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(b) The contested judgment I -1405 (c) The arguments advanced in the present appeal I-1405 (d) Analysis I-1406 (iii) The abusive nature of the impugned conduct I -1409 (a) The issues raised I -1409 (b) Analysis I-1411 — The multilateral character of the abuse I -1411 — The exclusionary intent I -1412 — Departure from the conference tariff I -1413 — Sharing of revenue losses I -1413 — The case-law on 'predatory' pricing I -1414 — The abusive nature of the 'fighting ships' conduct I-1417 C — The imposition of 100% loyalty contracts I -1421 (i) Introduction I -1421 (ii) The content I -1422 (iii) First limb: misinterpretation of 1986 Regulation — 'imposition' of loyalty I-1423 (a) First subsidiary point — f.o.b. sales I-1424 (b) Second subsidiary point — blacklists I-1425 (iv) Second limb: the Commission cannot fine before withdrawing exemption I-1428 VI — The fines I-1431 A — Introduction I -1431 B — The jurisdiction of the Court I -1431 C — The appellants' pleas I-1432 D — Analysis I -1433 (i) Breach of the right to a fair hearing I -1433 (ii) Other pleas I -1437 (iii) The interest rate I -1438 E — Summary of recommendations I -1439 VII — The ECHR I-1440 VIII — Costs I-1440 IX — Conclusion I -1441

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Certain African countries claimed, as will be discussed more fully later, that the UNCTAD rule applied to all and not merely conference cargo. In respect of the 4. These four members of the Cewal con- maritime routes between Northern Eur- ference (hereinafter, in the context of proceedings before the Court of First ope and Zaïre, the sharing of cargoes Instance, 'the applicants') brought annul- according to the UNCTAD rule was ment actions relating to the Decision pur- implemented in the mid-to-late 1980s by suant to Article 173 of the Treaty before various means, of which the most impor- the Court of First Instance. In a judgment tant for the purposes of this appeal is the of 8 October 1996 (hereinafter 'the con- conclusion in 1985 of a cooperation tested judgment'), that Court, while redu- agreement (hereinafter 'the Ogefrem cing the four fines imposed by 10% in each Agreement') between the Zairean Office case, 5nevertheless dismissed their applica- Zaïrois de Gestion du Fret Maritime tions. 6 Although the applications sought (Maritime Freight Management Office, the annulment of the Commission's find- hereinafter 'Ogefrem') and Cewal.

concerned'. Notwithstanding these provi- sions, Ogefrem unilaterally decided in 5 — CMB's fine was reduced by ECU 960 000 and the other and around 1986 to grant a rival shipping fines by ECU 20 000 in the cases of both Dafra-Lines and consortium, Grimaldi and Cobelfret Deutsche Afrika-Linien and by ECU 10 000 in that of Nedlloyd Lijnen. (hereinafter 'G & C'), about a 2% share 6 — See Joined Cases T-24/93, T-2J/93, T-26/93 and T-28/93 Compagnie Maritime Beige Transports and Others v of the trade to and from Zaire, a share Commission [1996] ECR II-1201. which appears to have increased during 7 — Hereinafter, all references to 'Articles 85 and 86' will be to Articles 85 and 86 of the Treaty establishing the European the following years but not to an extent

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that the dominance of Cewal was 7. The Commission found that 'Cewal had affected. 8 abused its dominant position by three different means ... in an attempt to elim- inate its main rival (G & C)'. 11 Those means, as formulated in Article 2 of the Decision, were:

— 'participating in the implementation of the [Ogefrem Agreement] and ... repeatedly requesting by a variety of 6. Only the Commission's findings con- means that it be strictly complied with'; cerning Article 86 and the fines imposed are relevant in the appeals brought by CMB and Dafra (hereinafter 'the appellants', but, as explained in paragraph 4 above, where appropriate, 'the applicants'). 9The Com- mission found that 'the whole of the routes on which Cewal's members operate[d] — 'modifying its freight rates by departing between Zaïre and Northern Europe con- from the tariff in force in order to offer stitute[d] a specific market'. 10 The Com- rates the same as or less than those of mission referred also to the benefits Cewal the principal independent competitor derived from the Ogefrem Agreement, its for vessels sailing on the same date or extensive network of routes, the capacity of neighbouring dates (practice known as its fleet and the frequency of the services it fighting ships)'; could provide, as well as the experience acquired from having operated a service for several decades on the market. The Com- mission found that the members of Cewal enjoyed collectively a very significant domi- nant position on that market both because and of their very high market share and other factors.

In the second subparagraph of Article 3, the Commission ordered the members of Cewal 'to bring to an end the infringements referred to in Article 2', while, in Article 5, 'Agreements, decisions and concerted prac- it 'recommended' that the terms of the tices of all or part of the members of one or loyalty contracts be amended 'so that they more liner conferences are hereby comply with Article 5(2) of [the 1986 exempted from the prohibition in Arti- Regulation]'. In Article 6 the fines, to cle 85(1) of the Treaty, subject to the which reference has already been made condition imposed by Article 4 of this (see paragraph 3 above), were imposed. Regulation, when they have as their objec- tive the fixing of rates and conditions of carriage, and, as the case may be, one or more of the following objectives:

(a) the coordination of shipping timeta- B — The 1986 Regulation bles, sailing dates or dates of calls;

The application of the exemption is 11. Article 7 deals with the effect of expressly made subject, under Article 4, to 'breach of an obligation which, pursuant 'the condition' that the agreement or other to Article 5, attaches to the exemption conduct thus exempted 'shall not, within provided for in Article 3 ...'. Article 7(1) the common market, cause detriment to authorises the Commission, in accordance certain ports, transport users or carriers by with the rules of procedure laid down in applying for the carriage of the same goods Section II of the 1986 Regulation, to: and in the area covered by the agreement, ... rates and conditions of carriage which differ according to the country of origin or destination or port of loading or discharge, unless such rates or conditions can be economically justified'. The effect of '— address recommendations to the per- breaching this condition is that the agree- sons concerned; ment, or the offending part of it, if it is severable, 'shall be automatically void pursuant to Article 85(2) of the Treaty'.

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the Treaty ...'. It provides that the Commis- should be dismissed in its entirety. How- sion 'may withdraw the benefit of the block ever, in so far as G & C also contend that exemption and take ... all appropriate certain aspects of the appeals are also measures for the purpose of bringing to inadmissible, their intervention, in seeking an end infringements of Article 86 of the to go further than the ruling sought by the Treaty'. Commission, should in my opinion be regarded, pursuant to Article 93(5)(a) of the Rules of Procedure of the Court of Justice, as being inadmissible.

III — Overview of the appeal

IV — The finding of collective dominance

16. According to the appellants, the three — the Decision and the contested judg- conditions for the establishment of collec- ment erroneously relied on concerted tive dominance between independent behaviour of the members of Cewal undertakings are: which is cognisable under Article 85 but which cannot be simply 'recycled' to form the basis of a finding of collective dominance under Article 86;

— the undertakings concerned must be united by sufficient economic links; — the Decision contained no sufficient reasoning to justify the applicability of Article 86 to the members of Cewal collectively and that the Court of First Instance impermissibly supplemented the Commission's inadequate reason- — those links must be such that they ing. adopt the same conduct on the market;

C — The nature of collective dominance

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tight compartments. As the Court said in enough to establish joint dominance. In SIV Ahmed Saeed, 'the possibility that Arti- v Commission, 23 the Court of First cles 85 and 86 may both be applicable Instance rejected an argument made at the cannot be ruled out'. 20 Thus the Court held hearing by the Commission's agent that it that where an airline in a dominant posi- was sufficient to '"recycle" the facts con- tion was, as a matter of economic reality, in stituting an infringement of Article 85, a position to have agreed tariffs applied by deducing from them the finding that the other undertakings, Article 86 as well as parties to an agreement or to an unlawful Article 85 could apply, at least in the sense practice jointly hold a substantial share of that participation in an agreement prohib- the market [and] that by virtue of that fact ited by Article 85 could, at the same time, alone they hold a collective dominant amount to an abuse contrary to Article 86. position ...' . 24 This finding gave birth to the term 'recycling'. It is clear, therefore, that a conclusion of collective dominance by independent undertakings must be sup- ported by more than a mere cartel-like agreement, whether fixing prices or other collusive market behaviour. 'Italian Flat Glass' represents the first express attempt to identify the elements of a collective dominant position between independent undertakings.

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practices are concerned merely with the 'sales policy fixed by' that producer to internal allocation of tasks as between the conclude that the market shares of all the undertakings'. 25 However, this distinction producers should be aggregated in estab- has not always been clearly stated. Bod- lishing the extent of the dominant position son 26 has been cited by the Court as an enjoyed by the largest of them. authority on collective dominance, although the expression does not appear in the judgment. In Bodson, the mere fact that the holders of the exclusive communal funeral concessions belonged to the same group was not considered decisive in estab- lishing a collective dominant position. Account had to 'be taken of the nature of the relationship between the undertakings belonging to that group' and, in particular, whether they pursued 'the same market strategy, which [was] determined by the 26. Almelo, 29 however, contains the clear- parent company'. 27 est statement to date on the issue of collective dominance. The Court ruled that for 'a collective dominant position to exist, the undertakings ... must be linked in such a way that they adopt the same conduct on the market'. 30 In both Centro Servizi Spediporto and DIP, the Court also noted that the absence of competition between 25. The two ingredients, relationship and the supposed collectively dominant under- common market strategy, cited in that takings would be a salient feature. 31 More passage are to be found consistently in the recently, in France v Commission, the case-law on the definition of a collective Court considered whether a proposed con- dominant position. As long ago as 1975, centration would result in a collective the Court, in Suiker Unie, 28 had regard to dominant position in the Community mar- 'the personal and financial links' between ket for potash-salt-based products for agri- certain sugar producers and the largest cultural use. 32 The test applied by the sugar producer on the Belgian market Court was whether the concentration together with the fact that they adopted a

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would '[lead] to a situation in which However, the phrase 'united by such eco- effective competition in the relevant market nomic links' in that passage should now be is significantly impeded by the undertak- understood in the light of the formulation ings involved in the concentration and one from France v Commission, 36 to wit, or more other undertakings which together, 'factors giving rise to a connection between in particular because of factors giving rise them', which does not seem to me to be any to a connection between them, are able to different from 'economic links'. adopt a common policy on the market and act to a considerable extent independently of their competitors, their customers and also of consumers'. 33 Applying this test, it found that some of the applicants' criti- cisms of the supposed 'cluster of structural links' 34 relied upon by the Commission were well founded.

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undertakings performs as a single market 31. In the present case, the Court of First entity. Instance, at the outset of its assessment of the collective dominance of the members of Cewal, correctly posed for itself the test that 'the undertakings in question must be linked in such a way that they adopt the same conduct on the market' (para- graph 62). The contested judgment went on (paragraphs 63 to 65) to set out the reasons 'in the light of the Decision as a 29. Furthermore, I repeat that weakness in whole' which led it to the conclusion that evidence of concertation cannot be over- 'it was necessary to assess the position of come by resort to Article 86.1 have already the Cewal members collectively' (para- agreed that concerted behaviour alone does graph 66). Paragraphs 63 to 65 read as not satisfy that test of collective domi- follows: nance. I do not, however, accept that reliance on such evidence can be precluded, whether by the Treaty or by any principle of law or logic.

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infringement of Article 86 if the other in precise terms in the Decision, con- requirements for the application of that stituted aspects of an overall strategy provision are also met. which Cewal members pooled their forces in order to implement.'

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37. The complaint of the appellants on this the applicability of Article 86 to shipping appeal is that the Court of First Instance conferences. Point 49 states: failed to respond to their arguments, but supplemented the reasoning of the Com- mission, i.e. furnished reasons for the finding of collective dominance other than those relied upon by the Commission. In particular, they complain of the reliance by the Court of First Instance on the Decision 'Article 8 of Regulation (EEC) No 4056/86 'taken as a whole' (paragraph 66) and of its deals with the possibility of an abuse of a finding that 'quite apart from the agree- dominant position by shipping conferences. ments concluded between the shipping The Court of First Instance of the European companies creating the Cewal confer- Communities has, moreover, cited shipping ence ... there were links between the com- conferences as an example of agreements panies such that they adopted uniform between economically independent entities conduct on the market' (paragraph 67). which enable economic links to be formed that can give these entities jointly a domi- nant position in relation to other operators on the same market. 38 The agreement between the members of Cewal constitutes such an agreement.'

40. Thus, only point 61 (and to some extent point 49) expressly discuss the joint 43. The classic statement of the obligation or collective nature of the dominance of of the Community institutions to support Cewal, the conclusion being reached in the their decisions with a statement of the former on the basis that the Cewal mem- principal points of fact and of law upon bers 'are linked to each other by the which it relies is to be found in Remia v conference agreement ...'. Commission: 40

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44. A review of the case-law shows that Advocate General's Opinion in an annul- arguments of insufficiency of reasoning of ment action relating to an earlier Commis- decisions, though frequently advanced, sion decision on the same subject-matter, as have rarely succeeded. 41 When they have, well as in the Commission Communication the criticism of reasoning is often, in effect, reopening the administrative procedure. a finding that the decision is substantively On this basis, the Court concluded that flawed. An example of a successful reliance 'the interested parties could ascertain those is to be found in Leeuwarder, 42 where the matters and put their point of view in that Court found the statement of reasons regard to the Court'. 44 The Court may seriously deficient in market analysis. accept that the interests of an affected person are sufficiently protected if he is independently aware of the information upon which the Commission has relied, 45 such as, for example, through participation in the administrative procedure. 46

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and was, in any event, discussed during the A — The Ogefrem abuse administrative procedure. 47

(i) Background

E — Conclusion

49. In Article 2 of the Decision the Com- mission found that, in order to eliminate its competitor, Cewal had, inter alia, abused its joint dominant position by 'participating 47. Accordingly, I would dismiss the in the implementation of the cooperation ground of appeal relating to the finding of agreement with Ogefrem and by repeatedly collective dominance. [requesting] 48 by a variety of means that it be strictly complied with'. This finding must be read in the light of points 20 to 27 and 63 to 72 of the Decision, from which it emerges that the Commission regarded Cewal's conduct, in respect of the Ogefrem Agreement, as designed to prevent and/or weaken the emergence of competition on the market for freight between Zaire and V — The abuses upheld against Cewal Northern Europe. First, in point 63 of the Decision, the Commission invokes the principle that dominant firms must not engage in conduct that jeopardises the maintenance of existing, or the develop- ment of fresh, competition on the market 48. I now turn to consider seriatim the on which they are dominant. 49 Second, in appellants' arguments regarding the abuses point 64, it expresses the view, reflected in allegedly committed by the members of Article 2 of the Decision, that the abusive Cewal. conduct committed by Cewal consisted in its active participation in the implementa-

tion of the Ogefrem Agreement and its 51. In their application before the Court of repeated requests to Ogefrem to comply First Instance the applicants argued that the with Article 1 of that agreement, all with a behaviour of which they were accused by view of ensuring 'the elimination of [its] the Commission could not constitute a sole competitor for the trade in question'. breach of Article 86 of the Treaty. They Noting that Cewal's pre-existing dominant submitted, inter alia, that the Ogefrem position was 'strengthened' by the Ogefrem Agreement was a concession agreement Agreement (point 65), the Commission under which they had been granted an stated at point 66 that Cewal had 'con- exclusive right by the Zairean authorities, tinually exerted pressure on Ogefrem to that Article 86 of the Treaty did not ensure the latter's compliance with the said preclude them from taking steps to ensure agreement and, consequently, the elimina- respect for that right and, in any event, that tion of its principal competitor'. mere inducement of government action could not constitute an abuse for the purposes of Article 86. They also argued, in their reply, that the Decision violated their right to a fair hearing since the Commission had also initially accused them in its statement of objections of abusing their dominant position by obtaining through the conclusion of the Ogefrem Agreement the exclusive right at issue, an 50. The Commission rejected the defence accusation which was not maintained in advanced by Cewal to the effect that it was the Decision. obliged to engage in these practices as a result of obligations imposed on it by public authorities. It also rejected the defence advanced by Cewal that the con- duct complained of fell outside Article 86, because the Ogefrem Agreement should be regarded as comprising obligations imposed by a public authority or, in effect, 52. In its defence before the Court of First by a State measure; in its view, the agree- Instance, the Commission contended that ment constituted a consensual agreement the Ogefrem Agreement was synallagmatic, 'concerning the monitoring of the trade in i.e. consensual in nature, and stressed that question', which could be terminated by the only abuse which it found Cewal to the parties 'subject to due notice being have committed comprised its voluntary given' (point 70). Finally, it stressed 'that efforts to uphold the exclusive right granted the Zairean rules in force do not oblige to it under that agreement. In its rejoinder, shipowners who are members of a confer- the Commission contended that the appli- ence to set up systems aimed at ensuring cants' arguments regarding the supposed that cargoes are channelled towards their denial of a fair hearing were inadmissible as own ships while excluding independent a new plea of law under Article 48(2) of the companies', and then concluded that 'the Rules of Procedure of the Court of First conclusion of this agreement and Cewal's Instance and, furthermore, unfounded since reminders that it be complied with do not there was no substantial difference between result from obligations imposed by the the statement of objections and the Deci- public authorities' (points 71 and 72). sion, the applicants having been found

guilty, in the latter, of part only of the Noting that there was no challenge to the allegation levelled in the former. finding that 'approaches to Ogefrem in order to have G & C removed from the market' had occurred, it proceeded to assess how they should be characterised. First, it referred to the 'special responsi- bility' of a dominant undertaking 'not to 53. In the contested judgment, the Court of allow its conduct to impair genuine undis- First Instance initially observed that the torted competition on the common mar- case concerned the alleged abuse of a ket', 5 1 before observing that, although dominant position by the members of such undertakings may take 'reasonable Cewal and that, 'since the only matter in steps .

The Court exclusive right granted to it under that of First Instance thus held that 'the Com- agreement. Thus, even if that agreement mission was entitled to take the view that, were to be regarded as constituting a State by actively participating in the implemen- concession, since it 'embodied a means of tation of the agreement with Ogefrem and opening up to competition' so that Cewal repeatedly asking that it be strictly com- members 'could have altered its implemen- plied with as part of a plan designed to tation so as to satisfy the requirements of remove the only independent shipping Article 86', there was no conflict 'between operation for which Ogefrem had author- the Treaty' and the 'structure of the agree- ised access to the market, the members of ment' (paragraph 104). Cewal infringed Article 86 of the Treaty' (paragraph 109).

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graph 110). Finally, it held inadmissible the appellants assert that, since that Court took applicants' plea concerning the difference the view that Cewal's members were not between the statement of objections and accused of failing to terminate the agree- the Decision regarding the supposed abu- ment or of encouraging governmental sive nature of the conclusion of the Oge- action, it could not, without contradicting frem Agreement, but also expressed the itself, have come to the conclusion that the view that the difference at issue could not Commission was entitled to find that their have affected the applicants' rights (para- active participation in the implementation graph 113). of the agreement constituted an abuse. Fourthly, the appellants contend that a failure to waive the exercise of exclusive rights cannot constitute an abuse of Arti- cle 86.

(ii) Synopsis of the observations submitted in the appeal

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(iii) Analysis of the appellants' pleas sense imposed upon them by the terms of the supposed State concession.

(a) The right to a fair hearing

59. I would, therefore, reject the appel- lants' first argument, i.e. that the Court of 57. I believe that the appellants have mis- First Instance deprived them of a fair construed the contested judgment as advan- hearing by the introduction of a charge of cing a new complaint of failure to act failing to act reasonably in exercising a reasonably in the exercise of a right of veto. right of veto. At paragraph 109 (quoted at paragraph 54 above) the Court of First Instance explicitly upheld the Commission's central findings of acts of abuse relating to the Ogefrem Agreement. In the course of the preceding analysis, in particular at paragraph 105, the Court of First Instance summarised the behaviour of Cewal in implementing the Ogefrem Agreement as set out in the (b) The incitement of government action Decision and went on to recall the indis- plea putable principles which should restrain the behaviour of dominant undertakings.

63. The appellants contend that their beha- viour should be characterised as amounting to no more than an attempt to lobby the Zairean authorities regarding the fulfilment of a State concession. During the oral hearing, the Commission did not dispute 61. The contested judgment prescinded that conduct consisting of the mere encour- entirely from the nature of the Ogefrem agement of the government of a non- Agreement. The Court of First Instance was Member State to act in a particular way satisfied that, regardless of its precise legal could not be described as an abuse of a nature, Cewal's members enjoyed an ele- dominant position. However, the Commis- ment of discretion and autonomy in respect sion insisted at the hearing that in this case of its implementation. the appellants were parties to a commercial contract involving mutual obligations and benefits and that insistence on compliance with its terms went beyond mere lobbying.

64. The Court of First Instance stated at paragraph 110 of the contested judgment 62. It is well established that dominant that: undertakings, since their very presence on a market leads to a weakening of competi- tion, are precluded from engaging in con- duct which may not be reprehensible if engaged in by non-dominant firms. 54 This is a fortiori the case where, as in the present 'The applicants' argument that encouraging case, the appellants enjoyed a near-mono- a government to take action is incapable of poly position. 55 Nevertheless, the actual constituting an abuse is irrelevant, since no scope of that special responsibility 'must be charge of such a practice has been made in considered in the light of the specific this case.' circumstances of each case which show a weakened competitive situation'. 56

66. The appellants rely, in particular, on certain principles developed in the anti- trust case-law of the United States of America. They accept that no such princi- '70. The agreement between Ogefrem and ples have been established in Community CEWAL referred to in recital 24 can- law. In essence, this part of the appellants' not be considered to constitute national argument depends on their showing that rules obliging the CEWAL members to the Ogefrem Agreement represents an act act as they did. On the contrary, as its exercising the sovereign power of the title and content indicate, the agree- Government of Zaïre. ment is in itself not a State measure, being an agreement which imposes obligations on its two signatories con- cerning the monitoring of the trade in question and which can be terminated by them subject to due notice being given. At all events, CEWAL accepted 67. The applicants claimed before the it and insistently urged Ogefrem to Court of First Instance that mere induce-

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70. First, the appellants attach great impor- tance to the UNCTAD Code of 1974, which entered into force in 1983, to which I have referred at paragraph 5 above. Council Regulation (EEC) No 954/79 60 57 — They cited, for example, American Banana v United Fruit Co 213 US 347, 358 (1909) and a decision of the Federal of 15 May 1979 dealt with its ratification Court of California in Occidental Petroleum Corp. v Battes Gas & Oil Co 331 F Supp. 92, 109-13 ( C D . CAL. by Member States. The Code provided, at 1971) affirmed per curiam, 461 F.2d1261 (ninth CIR) Article 2, for the distribution of conference certiorari denied, 409 US 950 (1972). 58 — See, among others, Case 311/84 CBEM v CUT and IPB [1985] ECR 3261 (hereinafter 'Télémarketing'), para- graph 17 and Case C-266/96 Corsica Ferries France v Gruppo Antichi Ormeggiatori del Porto di Genova and 60 — Council Regulation (EEC) N o 954/79 of 15 May 1979 Others [1998] ECR I-3949, paragraph 40. concerning the ratification by Member States of, or their accession to, the United Nations Convention on a Code of 59 — Télémarketing, loc. cit., paragraph 17. Conduct for Liner Conferences; OJ 1979 L 121, p. 1.

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74. In these circumstances, Cewal says that the Ogefrem Agreement was 'imposed' upon it. It cites the terms of the agreement to demonstrate, in particular, that it 'results 71. The applicants have recounted at from', inter alia, 'Ordonnance 80-256', and length the steps taken by a number of claims that it could not resist the imposi- African States and Zaïre in particular to tion by a government whose policy was impose their interpretation with a view to vital to its trade of an agreement which protecting their national shipping lines. implemented that policy. Zaïre incorporated Ogefrem as a public body in 1980. It became operational in 1983 pursuant to 'Ordonnance Présiden- tielle No 80-256'. Its tasks included the control of cargo and negotiation of freight rates, the protection of the profitability of the national shipping line, Compagnie Maritime Zaïroise (hereinafter 'CMZ') 75. The Commission, while not disputing and the defence of Zairean shipping inter- most of the recited facts, maintains that the ests. Ogefrem Agreement does not have the

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character of an imposed 'Act of State' but — The true nature of the Ogefrem Agree- constitutes an agreement imposing mutual ment obligations and granting reciprocal bene- fits.

77. As to the terms of the Ogefrem Agree- ment, the Commission refers to the provi- sion for unilateral termination by either party on one year's notice, the provision for reference of disputes to arbitration and the apparent success of Cewal in negotiating the rate of commission down from 3 to 79. Nor do the difficulties described by the 0.5%. Furthermore, the Commission appellants in dealing with Ogefrem go repudiates the description of the agreement further than to establish a certain inequality as a State concession. That would presup- of bargaining power. In spite of many pose legislation providing for the grant of problems described, Cewal wished to con- an exclusive right and for its grant through tinue to operate the conference line on an administrative procedure. which it had, as it concedes, a de facto

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81. In its operative part, the Ogefrem Agreement is just that, i.e. an agreement. The exclusivity clause in Article 1 is the heart of the matter. It does not purport to exercise any legal or administrative power. 83. Accordingly, I would dismiss the sec- I agree with the Commission that it does ond head of the ground of appeal relating not identify any particular basis for the to the Ogefrem Agreement.

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(i) Introduction (d) The permissibility of the Ogefrem conduct under Article 86

87. The appeal against the finding of the 85. A similar fate must befall the appel- 'fighting ships' abuse has a procedural and lants' fourth argument, namely that Arti- a substantive aspect. cle 86 does not prohibit an undertaking which has been lawfully granted a legal exclusivity from insisting that it be 61 — Télémarketing, loc. cit., footnote 58 above, paragraph 17. The appellants also cite Case 155/73 Sacchi [1974] respected. The appellants rely on the con- ECR 409.

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from the relevant routes. The salient fea- the departure times of G & C sailings, the tures of the conduct thus described were establishment of a rotation system to that: ensure 'a sharing of the losses related to the operation', 62 claimed that the 'fighting rates' were not fixed by reference to economic criteria (i.e. by reference to costs) but solely in order to be lower than those announced by G & C, and described this conduct as constituting 'the fixing of pre- — the secretariat of Cewal informed datory prices with a view to eliminating a members of Cewal of the next sched- competitor from the market'. 63 uled sailings of G & C;

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those members that the system of fighting 96. In their reply before the Court of First ships was in principle likely to result in a Instance the applicants originally stated loss of revenue, which they would have to that there was no difference between the shoulder' (emphasis added). statement of objections and the Decision but claimed that the defence of the Com- mission redefined their alleged abusive conduct in respect of the designation rather than programming of 'fighting ship' sail- ings, in moving from losses to 'loss of revenue' and in failing to rely on the well- defined notion of 'predatory pricing'. They made two legal arguments in respect of these supposed differences. First, they con- In point 74 of the Decision reference is tended that, if the Decision were properly made to a leading academic definition of based on what they regarded as the 'new' the practice of 'fighting ships', which, inter definition of 'fighting ships', then the alia, refers to the specific scheduling of relevant parts of it should be annulled for fighting ships on the same day as interlo- having condemned Cewal for a practice of pers' sailings. The Commission points out, which they had not been accused in the however, that in the present case, since its statement of objections. In the alternative, ships sailed so regularly, Cewal, in desig- it was argued that if the Decision were in nating fighting ships, did not have to alter reality based on the 'new' definition, it its scheduled timetables. should still be annulled since the require- ment to state reasons under Article 190 of the Treaty would have been infringed.

100. In its response, the Commission, sup- ported by the intervener, points out that the Court of First Instance clearly rejected the applicants' explicit plea that the definition of the impugned conduct relied upon by it (b) The contested judgment in its defence before that Court differed from that set out in the Decision. The Commission then contests the admissibility of any plea before the Court of First Instance, and, in consequence, in the pre- 98. The Court of First Instance analysed sent appeal, to the effect that the Decision the terms of the Decision and the Commis- and the statement of objections were sion's defence (paragraphs 138 to 140) and inconsistent. It contends that there was no held that the Commission '... [did] not justification in the light of Article 48(2) of introduce a new definition of the practice the Rules of Procedure of the Court of First of fighting ships by comparison with the Instance for advancing such a plea at the Decision, but [was] fully consistent there- reply stage before the Court of First with' (paragraph 140). It then concluded Instance, since an alleged discrepancy that '[S]ince the premiss underlying the between the statement of objections and applicants' reasoning is without founda- the Decision could hardly be said to have tion, both pleas raised against the concept come to light only in the course of proceed- of fighting ships must be rejected' (para- ings before that Court. Consequently, the graph 140, emphasis added). Commission maintains that pursuant to Article 113(2) of the Rules of Procedure of the Court of Justice, under which the 'subject-matter of the proceedings before the Court of First Instance may not be changed in the appeal', it must be equally inadmissible before this Court.

light this argument. They point firstly to advanced by the Commission in its defence. their initial application before that Court, In short, did the reliance on losses of where, in order to show that they had not revenue in the Decision so depart from made losses, they asserted that the Com- the allegation of losses in the statement of mission had abandoned in the Decision the objections as materially to prejudice the claim made in paragraph 23 of the state- applicants' interests? ment of objections that Cewal members had suffered losses. They also refer to the alternative argument made in their reply before the Court of First Instance that, if the Decision were to be read as based on what they described as the 'new' definition, it should be annulled, in relevant part, for condemning the members of Cewal for a 103. In my opinion, the Court of First practice of which they were not accused in Instance was clearly correct, in para- the statement of objections. Consequently, graph 141 of the contested judgment, to they maintain that, since their alternative interpret the Decision as being based on plea alleged an infringement of an essential losses of revenue rather than net losses. procedural requirement by the Commis- This emerges from points 73 and 74 of the sion, it should have been raised ex officio Decision where the Commission refers, by the Court of First Instance as a matter of respectively, to 'shortfall in revenues' and public interest. 65 They assert that that Cewal members' acceptance of the like- Court, however, did not even address the lihood of 'a loss of revenue' and to admissibility of this plea. 'financial losses of the "fighting vessel"'. The Commission was entitled, in its defence before that Court, to deny that the Decision was based on the fighting rates at issue resulting in actual losses.

hearing flowing from a supposed difference fied the appellants in only raising the between the statement of objections and difference at issue in their reply before that the defence, that plea constituted an inad- Court. I am satisfied that there was none. It missible 'new plea in law', which, by virtue is clear beyond peradventure from point 80 of Article 48(2) of the Rules of Procedure that the Commission based the Decision on of the Court of First Instance, may not 'be a legal characterisation of the applicants' introduced in the course of proceedings behaviour distinct from the situation unless it is based on matters of law or of addressed by the Court in AKZO. The fact which come to light in the course of the applicants had every right to challenge that procedure'. Consequently, I agree with the decision as well as any prejudice to their Commission that it is equally inadmissible right to a fair hearing at the administrative- before this Court by virtue of Arti- hearing stage before the Commission in cle 113(2) of the Rules of Procedure of their initial application before the Court of the Court of Justice. Since, however, the First Instance. Court of First Instance did not, notwith- standing the third subparagraph of Arti- cle 48(2) of its Rules of Procedure, which provides that '[Consideration of the admissibility of the plea shall be reserved for the final judgment', address the admis- sibility of the plea, it behoves this Court, in my opinion, to explain the reasons under- lying such inadmissibility.

ment of objections and the Decision. That below cost. It is not claimed, however, that plea is clearly inadmissible. the Commission introduced any new mate- rial prejudicial to the appellants which they were unable to counter. On the contrary, all of the claimed discrepancies (designating instead of programming sailings; prices the same or lower, instead of simply lower; loss 108. The appellants contend in their reply of revenue instead of losses, and omission before this Court, in response to the of the term 'predatory') involve a reduced Commission's contention that their plea level of alleged abusive behaviour. On this regarding the possible discrepancy between basis the appellants claimed in the admin- the statement of objections and the Deci- istrative procedure that they could not be sion is inadmissible, that a plea concerning found guilty of abuse. The fact that they an alleged violation of the right to a fair were, none the less, so found does not hearing resulting from an inadequate state- amount to an infringement of the rights of ment of reasons '... constitutes a matter of the defence. In reality, the appellants have public interest which may, and even must, not shown that they have been prejudiced be raised by the Community Court of its in advancing their principal legal case in own motion'. 66 The Court has further held great detail before both the Court of First that 'consideration of such pleas may take Instance and this Court to the effect that place at any stage in the proceedings' and their conduct should not have been classi- 'the applicant cannot be debarred from fied as being abusive since it did not involve relying upon them solely on the ground that below-cost rates. he did not raise them in his complaint'. 67

111. According to the contested judgment (paragraph 139), 'the Commission identi- fied three factors constituting the practice of fighting ships used by members of Cewal 113. The relevant paragraphs of the con- to drive out its competitor G & C, namely: tested judgment comprise paragraphs 146 designating as fighting ships those Cewal to 148: vessels whose sailing dates were closest to the sailings of G & C ships without altering its scheduled timetables; jointly fixing fighting rates different from the rates normally charged by Cewal members so that they were the same or lower than G &C C's advertised prices; and the resulting '146. As has already been pointed out, it decrease in earnings, which was borne by has been consistently held that Cewal's members'. whilst the fact that an undertaking is in a dominant position cannot deprive it of entitlement to protect its own commercial interests if they are attacked; and whilst such an undertaking must be allowed the right to take such reasonable steps 112. Arguably the issue of the greatest as it deems appropriate to protect general importance raised by the present those interests, such behaviour appeal concerns the correctness of the cannot be allowed if its real pur- Commission's view, as upheld by the Court pose is to strengthen this dominant of First Instance, that the method of 'fight- position and thereby abuse it (in ing ships' conduct employed by Cewal particular, BPB Industries and members, although it did not involve net British Gypsum v Commission, losses, still constituted an abuse contrary to paragraph 69). 69 Article 86 of the Treaty and not, as alleged by the appellants, a reasonable reaction by a dominant undertaking to competition 68 — See paragraph 139 of the judgment of the Court of First presented by the entry onto its market of Instance. a new competitor. The Commission based 69 — The Court of First Instance referred to its own judgment in British Gypsum, loc. cit., footnote 52 above.

147. In this regard, the Court considers, 114. The appellants essentially allege that having regard in particular to the the Court of First Instance has erred in law minutes of the Special Fighting in failing to recognise that a dominant Committee cited in the footnote to undertaking is entitled, in reaction to price point 32 on page 2 of the Decision, competition presented by a new entrant to and especially the minutes of its market, to devise a plan to eliminate that 18 May 1989, which refer to "get- entrant through selective price reductions, ting rid" of the independent ship- once the prices that it offers are not abusive ping operation, that the Commis- in the sense defined by the Court in AKZO. sion has established to a sufficient In their view, the Court of First Instance legal standard that that practice erroneously upheld the Decision on the sole was carried out with a view to basis of incriminating documents found by removing Cewal's only competitor the Commission which showed that Cewal on the relevant market. In addition, members wished to eliminate their compe- the Court considers that whilst the titor, which is not in itself anti-competitive. mere name given to the practice used by the members of Cewal is not sufficient to characterise it as an infringement of Article 86, the Commission was entitled to regard the use by professionals in the international maritime transport sector of a well-known description in that sector of activity and the establishment of a Special Fighting Committee within the conference as disclosing an intention to imple- ment a practice designed to affect 115. The Commission considers that the the operation of competition. 'fighting ships' practice which it had found the appellants to have employed differs from that of 'classic' predatory pricing, a 148. Since the purpose of the practice term not in fact used by the Court, which was to remove their only competi- the Commission regards as involving the tor, the Court considers that the incurring of losses as in AKZO. The applicants cannot effectively argue Commission says, in effect, that a dominant that they merely reacted to an undertaking which departs from its pub- infringement by G & C of the lished list of rates by selectively reducing monopoly legally granted to Cewal, them as part of a strategy to eliminate a compensated for discrimination competitor from the market is not engaging which they suffered at the hands in normal competition. The fact that the of Ogefrem, entered into a price fighting rates offered by Cewal were merely war started by the competitor or a reaction to price competition from a new even responded to expectations of competitor does not justify them, in parti- their customers. Even assuming cular where dominant undertakings, such them to be proven, those circum- as Cewal, enjoy a virtual monopoly on the stances could not render the market. In the Commission's view, normal response put into effect by the price competition would have been for members of Cewal reasonable and Cewal members to lower their published proportionate.' conference tariff rates across the board.

116. At point 80 of the Decision the Com- mission stated that 'the multilateral and intentional character demonstrates the abu- sive nature of conduct that consists in establishing a concerted exceptional price with the aim of removing a competitor'. However, in this case, the relevance of the concerted behaviour is limited to its role in establishing the collectively dominant posi- tion, enabling Cewal to act unilaterally. The 'multilateral' character of the price 118. It is necessary to examine carefully the behaviour at issue has no bearing on the structure and the legal and economic char- finding of abuse. It follows, in my opinion, acteristics of the particular market, bearing that the Court of First Instance was correct in mind, of course, that the finding of a to ignore the Commission's reference in dominant position is itself not in issue. As point 80 of the Decision. the Commission's agent stated at the hear- ing, this is a case of a liner conference where price-fixing behaviour between indi- vidual shipping lines has, very exception- ally, been granted a group exemption (contained in a Council regulation) from 117. The present appeal presents certain the prohibition prescribed in Article 85(1). novel features from the point of view of the Liner conferences, by definition, involve a competition rules. It is the first time the degree of concertation by a number of Court has been asked to consider the shipping undertakings. Thus, the Commis- 'fighting ships' practice, but also more sion could refer to meetings of committees particularly, the circumstances in which a established by the conference to demon- pricing strategy not found to be below cost strate the purpose of a particular scheme of can, none the less, be found to be an abuse conduct, or to a revenue-pooling arrange- of a dominant position. It is natural to ment so as to illustrate that cross-subsidi- approach this latter problem with reserve. sation of rates occurred. On the other hand, Price competition is the essence of the free the appellants refer to the generally and open competition which it is the accepted stabilising effect, from the point objective of Community policy to establish of view of shippers, of the presence of liner on the internal market. It favours more conferences in international maritime efficient firms and it is for the benefit of transport and the need to take account of consumers both in the short and the long the disadvantages which they suffer in run. Dominant firms not only have the competing with non-conference shipping

— The exclusionary intent 120. The appellants criticise para- graph 147 of the contested judgment for concluding that the minutes of the 'Special Fighting Committee' of 8 May 1989, to which the Decision refers and in which reference is made to 'getting rid' of G & C, coupled with the mere use of the expression 'fighting ship', a term well-known in the international maritime transport sector, were sufficient to justify the Commission's finding that elimination of G & C was the 119. The essence of the abusive conduct of intention of the members of Cewal. A Cewal members as found resides in a finding of abuse can only be established strategy of selective and targeted applica- by proper proof of the facts. 70 However, tion of lower rates in response to the fresh neither the contested judgment nor the competitive threat posed by G & C pursued underlying Decision were based solely on for the avowed purpose of eliminating that the name applied to the conduct. As the competitor. Although the appellants criti- Court of First Instance held, the appellants cise both the Decision and the contested have not disputed the three criteria relied judgment for basing the finding of exclu- upon by the Commission in the Decision as sionary intention on the descriptions used demonstrating the pursuit of 'fighting by Cewal members of their behaviour at ships' practice — to wit the designation of various meetings of the 'Special Fighting fighting ships, the fixing of fighting rates Committee', which oversaw the implemen- lower than Cewal's normal rates and the tation of the Cewal 'fighting ship' practice, they have not sought to dispute the exclu- sionary intention attributed to them. 70 —They refer to Cases 23/63, 24/63 and 52/63 Usines Henricot v High Authority [1963] ECR 217, and Suiker Indeed, it would be inconsistent with their Unie, loc. cit., paragraphs 203, 482 and 541.

121. The selectivity of the price reductions — Sharing of revenue losses is an important element in the finding of abuse. Combined with Cewal's exclusion- ary purpose, it meant selecting for reduc- tions only those sailings which had to meet the competition of G & C. In point 81 of the Decision the Commission, referring to the abusive nature of 'recourse' by domi- 122. The Commission's finding that the nant undertakings 'to methods different 'shortfall in revenue resulting' from the from those which condition normal com- fighting rates was 'borne by all Cewal's petition on the basis of merit', admittedly members' (point 73 of the Decision) has stated that '[t]his [was] the case with never been contested by the appellants, fighting ships, especially since, Cewal being who claimed only that such pooling of risks a shipping conference, its members are was covered by the exemption. Naturally, bound to respect the conference tariff'. In there can be no exemption for sharing the violation of their obligations under Arti- costs of abusive behaviour. In the Commis- cle 5(4) of the 1986 Regulation Cewal sion's view, the abusive nature of Cewal failed to ensure the public availability of members' conduct flowed not only from the Cewal conference's tariff. However, the the intent to eliminate the competitive Commission, in drawing attention to this, threat posed by G & C but, in particular, was merely restating a central aspect of the from the fact that Cewal members were practice which it regarded as abusive, able to subsidise 'the cost of fighting rates namely the selective as distinct from gen- by the conference's normal rates charged on eral price reductions. If a general rather its other sailings' and that such anti-com- than a selective price reduction policy had petitive conduct, even if G & C were as been adopted, assuming the reduced rates efficient as Cewal, could have the effect of were still not below cost, it would have eliminating 'from the market an undertak- been much more difficult to make a finding ing which is perhaps as efficient as the

125. The Commission had argued in AKZO 73 that Article 86 'does not make — The case-law on 'predatory' pricing costs the decisive criterion for determining whether price reductions by a dominant undertaking are abusive' since account had also to be taken of 'the need to prevent the 123. Notwithstanding the Commission's impairment of an effective structure of attempt entirely to distinguish this case competition in the common market'. 74 from classic below-cost 'predatory' pricing Price-cutting could be anti-competitive cases like AKZO, it is necessary to assess 'whether or not the aggressor sets its prices whether the Court of First Instance was above or below its own costs, whatever the correct in upholding the Commission's manner in which those costs are under- finding that the 'fighting ships' practice stood'. 75 In the Commission's view, a was abusive in the absence of below-cost 'detailed analysis of the costs of the domi- selling. The commonly used term 'preda- nant undertaking' would only be of 'con- tory' pricing has no, of course, particular siderable importance' when the exclusion- legal status. The only test justified by ary intention of its pricing practice was not Article 86 is examining whether there is obvious. 76 an abuse.

124. The starting point for the discussion of abuse of a dominant position is the 126. It is significant, as the appellants C o u r t ' s judgment in Hoffmann-La stress, that the Court in AKZO did not Roche: 72 endorse the Commission's approach; nor, however, it must be said, did it expressly reject it. Referring to Hoffmann-La Roche,

'71. Prices below average variable costs 127. Therefore, sales below average vari- (that is to say, those which vary able (or short-run marginal; AKZO, para- depending on the quantities produced) graph 70) costs are in effect presumed to be by means of which a dominant under- abusive. While it is usually rational to sell taking seeks to eliminate a competitor above average variable costs, because that must be regarded as abusive. A domi- permits some return on capital, where the nant undertaking has no interest in market will not bear a higher price, it is not applying such prices except that of usually rational to sell below average eliminating competitors so as to enable variable costs. Marginal costs need not be it subsequently to raise its prices by incurred and business has no interest in taking advantage of its monopolistic incurring them so as to make a loss. A position, since each sale generates a dominant firm would be permitted, how- loss, namely the total amount of the ever, to rebut this presumption by snowing fixed costs (that is to say, those which that such pricing was not part of a plan to remain constant regardless of the quan- eliminate its competitor. tities produced) and, at least, part of the variable costs relating to the unit produced.

72. Moreover, prices below average total 128. Furthermore, even prices above aver- costs, that is to say, fixed costs plus age variable costs (yet still below average variable costs, but above average vari- total or long-run marginal costs; AKZO, able costs, must be regarded as abusive paragraph 17), although not considered if they are determined as part of a plan presumptively to be predatory, 'must be' considered abusive where it is established that they are part of a plan to eliminate a 77 — Paragraph 70. competitor. On the facts, the Court, later in

130. The categories of abusive exclusion- ary pricing practices have not been exhaus- tively defined in AKZO. The Court in AKZO did not definitively preclude the application of Article 86 to cases where a dominant firm undertakes selectively tar- geted price reductions while retaining its 129. In Tetra Pak II the Court upheld the prices above its total costs. I agree with the judgment of the Court of First Instance in view expressed by Advocate General Ruiz- which the approach laid down in AKZO Jarabo Colomer in his Opinion in Tetra had been applied in circumstances where Pak II that in AKZO 'the Court considered the abuses were found to have occurred on that competition based on pricing [was] not a market other than that on which Tetra always legitimate and went on to identify Pak was dominant but on which it held a two types of predatory pricing contrary to leading position. 81 The appellants in that Article 86'. 85 Indeed, prior to its judgment case challenged — largely by reference to in AKZO, it had, for example, held in United States Supreme Court case-law 8 2 — the refusal of the Court of First Instance to require the Commission to demonstrate 83 — Tetra Pak II, loc. cit. above, paragraph 39. 84 — Tetra Pak II, paragraph 44 (emphasis added). The Court would not appear to have gone as far as Advocate General Ruiz-Jarabo Colomer, who had recommended (para- graph 78 of his Opinion) that the Court 'should not lay 78 — AKZO, paragraphs 102 and 115. down the prospect of recouping losses as a new prerequi- site for establishing the existence of predatory pricing 79 — AKZO, paragraph 156. contrary to Article 86', inter alia, because, in his view, 80 — AKZO, paragraph 155. 'recouping losses is the result sought by the dominant 81 — Tetra Pak U, loc. cit., footnote 56 above. undertaking, but predatory pricing is in itself anti-compe- titive, regardless of whether it achieves that aim'. 82 — Brooke Group v Brown Sc Williamson Tobacco 509 U.S. 85 — Paragraph 73 of the Opinion (emphasis added). 209 (1993).

Ahmed Saeed that the imposition by a — The abusive nature of the 'fighting ships' dominant air carrier on a particular route, conduct on other air carriers operating on that route, of '. . . excessively high, or, in order to eliminate from the market [competitors] which are not parties to the [price-fixing] agreement, excessively low' tariffs would constitute an abuse of its dominant posi- tion. 86 Among the criteria mentioned for assessing whether the rate employed was 131. It is clear that the abuse of which the excessive were whether it was '.

takings. However, it would, in my opinion, competitor, can properly lead to a finding potentially significantly impair the pursuit of abuse. of the objective of Article 3(g) of the Treaty of ensuring the establishment of an internal market in which competition is not dis- torted, if the Court were to regard a threshold such as total average (or long- run marginal) costs as an absolute yardstick against which all possible abusive or exclu- sionary pricing practices had to be assessed. The Court in Tetra Pak II approved the view taken by the Court of First Instance in 86 — Loc. cit., footnote 20 above, paragtaph 43 (emphasis that case '.

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nant undertaking must be considered in the dominant undertaking's competitors are light of the specific circumstances of each equally or more efficient, they should be case which show a weakened competitive able to compete on the same terms. Com- situation'. 90 munity competition law should thus not offer less efficient undertakings a safe haven against vigorous competition even from dominant undertakings. 92 Different considerations may, however, apply where an undertaking which enjoys a position of dominance approaching a monopoly, par- ticularly on a market where price cuts can be implemented with relative autonomy from costs, implements a policy of selective price cutting with the demonstrable aim of eliminating all competition. In those cir- cumstances, to accept that all selling above cost was automatically acceptable could 132. I would, on the other hand, accept enable the undertaking in question to that, normally, non-discriminatory price eliminate all competition by pursuing a cuts by a dominant undertaking which do selective pricing policy which in the long not entail below-cost sales should not be run would permit it to increase prices and regarded as being anti-competitive. 91 In the deter potential future entrants for fear of first place, even if they are only shortlived, receiving the same targeted treatment. 93 they benefit consumers and, secondly, if the

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133. There are peculiar features of certain 134. The fundamental question posed in markets such as maritime transport where the present case is whether, at the material costs may be an unreliable guide to the time, the adverse potential effects of the reasonableness of competitive strategies conduct undertaken by Cewal members, in adopted by dominant firms. In the first reaction to the competitive threat posed by place, once a ship has been designated to the entrance of G & C, on the structure of sail on a particular day, then, provided competition on the market at issue were capacity is available, the cost of transport- such as, having regard to the extent of the ing an additional container shipped as a market power collectively enjoyed by them, result of a reduced-rate offer may be close to be sufficient to constitute an abuse. to zero. 94 More generally, freight rates will largely be determined not by the marginal cost for the shipping line of providing the service but by the price elasticity of demand for the product shipped. 95

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the normal rates were substantially above monopoly would be reinstated and consu- cost, or, I would observe, that marginal cost mers would benefit only in the short run. If was, in any event, very low. that result is not part of the dominant undertaking's strategy it is probably engaged in normal competition.

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legitimate the application of such a pricing rates to the level of the published confer- policy. ence tariff.

139. Consequently, I recommend that the appeal against the decision of the Court of First Instance to uphold the Commission's characterisation as abusive of the 'fighting ships' conduct undertaken by Cewal mem- bers be dismissed in its entirety.

138. In this case the Court of First Instance C — The imposition of 100% loyalty has, rightly in my view, upheld the Com- contracts mission's finding that Cewal members devised a strategy, for the sole and exclusive aim of eliminating G & C, their only competitor. The Commission has demon- strated that the appellants sought, by targeting G & C sailings with fighting rates equal to or lower than those offered by G (i) Introduction & C in respect of its sailings, to inflict the maximum damage to G & C while mini- mising the losses of revenue thereby incur- red through the operation of their revenue pool system. To my mind, the Commission 140. The appellants' challenge to the deci- was manifestly correct to take the view sion of the Court of First Instance uphold- that, even if G & C were as efficient a ing the Commission's finding of this third shipping line as the members of Cewal, it heading of abuse has two limbs. Firstly, the could not be expected to 'resist' such appellants say that the Court of First 'competition practised in a concerted and Instance was wrong in law because, in abusive manner by a powerful group of concluding that the loyalty arrangements shipowners operating together in a ship- were imposed, it misinterpreted Arti- ping conference' (point 82). In other cle 5(2) of the 1986 Regulation, which words, the 'fighting ships' practice was exempts such arrangements. Secondly, they designed to drive G & C out of the market say that the Commission was precluded by with the minimum of cost for Cewal the 1986 Regulation, in particular Arti- members, so as to restore them to their cle 8, from proceeding to impose fines for previous position of virtual monopoly and abuse without first withdrawing the accordingly permit them to return their exemption.

(ii) The content 143. According to the Decision, shippers of goods between Europe and Zaïre were able only occasionally to use non-conference services. Since they had no real choice but to use Cewal for most of their trade, offering rebates only on the basis of 100% loyalty (extended even to f.o.b. sales) was tantamount to imposing those contracts (points 84 to 86 of the Decision). 141. Before considering these grounds of The Commission also found that Cewal appeal in greater detail, it is necessary to aggravated the imposed terms by using recall the relevant features of the Commis- blacklists in order to impose sanctions on sion Decision. shippers 'linked to the supply or quality of the service' (point 86). The Commission relied in this respect on extracts from minutes of the Zaire Pool Committee as showing that Cewal used blacklists as part of a defensive strategy to ensure that shippers using the services of the only competitor could not claim the benefits of the loyalty contract or count on a normal adequate service from Cewal (point 29). The Commission found Cewal's overall 142. Article 2 of the Decision found the conduct to be abusive so that no claim to members of Cewal to have 'abused their rely on an exemption pursuant to the 1986 joint dominant position by ... establishing Regulation could 'stand in the way of the 100% loyalty arrangements (including applicability of Article 86 of the Treaty ...' goods sold f.o.b.) which went beyond the (point 87). terms of Article 5(2) of [the 1986 Regula- tion], accompanied by the use, as described in this decision, of blacklists of disloyal shippers'. Two general points of impor- tance need to be made about this finding. Firstly, the Cewal members are not accused of three independent kinds of abuse; rather the elements of 'establishing' the arrange- ments, of including goods sold f.o.b. and of using blacklists are taken together as amounting to 'unilaterally imposing loyalty 144. The Court of First Instance explained arrangements' (point 85 of the Decision). that the Commission had found this abuse Secondly, and more importantly, the essen- to consist of the 'imposition of 100% tial character of the abuse is, in common loyalty contracts, the inclusion of goods with the other two headings, in the finding sold f.o.b. and the use of blacklists of that it was adopted '[i]n order to eliminate disloyal shippers with a view to penalising the principal independent competitor in the them'. 9 7 The Court of First Instance agreed trade in question' (Article 2 of the Deci- with the Commission that 'the fact that the sion). The facts and reasoning behind this conclusion are found in points 28, 29 and 84 to 88 of the Decision. 97 —Paragraph 173.

146. I do not think it will be helpful to explore the details of this argument at any length. In my view, it is based on a fundamental error of interpretation of the Commission Decision and of the contested judgment. It fails to take account of the two crucial elements of the Decision which I have explained at paragraph 142 above. The appellants emphasise, to no useful purpose, that the literal, teleological and systematic interpretations of Article 5(2) of 98 — Paragraph 183. 99 — Paragraph 184. the 1986 Regulation show that 100% 100 — Paragraph 185. loyalty arrangements are permitted, even 101 — Paragraph 186. in the case of a dominant conference

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tor. Thirdly, these conclusions of the Court ping cargo with G & C still received the of First Instance are based on the compe- rebate. This was a response to the Com- titive effects of these practices on the mission's view that the maintenance in market, not on the legal enforceability ot force of the blacklists (point 88 of the any particular interpretation of the loyalty Decision) was in direct contradiction of contracts. Therefore, in principle, the find- Cewal's claim. The Commission contends ing of the Court of First Instance is one of in its response that the Court of First fact, not of law, and is not open to Instance, by referring in paragraph 185 of challenge on this appeal. I would, for these the contested judgment to the Zaire Pool reasons, rule that this argument is inad- Committee minutes where the fact that the missible. 'system of blacklists was working' was recorded, effectively upheld the view that it had expressed in the Decision. I agree with this interpretation of the contested judgment. I am satisfied that that Court had not only in mind the contradiction noted by the Commission in point 88 of the Decision but also the Commission's factual assessment in point 29 of the Decision, and, based on the abovementioned min- utes, that shippers who used the services of G & C 'could no longer claim the benefits (b) Second subsidiary point — blacklists offered by the loyalty contract' or 'count on a normal adequate service from Cewal'. To my mind, this view is borne out by the succeeding sentence in paragraph 185 of the contested judgment where that Court held that the blacklists were not used merely 'for statistical purposes'. This is a conclusion of fact. Moreover, it does not 149. As a second subsidiary argument the matter if Cewal ultimately allowed the appellants contest the findings of the Court rebate to all shippers who used G & C, of First Instance that the maintenance by once it is shown that the blacklists were Cewal of blacklists of disloyal shippers adopted as part of a strategy to dissuade could not be exempted by the 1986 Reg- them from doing so. ulation.

They refer to the tenth recital in the regarded as being exempted by any provi- preamble to the 1986 Regulation which sion of [the 1986 Regulation]'. However, as expressly permits conference lines to the Commission rightly points out in its impose 'penalties on users who seek by response, the drawing up of lists of unfaith- improper means to evade the obligation of ful shippers may at most be regarded as loyalty required in exchange for the falling within the exemption of 100% rebates'. In their view, accepting a 100% loyalty arrangements under the 1986 Reg- loyalty clause with a conference line in ulation if such arrangements do not, in the order to obtain a rebate while simulta- wording of the tenth recital, 'restrict uni- neously shipping some cargoes with inde- laterally the freedom of users and conse- pendent lines would constitute such impro- quently competition in the shipping indus- per means. Consequently, there is nothing try'. Since I agree with the view of the abusive in seeking to police the observance Commission, endorsed by the Court of even of a 100% loyalty obligation. To my First Instance, that Cewal's loyalty arrange- mind, this plea ignores key features of the ments were effectively imposed on ship- blacklists noted in both the Decision and pers, I am satisfied that the Court of First the contested judgment. The Commission Instance committed no error in law in clearly took the view in point 86 of the holding that the drawing-up of such lists Decision that the de facto effect on shippers was not exempted by any provision of the of requiring 100% loyalty was 'aggrava- 1986 Regulation. To my mind, the effects te [d]' by the use of blacklists which 'actu- of a shipping conference abusively impos- ally impos[ed] sanctions on them linked to ing loyalty arrangements are clearly cap- the supply or quality of the service'. The able of being reinforced by maintaining Commission set out, in a footnote to blacklists of disloyal clients since, in the point 29 of the Decision, evidence of the absence of such lists, those clients could de directly exclusionary function of the black- facto if not de jure effectively benefit from lists. The Court of First Instance expressly an option as to the use, at least occasion- upheld the finding of the Commission ally, of the services of independent lines. It (summarised at paragraph 182 of the con- follows, in my opinion, that the Commis- tested judgment) even to the extent of citing sion and the Court of First Instance were the footnote (paragraph 185). correct to view the overall effect of the drawing-up of blacklists as contributing to the abuse flowing from the effective impo- sition of the loyalty contracts by Cewal members.

this Court that their right to be heard was Court of First Instance and which has not breached by the Commission in respect of been challenged in this appeal. the potential role of blacklists in facilitating the imposition of non-financial penalties because that possibility was not mentioned in the statement of objections, the plea is inadmissible under Article 42(2) of the Rules of Procedure of the Court of Justice since it clearly constitutes a new plea in law which could have been raised before the Court of First Instance. 156. The imposition of the 100% loyalty contracts, as the Commission found in Article 2 of the Decision, went beyond Article 5(2) of the 1986 Regulation. Loy- alty arrangements are permitted as part of a scheme of either immediate or deferred rebates. As is clear from the 10th recital in the preamble to the 1986 Regulation they are 'permitted only in accordance with rules which do not restrict unilaterally the freedom of users and consequently compe- 154. In conclusion, I would uphold the tition in the shipping industry'. In so far as judgment of the Court of First Instance in the same recital contemplates the imposi- so far as it held that the 100% loyalty tion of 'penalties on users who seek by contracts were imposed (paragraph 183). I improper means to evade the obligation of also consider that both the Commission loyalty', it is clear that the latter is to be the and the Court of First Instance were correct quid pro quo 'for the rebates, reduced to view that behaviour 'taken as a whole' freight rates or commission granted to them (paragraph 186) in concluding that it could by the conference'. It is emphatically not not be exempt 'as regards Article 85 of the permitted to use the rebates for the purpose Treaty' (paragraph 183). of excluding competitors from the market, a central purpose which, as I have already pointed out, lay at the heart of the finding by the Commission of all three types of abuse. This purpose is most eloquently attested by the extract from the minutes of the Zaïre Pool Committee quoted at the second footnote to point 29 of the Decision and which spoke of '... the defensive strat- egy [which] should be based on deterring the customers by instituting a blacklist of 155. At this point it is important to distin- unfaithful shippers/consignees whose other guish those individual breaches of 'obliga- northbound shipments by conferences' ves- tion' attached to the block exemption sels would no longer benefit from normal which formed the subject-matter of the adequate conference treatment'. The impo- Commission's recommendation (Article 5 sition of the loyalty agreements could, thus, of the Decision) pursuant to Article 7 of the not benefit from any exemption by virtue 1986 Regulation, which was upheld by the of the 1986 Regulation.

(iv) Second limb: the Commission cannot no prior decision to that effect being fine before withdrawing exemption required'. It follows that Article 8(2) of the 1986 Regulation should be interpreted as giving a discretion as to what measures the Commission may take whenever prima facie exempt conduct is found to be abu- sive. 102 Alternatively, the Commission repeats the view expressed in point 87 of 157. The appellants claim that, if their the Decision that, even if the Cewal mem- loyalty arrangements were 'imposed' bers' conduct in respect of their loyalty within the meaning of Article 5(2)(b)(i) of contracts were 'covered by the block the 1986 Regulation, that conduct would exemption in Article 6 of [the 1986 Reg- merely have constituted the breach of an ulation]', 103 notwithstanding the breaches 'obligation ... attached to the exemption of various 'obligations' imposed by Arti- provided for in Article 3'. In that event, cle 5(2) of the 1986 Regulation, that reg- the Commission should follow the proce- ulation could 'not stand in the way of the dure set out in Article 7(1). Thus, it would applicability of Article 86 of the Treaty to be obliged to withdraw the benefit of the agreements and practices authorised by a block exemption under Article 3 before block exemption' so as to 'prevent Arti- imposing any fines. In the appellants' cle 86 from being applied'. It relies there- opinion, the Court of First Instance has fore on the well-established principle, con- ignored the distinction between breach of a firmed by the Court of First Instance, that 'condition' which automatically renders there can be no concurrent exemption inapplicable the benefit of that block under Articles 85 and 86. exemption and the breach of an 'obliga- tion'. They claim that the 1986 Regulation was a measure adopted under Arti- cle 87(2)(c) of the Treaty to define the scope of application of both Articles 85 and 86 in the maritime transport sector, and that two types of abuse are effectively recognised by it: abuses which result from conduct in respect of which liner confer- ences enjoy the benefit of the block exemp- tion and other abuses. In the former case, 159. The view taken by the Court of First Article 8(2) of the Regulation obliges the Instance that the 1986 Regulation cannot Commission to withdraw that exemption be viewed as conferring an exemption in before imposing any fines. respect of conduct that infringes Article 86 of the Treaty or Article 8(1) of the 1986

Regulation is manifestly correct. The Court from excluding the application of the held in Ahmed Saeed, 'no exemption may Treaty to sea (and air) transport, the only be granted, in any manner whatsoever, in effect of Article 84(2) was that the special respect of abuse of a dominant posi- Treaty provisions concerning transport tion ...'. 104 As the Commission rightly would not automatically apply to them points out in its rejoinder, this principle and, consequently, that they remained 'on has recently been unequivocally confirmed the same basis as the other modes of by British Gypsum, 105 where the Court transport, subject to the general rules of endorsed the view expressed by its Advo- the Treaty', 108 which, of course, include its cate General that Article 85(3) of the competition rules. 109 It emerges clearly Treaty does not operate as a 'concurrent from the Court's judgment in Ahmed exemption from the prohibition of abuse of Saeed, where it declared, notwithstanding a dominant position'; thus, even if Cewal's the absence of the enactment of any loyalty arrangements benefited from the regulations under Article 87, that 'the pro- block exemption, they would enjoy no hibition laid down in Article 86 of the protection from the immediate application Treaty is fully applicable to the whole of of Article 86 of the Treaty. 106 the air transport sector', 110 that the pur- pose of Article 87, and particularly the power conferred upon the Council under its paragraph 2(c) 'to define, if need be, in the various branches of the economy, the scope of the provisions of Articles 85 and 86', is not to permit the Council to determine the substantive scope of the application of Article 86 but, rather, to allow it prescribe the detailed procedural rules for applying those competition rules. In my opinion, it is clear from a perusal of the 1986 Regulation that this is precisely the objective which has 160. In so far as the appellants contend been pursued by the Council. that the fact that the exemption at issue in the present case is conferred by a Council regulation adopted pursuant to Arti- cle 87(2)(c) of the Treaty may affect the application of the above principle, their view is misconceived. The 1986 Regulation is based on both Articles 84(2) and 87 of the Treaty. As regards the former, the Court held in Commission v France107 that, far 161. I now turn to consider whether, as the appellants contend, the Commission was precluded from imposing fines for abuse of 104 — Loc. cit., footnote 20 above, paragraph 32. 105 — Loc. cit., footnote 47 above. 106 — See paragraph 67 of the Opinion of Advocate General Léger, whose reasoning in this respect was, inter alia, 108 — Ibid., paragraph 32. This view was subsequently con- expressly adopted by the Court in paragraph 11 of its firmed by the Court in Joined Cases 209/84 to 213/84 judgment. The Advocate General based his view on Ministère Public v Asjes (hereinafter 'Nouvelles Fron- paragraph 25 of the judgment of the Court of First tières') [1986] ECR 1425; see, in particular, p a r a - Instance in Case T-51/89 Tetra Pak v Commission [1990] graph 42. ECR II-309 (hereinafter 'Tetra Pak I'). 109 — Nouvelles Frontières, paragraph 4 5 . 107 — Case 167/73 [1974] ECR 359. 110 — Loc. cit., paragraph 33.

162. It is important to recall the character of the abuse found against the appellants, namely the imposition of 100% loyalty rebates (including application to f.o.b. sales), with no alternative to 100%, enforced by the maintenance of blacklists 'in order to eliminate the principal inde- pendent competitor' (emphasis added) of Cewal. 165. Nor does Article 8(2) of the 1986 Regulation contradict or qualify Arti- cle 8(1) in any way. It permits 'the Com- mission, either on its own initiative or at the request of a Member State or of natural or legal persons ...' to take the distinct step of withdrawing an exemption which is expressly conferred by Article 3. It imposes 163. In my view this behaviour was not no restrictions on the powers of the Com- and could not be exempted from the mission to impose fines in the circum- application of Article 86. Furthermore, in stances outlined in particular in Arti- so far as that is relevant, it could not be cle 19(2) of the 1986 Regulation. The described as a breach of a simple obligation abuse found against the appellants relates under Article 5 of the Regulation of the to abusive imposition of 100% loyalty order of those breaches covered in para- contracts and not to the enjoyment of the graph 178 of the contested judgment. It is exemption conferred by Article 3.1 can see straining language to say that the prohibi- no reason for concluding that the condem- tion of the unilateral imposition of 100% nation of the first should depend on the loyalty arrangements describes an obliga- extreme step of withdrawing the second. tion. It is a description of what is not permitted by Article 5(2)(b)(i).

167. The appellants raise, in the alterna- tive, a large number of pleas under different headings regarding the decision of the 169. As regards the appellants' alternative Court of First Instance substantially to pleas in respect of the fines, it is appro- uphold the fines imposed on them. Since priate first to stress that it is the Court of by far the largest fine was imposed on CMB First Instance which now enjoys the 'unlim- (see paragraphs 3 and 4 above), not all of ited jurisdiction' envisaged by Article 172 the pleas made by that appellant are also of the Treaty and granted under Article 21 made by Dafra. of the 1986 Regulation, in respect of fines imposed pursuant to that regulation, initi- ally to the Court. This jurisdiction has been given to that Court pursuant to Arti- cle 168a of the Treaty and Article 3(1)(c) of Council Decision 88/591/ECSC, EEC, Euratom of 24 October 1988 establishing a Court of First Instance of the European Communities. 111 Next, it should be B — The jurisdiction of the Court recalled that this Court's jurisdiction to review the findings made by the Court of First Instance in exercise of that jurisdiction is clearly limited, by both Article 168a of the Treaty and Article 51 of the Statute, to considering any errors of law that might 168. The appellants contend that, in quash- have been made in upholding or annulling ing the contested judgment, the Court may, the Commission's findings in respect of pursuant to its power under the first fines. Thus, in Ferriere Nord v Commis- paragraph of Article 54 of the Statute to sion, the Court held, in response to a plea 'give final judgment in the matter, where that the fine in that case was unjust, that, in the state of the proceedings so permits ...', ruling on questions of law, it would not exercise the unlimited jurisdiction with 'substitute, on grounds of fairness, its own regard to the fines concerned granted by assessment for that of the Court of First Article 172 of the Treaty and Article 21 of Instance exercising its unlimited jurisdic- the 1986 Regulation. If the Court follows tion to rule on the amount of fines imposed my recommendation to dismiss all the grounds of appeal regarding the issues of abuse, it should none the less, in my 111 — OJ 1988 L 319, p. 1.

(i) They complain that the nature (or gravity) of the infringements was not such as could have been described as serious or even intentional; 170. In the event of the Court finding, however, that an error of law affecting in part only the contested judgment occurred, the further question of the extent or nature of this Court's residual jurisdiction would arise. Under the first paragraph of Arti- cle 54 of the Statute, the Court, if it decides (ii) They complain that the Commission in that an appeal is well founded, must quash imposing the fine on them instead of on the decision of the Court of First Instance Cewal breached their right to a fair but, in addition, it 'may itself give final judgment in the matter, where the state of hearing; the proceedings so permits'. It follows, in my view, that, if those circumstances arise, the unlimited jurisdiction envisaged by Article 172 of the Treaty with regard to fines, originally granted to the Court, but transferred to the Court of First Instance, is revived. Thus, if the Court of First Instance (iii) For varying reasons, they assert that errs in law in exercising its jurisdiction the fines were based on an erroneous under Article 172 of the Treaty, it is assessment of the degree of their invol- essential that this Court, both in the vement in the trade on the Cewal route; interests of procedural economy and the rights of the appellants, where it is satisfied that it is appropriate for it to decide the case itself, be empowered to exercise an unlimited jurisdiction over fines.

(iv) They complain that their cooperation 112 —Case C-219/95 P [1997] ECR I-4411 (hereinafter 'Fer- with the Commission was not taken riere Nord'), paragraph 31. 113 —Ibid. into account as a mitigating factor;

Furthermore, CMB also asserts that the fine imposed on it was unprecedentedly high and that it was improperly imposed so as to 'Secondly, as regards the calculation of the strike a political balance with the fine fine, the Court finds that, since the con- imposed in a different Commission decision ference does not have legal personality, the on a different conference line. Finally, the Commission was entitled to impose a fine appellants, in what is in effect an autono- on the members of Cewal, rather than on mous plea, argue that the interest rate the conference itself. In this regard, it (13.25%) imposed in Article 7 of the should be stressed that, in addition to Decision in the event of the fines not being Cewal, each of the members of the con-

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175. The Commission does not claim that the members of Cewal were put on notice of fines but maintains that it should have been clear to the appellants 'that through- — if the fine had been imposed on Cewal out the statement of objections, "Cewal" it could only have been based on was intended to refer to the group of Cewal's turnover and not on that of undertakings making up the conference', its members; the former, being based since a list of its members was annexed to solely on the Zairean routes, was lower the statement of objections. It also claims than the latter; that the Court of First Instance was correct to hold that it would have made no sense to impose a fine on Cewal as it had no legal personality. The Commission contends that it was 'implausible' that they should be 'unsophisticated enough to be surprised by — while the fine would ultimately have the imposition of a fine ...'. In addition, the been paid by the members of Cewal Commission maintains that, because it was individually, their contributions would envisaged that fines would be imposed on have been in accordance with their members of Cewal in respect of the infrin- share in the pool; 114

115 — They cite, inter alia, Joined Cases T-39/92 and T-40/92 114 — In its appeal, CMB points out that the fine imposed on it CB and Europay v Commission [1994] ECR II-49 and could not therefore nave amounted to 95% of the total. T-38/92 AWS Benelux v Commission [1994] ECR II-211.

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177. It is common case that a copy of the statement of objections was sent to the appellants, albeit only three months after it was sent to Cewal. The real issue, however, is whether the appellants were properly put 179. Secondly, it should be remembered on notice, by the copy of the statement of that Article 19(2) of the 1986 Regulation, objections which they eventually received like its counterpart in Article 15(2) of along with a cover letter which added Regulation No 17/62, empowers the Com- nothing to the contents of that statement, mission to impose fines both on under- that they could individually be subjected to takings and 'associations of undertakings'. fines which the statement expressly envi- A liner conference, such as Cewal, is clearly saged imposing only on Cewal, with all the such an association. Equally, it is clear that consequences that would follow in respect the Treaty competition articles generally of the calculation of the amount of the apply to associations of undertakings 119 fines. and that they are explicitly subjected to the investigating powers of the Commission,

116 — Joined Cases 100/80 and 103/80 Musique Diffusion française v Commission [1983] ECR 1825, para- graph 14. 117 — Ibid., paragraph 10. 178. In the first place, I do not find it 118 — See, in this respect, Article 19(4) of the 1986 Regulation. acceptable that the Commission should 119 — See, for example, Joined Cases 96/82 to 102/82, 104/82, 105/82, 108/82 and 110/82 IAZ v Commission [19831 make presumptions concerning such an ECR 3369, paragraph 20.

including fining. 120 The Commission gave the decision rather than infringement of the as one of its reasons for fining the members rights of the defence. of Cewal that the latter did not have legal personality. It has not said, nor has the Court of First Instance, that fines could not be imposed on unincorporated associa- tions, as, of course, they can. 1 2 1From the point of view of the members of Cewal, it is sufficient to say that there was no reason not to take the statement of objections at its face value as expressing an intention to fine 180. Thirdly, the failure to notify the Cewal and I see no reason to dispense the individual members of Cewal of this expo- Commission from what I regard as a strict sure to fines is not a merely formal defect. obligation. In AWS Benelux v Commission, CMB, in particular, is in a position to point the Court of First Instance annulled fines, to concrete prejudice. The appellants have where 'the Commission, despite thus pointed out in their reply, without being

total fine would have been very much lower. In fact they would hardly have exceeded one-quarter of the actual amount. In so far as the Commission intended to allocate fines on the basis of individual responsibility, those undertakings should, at the very least, have been notified that they, as distinct from Cewal, were liable to 120 — See Article 18(1) of the 1986 Regulation and, for example, Joined Cases T-213/95 and T-18/96 SCK and be fined. FNK v Commission [1997] ECR II-1739, para-

Indeed, the principal fine was imposed on the association. In 181. Since a fundamental requirement has Case 246/86 Belasco v Commission [19891 ECR 2117, Belasco, an association of Belgian roofing felt manufac- been infringed by the Commission, I turers and seven of its member undertakings were fined for implementing an agreement regarding price lists and recommend that the judgment of the Court sales conditions. Belasco was fined ECU 15 000 by of First Instance upholding the Decision, in reference to its annual turnover; see paragraphs 65 and 66. so far as the fines imposed on the appel- 122 — Loc. cit., footnote 115 above, paragraph 27. lants are concerned, be set aside and,

furthermore, the Decision quashed in 184. It should satisfy itself that the Court respect of those fines. of First Instance has adopted the role of unlimited review assigned to it by the Treaty and given adequate consideration to all the points of fact and law raised in contesting the fines. It seems clear to me, from paragraphs 208 to 251 of the con- tested judgment, that the Court of First Instance carefully reviewed to an adequate standard the imposition, the level and the (ii) Other pleas allocation of the fines. I propose to deal very briefly with only two issues, gravity and novelty which have been recognised as having, respectively, aggravating or miti- gating effects on the imposition of fines. 182. Apart from the foregoing, the appel- For the rest, the arguments are very largely lants have presented a large number of concerned with discretionary imposition of points of appeal regarding the fines fines based on evaluation of facts (e.g. imposed under various headings. These alleged discrimination in allocation of fines involve for much the greater part a repeti- to individual Cewal members). tion of arguments presented before the Court of First Instance and detailed argu- ments on the facts. To deal with all of these points exhaustively would enormously lengthen this already lengthy Opinion. Having accepted the force of the argument of the appellants under the second heading, 185. Firstly, the appellants challenge the I believe that I can dispense with a point by finding that the infringements were of a point explanation of each of the other particularly serious nature. The contested points, especially since, having examined judgment rightly rejected this argument them, I am satisfied that, without excep- (paragraph 231) on the basis that the tion, they are devoid of merit. 'practices were implemented in order to drive out the only competitor on the market'. The appellants do not contest the deliberateness of their behaviour, but rely once more on the supposed non-abusive character of the pressure on Ogefrem, the fighting ships practice and the loyalty 183. The correct approach is, in my view, rebates. In my view this ground of appeal to consider any identifiable error of law in is without merit. the contested judgment. Otherwise the Court should apply the test laid down in Ferriere Nord. 123 It is not required to repeat the assessment of each of their points in detail.

187. In respect of the novelty issue, the Court of First Instance rightly stresses that 'the aim of the abusive practices at issue, namely to drive the only competitor out of the market, is not in any way novel in competition law' (paragraph 248). This (iii) The interest rate conclusion has not been shown to be wrong in law. I think that the Court of First Instance, having asserted its own 'unlimited jurisdiction', responded to the arguments to a sufficient legal standard. What is more, I believe that that Court was correct to 189. The appellants appeal against the discount any elements of novelty relating rejection by the Court of First Instance of to the individual heads of abuse in the light their claim that the Commission had erred, of their manifest exclusionary and anti- in Article 7 of the Decision, in fixing the competitive purpose. 124 interest rate that was to be paid in respect of delayed payment of the fines imposed in the Decision by reference to that 'charged 124 — I would draw particular support for this conclusion from Tetra Pak II, loc. cit., footnote 56 above. It concerned by the European Monetary Cooperation the application of Article 86 to abuses committed by a Fund on its ECU operations on the first dominant undertaking on a related market on which it held a leading but not dominant position. Tetra Pak working day of the month in which [the] claimed that the novelty of this application constituted a mitigating factor. The Court, however, upheld the rejec- Decision was adopted, plus 3.5 percentage tion of this argument by the Court of First Instance, the latter having correctly based its decision on the fact that Tetra Pak 'could not have been unaware ... that the practices in question contravened the rules in the Treaty', and because of 'the manifest nature and particular gravity 125 — Commission Decision 89/93/EEC of 7 December 1988 of the restrictions on competition resulting from the relating to a proceeding under Articles 85 and 86 of the abuses in question'; Tetra Pak II, paragraph 48. EEC Treaty (IV/31.906, flat glass); OJ 1989 L 33, p. 44.

190. I am not satisfied that this approach addressed to a sufficient legal standard the arguments advanced by the applicants in so far as concerns the additional three-and-a- E — Summary of recommendations half percentage points. The Commission clearly enjoys a margin of appreciation in setting the appropriate rate of interest. An appropriate interest rate ensures that undertakings do not indulge in more delay- 192. For the reasons which I have discussed ing tactics. On the other hand, the rate set (paragraphs 173 to 181), I am of the view should not be so high as effectively to that the fines imposed on CMB and Dafra oblige undertakings to pay fines even if pursuant to Article 6 of the Decision they are of the view that they have good should be annulled since the Court of First legal grounds for challenging the validity of Instance was wrong to dismiss the plea that the Commission decision. 126 I think that the Commission had failed to respect the the Commission is entitled to adopt a point appellants' right to a fair hearing in respect of reference in fixing the rate of default of the imposition of those fines. Further- more, although I would reject all of the other pleas made in respect of the fines, I 126 — In Case 107/82 AEG v Commission [1983] ECR 3 1 5 1 , the Court rejected (paragraph 141) the argument of the am satisfied that the Court of First Instance applicant that 'there was no legal basis in Community also erred in law in upholding the level of law for any requirement to pay default interest' and held that such interest was necessary to discourage 'manifestly the interest rate imposed by Article 7 of the unfounded actions with the sole object of delaying payment of the fine'. See also Case T-275/94 CB v Decision in respect of the tardy payment of Commission [1995] ECR II-2169, paragraphs 48 and 49. the fines imposed.

194. For the reasons which I have already given in sections V and VI above rejecting VIII — Costs the various infringements of the right to a fair hearing alleged by the appellants, I do not accept that (other than in respect of the failure of the Commission to give notice of its intention to impose fines on the mem- bers of Cewal) either the Commission or 196. In the present case, since the appel- the Court of First Instance has contravened lants should, in my opinion, fail in all of the obligation — which I would accept their submissions regarding the correctness flows as much from the general principles of the Court of First Instance's decision to of Community law as from Article 6(3) of uphold the Decision as well as in most of the ECHR — that a party accused of their pleas regarding the fines, I would, for the purposes of Articles 69 and 122 of the Rules of Procedure of the Court of Justice, 127 — Article 6(3) provides, in relevant part, that 'everyone regard them as being effectively the unsuc- charged with a criminal offence' has the right 'to be informed promptly ... of the nature and cause of the cessful parties and, accordingly, recom- accusation against him', while, under Article 7(1), 'no mend to the Court that they be obliged to one shall be held guilty of any criminal offence on account of any act or omission which did not constitute a pay both the respondent's costs and those criminal offence under national or international law at the time when it was committed ...'. of the intervener.

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— order the appellants to pay the costs of the respondent and of Grimaldi and Cobelfret, the intervener.

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