C-60/81

JUDGMENT OF 11. 11. 1981 — CASE 60/81

effects they produce, as being effect of depriving it of the protection decisions within the meaning of hitherto available to it against the Article 173 of the EEC Treaty which application of a fine, as is the case may be challenged in an action for a when the Commission informs an declaration that they are void. In undertaking, pursuant to Article 15 the context of the administrative (6) of Regulation No 17, of the procedure as laid down by Regu­ results of the preliminary examination lations No 17 and No 99/63, they of an agreement which has been are procedural measures adopted notified by the undertaking. Whilst a preparatory to the decision which statement of objections may have the represents their culmination. effect of showing the undertaking in question that it is incurring a real risk of being fined by the Commission, 3. A statement of objections does not that is merely a consequence of fact, compel the undertaking concerned to and not a legal consequence which alter or reconsider its marketing the statement of objections is intended practices and it does not have the to produce.

In Case 60/81

INTERNATIONAL BUSINESS MACHINES CORPORATION (hereinafter referred to as "IBM"), Armonk, New York 10504, United States of America, represented by Jeremy Lever, Queen's Counsel, of the Bar of England and Wales, David Edward, Queen's Counsel, advocate of the Scots Bar, John Swift, Queen's Counsel, of the Bar of England and "Wales, Christopher Bellamy and Nicholas Forwood, barristers of the Bar of England and Wales, and Andrew Soundy, of Ashurst, Morris, Crisp and Co., Solicitor of the Supreme Court of England and Wales, with an address for service in Luxembourg at the offices of International Business Machines of Belgium SA, 8 Boulevard Royal,

MEMOREX SA, 178 Chaussée de la Hulpe, 1170 Brussels, represented by Ivo Van Bael and Jean-Francois Bellis, of the Brussels Bar, with an address for service in Luxembourg at the chambers of Messrs Elvinger and Hoss, 15 Côte d'Eich, intervener,

APPLICATION for the annulment of the decision to initiate a procedure in the matter of competition and the statement of objections appertaining thereto,

T H E COURT

composed of: J. Mertens de Wilmars, President, G. Bosco and A. Touffait (Presidents of Chambers), Lord Mackenzie Stuart, T. Koopmans, U. Everling and F. Grévisse, Judges,

Advocate General: Sir Gordon Slynn Registrar: A. Van Houtte

gives the following

2. By letter of 28 January 1981 the It appears from the statement of applicant requested the Commission to objections that the Commission is of the supply it with details concerning the acts opinion that the applicant occupies a of the Commission authorizing the dominant position in the supply of initiation of the procedure and central processing units and basic communication of the statement of software for the IBM 360 and 370 type objections, and to send copies of the computer systems, thus controlling the relevant documents recording those acts. operation and maintenance of such units, and that it has abused that position to the detriment of "plug-compatible" manufacturers who offer products In a letter of 3 February 1981 signed by specifically designed to be compatible the Director of Directorate IV Β the with the above-mentioned computer Commission refused to supply the said system, by means of certain marketing details, stating that the decisions were practices which consist of: internal ones which would not be notified outside the Commission.

(b) The initiation of the procedure II — Conclusions and procedure under Article 86 constitutes an unlawful exercise of the powers of the Commission. The acts which are 1. This application was lodged on 18 the subject-matter of the application March 1981; in it the applicant claims were not adopted by a collegiate that the Court should: decision of all the Commissioners, yet there was no delegation of powers, nor can such a delegation be (1) Declare void: lawfully made, at least in the absence of publication or due notification. (i) the act or acts of the Commission by which (c) As the conduct of the applicant to (a) a proceeding was initiated which objection is taken is pursued against IBM pursuant to for the most part outside the Article 3 of Regulation No confines of the Community and is 17 of the Council; the subject of legal proceedings in the United States, the Commission (b) a statement of objections was under a duty from the start to was addressed and/or have regard to the relevant principles notified to the applicant; of international law, in particular the and/or principles of comity and non-inter­ ference in the internal affairs of the United States, which preclude the (ii) the statement of objections itself, exercise of Community jurisdiction. in so far as by itself it constitutes an act of the Commission; In a separate lodged at the Court (2) Order the Commission to pay the Registry on 10 April 1981 pursuant to costs. Article 91 (1) of the Rules of Procedure the Commission entered an objection of inadmissibility claiming that the Court The application is founded on three should: grounds which may be briefly summarized as follows: — Declare the application inadmissible; and (a) The Commission has failed to meet minimum legal criteria in relation to the statement of objections. The — Order the applicant to pay the costs.

By an order of the Court of 13 May powers of review under Article 173 of 1981 Memorex SA, the complainant in the EEC Treaty. the administrative proceedings before the Commission, was allowed to intervene. The Commission, replying, contended In its observations on the admissibility of that the Court should: the application the intervener claimed that the Court should : — Dismiss the application for production of documents; — Declare the application inadmissible; and and — Order the applicant to pay the costs. — Order the applicant to pay the costs including those of the intervention. In support of its conclusions the Commission claimed that it was not open to the applicant to request the 2. Concurrently with the main production of documents dealing with application the applicant by a separate issues of substance in the main document made application pursuant to application outside the context of the Article 91 (1) of the rules of Procedure main procedure, and before it had even for an order: been established whether the main application was admissible, and that the provisions relied upon by the applicant (1) that the Commission should produce dealt with different circumstances and particulars of its acts authorizing: could not therefore support such a request. (i) the initiation of the proceedings; and 3. On 29 May 1980 the applicant (ii) the delivery of the statement of submitted an application for the adoption objections, and provide copies of of interim measures pursuant to Article the minutes or other relevant 83 of the Rules of Procedure seeking documents recording the same; the suspension of the Commission's and administrative procedure and of the implementation of the disputed acts or the adoption of such interim measures as (2) that the Commission should pay the might be necessary. costs of and incurred in connection with that application. The President of the Court made an interlocutory order on 7 July 1981 dismissing the application for the adoption of interim measures and In support of that application the reserving costs, including those of the applicant relied on Article 21 of the intervention. Statute of the Court of Justice of the European Economic Community and Article 45 (2) of the Rules of Procedure, 4. The written procedure relating to stating that unless the Commission the objection of inadmissibility followed provided the particulars so requested the the normal course. applicant would be unable effectively to advance relevant arguments relating to On hearing the views of the Advocate the validity of the acts in question, and General the Court decided to open the Court would be unable to exercise its the oral procedure concerning the

Notification of the statement of 2. In support of its objection of objections, crystallizes and determines inadmissibility the Commission argues the final attitude of the Commission that initiation of an administrative concerning undertakings and binds it to procedure and the statement of a position from which it cannot lawfully objections are procedural steps, which depart. Furthermore, notification of a are preparatory and provisional and statement of objections is a conditio sine therefore not open to challenge under qua non of the power of the Commission Article 173 of the EEC Treaty. to impose a fine or a periodic penalty payment or to make an order for termin­ ation of an infringement. It brings about a change in the legal position of the Community competition law draws a undertaking concerned in that the latter distinction, in the same way as the is thereby required to answer a charge various national legal procedures known and put up a defence and to do so within to the Commission, between decisions a period laid down by the Commission. which may be challenged under Article By virtue of the notification of the 173 and procedural steps which cannot statement of objections the undertaking themselves be challenged. If such proce­ may become directly liable to a fine, a dural steps are adopted or carried out penalty payment or an order for termin­ improperly, the only course of action ation of an infringement if it takes no available to the undertaking concerned is action to defend itself. to challenge the validity of the decision

Regulation No 17 of the Council and Regulation No 99/63 of the Commission of 25 July 1963, on the hearings The Commission must always reconsider provided for in Article 19 (1) and (2) of the case when it receives the reply to the Council Regulation No 17 (Official statement of objections and it is free to Journal, English Special Edition 1963-64, send out a second statement of p. 47), contain no indication whatsoever objections, or to clarify or add to the that the initation of a procedure and the first. The "crystallizing" effect of the statement of the objections are to be statement of objections does not regarded as decisions which may be the therefore justify its being challenged subject of challenge in the courts. directly. The undertaking's right to criticize the statement of objections is more efficiently and appropriately protected by the right to challenge the final decision, for only at that stage can the effect of any defects in the statement The measures impugned are to be of objections be adequately assessed distinguished, in particular, from without its being necessary to indulge in notification of the results of a pre- speculation as to the future development liminary examination of an agreement, of the procedure.

IBM ν COMMISSION

It 17 large numbers of actions directed marks the end of the initial stage of the against steps in the procedure might procedure, has the effect of eliminating come before the Court which would thus the presumption of good faith on the be obliged to examine at an unsuitably part of the applicant who prior to the early stage arguments going to the statement of objections had no reason to substance of the issues. believe that the conduct complained of might constitute an infringement of Article 86 of the EEC Treaty, and it confronts the applicant with the dilemma

The Initiation of a procedure proceeds from issues raised are, by their very nature and a formal decision by the Commission by their implications for the integrity of which constitutes an authoritative act on the Community, and international, legal the part of the latter, and the statement order, questions which fall squarely signals the termination, by an authori within the immediate jurisdiction of the tative act which determines the Court and ought to be decided now. The Commission's attitude, of the internal crux of the main application is that the administrative phase of the preliminary Commission's administrative procedure

was vitiated ad initio by a defect and that for that reason constitutes a reviewable to pursue that procedure in any way is decision under Article 173. unlawful. The application seeks to establish that the acts in question were adopted in breach of international law by persons acting without the lawful authority of the Commission, and to protect the applicant's interest in not The applicant relies further, in support of finding itself compelled to defend itself its argument, on a series of opinions and in the course of a procedure which is notes on the laws of the Member States wholly unlawful. In the circumstances which, it claims, reveal the existence of a subsequent annulment of the Com- principle common to all the legal systems mission's ultimate decision would not be to the effect that judicial review in limine sufficient to provide proper protection is available at an early stage in various for the applicant and legal action should forms in the same circumstances as those be available to it in order to obtain early of the present case when the interests of judicial review. the administration of justice so require, especially where competence or juris- diction is in issue. Examination of past decisions of the Court in staff cases also show that under certain conditions and on certain grounds preparatory acts may be subject to judicial review and that the principle of early judicial review is In support of its argument the applicant known in Community law. refers to a legal opinion by Professor Meessen which states that the rule of non-interference under customary inter- national law, which has direct effect in Community law and may be relied upon by undertakings, requires States to refrain from adopting measures in 4. The intervener, in its observations as application of their competition law if to the admissibility of the application, such measures would affect the interests maintains that the application is of a foreign State to a substantial extent manifestly inadmissible for failure to and if those interests outweigh the meet the conditions laid down by the interests of the State proposing to take case-law of the Court for application of the measures. By initiating and con- Article 173 of the EEC Treaty, because tinuing the administrative procedure the the acts impugned do not have legal Commission has, according to that effects capable of prejudicing the opinion, infringed the rule of non-inter- individual interests of the applicant and ference. Community law and the rules of do not constitute the culmination of a international law require the acts in special procedure of the Commission. question to be subject to judicial review at the outset, therefore, to determine whether they breach the rule of non- interference, which is a rule of jurisdiction, relevant under Article 173 of the EEC Treaty. The decision to deliver The statement of objections has no more the statement of objections must, in the character of a decision within the addition, be viewed as an implicit refusal meaning of Article 173 of the EEC to apply the rule of non-interference and Treaty than the reasoned opinion given

Decision

ι By application lodged at the Court Registry on 18 March 1981 the Inter­ national Business Machines Corporation (hereinafter referred to as "IBM"), whose headquarters are in Armonk, New York, United States of America, brought an action under the second paragraph of Article 173 of the EEC Treaty for a declaration that the measure or measures of the Commission of which IBM was notified in a letter dated 19 December 1980, initiating a procedure against IBM pursuant to Article 3 of Regulation No 17 of the Council of 6 February 1962, the first regulation implementing Articles 85 and 86 of the Treaty (Official Journal, English Special Edition 1959-62, p. 87) and notifying IBM of a statement of objections, or the statement of objections itself, are void.

JUDGMENT OF 11. 11. 1981 — CASE 60/81

4 IBM's action is based on the submission that the measures which it challenges do not meet the minimum legal criteria which have been laid down for such measures, and that defects in the content of the statement of objections, the inadequacy of the time-limits laid down and the Commission's reservation of the right to raise further objections at a later date have made it impossible for IBM to raise a defence. In addition, IBM considers that the measures impugned amount to an unlawful exercise of its powers by the Commission inasmuch as they have not been the subject of a collegiate decision adopted by all the members of the Commission together although there has been no corresponding delegation of power and, in law, there could not be one, at least without due publication or notification. Finally, IBM maintains that the measures in question offend against the international legal principles of comity between nations and non-interference in internal affairs, principles which ought to have been taken into consideration by the Commission before it adopted the measures in question because the conduct of IBM which is the subject of complaint occurred in

IBM ν COMMISSION

the main outside the Community, in particular in the United States of America where it is also the subject of legal proceedings.

5 The Commission, supported by Memorex SA, intervening, lodged an objection of inadmissibility under Article 91 (1) of the Rules of Procedure. The Court decided to adjudicate on the objection of inadmissibility without going into the substance of the case.

JUDGMENT OF 11. 11. 1981 — CASE 60/81

10 In the case of acts or decisions adopted by a procedure involving several stages, in particular where they are the culmination of an internal procedure, it is clear from the case-law that in principle an act is open to review only if it is a measure definitively laying down the position of the Commission or the Council on the conclusion of that procedure, and not a provisional measure intended to pave the way for the final decision.

1 1 It would be otherwise only if acts or decisions adopted in the course of the preparatory proceedings not only bore all the legal characteristics referred to above but in addition were themselves the culmination of a special procedure distinct from that intended to permit the Commission or the Council to take a decision on the substance of the case.

12 Furthermore, it must be noted that whilst measures of a purely preparatory character may not themselves be the subject of an application for a declaration that they are void, any legal defects therein may be relied upon in an action directed against the definitive act for which they represent a preparatory step.

1 3 The effects and the legal character of the invitation of an administrative procedure pursuant to the provisions of Regulation No 17 and of the notification of objections as provided for in Article 2 of Regulation No 99/63 must be determined in the light of the purpose of such acts in the context of the Commission's administrative procedure in matters of competition, detailed rules for which have been laid down in the abovementioned regulations.

17 Some of those effects amount to no more than the ordinary effects of any procedural step and, apart from the procedural aspect, do not affect the legal position of the undertaking concerned. That is so, in particular, of the inter­ ruption of the time-limit brought about both by the initiation of a procedure and by the communication of the statement of objections by virtue of Regu­ lation (EEC) No 2988/74 of the Council of 26 November 1974 concerning limitation periods in proceedings and the enforcement of sanctions under the rules of the European Economic Community relating to transport and competition (Official Journal 1974, L 319, p. 1). The same is true as regards the fact that the acts in question are necessary stages to be accomplished by the Commission pursuant to the provisions of Regulation N o 17 before it is able to impose a fine or a periodic penalty payment on the undertaking concerned, and the fact that the acts oblige the undertaking concerned to put up a defence in administrative proceedings.

18 Other effects relied on by IBM do not adversely affect the interests of the undertaking concerned. One such is the fact that initiation of a procedure under Article 9 (3) of Regulation No 17 puts an end to the jurisdiction of the authorities in the Member States — a result which did not in fact occur in this instance as there were no national proceedings, and which essentially results in protecting the undertaking concerned from parallel proceedings brought by the authorities of the Member States. Another such effect is the fact that communication of the statement of objections is recognized as crys­ tallizing the Commission's position, which means in effect that the Commission is prevented, pursuant to Article 4 of Regulation N o 99/63, from relying in its decision, in the absence of a fresh statement of objections, on the existence of any objections other than those on which the undertaking

21 It follows from the foregoing that neither the initiation of a procedure nor a statement of objections may be considered, on the basis of their nature and the legal effects they produce, as being decisions within the meaning of Article 173 of the EEC Treaty which may be challenged in an action for a declaration that they are void. In the context of the administrative procedure as laid down by Regulations No 17 and No 99/63, they are procedural measures adopted preparatory to the decision which represents their cul- mination.

22 In support of its submission that the application is admissible IBM relies further on the special circumstances of the case and on the nature and

IBM ν COMMISSION

implications of the submission which it puts forward on the substance of its case, claiming that a judicial review ought to be made available at an early stage in this case both in accordance with the principles of international law in such matters and pursuant to general principles flowing from the laws of the Member States. The present application is intended to establish that the administrative procedure was wholly unlawful from the beginning under the rules of Community law and international law, particularly those concerning the power to initiate such procedures. Any continuation of that administrative procedure is unlawful, it claims, and the fact that IBM may subsequently have the final decision declared void is not sufficient to give it effective legal protection.

23 It is not necessary for the purposes of this case to decide whether, in exceptional circumstances, where the measures concerned lack even the appearance of legality, a judicial review at an early stage such as that envisaged by I B M may be considered compatible with the system of remedies provided for in the Treaty, because the circumstances referred to by the applicant in this case are in any event n o t such as would make it possible to regard the action as admissible.

On those grounds,

THE COURT

hereby:

1. Dismisses the application as inadmissible;

2. Orders the applicant to pay the costs including the costs of the intervener, Memorex SA, and the costs resulting from IBM's application for the adoption of interim measures and the production of information and documents concerning the Commission's initiation of the procedure.

Mertens de Wilmars Bosco Touffait