C-36/92

OPINION OF MR JACOBS — CASE C-36/92 P

OPINION OF ADVOCATE GENERAL JACOBS delivered on 15 December 1993 "

My Lords, enterprise; but the argument has proceeded, in part, on the basis that it is private. It is not disputed that SEP is under a statutory duty to endeavour to produce electricity at the lowest possible price to the consumer, having regard to the security of supplies.

1. In this case a Dutch producer of electric- ity is appealing against a judgment whereby the Court of First Instance dismissed its application for the annulment of a Commis- sion decision requiring it to disclose certain documents to the Commission. The case 3. In the Netherlands 50% of electricity is raises an important issue. The issue itself is generated with natural gas. SEP's principal straightforward, but has been greatly compli- supplier of natural gas is NV Nederlandse cated by the course of the proceedings. Gasunie (hereafter 'Gasunie'), which enjoys a de facto monopoly in the supply of natural gas in the Netherlands. It appears that all natural gas extracted from Netherlands terri- tory must be offered to Gasunie for sale. Gasunie is a mixed company, in the sense that 50% of its share capital is owned by the The background to the case Dutch State and 50% by the Shell and Esso petroleum companies. Its major decisions of commercial policy are subject to the approval of the Dutch Ministry of Economic Affairs.

2. The appellant is N V Samenwerkende Elektriciteits-produktiebedrijven (hereafter 'SEP')· As its name implies, SEP takes the form of a naamloze vennootschap (a public limited company governed by Dutch law). 4. On 16 June 1989 SEP entered into a con- According to the judgment appealed against, tract for the supply of gas with a Norwegian SEP groups together the four 'public utility' undertaking called Statoil. I shall refer to that undertakings which produce electricity in contract as the 'Statoil contract'. Statoil had the Netherlands. The parties disagree on never previously gained access to the Dutch whether SEP is privately owned or is a State gas market and SEP had never previously concluded such a contract with anyone other than Gasunie, which none the less remains * Original language: English. SEP's principal supplier.

5. The conclusion of the Statoil contract led SEP to send to the Commission, within 10 Gasunie to negotiate a 'cooperation code' days, the Statoil contract and the correspon- with SEP. The negotiations began in the sec- dence relating to it. In a letter dated 16 ond quarter of 1989 and the final version of August 1990 SEP persisted in its refusal to the code was concluded on 9 April 1990. produce the Statoil contract, invoking for the Towards the end of 1989 the Commission first time the confidential nature of the con- learned of the Statoil contract and of the tract. It also offered to explain its attitude in negotiations between SEP and Gasunie. The a personal meeting with the Commission's Commission opened an investigation with a Director General for Competition. By letter view to determining whether the dealings of 30 August 1990 the Commission declined between SEP and Gasunie were compatible that offer and stated that the confidential with the competition rules of the EEC nature of the Statoil contract could not jus- Treaty. tify SEP's refusal to hand it over to the Commission, which was under an obligation to respect business secrets by virtue of Arti- cle 20 of Regulation N o 17. Paragraphs (1) and (2) of Article 20 have played a key role 6. O n 6 March 1990 the Commission in this dispute and it is convenient to set requested SEP to disclose certain documents them out in full at this point. They provide to it, including the cooperation code and the as follows: Statoil contract. The request was made pur- suant to Article 11(1) of Council Regulation (EEC) N o 17, ' which authorizes the Com- mission to Obtain all necessary information from the Governments and competent ' 1. Information acquired as a result of the authorities of the Member States and from application of Articles 11, 12, 13 and 14 undertakings and associations of undertak- shall be used only for the purpose of the ings'. In response, on 9 April 1990, SEP sent relevant request or investigation. the Commission the final version of the cooperation code concluded between itself and Gasunie, together with an earlier draft version of the code, but it refused to send the Statoil contract. It contended that the con- tract had nothing to do with the cooperation 2. Without prejudice to the provisions of code, but it did not rely at this stage on con- Articles 19 and 21, the Commission and fidentiality. the competent authorities of the Member States, their officials and other servants shall not disclose information acquired by them as a result of the application of this Regulation and of the kind covered by the obligation of 7. After a further exchange of correspon- professional secrecy.' dence between SEP and the Commission, the latter adopted the contested decision on 2 August 1990 pursuant to Article 11(5) of Regulation N o 17. The decision required 8. In a letter of 12 September 1990 SEP made it clear that it was raising the issue of 1 — OJ, English Special Edition 1962, p. 87. confidentiality because it was anxious that

11. On 14 December 1990 SEP appealed to the Court of Justice against the order of the President of the Court of First Instance. O n the same date SEP also applied to the Court for an order suspending the operation of the Commission's decision of 2 August 1990. In the alternative, it asked the Court to order 9. In a letter dated 24 September 1990 the the Commission not to send a copy of the Commission rejected that offer on the Statoil contract to the Member States until ground that it did not satisfy the require- the Court of First Instance had ruled on ments of Article 11 of Regulation No 17. SEP's action for the annulment of the con- The Commission also stated in that letter tested decision or until the Court of Justice that Article 10 of the same regulation left it a had given judgment on SEP's appeal against sufficient margin of appraisal as regards the the order made by the President of the transmission of documents to the Member Court of First Instance. Finally, on 23 Janu- States and that it would have no reason to ary 1991 SEP lodged a second appeal against send them the Statoil contract if, as SEP the order of the President of the Court of maintained, the application of the contract First Instance; in this appeal it sought an could not be influenced by the cooperation order requiring the Commission to return code. the Statoil contract to it.

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12. By order of 3 May 1991 the President of gas market; such an inquiry was governed b y the Court took note of SEP's discontinuance Article 12 of Regulation N o 17. of its claims for interim measures, as a result of the Commission's undertaking not to dis- close the contents of the Statoil contract to the authorities of the Member States until the Court of First Instance had ruled on 15. By its second submission SEP argued SEP's action for the annulment of the con- that the contested decision was insufficiently tested decision. The Court of First Instance reasoned because the reasons relied on b y dismissed that action by judgment of 12 the Commission could not justify the December 1991. 2 That judgment forms the demand for disclosure of the Statoil contract subject-matter of the present appeal. in so far as they modified the object of the inquiry.

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gation had at all times been the relations ject to compliance with the principle of pro- between SEP and Gasunie, which had culmi- portionality; the obligation to supply infor- nated in an agreement (the cooperation code) mation must not therefore impose on the suspected of infringing Article 85 of the undertaking concerned a disproportionate Treaty. The Commission was entitled to burden, having regard to the needs of the demand any document that could legiti- investigation. The Court held, however, that mately be regarded as presenting a relation- the disclosure of the Statoil contract did not ship with the alleged infringement. There impose a disproportionate burden on SEP. was a sufficient relationship between the Even if the Commission sent the contract to Statoil contract and the cooperation code the Dutch authorities under Article 10(1) of because the two agreements had been con- Regulation N o 17, the confidentiality of that cluded by SEP with two of its suppliers of document would be guaranteed by Article 20 natural gas. Moreover, in addition to the of the regulation, which required the Com- proximity in time between the two agree- mission and the competent authorities of the ments, SEP had admitted that the Statoil Member States to respect the confidentiality contract had induced Gasunie to negotiate of documents containing business secrets. the cooperation code. The Statoil contract constituted 'necessary information', within the meaning of Article 11(1) of Regulation N o 17, since it formed part of the economic context of the cooperation code.

23. But the decisive point is the one noted 21. I do not think that this ground of appeal by the Court of First Instance in the third can succeed. It is true that there are certain subparagraph of paragraph 31: namely, that passages in the Court of First Instance's — as SEP had itself recognized — the con- judgment that suggest too wide a definition clusion of the Statoil contract led Gasunie to of the term 'necessary' in Article 11(1) of negotiate the cooperation code with SEP. In Regulation N o 17. Thus, for example, in the view of that direct causal connection last sentence of paragraph 29 the Court between the contract and the code I do not refers to the 'requirement of a correlation see how it can be seriously argued that the between the request for information and the one was not relevant to an investigation into alleged infringement' and says that that the alleged illegality of the other. requirement is satisfied if the request 'may legitimately be regarded as displaying a rela- tionship with the alleged infringement'. A mere relationship between a document and the alleged infringement is not sufficient to justify a request for disclosure of the docu- Second ground of appeal: the reasons given ment; the relationship must be such that the by the Court of First Instance for its finding Commission could reasonably suppose, at that Article 11 of Regulation N o 17 had not the time of the request, that the document been infringed are inadequate and incorrect would help it to determine whether the alleged infringement had taken place.

26. SEP refers to paragraph 27 of the 29. This ground of appeal is complex and Court's judgment in which the Court raises several issues, but all are essentially observed that the disclosure of the Statoil concerned with the definition of the subject- contract was requested by the Commission matter of the Commission's investigation. because it was needed in order to appraise SEP's basic argument is that the Commission the legality of the cooperation code in view has created confusion about the subject- of the possible effect of the code on the con- matter of its investigation as a result of tract. The Court referred in that regard to ambiguous statements in its original request point 6 of the preamble to the contested for documents (the letter of 6 March 1990) decision. According to SEP, point 6 of the and in the contested decision. preamble does not support that finding. SEP complains in particular that in point 6 the Commission stated that the Statoil contract might be an agreement capable of affecting competition within the common market. 30. According to SEP, it is not clear whether the subject-matter of the investigation is the cooperation code alone, or both the code and the Statoil contract, or whether the Commis- 27. SEP also contends that the Court of sion is carrying out a sectoral investigation First Instance's judgment was insufficiently into the Dutch gas market. The relevance of reasoned in so far as the Court failed to this point is that when the Commission appreciate that the Commission should have requests information under Article 11 of demonstrated necessity at the time when it Regulation N o 17 it is required by Arti- requested disclosure of the contract. SEP cle 11(3) to state 'the purpose of the request', refers to paragraph 28 of the judgment, in meaning of course that it must identify the which the Court held that the supplementary suspected infringement of the competition reference, in the contested decision, to the rules. The necessity of the information must possible illegality of the Statoil contract can- be judged in relation to the purpose stated in not have had the effect of modifying the the request for information. The purpose subject-matter of the investigation in view of must be indicated with reasonable precision, the clear terms of the initial request for doc- otherwise it will be impossible to determine uments and of the contested decision 'in the whether the information is necessary and the light of the clarification provided by the Court will be prevented from exercising Commission at the hearing'. According to judicial review. As regards SEP's claim that SEP, the clarification provided by the Com- the Commission is in reality carrying out a mission at the hearing came too late to be of sectoral inquiry into the Dutch gas market any relevance for the purpose of justifying under Anicie 12 of Regulation N o 17, the the request for disclosure of the Statoil con- relevance of that is that the Commission tract. does not, in the context of such an inquiry,

34. I do not think that it can be said that 32. Thus in the letter of 6 March 1990, the that finding by the Court of First Instance subject-matter of which is described as being was erroneous or that it was not supported the 'agreement between SEP and Gasunie', by an adequate statement of reasons. Admit- the Commission referred to that agreement tedly, it is questionable whether the Court (the cooperation code) and to the Statoil was right to suggest (in the third subpara- contract and then stated that it wished to graph of paragraph 28) that clarification receive information about both agreements about the subject-matter of the enquiry and that the information requested should could usefully be provided by the Commis- enable it to appraise the compatibility, of sion at the hearing before the Court. The 'that agreement (those agreements)' 3 with Commission must make the subject-matter the competition rules of the Treaty. Further of its enquiry clear in its initial request for confusion was caused by point 6 in the pre- documents and in the formal decision (if amble to the contested decision, which there is one) requiring disclosure of docu- expressly stated that the Statoil contract ments under Article 11(5) of Regulation might be an agreement capable of affecting N o 17. If the subject-matter of the enquiry is competition within the common market. not clear at those stages, the undertaking concerned will be unable to determine whether there are grounds for refusing to 3 — In paragraph 27 of its judgment the Court of First Instance comply with the initial request and for chal- cites this part of the letter of 6 March 1990 and indicates that lenging the formal decision before the Court it construes the words 'those agreements' as referring exclu- sively to agreements between SEP and Gasunie. It seems of First Instance. It is not sufficient to pro- clear, however, that the Commission was referring to the cooperation code and to the Statoil contract. vide clarification at the hearing.

36. SEP's contention is that the Commission is in reality investigating the Dutch gas mar- ket in general, rather than the relations between SEP and Gasunie. It should there- 38. It is of course possible that the Commis- fore proceed under Article 12 of Regulation sion might wish to investigate a specific N o 17, rather than Article 11. Article 12(1) alleged infringement in the gas industry and empowers the Commission to request at the same time carry out a general inquiry 'undertakings in the sector concerned to sup- into the gas market. If the Commission is ply the information necessary for giving able to establish that it is entitled to have effect to the principles formulated in Arti- access to a document for the purpose of cles 85 and 86 of the Treaty and for carrying investigating the specific infringement, I do out the duties entrusted to the Commission'. not see how it can lose the right to see the When acting under Article 12 the Commis- document on the ground that the document sion is still required to state 'the legal basis is also relevant to the general inquiry. I and the purpose' of a request for information would therefore dismiss this ground of because Article 11(3) is rendered applicable appeal.

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The fourth ground of appeal: the Court of The fifth ground of appeal: the Court of First Instance wrongly applied Article 190 of First Instance did not give sufficient reasons the Treaty by declaring that the contested for dismissing SEP's submission that the decision was sufficiently reasoned contested decision was not sufficiently rea- soned

43. The final three grounds of appeal overlap 41. It will be clear from what I have said considerably and I shall deal with them with regard to the second ground of appeal jointly. Their common theme is that the con- that, while I accept that the Commission cre- tested decision breached the principle of pro- ated a certain amount of confusion about the portionality by requiring SEP to disclose to subject-matter of its investigation, it was the Commission a confidential document clear from the letter of 6 March 1990 and which would then be transmitted to the from the contested decision that the princi- competent national authorities, including the pal subject-matter of the Commission's Directorate General for Competition at the investigation was the cooperation code and Netherlands Ministry of Economic Affairs; that the Statoil contract was of ancillary the document was thus likely to find its way interest. It follows that the contested decis- into the hands of the officials in the Director- ion cannot be insufficiently reasoned in the ate General for Energy at the same ministry manner alleged by SEP. who have responsibility for determining

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Gasunie's commercial policy. SEP maintains istic and could not therefore result in any that it has a legitimate interest in not allow- special factors being taken into account in ing the persons who determine the commer- the application of Regulation N o 17. cial policy of its main supplier (Gasunie) to become acquainted with the terms of a con- tract which SEP concluded with an alterna- tive supplier (Statoil).

45. As regards the emphasis placed by SEP on the special nature of the present dispute, the Court stated (in paragraph 57) that the same issue was likely to arise whenever an inquiry by the Commission involved the 48. SEP directs a number of criticisms commercial relationship between a private against that part of the Court's judgment. undertaking and a public undertaking or a First, it contends that Article 20(2) of Regu- private company with government participa- lation N o 17 does not contain the prohibi- tion; such situations, which arose very fre- tion read into by the Court, regarding the quently in practice, did not bestow upon the circulation of documents within a national Commission's inquiry any specific character- authority.

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62. The Court of First Instance sees a solu- to information when deciding whether to tion to that problem in Article 20(1) of Reg- adopt a particular course of action. Thus, if ulation N o 17, which provides that 'informa- officials in the Directorate General for tion acquired as a result of the application of Energy became acquainted with the terms of Articles 11, 12, 13 and 14 shall be used only the Statoil contract, Article 20(1) could not for the purpose of the relevant request or prevent them from taking such information investigation'. But I do not see how that pro- into account when determining the policy of vision can confer on SEP the protection to Gasunie. which it is entitled in the present case. To say that the officials in the Directorate General for Energy would be precluded by Arti- cle 20(1) from 'using' information contained in the Statoil contract for the purpose of for- mulating the commercial policy of Gasunie is futile; it presupposes that those officials can simply erase the information from their 64. It follows that the judgment of the minds. But Article 20(1) does not, and could Court of First Instance must, in my view, be not, require officials to engage in self- quashed on the ground that that Court com- induced amnesia. The Court of Justice recog- mitted an error of law by holding that, in the nized that in its judgment in Asociación circumstances of the present case, Arti- Española de Banca Privada. 8 cle 20(1) and (2) provided a sufficient guaran- tee that the confidentiality of the Statoil con- tract would be respected.

since it modifies, at the appeal stage, the the issue of alternative means can perhaps be subject-matter of the proceedings before the explained by its conviction that the danger of Court of First Instance. According to the a breach of confidentiality was in any event Commission, the argument was not raised by minimal on account of the terms of Arti- SEP before the Court of First Instance, cle 20 of Regulation No 17. which explains why the Court did not refer to it in its judgment. In SEP's view, the argu- ment is simply an amplification of the sub- mission alleging an infringement of the prin- ciple of proportionality, which was pleaded in its application to the Court of First Instance. SEP contends that such an amplifi- cation in the course of the proceedings is 68. In my view, there is much merit in the permissible according to the case-law of the substance of SEP's complaint. By reason of Court of Justice. 9 the confidential nature of the Statoil contract and having regard to the unusually delicate situation that arose in this case, the Commis- sion should — once the issue of confidenti- ality had been brought to its notice — have shown a greater willingness to allay SEP's fears and to consider means of preventing confidential information from reaching offi- cials in the Directorate General for Energy of the Dutch Ministry of Economic Affairs. 67. The argument does not seem to have Once SEP had made clear its legitimate con- been raised expressly in SEP's written plead- cern about the confidentiality of the con- ings before the Court of First Instance. In its tract, the Commission should have made it appeal SEP states that it made the point at clear that it would apply Article 10(1) of the hearing before the Court of First Regulation N o 17 in such a way as to meet Instance, at which stage a new issue could that concern. It was not sufficient to suggest not of course be raised. 10 In my view, the that the contract might prove not to be argument that the Commission could have among 'the most important documents' attained the desired aim by less drastic means which are, under that provision, to be trans- than those employed may legitimately be mitted to the national authorities, or that the regarded as amplification of the argument Commission had a margin of appraisal in the based on an infringement of the principle of matter. proportionality, rather than as a new issue. Since the argument about the confidentiality of the Statoil contract was presented as an issue of proportionality, it was implicit in that argument that the result pursued by the Commission could be obtained by other means less likely to lead to a breach of con- fidentiality. The Court's failure to consider 69. However I do not think that SEP can be right in suggesting that the Commission should have refrained from requiring pro- 9 — Case 306/81 Vernu v Parliament [1983] ECR 1755. duction of the contract and instead should, 10 — Article 48(2) of the Rules of Procedure of the Court of First Instance. for example, have asked questions about it.

That suggestion seems to be based on an Member State concerned. There is no reason incorrect view of the effect of Article 10(1) to believe that the pursuit of those aims can- of Regulation N o 17. In my view, in cases not be reconciled with the protection of con- (which will probably be rare) where the need fidentiality. for commercial confidentiality is established vis-à-vis the national authorities, then the protection of that confidentiality must be regarded not as a limitation on the Commis- sion's power to require the production of documents under Article 11 of Regulation 71. In my view, in the rare cases where the N o 17, but as a limitation on the Commis- problem of confidentiality vis-à-vis the sion's obligation, under Article 10(1) of the national authorities arises, the Commission is regulation, to transmit documents to the entitled to require production of the docu- national authorities. Article 10(1) does not ment but must then consider whether on impose an absolute obligation to send 'the grounds of confidentiality it would be most important documents' to the national appropriate to refrain from transmitting the authorities. It must be interpreted in the light document to the national authorities or to of the duty of confidentiality laid down in transmit to them an edited version of the Article 214 of the Treaty.

But pro- tection of the type of confidentiality claimed in this case cannot in principle be invoked as a limitation on the Commission's power to 70. N o r does the purpose of Article 10(1) require production of documents. That require that it should be so interpreted. The would be to protect such confidentiality at purpose of that provision is explained in the the wrong point. An undertaking could per- seventh recital in the preamble to the regula- haps justify refusing to produce a document tion, according to which the Commission, in to the Commission on the ground that it applying Articles 85 and 86 of the Treaty, is contains information which is confidential to act in close liaison with the competent vis-à-vis the national authorities if the Com- authorities of the Member States. In Asocia- mission had made it clear in advance that it ción Española de Banca Privada the Court would transmit the document regardless: that noted (in paragraph 34) that the twin con- would show that the Commission intended cerns of Article 10(1) are to inform Member to act unlawfully by failing to apply the States of Community procedures concerning principle of proportionality.

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72. It is not contended by SEP that the ities, of commercially confidential informa- Commission acted unlawfully in the way tion the disclosure of which could be damag- which, I have suggested, might have entitled ing to it. Any further proceedings, therefore, SEP to refuse to produce the contract. N o r might be a waste of time and resources, both has the case been argued on the basis of Arti- for the parties and for the Courts. cle 10(1) of Regulation N o 17, which seems to me to provide the solution to the problem raised. Since, on the view I take, the judg- ment of the Court of First Instance must be Costs quashed, and since the approach which I advocate is different from the approach taken by the parties throughout the course of the dispute, it seems formally inescapable that the case should be referred back to the Court of First Instance for judgment under Arti- 73. Since the case must be referred back to cle 54 of the Statute. From a practical point the Court of First Instance, costs must be of view, however, any further proceedings reserved. If a decision on costs were to be may be unnecessary: on the view I take, the taken at this stage, I would consider it Commission will have established its right to appropriate in all the circumstances to order require production of the document in ques- the parties to bear their own costs, in accor- tion, while SEP will have established its right dance with Articles 69(3) and 122 of the to protection, as against the national author- Rules of Procedure.

Conclusion

74. Accordingly, I am of the o p i n i o n that the C o u r t should: