C-246/86

BELASCO AND OTHERS v COMMISSION

OPINION OF MR ADVOCATE GENERAL MISCHO delivered on 5 May 1988 *

Mr President, tation of the contested agreement and its Members of the Court, effects. From the legal standpoint, they allege in particular that the Commission committed three errors in its appraisal of the facts, in relation to the relevant market, the impact of the Belgian rules on prices and 1. Société coopérative des asphalteurs their own role in the negotiations belges (hereinafter referred to as 'Belasco') concerning the takeover of a competing and the seven members of that association undertaking, UPM, a former member of seek, primarily, a declaration as to the Belasco, which caused the procedure to be nullity of the Commission Decision of 10 initiated by lodging a complaint with the July 1986 relating to a proceeding under Commission. Article 85 of the EEC Treaty 1 (IV/31.371—roofing felt) and, in the alternative, the cancellation or at least a reduction of the fines imposed on them.

OPINION OF MR MISCHO — CASE 246/86

for the application of Article 85(1) were met 9. A last chapter will be devoted to the in their case, the applicants allege an complaints made regarding the imposition infringement of Article 15(2) of Regulation of the fines. 2 No 17 and of the principle of equality, justifying the cancellation or, at any event, a reduction of the fines imposed. 10. The scheme of this Opinion will therefore be as follows:

7. It appears from this brief summary of the arguments put forward, for the details of A — The market and the relevant products which I refer you to the Report for the Hearing, that the same factual elements and the same arguments underlie several of B — The distortion of competition them. Therefore, in order to avoid excessive repetition and cross-reference I shall not consider them in the order in which they are put forward but shall endeavour to place C — The effect on trade between the them under four main chapter headings Member States based on the conditions for applying Article 85(1) of the EEC Treaty. D — The application of Article 15 (2) of Regulation No 17

12. The Commission denies that it made 15. As regards the 'relevant products', the any error of assessment by not including roofing felts to which the Belasco agreement synthetic products in its definition of the and the measures for its implementation relevant market and asserts that, even if it related, the Commission made a distinction had taken it into account, the market shares in points 3 and 4 of its decision between: of the applicants would have been unchanged between 1978 and 1980 and would have undergone only slight changes between 1981 and 1984, remaining at all times well above 50%. Bituminous felt and similar products, referred to as 'Belasco products';

'new' products or the 'enhanced' products serving the same purposes, I should like to which did not appear on the market until point out in the first place that the the end of the 1970s seems to me to be applicants themselves accept that there is contradicted by the very wording of clause not a single waterproofing and roofing lb of the chapter entitled 'Object of the market and that they distinguish between agreement' which defines products as 'felts the tile and slate market and the market in of all kinds ... impregnated with bitumen, flexible roof-waterproofing products. both those now known in the trade as roofing felt "... and such materials of the same kind as may be manufactured in the future to satisfy the same needs'. 21. Interchangeability as regards function and use are not the only criteria by virtue of which products which are intrinsically different belong generally to the same 18. In that context, the fact that the market. Other criteria to be taken into Commission's decision was not addressed to account are the properties and prices of the Derbit, a company which produces only products concerned, since in principle only 'new' products (point 30 of the decision), those products which are regarded by users does not mean, as the applicants claim, that as similar, particularly because of those the decision does not apply to those various factors, form part of the same products or, a fortiori, that the contested market. agreement does not cover them, but is accounted for by the fact that Derbit, which is not a member of Belasco, did not participate, as a non-member, in the agreements concluded with the members. 22. It may in fact happen that products There is thus no contradiction in that which can in principle be used for the same respect in the statement of reasons for the purposes cannot in practice, by reason of Commission decision, which correctly other features, be employed without defined the relevant products. distinction by the users.

place overnight, and in particular involves 28. It is not therefore surprising that they substantial retraining of personnel. The left it until their reply (p. 46) to gives document from the Centre scientifique et figures concerning the impact which the technique de la construction (CSTC) inclusion of synthetic products in the produced by the applicants as Annex C to relevant market would have on their market their application and Annex 1 to their reply share as defined by the Commission in point expressly confirms that view, at least as 8 of its decision. regards a substantial category of the products in question, namely those with an elastomer or plastomer base (See paragraph 3.21, p. 12). 29. Having recognized that it is very difficult to make an evaluation in that regard, they state that, from 1981 to 1983, their market share would be curtailed by 10 to 15% if account were taken of all the 25. The Commission also states — and the substitutable products, the result of which applicants themselves acknowledged at the would be that in 1981 it would merely be hearing — that the prices for synthetic between 47 and 50 % and in 1983 between products are considerably higher, which 42 and 45 % instead of 58.7% and 59.6% means that they do not represent real alter­ respectively. natives in economic terms for waterproofing work usually done using bituminous coverings.

30. That assertion calls for the following observations:

26. In those circumstances I do not think that it was wrong to take the view that synthetic products are used for specific (1) It relates only to the years 1981 to applications and are not really competing 1983, so that it may be inferred from it products which could be substituted for that the applicants' market share was in bitumen-coated felts. fact unchanged from 1978 to 1980;

the figures they put forward, the '. . . in order to decide whether an Commission has shown, on the basis of agreement is to be considered as prohibited a market study produced by a German by reason of the distortion of competition firm, that at the end of 1981 the share which is its object or effect, it is necessary of the market accounted for by to consider the competition within the synthetic products did not exceed 10 %; actual context in which it would occur in the applicants' representative also the absence of the agreement in dispute. To admitted at the hearing that at the that end, it is appropriate to take into material time synthetic products actually account in particular the nature and represented only 8 to 10% of that quantity, limited or otherwise, of the market; products covered by the agreement, the position and the importance of the parties on the market for the products concerned, (4) furthermore, it is apparent from the and the isolated nature of the disputed Buytaert report produced by the agreement or, alternatively, its position in a applicants themselves that the 3 series of agreements'. Commission in fact underestimated the members' share of the market which it took into account (see Annex III to the defence).

It must be possible, by reference to the last- mentioned factors, to establish whether the 31. In view of those considerations, I must barriers to competition are appreciable, conclude that the Commission is right to since agreements which give rise to insigni­ maintain that even if it had taken account of ficant restrictions of competition are not the synthetic products in defining the caught by the prohibition contained in relevant market, the market share of the Article 85(1). Belasco members from 1981 to 1984 would only have fallen short by 5 to 7 % of the levels indicated in its contested decision and at all times exceeded 50%.

(7) To study and promote ways of standar­ 36. The purpose of the agreement is dizing and rationalizing the production defined as follows by the parties to it: and distribution of tar- and bitumen- coated felt.

(1) To adopt a price list and minimum prices for all deliveries in Belgium, 37. The other clauses to which the without any exception, of the products Commission draws particular attention are specified below and for the execution of in Article 1(8) of the agreement, which all work by the parties using the defines the powers and duties of the general products governed by the present meeting of members, which is responsible in agreement. particular for the implementation of the agreement, in Article 2, which provides that an accountant will monitor compliance with quotas and prices, in Article 3, which fixes the delivery quotas allocated to each of the (2) To establish a price list and minimum members and provides for a compensation conditions for the execution and guar­ system, in Article 5, which describes certain anteeing of all board-roofing work as 'duties' of the parties, providing in described in the present agreement. particular, in paragraph (4), that the general meeting reserves the right to fix the sale price of ancillary products, and in Article 6, which governs the conduct of the members in the event of the insolvency of one of their (3) To allocate quotas between members. number.

38. There can be no doubt that the (4) To lay down penalties for breaches of agreement as a whole and most, if not all, the agreement or of validly adopted of the clauses mentioned indeed had as their resolutions. object the restriction of competition and, in

40. The applicants maintain, however 44. There is no contradiction between that (p. 15 of their reply) that the 'common conclusion and the fact that the Commission price list ... served as a basis for ... joint showed in Annex II to its defence and in applications for price rises which enabled Annex III to its rejoinder that in fact the non-members, apprised thereof, to take a time-limits for implementing the authorized competitive stance with respect to those rises varied considerably and that the rises prices'. In other words, the common price were not applied uniformly and in full to all list was merely an instrument designed to the products. The very fact that both the facilitate joint applications for price rises time-limits and the rates of increase for the and was not intended to eliminate compe­ products were identical for all the members tition between the members of the asso­ of Belasco shows clearly that the members ciation. Moreover, on each occasion the must have consulted each other on each members gave non-members a first-class gift occasion as to the apportionment of the by informing them of the common prices so authorized rises amongst the various that they could offer their products at a products and as to the best time to bring lower price and thus compete. them into force.

BELASCO AND OTHERS v COMMISSION

51. The same applies in the case of the new products. There is no contradiction between (3) the adoption of standardization and recognition of the fact that they 'were rationalization measures. developed independently by each producer' (third paragraph of point 74(xi) of the decision) and the finding that in the context of an agreement such as the one at issue the joint determination of certain of their 48. The object of the first of those clauses characteristics is restrictive of competition, is, as the Commission has rightly pointed particularly since, in the absence of stan- out (point 73(ii) of the decision), to prevent circumvention of the agreed price rules and 5 — Law of 14 July 1971 on commercial practices {Moniteur therefore is certainly not merely a transpo­ belge, 307.1971. p. 9087).

OPINION OF MR MISCHO —CASE 246/86

dardization, such coordination is an series of other agreements and measures and essential precondition for any joint price decisions adopted to implement and fixing. supplement it. Moreover, the Commission decision relates not only to that 'agreement' but also to agreements between members and non-members on price discounts, dating 52. As regards the other clauses, it is rather from May and October 1978 (Articles 2 and their implementation and their specific 3 of the decision). effects which are the subject of the applicants' complaints.

BELASCO AND OTHERS v COMMISSION

(iv) that they established the principle of considerably exceeded the quotas allocated stability of clientele whereby each to them (point 26). That does not mean member must retain its own customers however that, as a whole, the system did not and not approach those of other operate or that those two members were members; able to disregard it with impunity and without having to pay compensation to the other members.

63. The members of Belasco also claim that the defence measures against competition from IKO, discussed at its general meetings, 60. In a number of cases the Commission proceeded no further than the stage of itself acknowledges that fact, particularly as declarations of intent and that the proposals regards observance of the common prices had not been put into effect. The for ancillary products (see point 74(v)), the Commission has, however, contrived to principle of stability of clientele (point prove, by quotations from the voluminous 74(vi) and the sales prices for new products minutes of general meetings, that 'the action (point 74(xi)). decided upon' and 'the action taken' against that company enabled three parties to the agreement to take customers away from that company (points 60 and 74(vii) of the decision, paragraph 36 of the statement of 61. As regards the quota system, the objections and minutes of the general Commission ascertained that the sales of meeting reproduced in Annex VIII to the two of the seven members of Belasco rejoinder).

OPINION OF MR MISCHO — CASE 246/86

68. It must be observed that the contested 'for the purposes of Article 85(1) it is agreement expressly provided for collective unnecessary to take account of the actual action against foreign competitors since it effects of an agreement where its object is entrusted to the general meeting of 7 to restrict, prevent or distort competition'? members the task of taking 'protective and defensive measures ... if for any reason alien to the membership the object pursued by the present contract ... should be threatened, for example in the event of competition from foreign companies 66. The various decisions for implemen­ becoming stronger ... ' (Article l(8)(b). tation of the agreement were undeniably Recourse to concerted action in an restrictive in their objectives. As far as their endeavour to avoid any increase in compe­ effects are concerned, account need be tition from other Member States reflects a taken of them, as the Commission itself wish to 'freeze' the pattern of trade and to pointed out in point 76 of its decision, only resist the movement towards a single when the seriousness of the infringements market. Similarly, the members of Belasco committed is assessed for the purpose of undertook to refrain, without the prior determining the size of the fines to be authorization of the general meeting of imposed. members, from using their plant or

7 — Case 123/88 BNIC v Clair [1985] ECR 391, paragraph 8 — Case 42/84 Remia and Others v Commission [1985] 22; see also Case 45/85 Verband der Sachversicherer v ECR 2545, paragraph 22; see also Case 56/65, suora, at Commission [1987] ECR 405, paragraph 39. p. 249.

70. It may perhaps be concluded, in view of the increase of imports into Belgium which 74. When UPM became insolvent in 1980, occurred in spite of that situation, that the the applicants were extremely concerned to action of Belasco members was not wholly provide assistance in order to ensure that effective. The fact nevertheless remains that that company would not be taken over by the intention to preclude an increase in competing undertakings, in particular imports did exist and that in the absence of foreign undertakings. Here again there is no the agreement they would perhaps have contradiction between the Commission's increased much more. finding (in points 63, 64 and 74(vü¡) of the decision) and the applicants' statement — not challenged by the Commission — that they bear no responsibility in relation to 71. In points 61 and 62 of its decision the UPM's insolvency: the Commission did not Commission has also shown that concerted challenge the reasons for the insolvency or

OPINION OF MR MISCHO — CASE 246/86

80. Moreover, the agreement at issue here expressly provides for the adoption of 76. That is correct and in that respect the protective and defensive measures against present case is to be distinguished quite increasing competition from foreign under­ clearly from the case involving the takings. The agreement was therefore liable Netherlands cement traders' association to affect trade between Member States. The (Case 8/72 Vereeniging van Cementhan- question remains whether the effect could delaren v Commission [1972] ECR 977) be described as appreciable. In my view, that cited in the Commission decision. is the most delicate issue in this case. In circumstances such as these, the answer depends above all on the position in the relevant market held by the parties to the agreement (see in particular paragraph 27 of 77. As Mr Advocate General Mayras the decision in Papiers peints) and their emphasised in his Opinion in that case (at collective ability to react to attempts by p. 1000), the cement traders affiliated to the foreign competitors to penetrate the market. association in question also sold two-thirds of the imported cement (domestic production only covered two-thirds of the Netherlands cement requirements) and applied their system of guide prices and 81 Furthermore, as the Court emphasised in general sales conditions to such sales. its judgment of 1 February 1978 in Miller:"*

9 — Case 73/74 Groupement des fabricants de papiers peints de Belgique and Others v Commission [1975] ECR 1491, paragraph 25. 78. The fact nevertheless remains that the 10 — Case 19/77 Miller International Schallplatten GmbH v Commission [1978] ECR 131; see also Case 226/84 British Court has consistently held Leylandv Commission [1986] ECR 3263, paragraph 20.

82. In Miller, the Court considered it sufficient that the Commission had estab­ lished, on the basis of certain facts, that the 86. Under Article 15(2) of Regulation No danger of an appreciable effect existed. It 17 the Commission may impose on under­ seems to me that it has done so in this case takings and associations of undertakings as well. fines of up to ten per cent of their turnover for the previous financial year, where the infringement was committed 'intentionally or negligently'. "When it determines the amount of the fine, 'regard shall be had 83. As stated earlier, the agreement applied both to the gravity and to the duration of to the whole of Belgian territory and the the infringement'. deliveries by Belasco members represented, in square metres, almost 60% of the apparent consumption of roofing felt in Belgium in 1983 and their output accounted 87. In support of their alternative claim that for around 70 % of Belgian production. the fines imposed should be cancelled or Even if the Commission had been obliged to reduced, the applicants draw attention to include synthetic products in its definition the fact that the Commission did not of the relevant market, the sales of Belasco express a view on the arguments relating to members would still have represented more the intentional nature and the duration of than 50% of the market. the infringements allegedly committed which they put forward in their response to the statement of objections.

84. It is therefore undeniable that foreign producers wishing to export to the Belgian 88. They add that the Commission did not market were confronted by a very daunting assess the gravity of the infringements by bloc of national producers committed to a reference to their effects on the market and concerted fight against any increase in that it discriminated against them by imports. Even though the action successfully comparison with the undertakings which undertaken against IKO related to a Belgian were not members of Belasco upon which competitor, it proves that the members of no fine was imposed.

95. Under the heading of the agreement 'Term and expiry of the contract', we read: 1. The intentional nature of the infringements

'The present contract is entered into for a 92. It must first be remembered that, period of six years commencing on 1 according to Article 15(2), it is sufficient for January 1978 and ending on 31 December the infringement of Article 85 to have been 1983. If not terminated it shall automatically committed 'negligently'. That minimal be renewed for a period of five years on condition is in any event satisfied in this each expiry date'. case.

96. Despite their protestations that the agreement was never renewed, not even 93. In the second place, it is apparent from automatically, the applicants have still not the previous decisions of the Court and l2 yet produced any notice of termination. The from Miller, cited above, and the BMW Commission therefore had good grounds for concluding that it remained in force at 11 — See most recently Joined Cases 142 and 156 British American Tobacco Ltd. and R. J. Reynolds Industries Inc. v Commission [1987] ECR 4487. 13 — Joined Cases 32 and 36 to 82/78 BMW v Commission 12 — [1978] ECR 131, paragraph 18. [1979] ECR 2435, paragraph 44.

BELASCO AND OTHERS v COMMISSION

least until 9 April 1984, the date of its first express reference to the assessment of the investigative action, particularly since gravity of the infringements. It is discussions on 'amendments to be made to immediately apparent from that part of the the current agreement' continued beyond 1 decision that in that context the January 1984, a general meeting of Commission did not take account of those members having been held four times after measures for the implementation of the that date (see paragraph 53 of the statement Belasco agreement in respect of which it of objections and paragraph 120 of the acknowledged that it had been unable to rejoinder). identify any repercussions.

OPINION OF MR MISCHO —CASE 246/86

in the determination of the amount of the 108 of the decision), the different fines. It is apparent from point 104 of the percentages are accounted for by the fact contested decision that the Commission also that the Commission also took into took account, in addition to the duration of consideration the turnover deriving from the the infringement, 'of each firm's aggregate business of supplying roofing felt in turnover and turnover from roofing felt in Belgium. Belgium and, in Belasco's case, its annual expenditure'.

4. Observance of the principle of equality

104. Also, the Commission — and similarly the Court in the exercise of the unlimited jurisdiction conferred on it by Article 17 of 107. The allegation of breach of the Regulation No 17 pursuant to Article 172 of principle of equality is likewise unfounded. the EEC Treaty — has a wide margin of discretion in evaluating the exact impact which one or other of those factors may have on the amount which it finally decides to adopt. That applies also to the factors to 108. It is true that the Court has, as the be considered in assessing the gravity of the applicants point out, consistently held that infringements.

'that principle requires that similar situations shall not be treated differently unless 5 differentiation is objectively justified'. ' 105. Finally, Article 15 of Regulation No 17 merely gives a minimum (1 000 units of account) and a ceiling (10% of the turnover achieved in the preceding financial year by each of the undertakings participating in the 109. But in the present case the Commission infringement) for the amount of the fines has duly demonstrated that the respective which the Commission may impose. situations of the members of Belasco and of Belasco itself, on the one hand, and of non-members, on the other, could not be precisely compared.

111. The Commission was thus entitled to 113. Since the principle of equality prohibits decide not to impose fines on IR and Al not only different treatment of situations Asfalt — although it did require them to which are identical but also identical cease forthwith the infringements that they treatment for situations which are 16 had committed (in so far as they were still different, it does not seem to me that that in existence) and to refrain in the future principle can justify either a reduction or, a from entering into any agreement or fortiori, cancellation of the fines imposed on engaging in any concerted practice or the members of Belasco and on Belasco measure likely to have a similar effect (see itself, whose participation in the agreements Article 5 of the decision). with non-members is in reality a relatively modest element among the matters complained of as constituting the 112. As regards UPM , which had in the past infringement of Article 85(1) which they been a member of Belasco and had entered were found to have committed.

Conclusion

114. It follows from the foregoing that the Commission applied Article 85(1) of the EEC Treaty correctly to the agreements and decisions in question and did not infringe Article 15 of Regulation No 17 or the principle of equality by imposing the fines at issue on the members of Belasco and Belasco itself.

115. I suggest therefore that the Court dismiss the application in its entirety and order the applicants to pay the costs, including those of the intervener.

16 — Sec in particular Case 58/86 Coopérative agricoli d'approvi- sionnement dei Avirons v Receveur des douanes de Saint-Denis and Directeur régional des douanes de L· Réunion, [19871 ECR 1525, paragraph 15.