not supply the the Council and was adopted by the information requested.

The reasons why, in contrast to Article 11 either is irrelevant since that 11, a single-stage procedure is auth­ article already makes clear what orized under Article 14 are not difficult procedure it requires; to see. Where the Commission sees a need to inspect a company's documents — Article 2 (1) (b) of Regulation (EEC) iti situ, only a visit without previous No 2988/74 of the Council on warning can enable the risk to be limitation periods in proceedings and avoided that the undertaking concerned the enforcement of sanctions under might remove incriminating material. If the EEC competition rules recalls that possibility of action were prohibited, amongst the actions which interrupt the Commission would not be able to the running of the period of ensure the application of the rules on limitation "written authorizations to competition and Community law would carry out investigations issued to not be interpreted so as to give full effect their officials by the Commission or to its purpose. by the competent authority of any Member State at the request of the Commission or a Commission As regards the argument based on Article decision ordering an investigation". 13 of the Regulation, it is necessary to If it were necessasry for written observe that that article, whilst authorizations always to precede mentioning two types of investigation, decisions of the Commission ordering does not suggest that it is necessary to an investigation, the limitation period carry out one of them before the other. would always be interrupted by those authorizations and the mention of decisions would be completely As regards the alleged connexions pointless. between Article 14 on the one hand and Article 11 on the other, these are in fact two provisions which have different The Commission's point of view is purposes and therefore lay down moreover confirmed on many occasions different procedures. There is nothing in in the case-law of the Court of Justice Regulation No 17 to suggest that there and in the works of learned authors. By must be a link between the two pro­ judgment of 4 April 1960 in Case 31/59, cedures or that the procedure under Acciaieria e Tubificio di Brescia ν High Article 11 must be used before that of Authority [1960] ECR 71, the Court Article 14. Moreover, safeguards are of Justice categorically rejected an built into both procedures. argument very similar to that adduced by Panasonic according to which Article 47 of the ECSC Treaty necessitated a two- The Commission moreover puts forward stage procedure to enable information to the following arguments in support of its be collected and investigations to be view: carried out by the High Authority. As regards the work of learned authors, most of them share the Commission's opinion. — Article 19 of Regulation No 17/62 lists the circumstances in which the Commission is required to give the The Commission replies to the argument undertaking an opportunity of being based on its practice that that practice heard before a decision is adopted merely shows that an informal but does not refer to Article 14. The investigation is authorized and not that it fact that it does not mention Article is obligatory. It is necessary moreover to

state that contrary to Panasonic's 11 by using Article 14. Thirdly, it quotes allegation, this is not the first time that once more the statements made by Mr the Commission has carried out an Von der Groeben, in particular the investigation on the basis of decisions following sentences: "We foresee first of which were not previously notified to the all that information is given voluntarily. undertaking concerned, since that If it is not, the Commission will have to procedure has been used in 24 other take a decision.

arguments. Mr Deringer in fact with the preservation of fundamental explained the two-stage procedure but in rights because if it were possible to adopt no way stated that it was obligatory. Mr a decision of investigation without Von der Groeben did not state his warning the undertaking concerned, that opinion on the crucial question of undertaking would be deprived of an whether Article 14 prohibits the opportunity to make its views known Commission from adopting a decision before a decision was taken, and to without first attempting an investigation prepare itself for the investigation, to on the basis of a written authorization. protect its rights by applying to the The legislative history of the Regulation Court of Justice before the decision was was therefore at the very least ambiguous implemented and, if appropriate, to seek and inconclusive and certainly does not a stay.

It then equipment, in other words within the acknowledges that a decision ordering same context and during the same period an investigation must not necessarily be as the decision concerning Panasonic, preceded by a request for information whereas some of the six other decisions but recalls that in any case the seem to have been taken early in 1979. Commission should not be allowed to The argument adduced by Panasonic avoid the safeguards laid down in Article therefore remains wholly valid.

The judgment in Acciaieria di Brescia is Article 19 of Regulation No 17 gives no cited in error by the Commission. Quite support to the Commission's argument. apart from the fact that it is very The eleventh recital in the preamble to dangerous to interpret a regulation that regulation states in general terms adopted on the basis of the EEC Treaty that undertakings are entitled to be in the light of an article of the ECSC heard before a decision is taken with Treaty, it should be sufficient to recall reference to them. There is therefore no that Acciaieria di Brescia had in fact reason why Article 14 alone should claimed that the High Authority should exclude that right, especially as the take a preliminary decision to obtain Commission agrees that that right is information before taking a decision to recognized by Article 11, which itself is verify. It was not open to that under­ not mentioned in Article 19. taking to argue that a decision had to be preceded by an informal request, as it had already refused on two occasions voluntarily to provide information which the High Authority had "informally requested". It is therefore submitted that Panasonic also rejects the argument no comparison may be made with the based on Article 2 (1) (b) of Regulation argument adduced by Panasonic in this (EEC) No 2988/74 of the Council, first case. because a regulation adopted in 1974 cannot be a guide for the interpretation of a regulation adopted in 1962, and secondly because substantially similar wording is used in paragraph (1) (a) of The writers mentioned by the the same article which refers to the two- Commission rely on no authority for stage procedure of Article 11 which is their propositions, except, in some cases, admitted to be obligatory. for the Brescia case, which, as explained above, is not in point. Those writers may be countered by numerous other Community law specialists who interpret Article 14 as meaning that it provides for a mandatory two-stage procedure. In its rejoinder, the Commission notes that Panasonic's first submission is based on the proposition that Article 14 is drafted in the same terms as Article 11. If Panasonic is unable to prove that The Commission claims that a two-stage assertion all the consequences which it procedure sometimes creates too great a draws from it must fail. However, for risk that compromising documents will the purposes of such proof it is .not be destroyed or amended. However, it sufficient to state that, despite the admits that it is only recently that such a incontestable textual differences between risk has arisen and that it has become the two articles, their structural similarity aware of it. Clearly, recent developments results from the spirit and aim of Article cannot be relevant to the interpretation 14 in the context of the overall objective of a regulation adopted in 1962. If, in of Regulation No 17, since an interpret­ view of the present situation, the ation which would amount to preventing Commission feels that Regulation No 17 the Commission from obtaining proof of does not give it adequate powers, the infringement of the rules on competition only course open to it is to initiate new could hardly be in conformity with the legislation. objective pursued by that regulation.

— The decision must state adequate It is not true to say that the Commission reasons; may obtain information by requiring explanations on the spot at the time of — The Commission is obliged to consult an investigation by means of a decision the competent authority of the under Article 14 and thus avoid the safe- Member State involved and to inform guards of the procedure under Article it of the investigation; 11. In fact officials of the Commission undertaking an investigation are em- powered to require explanations of spe- —· The decision must call attention to cific concrete questions arising out of the the right of the firm to challenge its books ans business records which they validity before the Court; examine, which has nothing to do with the power to ask general questions — If the decision is successfully requiring careful consideration and challenged before the Court, the perhaps gathering of information by the Commission could not make use of firm. the documents which had come into its possession as a result of an investigation undertaken on the basis In the Commission's opinion the of that decision; statements made by Mr Von der Groeben in the parliamentary debates are not necessarily to be interpreted as —· In appropriate circumstances, the Panasonic maintains. At all events, firm concerned could seek damages whatever interpretation is to be put upon under Article 215 of the EEC Treaty.

NATIONAL PANASONIC ν COMMISSION

As regards the Commission's practice, decisions for investigation have been As regards Article 19 it should be taken in several other instances since mentioned that it makes no reference to 1 January 1973. It is worth mentioning Article 11, inter alia because that article that none of those decisions gave rise to does not give the undertaking a right to any protest or claim that the Commission argue that no decision obliging it to was not following a proper procedure. provide information should be adopted, but primarily gives that undertaking an opportunity voluntarily to provide the In the Commission's opinion and information requested or to state that it contrary to that of Panasonic, the has no such information. reference to the Brescia judgment is completely relevant. In that judgment the Court of Justice stated that Article 47 of the ECSC Treaty does not prohibit In response to Panasonic's attempt to "information being obtained and a check refute the arguments put forward by the being made at the same time". That Commission on the basis of Regulation amounts to saying that an investigation No 2988/74, it should be recalled that under Article 47 of the ECSC Treaty later legislation may always be used to must not necessarily be preceded by an show that a given interpretation of "informal request" or by a prior decision earlier legislation was accepted by the under Article 86 of that Treaty. In those legislature. circumstances, it is correct to state that the question at issue in Brescia was in all essential respects similar to that which is Moreover, a comparison between the subject-matter of these proceedings. subparagraphs (a) and (b) of Article 2 (1) of Regulation No 2988/74 does not necessarily lead to the conclusions put As far as learned writers are concerned, forward by Panasonic. It is in fact quite those cited by Panasonic do not provide possible in the context of Article 11 that

a request for information with which an without notice did not challenge the undertaking had not complied should decisions taken with reference to them in not be followed by a decision if the circumstances where, if Panasonic were Commission had for example obtained correct, they were entitled to do so, sufficient information for immediate indicates that they did not share the purposes as the result of similar requests applicant's opinion on this matter, which sent at the same time to other under- is certainly relevant. takings. If, after a certain period of time, the Commission wished to take a decision obliging the undertaking to provide the same information as that previously requested, it would (or at least Infringement of fundamental rights it might in certain circumstances) be open to the Commission to do so without making a second request for The second submission of a general information. It would be appropriate in nature put forward by Panasonic relates that case to mention the decision as a to the right of all individuals to be heard measure interrupting the prescription before a decision is taken which period. On the other hand, the written appreciably affects their interests. That authorization under Article 14 is always right, which is said to be one of those drafted so as to require an inspection fundamental rights which form an visit to begin on or about a specified integral part of Community law, is parti- date. cularly important where' a decision is to be taken which imposes "considerable obligations having far-reaching effects". A decision under Article 14 has such It would in fact be improper if the effects because it gives officials of the Commission were to purport to Commission very wide powers of authorize an inspector to visit an under- investigation and exposes the under- taking at any time during a period of taking to fines and/or periodic penalty months or years following the date of payments if it refuses to comply. the authorization. Also, once the Commission had decided that it was necessary to have an inspection, it would In proceedings under Article 14 the always carry it out, either by way of a undertaking concerned is entitled, written authorization or on the basis of a pursuant to the foregoing principle, to : decision if the undertaking concerned did not co-operate spontaneously. There cannot therefore be a considerable time — be given notice of the Commission's lag between the authorization and the intention to take a decision; decision to investigate so that it is unnecessary to mention the decision — be given sufficient notice of the separately as a measure interrupting the Commission's intention to implement prescription period. The conclusion must the decision; therefore be drawn that the reference in paragraph (1) (b) can only concern decisions adopted without prior recourse — have the opportunity of obtaining to the procedure of the written authoriz- such legal advice as is reasonably ation. necessary to protect its interests.

to take advice as to its rights and the spot is never a trivial matter and obligations in the event of an should not be undertaken without investigation or to ascertain whether any adequate reason. documents were of such a nature as not to be subject to the Commission's power of inspection. Furthermore, it was unable to prepare itself so as to collaborate fully in the investigation. Panasonic claims that a decision obliging a company to allow an investigation “imposes considerable obligations having far-reaching effects” on that company. The Commission replies that the principle But in fact the only obligation imposed relied on by Panasonic does not give the on the company is that of allowing undertaking which is to be investigated a the investigation. A decision cannot right to prior notice of the investigation. No authority is cited for Panasonic's authorize Commission officials to copy argument, in Community law or in documents irrelevant to the investigation national law. The Community insti­ or subject to legal or professional tutions know of no authority stating that privilege. If its rights were violated in the there is a right to be warned in advance course of an investigation the under­ of a duly authorized and entirely lawful taking concerned would clearly have a search under express legislative powers legal remedy. Where a company refused for documents required for the to comply with the decision it would investigation of a serious infringement of naturally render itself liable to fines; the public law. latter could not, however, be inflicted without a further decision, before which the company would certainly have a right to be heard. Finally, the Commission thinks it useful to point out The right to respect for private and its powers of investigation are sub­ family life, home and correspondence is stantially limited in comparison with subject to a certain number of exceptions those enjoyed by many national auth­ in all legal systems. This applies, to take orities of EEC Member States and other as an example only Article 8 of the democratic States. European Convention for the Protection of Human Rights and Fundamental Freedoms, on the assumption (which is not entirely free from doubt) that the principle laid down in that article may be regarded as applying not only to natural The statement that the undertaking persons but also to legal persons. which is to be investigated is entitled to Moreover, as regards Community law, it delay the investigation until its lawyer is clear from the case-law of the Court arrives was not given by Panasonic as of Justice that fundamental rights are not one of its four grounds of application. It absolute but are subject to limitations may, however, be briefly examined. It laid down in accordance with the public should be noted, first, that in the present interest or justified by the overall case the fact that the officials of the objectives pursued by the Community. Commission did not await the arrival of the solicitor before commencing the investigation in no way prejudiced Panasonic's interests. Having said that, it Having said that, the Commission agrees should be emphasized, on the one hand, that the investigation of a company on that Panasonic was unable to cite any

provision (whether of Community law, the EEC Treaty, to suspend the law of a Member State of the EEC application of a contested act. or of the law of a non-member country) in support of its view and, on the other hand, that if it is accepted that an under- taking is not entitled to receive prior Such rights are also recognized by notification of an investigation, it must academic writers. also be recognized that it is not entitled to delay that investigation until the lawyer of its choice is available. If it were As regards the right to seek legal advice, otherwise, the same risk of destruction it does not necessarily seek to suggest or amendment of documents would arise that that is a fundamental right separate as was precisely sought to be avoided by from those mentioned above. However, an investigation without prior notice. due observance of the fundamental right to receive sufficient notice of the intention to take and to implement a In its reply, Panasonic states that if the decision at the same time ensures respect right of the undertaking to be heard for that right. during the procedure within the meaning of Article 11 before a decision is taken is, as the Commission accepts, a Finally, the fact that the defendant's fundamental right, the same right must powers are more limited than those of be guaranteed in the procedure under the authorities of Member States cannot Article 14. be a reason to deny an undertaking protection for its fundamental rights in relation to the Commission. The undertaking's right to prepare for the investigation and to appeal before the investigation took place are said to be confirmed : In its rejoinder, the Commission claims that Panasonic's argument is based on the quite incorrect assumption that an — by the fact that Article- 14 (3) investigation is a drastic, damaging and provides that the Commission in its permanent action which adversely affects decision shall appoint the date of the the interests of the firm involved. In fact, investigation, which, in Panasonic's inspectors decide nothing and draw no opinion, is intended, inter alia, to conclusions. An investigation is similar to ensure that the undertaking should a duly authorized official search under know beforehand the date on which national law, not to any judicial the investigation is to begin so as to procedure. Furthermore, Panasonic be able properly to prepare itself and, forgets that the Commission takes a where appropriate, to appeal against decision to inspect a firm's books and the decision; business records in pursuance of an investigating power, not a judicial power. That being the case, the undertaking is — by the fact that all decisions taken quite clearly not entitled to be heard. pursuant to Regulation No 17 are subject to review by the Court of Justice under the conditions specified As regards Article 11, the Commission in the Treaty, which include the has never said that it gives a right to be power, which is conferred on the heard or, consequently, that it creates a Court of Justice under Article 185 of fundamental right.

Article 11 in fact quite simply gives an an action being brought subsequent to opportunity to comply on a voluntary the investigation, it could request, and basis with the request for information the Court would order, that documents made by the Commission. However that copied by the Commission's officials may be, it cannot be accepted that there should not be used before the Court had is a fundamental right to be heard before given final judgment. an investigation occurs, since such a right would undermine the effectiveness of the investigation. Finally, in recalling that its own powers are limited, the Commission did not mean to say that there is no need to For the same reasons it cannot be protect fundamental rights in relation to accepted that an undertaking is entitled the powers which it exercises, but quite to prepare for the investigation. simply that an interpretation which seeks further to restrict those powers, to the point of rendering them totally in­ As for Panasonic's statement in its reply effective, should be avoided. to the effect that an undertaking's right to be notified in sufficient time of the Commission's intention to implement a decision of investigation should enable Total or partial failure to state reasons the undertaking to appeal, it is sufficient to recall that to admit of the necessity of granting a period of notice between According to Panasonic, the Commission the adoption of a decision and its failed to state or to state properly the implementation would be entirely reasons on which its decision was based. inconsistent with the provisions, of the Treaty and with the case-law of the Court and the practice of the In the present case, according to the Commission. established case-law of the Court of Justice, the statement of reasons should have been detailed, since the decision at The requirement that the decision should issue was one involving a particularly fix a date for the investigation is not serious measure depriving the under­ intended to make that date known to taking concerned of its fundamental the undertaking concerned. That con­ rights, exposing that undertaking to fines struction could be placed upon it only if or to periodic penalty payments and it were proved that the decision must be involving a departure from the notified to the undertaking. Commission's previous practice.

The Commission replies that, since it was The obligation to give reasons is parti- not required to proceed by first under- cularly important in this case since the taking an informal investigation, it was decision marks a complete departure not required to give reasons for not from previous published practice and the having followed that procedure. It did, previous decisions to the same effect however, give reasons why an were not only very rare but have in fact investigation was necessary (namely not been published. The Commission has information which gave grounds for stated that a decision under Article 14 believing that there was an export (3) may be taken without first informally prohibition), and this amounts to a requesting an investigation either "where sufficient statement of reasons. When the it is known from contacts with the Commission has a choice between enterprise involved that it will not agree several courses of action, it must give to an investigation on a voluntary basis" reasons in its decision for the course of or where "there is reason to believe that action which it chooses to adopt, but important evidence is likely to be surely need not discuss why it did not concealed or destroyed either by the prefer any of the others. enterprise in question . . . or by some other enterprise involved in the suspected infringement". Nowhere in the decision Moreover, the contested decision is not a is there even a suggestion that either of particularly grave step, nor does it these requirements was satisfied in deprive the undertaking of its relation to the present case. It would fundamental rights, nor does it depart indeed have been impossible for the from previous practice, all of which Commission to claim that Panasonic enables the Commission to confine itself would not agree to an investigation on a to a somewhat summary statement of voluntary basis because, prior to the reasons. investigation, the Commission had no contact with that company. As for the second condition, the Commission had A summary statement of reasons was no reason to believe that important held to be sufficient by the Court of evidence was likely to be concealed or Justice in the case of a decision ordering destroyed by Panasonic. an investigation in the judgment in Case 31/59, Acciaieria di Brescia, cited above.

that which the Commission contends is that a decision which departs from available to it under Article 14. previous "published practice" should contain a very full statement of reasons. But the contested decision was not a departure — as has already been shown — from the previous practice of the Commission. Furthermore, inspection In its rejoinder, the Commission recalls decisions need not be published. Finally, that a decision to investigate adopted provided that such a decision is properly without prior notice is justified whenever reasoned it cannot be seriously claimed a serious infringement of Community that it is invalid because other similar law such as an export ban is suspected. decisions in the past have not been However, since Panasonic appears to published. believe that such a decision is justified only if the undertaking concerned has supplied the Commission with incorrect or misleading information, it is a simple matter to show that the condition also was fulfilled in this case. The contested decision expressly states that the Commission had been informed of the The applicant claims that nowhere in the fact that Panasonic had required trade decision is there a suggestion that customers not to export. It also states Panasonic was likely to conceal evidence. that, when its distribution agreement was But the fact that National Panasonic notified to the Commission, National Vertriebsgesellschaft mbH in its Panasonic Vertriebsgesellschaft mbH, a notification had not mentioned the fact German company in the Panasonic that there was a ban on exports entitled group made no mention of a ban on the Commission to believe that exports to Germany from the United Panasonic was prepared, if necessary, to Kingdom. In this connexion it should be conceal evidence relating to that ban. borne in mind that when an undertaking The inaccuracy of the notification made notifies an agreement within the meaning by National Panasonic Vertriebs­ of Regulation No 17/62 it is under a gesellschaft mbH was mentioned in the legal obligation not to supply incorrect decision. Clearly, the best proof that an information, that a ban on exports from undertaking is liable to conceal evidence the United Kingdom would no doubt would be proof that it has done so in the have benefited Panasonic GmbH and past — but such proof is, for several that Panasonic GmbH and Panasonic obvious reasons, not normally available UK are 100% subsidiaries of the same and the Commission is therefore obliged parent company. It is therefore clear to assess that possibility on the basis of from the decision that the undertaking the evidence available to it at the time. which was to be subjected to the investigation seemed already to have concealed from the Commission a factor of some importance for the assessment of its competitive behaviour. According to Panasonic, the Commission had no reason to consider it likely that it would conceal important evidence. But there is indeed such a reason, namely Panasonic further maintains that the that the Panasonic group had already statement of reasons is insufficient in concealed an important fact.

The argument on proportionality in relation to the decision Panasonic also adopts the reasoning of Mr Advocate General Roemer in Brescia. Mr Roemer noted in that case that if several measures are equally appropriate According to Panasonic the principle of the measure adopted should be the one proportionality, as outlined in the which obtains the best possible result case-law of the Court of Justice, requires with the least effort and imposes the least that measures and provisions taken by burden on the citizen. He added that an the institutions must be "appropriate and investigation following a decision "may necessary to attain the objectives only be exercised where a special need is sought". A decision to investigate which shown in a special case, that is, for is not preceded by an informal request example, if information has been refused fulfils those conditions only if the or if there is good reason to suspect that situation is very grave, if there is extreme the information obtained is incomplete urgency and if there is need for complete or incorrect". Those conditions do not secrecy before the investigation is carried obtain in this case, there having been out. The recitals in the preamble to the neither such a refusal nor a previous decision in dispute do not however supply of information. disclose any such circumstance, so that the decision itself must be held to be contrary to the principle of propor- The Commission notes, in its rejoinder, tionality. that the authors cited by Panasonic, far from supporting the applicant's point of view, illustrate conditions which are precisely those obtaining in this case. The Commission believes, on the other hand, that the principle of propor- tionality requires quite simply a reasonable relationship between the As for the criteria set out in the opinion measure and "what is appropriate and of Mr Advocate General Roemer, it necessary to attain the objectives should be noted, without its being sought", to prevent onerous measures necessary to discuss the applicability of being adopted for insufficient objectives. those criteria to Panasonic's case, where In the present circumstances, the the investigation did not constitute "far- procedure followed by the Commission reaching intervention" into its activities, was without doubt appropriate and that: necessary; indeed, it was the only procedure which was capable of preventing the concealment or de- — a procedure which offered an under- struction of possible proof of a serious taking which had already concealed infringement of Community law. important facts from the Commission

2 The applicant is a company formed under English law and a subsidiary of the Japanese Matsushita Electric Industrial Company and the exclusive distributor in the United Kingdom of National Panasonic and Technics electronic goods intended for sale to consumers. Another subsidiary of the Matsushita group is National Panasonic Vertriebsgesellschaft mbH, which is incorporated in the Federal Republic of Germany and distributes Panasonic products in that Member State.

JUDGMENT OF 26. 6. 1980 — CASE 136/79

3 On 11 January 1977 National Panasonic Vertriebsgesellschaft mbH notified the Commission of an agreement relating to the distribution of National Panasonic products and requesting negative clearance or an exemption under Article 85 (3) of the Treaty.

4 Although the notification did not indicate whether or not the agreement contained a prohibition on exports to another Member State, information obtained by the Commission showed that National Panasonic required its re-sellers not to re-export National Panasonic and Technics products to other Member States.

5 On the basis of that information, the Commission considered that it was necessary to believe that the applicant had participated and was still parti- cipating in agreements and concerted practices contrary to Article 85 of the EEC Treaty and therefore decided to carry out an investigation pursuant to Regulation No 17 of the Council and more particularly to Article 14 (3) thereof. For that purpose on 22 June 1979 it adopted the contested decision, Article 3 of which provided inter alia that it would be notified by being handed over personally immediately before the investigation was to begin to a representative of the undertaking by the Commission's officials authorized for the purposes of the investigation.

9 These arguments do not appear to be well-founded. In order to enable the Commission to accomplish its task of ensuring that the rules of competition in the common market are complied with, the eighth recital of the preamble to Regulation No 17 provides that it "must . . . be empowered, throughout the common market, to require such information to be supplied and to undertake such investigations as are necessary to bring to light any agreement, decision or concerted practice prohibited by Article 85 (1) or any abuse of a dominant position prohibited by Article 86". For this purpose, that regulation provides for separate procedures, which shows that the exercise of the powers given to the Commission with regard to information and investigations is not subject to the same conditions.

10 Article 11 (2), (3) and (5), which concerns the Commission's power to request the information it considers necessary, provides as follows:

"2. When sending a requestfor information to an undertaking or association of undertakings, the Commission shall at the same time forward a copy of the request to the competent authority of the Member State in whose

JUDGMENT OF 26. 6. 1980 — CASE 136/79

territory the seat of the undertaking or association of undertakings is situated.

3. In its request the Commission shall state the legal basis and the purpose of the request and also the penalities provided for in Article 15 (1) (b) for supplying incorrect information.

NATIONAL PANASONIC ν COMMISSION

3. Undertakings and associations of undertakings shall submit to investigations ordered by a decision of the Commission. A decision shall specify the subject-matter and purpose of the investigation, appoint the date on which it is to begin and indicate the penalities provided for in Article 15 (1) (c) and Article 16 (1) (d) and the right to have the decision reviewed by the Court of Justice."

This provision does not of course prevent the Commission from carrying out an investigation solely pursuant to a written authorization given to its officials without adopting a decision, but in other respects it contains nothing to indicate that it may only adopt a decision within the meaning of Article 14 (3) if it has previously attempted to carry out an investigation by mere auth­ orization. Whereas Article 11 (5) expressly makes the adoption of a Commission decision subject to the condition that the latter has previously asked for the necessary information by means of a request addressed to those concerned and specifies in Article 11 (3) the essentials which such a request must contain, Article 14 makes the investigating procedure by means of a decision subject to no preliminary of this kind.

12 The applicant wrongly relies in support of its argument on the wording of Article 13 (1) of the same regulation which provides that, at the request of the Commission, the national authorities must undertake the investigations which the Commission considers to be necessary under Article 14 (1) or which it has ordered by decision pursuant to Article 14 (3). By making a distinction between the two investigatory procedures, that provision clearly shows by the use of the word " o r " that those two procedures do not necessarily overlap but constitute two alternative checks the choice of which depends upon the special features of each case.

16 For all these reasons, it is necessary to dismiss the first submission as unfounded.

(b) The infringement of fundamental rights

17 The applicant then claims that by failing previously to communicate to it beforehand the decision ordering an investigation in question, the Commission has in this instance infringed fundamental rights of the applicant, in particular the right to receive advance notification of the intention to apply a decision regarding it, the right to be .heard before a decision adversely affecting it is taken and the right to use the opportunity given to it under Article 185 of the Treaty to request a stay of execution of such a decision. The applicant relies in particular on Article 8 of the

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European Convention for the Protection of Human Rights and Fundamental Freedoms of 4 November 1950 whereby "everyone has the right to respect for his private and family life, his home and his correspondence". It considers that those guarantees must be provided mutatis mutandis also to legal persons.

18 As the Court stated in its judgment of 14 May 1974 in Case 4/73, J. Nold, Kohlen- und Baustoffgroßhandlung ν Commission of the European Com­ munities [1974] ECR 491 at p. 507, fundamental rights form an integral part of the general principles of law, the observance of which the Court of Justice ensures, in accordance with constitutional traditions common to the Member States and with international treaties on which the Member States have collaborated or of which they are signatories.

20 In this instance, as follows from the seventh and eighth recitals of the preamble to Regulation No 17, the aim of the powers given to the Commission by Article 14 of that regulation is to enable it to cany out its duty under the EEC Treaty of ensuring that the rules on competition are applied in the common market. The function of these rules is, as follows from the fourth recital of the preamble to the Treaty, Article 3 (f) and Articles 85 and 86, to prevent competition from being distorted to the detriment of the public interest, individual undertakings and consumers. The exercise of the powers given to the Commission by Regulation No 17 contributes to the maintenance of the system of competition intended by the Treaty which undertakings are absolutely bound to comply with. In these circumstances, it does not therefore appear that Regulation No 17, by giving the Commission the powers to carry out investigations without previous notification, infringes the right invoked by the applicant.

JUDGMENT OF 26. 6. 1980 — CASE 136/79

22 Finally, the argument that the absence of previous information deprived the applicant of the opportunity of exercising its right under Article 185 of the Treaty to request the Court for a stay of execution of the decision in question is contradicted by the very provisions of Article 185. That article presupposes in fact that a decision has been adopted and that it is effective whereas the previous notification, which the applicant complains that the Commission did not send it, should have preceded the adoption of the contested decision and could not have been binding.

23 In view of these considerations, the second submission is not well founded.

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(c) Absence of a statement of the reasons upon -which the decision was based

24 The applicant also maintains that the contested decision is irregular in that it failed to state or to state properly the reasons on which it was based, in particular because it in no way indicates the reasons why the Commission applied Article 14 (3) of Regulation N o 17 in this instance without attempting first of all to carry out an informal investigation.

25 Article 14 (3) of Regulation No 17 itself lays down the essential constituents of the statement of the reasons upon which a decision ordering an investigation is based by providing that it "shall specify the subject-matter and the purpose of the investigation, appoint the date on which it is to begin and indicate the penalties provided for in Article 15 (1) (c) and Article 16 (1) (d) and the right to have the decision reviewed by the Court of Justice".

29 The Commission's choice between an investigation by straightforward auth- orization and an investigation ordered by a decision does not depend on the facts relied upon by the applicant but on the need for an appropriate inquiry, having regard to the special features of the case.

30 Considering that the contested decision aimed solely at enabling the Commission to collect the necessary information to appraise whether there was any infringement of the Treaty, it does not therefore appear that the Commission's action in this instance was disproportionate to the objective pursued and therefore violated the principle of proportionality.

31 For all these reasons, since this last submission cannot be accepted either, it is necessary to dismiss the application as unfounded.

Costs

32 Under Article 69 (2) of the Rules of Procedure, the unsuccessful party should be ordered to pay the costs.

33 Since the applicant has failed in its submissions, it must be ordered to pay the costs.

Kutscher O'Keeffe Touffait Mertens de Wilmars Pescatore

Mackenzie Stuart Bosco Koopmans Due

Delivered in open court in Luxembourg on 26 June 1980.

A. Van Houtte H. Kutscher Registrar President

O P I N I O N O F MR ADVOCATE GENERAL WARNER DELIVERED O N 30 APRIL 1980

My Lords, officials authorized by the Commission are empowered : This action is brought under Article 173 of the EEC Treaty by an English (a) to examine books and other business company, National Panasonic (UK) records; Limited, to challenge a decision of the Commission dated 22 June 1979 (b) to take copies of or extracts from the requiring it to submit to an investigation pursuant to Article 14 (3) of Regulation books and business records; No 17. (c) to ask for oral explanations on the spot; Article 14 of Regulation No 17 is, so far as material, in these terms: (d) to enter any premises, land and means of transport of undertakings. "Investigating powers of the Commission