JUDGMENT OF THE COURT OF FIRST INSTANCE (Third Chamber,
Extended Composition)
14 May 1998 (1)
(Competition Article 85(1) of the EC Treaty Liability for unlawful conduct
Relevant product market Information exchange Order Fine
Determination of the amount Statement of reasons Mitigating
circumstances)
In Case T-352/94,
Mo och Domsjö AB, a company incorporated under Swedish law, established at
Örnsköldsvik, Sweden, represented by Antony Woodgate, Martin Smith and
Vincent Smith, Solicitors, London, with an address for service in Luxembourg at the
Chambers of Arendt & Medernach, 8-10 Rue Mathias Hardt,
v
Commission of the European Communities, represented by Richard Lyal, of its
Legal Service, and Rosemary Caudwell, a national official seconded to the
Commission, acting as Agents, with an address for service in Luxembourg at the
office of Carlos Gómez de la Cruz, of its Legal Service, Wagner Centre, Kirchberg,
APPLICATION for annulment of Commission Decision 94/601/EC of 13 July 1994
relating to a proceeding under Article 85 of the EC Treaty (IV/C/33.833
Cartonboard, OJ 1994 L 243, p. 1),
THE COURT OF FIRST INSTANCE
OF THE EUROPEAN COMMUNITIES (Third Chamber, Extended
Composition),
composed of: B. Vesterdorf, President, C.P. Briët, P. Lindh, A. Potocki and J.D.
Cooke, Judges,
Registrar: J. Palacio González, Administrator,
having regard to the written procedure and further to the hearing which took place
from 25 June to 8 July 1997,
gives the following
Judgment
Facts
- 1.
- This case concerns Commission Decision 94/601/EC of 13 July 1994 relating to a
proceeding under Article 85 of the EC Treaty (IV/C/33.833 Cartonboard,
OJ 1994 L 243, p. 1), as corrected prior to its publication by a Commission decision
of 26 July 1994 (C(94) 2135 final) (hereinafter 'the Decision). The Decision
imposed fines on 19 producers supplying cartonboard in the Community on the
ground that they had infringed Article 85(1) of the Treaty.
- 2.
- The product with which the Decision is concerned is cartonboard. The Decision
refers to three types of cartonboard, designated as 'GC, 'GD and 'SBS grades.
- 3.
- GD grade cartonboard (hereinafter 'GD cartonboard) is white-lined chipboard
(recycled paper) which is normally used for the packaging of non-food products.
- 4.
- GC grade cartonboard (hereinafter 'GC cartonboard) is cartonboard with a white
top layer and is normally used for the packaging of food products. GC cartonboard
is of higher quality than GD cartonboard. During the period covered by the
Decision there was normally a price differential of approximately 30% between
those two products. High quality GC cartonboard is also used, but to a lesser
extent, for graphic purposes.
- 5.
- SBS is the abbreviation used to refer to cartonboard which is white throughout
(hereinafter 'SBS cartonboard). The price of this cartonboard is approximately
20% higher than that of GC cartonboard. It is used for the packaging of foods,
cosmetics, medicines and cigarettes, but is designated primarily for graphic uses.
- 6.
- By letter of 22 November 1990, the British Printing Industries Federation ('BPIF),
a trade organisation representing the majority of printed carton producers in the
United Kingdom, lodged an informal complaint with the Commission. It claimed
that the producers of cartonboard supplying the United Kingdom had introduced
a series of simultaneous and uniform price increases and requested the Commission
to investigate whether there had been an infringement of the Community
competition rules. In order to ensure that its initiative received publicity, the BPIF
issued a press release. The content of that press release was reported in the
specialised trade press in December 1990.
- 7.
- On 12 December 1990, the Fédération Française du Cartonnage also lodged an
informal complaint with the Commission, making allegations relating to the French
cartonboard market which were similar to those made in the BPIF complaint.
- 8.
- On 23 and 24 April 1991, Commission officials acting pursuant to Article 14(3) of
Council Regulation No 17 of 6 February 1962, First Regulation implementing
Articles 85 and 86 of the Treaty (OJ, English Special Edition 1959-1962, p. 87,
hereinafter 'Regulation No 17), carried out simultaneous investigations without
prior notice at the premises of a number of undertakings and trade associations
operating in the cartonboard sector.
- 9.
- Following those investigations, the Commission sent requests for both information
and documents to all the addressees of the Decision pursuant to Article 11 of
Regulation No 17.
- 10.
- The evidence obtained from those investigations and requests for information and
documents led the Commission to conclude that from mid-1986 until at least (in
most cases) April 1991 the undertakings concerned had participated in an
infringement of Article 85(1) of the Treaty.
- 11.
- The Commission therefore decided to initiate a proceeding under Article 85 of the
Treaty. By letter of 21 December 1992 it served a statement of objections on each
of the undertakings concerned. All the addressees submitted written replies. Nine
undertakings requested an oral hearing. A hearing was held on 7, 8 and 9 June
1993.
- 12.
- At the end of that procedure the Commission adopted the Decision, which includes
the following provisions:
'Article 1
Buchmann GmbH, Cascades SA, Enso-Gutzeit Oy, Europa Carton AG, Finnboard
the Finnish Board Mills Association, Fiskeby Board AB, Gruber & Weber GmbH
& Co KG, Kartonfabriek de Eendracht NV (trading as BPB de Eendracht NV),
NV Koninklijke KNP BT NV (formerly Koninklijke Nederlandse Papierfabrieken
NV), Laakmann Karton GmbH & Co KG, Mo Och Domsjö AB (MoDo), Mayr-Melnhof Gesellschaft mbH, Papeteries de Lancey SA, Rena Kartonfabrik A/S,
Sarrió SpA, SCA Holding Ltd (formerly Reed Paper & Board (UK) Ltd), Stora
Kopparbergs Bergslags AB, Enso Española SA (formerly Tampella Española SA)
and Moritz J. Weig GmbH & Co KG have infringed Article 85(1) of the EC Treaty
by participating,
in the case of Buchmann and Rena from about March 1988 until at least
the end of 1990,
in the case of Enso Española, from at least March 1988 until at least the
end of April 1991,
in the case of Gruber & Weber from at least 1988 until late 1990,
in the other cases, from mid-1986 until at least April 1991,
in an agreement and concerted practice originating in mid-1986 whereby the
suppliers of cartonboard in the Community
met regularly in a series of secret and institutionalised meetings to discuss
and agree a common industry plan to restrict competition,
agreed regular price increases for each grade of the product in each
national currency,
planned and implemented simultaneous and uniform price increases
throughout the Community,
reached an understanding on maintaining the market shares of the major
producers at constant levels, subject to modification from time to time,
increasingly from early 1990, took concerted measures to control the supply
of the product in the Community in order to ensure the implementation of
the said concerted price rises,
exchanged commercial information on deliveries, prices, plant standstills,
order backlogs and machine utilisation rates in support of the above
measures.
...
Article 3
The following fines are hereby imposed on the undertakings named herein in
respect of the infringement found in Article 1:
...
(xii) Mo Och Domsjö AB, a fine of ECU 22 750 000;
...
- 13.
- According to the Decision, the infringement took place within a body known as the
'Product Group Paperboard (hereinafter 'the PG Paperboard), which comprised
several groups or committees.
- 14.
- In mid-1986 a group entitled the 'Presidents Working Group (hereinafter 'the
PWG) was established within that body. This group brought together senior
representatives of the main suppliers of cartonboard in the Community (some eight
suppliers).
- 15.
- The PWG's activities consisted, in particular, in discussion and collaboration
regarding markets, market shares, prices and capacities. In particular, it took broad
decisions on the timing and level of price increases to be introduced by producers.
- 16.
- The PWG reported to the 'President Conference (hereinafter 'the PC), in which
almost all the managing directors of the undertakings in question participated
(more or less regularly). The PC met twice each year during the period in
question.
- 17.
- In late 1987 the Joint Marketing Committee (hereinafter 'the JMC) was set up.
Its main task, was on the one hand, to determine whether, and if so how, price
increases could be put into effect and, on the other, to prescribe the methods of
implementation for the price initiatives decided by the PWG, country-by-country
and for the major customers, in order to achieve a system of equivalent prices in
Europe.
- 18.
- Lastly, the Economic Committee discussed, inter alia, price movements in national
markets and order backlogs, and reported its findings to the JMC or, until the end
of 1987, to the Marketing Committee, the predecessor of the JMC. The Economic
Committee was made up of marketing managers of most of the undertakings in
question and met several times a year.
- 19.
- According to the Decision, the Commission also took the view that the activities of
the PG Paperboard were supported by an information exchange organised by Fides,
a secretarial company, whose registered office is in Zurich, Switzerland. The
Decision states that most of the members of the PG Paperboard sent periodic
reports on orders, production, sales and capacity utilisation to Fides. Under the
Fides system, those reports were collated and the aggregated data were sent to the
participants.
- 20.
- The Decision sets out the reasons why that decision was addressed to the applicant,
Mo och Domsjö AB (hereinafter 'MoDo) (point 151 et seq.). According to the
Decision, Thames Board Ltd (hereinafter 'TBM), a manufacturer of GC grade
cartonboard with a cartonboard mill in Workington, United Kingdom, took part
from mid-1986 in meetings of the bodies of the PG Paperboard, including PWG
meetings. With effect from 1 January 1988, the whole of TBM was acquired by AB
Iggesunds Bruk (hereinafter 'Iggesunds Bruk), an associated company of MoDo,
in which MoDo held 49.9% of the voting rights. TBM was then renamed Iggesund
Paperboard (Workington) Ltd.
- 21.
- Until the acquisition of TBM, Iggesunds Bruk had produced mainly SBS
cartonboard; it had also produced GC grade cartonboard to a lesser extent.
MoDo acquired 100% control of Iggesunds Bruk at the beginning of 1989 and
made it a division of the MoDo group, known as Iggesund Paperboard AB
(hereinafter 'Iggesund Paperboard). Representatives of that division attended
meetings of the PWG and of the JMC. Managers and employees from Workington
also attended the JMC meetings.
Procedure
- 22.
- The applicant brought this action by application lodged at the Registry of the Court
on 20 October 1994.
- 23.
- Sixteen of the eighteen other undertakings held to be responsible for the
infringement have also brought actions to contest the Decision (Cases T-295/94,
T-301/94, T-304/94, T-308/94, T-309/94, T-310/94, T-311/94, T-317/94, T-319/94,
T-327/94, T-334/94, T-337/94, T-338/94, T-347/94, T-348/94 and T-354/94).
- 24.
- The applicant in Case T-301/94, Laakmann Karton GmbH, withdrew its action by
letter lodged at the Registry of this Court on 10 June 1996 and the case was
removed from the Register by order of 18 July 1996 (Case T-301/94 Laakmann
Karton v Commission, not published in the ECR).
- 25.
- Four Finnish undertakings, members of the trade association Finnboard, and as
such held jointly and severally liable for payment of the fine imposed on Finnboard,
have also brought actions against the Decision (Joined Cases T-339/94, T-340/94,
T-341/94 and T-342/94).
- 26.
- Lastly, an action was also brought by an association, CEPI-Cartonboard, which was
not an addressee of the Decision. However, it withdrew its action by letter lodged
at the Registry of the Court on 8 January 1977 and the case was removed from the
Register of the Court by order of 6 March 1997 (Case T-312/94 CEPI-Cartonboard
v Commission, not published in the ECR).
- 27.
- By letter of 5 February 1997 the Court requested the parties to take part in aninformal meeting with a view, in particular, to their presenting observations on a
possible joinder of Cases T-295/94, T-304/94, T-308/94, T-309/94, T-310/94,
T-311/94, T-317/94, T-319/94, T-327/94, T-334/94, T-337/94, T-338/94, T-347/94,
T-348/94, T-352/94 and T-354/94 for the purposes of the oral procedure. At that
meeting, which took place on 29 April 1997, the parties agreed to such a joinder.
- 28.
- By order of 4 June 1997 the President of the Third Chamber, Extended
Composition, of the Court, in view of the connection between the abovementioned
cases, joined them for the purposes of the oral procedure in accordance with
Article 50 of the Rules of Procedure and allowed an application for confidential
treatment submitted by the applicant in Case T-334/94.
- 29.
- By order of 20 June 1997 he allowed an application for confidential treatment
submitted by the applicant in Case T-337/94 which related to a document produced
in response to a written question from the Court.
- 30.
- Upon hearing the report of the Judge-Rapporteur, the Court (Third Chamber,
Extended Composition) decided to open the oral procedure and adopted measures
of organisation of procedure in which it requested the parties to reply to certain
written questions and to produce certain documents. The parties complied with
those requests.
- 31.
- The parties in the cases referred to in paragraph 27 above presented oral argument
and gave replies to the Court's questions at the hearing which took place from
25 June to 8 July 1997.
Forms of order sought
- 32.
- The applicant claims that the Court should:
annul the Decision in so far as it concerns it;
annul Article 2;
annul the fine or reduce its amount;
order the Commission to pay the costs.
- 33.
- The Commission contends that the Court should:
dismiss the application as unfounded;
order the applicant to pay the costs.
The application for annulment of the Decision
- 34.
- The organisation of the pleas which are considered in this judgment differs from
that in the report for the hearing. Some of the pleas on which the applicant relies
in support of its claim for annulment of the Decision can lead only to a reduction
in the fine and must therefore be considered in that context.
A The pleas alleging infringements of essential procedural requirements
The plea that the statement of reasons is defective
Arguments of the parties
- 35.
- The applicant contends that the Decision is vitiated by a defect in the statement
of the reasons on which it is based, because it does not reveal how the Commission
assessed certain evidence and arguments submitted during the administrative
procedure.
- 36.
- First, its arguments contesting the probative value of Stora's statements were
probably misunderstood by the Commission (see point 108 of the Decision). Stora
might have been influenced by the likely consequences of its statements. The
Commission should not therefore have relied on those statements.
- 37.
- Moreover, while the Commission sometimes blindly followed Stora's statements, it
nevertheless drew conclusions that are incompatible with or different from those
statements.
- 38.
- In that context, the applicant refers to several points on which the Commission did
not follow Stora's statements, in particular the assertion that a number of aspects
of the alleged infringement had little impact on the market, the comments showing
that customers enjoyed considerable power, the statement that the information
exchanges did not include disclosure of the length of order backlogs and, lastly, the
statement that the main purpose of the collection of data on orders in hand was
to enable companies to monitor their own performance on the market.
- 39.
- Nor did the Commission take due account of certain observations in Stora's
statements. The applicant refers to points 3, 11, 12 and 28 of Stora's second
statement (appendix 39 to the statement of objections) and to paragraph 1.1 of
Stora's third statement (appendix 43 to the statement of objections).
- 40.
- The Commission therefore adopted an unfair approach in regard to Stora's
statements, since it followed them only in the absence of other evidence. By
contrast, where evidence other than the statements existed, it accepted the evidence
that was most unfavourable to the addressees of the Decision.
- 41.
- Second, the Commission did not correctly assess the reports by London Economics
(hereinafter the 'LE report), produced on behalf of several addressees of the
Decision, which aimed to explain the market phenomena noted by the Commission.
The applicant had also supplied data to the Commission in order to show that
production costs at its Workington plant had increased almost as much as the
transaction prices, despite the strong demand during the period in question.
- 42.
- Third, the implication that the applicant deliberately concealed evidence in order
to frustrate the investigation (point 116 of the Decision) is unfounded.
- 43.
- Lastly, it is apparent from the Decision that no consideration was given to the
possibility that Unilever plc, the owner of TBM before its acquisition by Iggesunds
Bruk, was responsible for part of the alleged infringement.
- 44.
- The Commission observes that it is not obliged to respond in detail to every matter
raised in a reply to a statement of objections (see Joined Cases 209/78 to 215/78
and 218/78 Van Landewyck and Others v Commission [1980] ECR 3125, paragraph
66) and that, in accordance with its duties, it considered the evidence and
arguments submitted by the applicant and replied in the Decision to the matters
which were relevant to its conclusions.
- 45.
- As regards the applicant's arguments relating to the reliability of Stora's statements,
the Commission maintains that it understood them and took them into account.
It simply did not agree with the applicant. As indicated in points 112 and 113 of
the Decision, the statements were corroborated by numerous documents.
Moreover, it seems absurd to maintain that the Commission blindly followed Stora's
statements and to complain that it did not follow those statements in every detail.
- 46.
- As regards the LE report, the Commission refers in the main to the arguments on
which it relies to show that it correctly assessed the effects of the cartel on the
market (see paragraph 289 et seq. below).
- 47.
- Contrary to the applicant's claim, the Commission never asserted that the applicant
had concealed evidence during the administrative procedure.
- 48.
- Lastly, in its reply to a written question from the Court, the Commission stated that
it had no evidence of the involvement of Unilever plc in the cartel.
Findings of the Court
- 49.
- It is settled law that the purpose of the obligation to give reasons for an individual
decision is to enable the Community judicature to review the legality of the decision
and to provide the party concerned with an adequate indication as to whether the
decision is well founded or whether it may be vitiated by some defect enabling its
validity to be challenged; the scope of that obligation depends on the nature of the
act in question and on the context in which it was adopted (see, inter alia, Case
T-49/95 Van Megen Sports v Commission [1996] ECR II-1799, paragraph 51).
Although pursuant to Article 190 of the Treaty the Commission is bound to state
the reasons on which its decisions are based, mentioning the facts, law and
considerations which have led it to adopt them, it is not required to discuss all the
issues of fact and law which have been raised during the administrative procedure
(see, inter alia, Van Landewyck and Others v Commission, cited above, paragraph
66).
- 50.
- As regards Stora's statements, the Commission explained in points 112 and 113 of
the Decision that the essential points of those statements are corroborated by other
proof.
- 51.
- The fact that the Commission did not adopt all the assertions made in Stora's
statements cannot render the statement of reasons for the Decision inadequate or
defective. In essence, the applicant's arguments merely contest the correctness of
the Commission's assessment of the reliability of Stora's statements. As such
arguments fall within the scope of the Court's examination of the substance of the
Decision, they are irrelevant in the present context.
- 52.
- The same holds for the applicant's assertion that the Commission did not correctly
assess the LE report or the evidence produced by the applicant in order to show
that its costs increased in line with the prices which it charged.
- 53.
- As regards the applicant's assertion that the Decision wrongly implied that it had
deliberately concealed evidence in order to frustrate the investigation, it suffices to
find that there is no such implication in the Decision. As the Commission has
rightly stated, the point in the Decision to which the applicant refers concerns only
the measures taken by the participants in the cartel designed to conceal its
existence. The Commission's assessment of that aspect is explained in detail in the
Decision (see, in particular, point 73 thereof).
- 54.
- Finally, the applicant did not submit any evidence during the administrative
procedure before the Commission to show that Unilever plc was involved in the
cartel as former parent company of TBM. In those circumstances, the fact that the
Commission did not examine in the Decision whether that decision might be
addressed to Unilever plc in order to make it answerable for part of the
infringement committed by TBM cannot constitute a defect in reasoning.
- 55.
- In the light of the foregoing, this plea must be rejected.
The plea grounded upon infringement of the rights of the defence
Arguments of the parties
- 56.
- The applicant contends that the grounds of the Decision refer to evidence which
was not set out in the statement of objections and thus infringes its rights of
defence.
- 57.
- That is the case in regard to many of the assertions concerning the alleged 'price
before tonnage policy, the fact that the Commission considers the Fides
information exchange in itself to infringe Article 85 of the Treaty and the fact that
the Commission considers the 1987 price increase in the United Kingdom to have
been the result of collusion.
- 58.
- Furthermore, although in the statement of objections the Commission accepted that
supply and demand were in balance for at least three or four years prior to 1991,
the Decision contains less favourable findings, in particular in that it states several
times that downtime was taken in 1990 (see, for example, point 134).
- 59.
- Lastly, information relating to the October 1988 price increases by Iggesunds Bruk
in the Netherlands and by Feldmühle (of the Stora group) in Belgium and data
relating to an October 1989 price increase by Enso-Gutzeit in Italy were included
in the tables annexed to the Decision, but had not been included in those annexed
to the statement of objections.
- 60.
- The Commission maintains that the statement of objections contained all the
evidence relating to the 'price before tonnage policy. Likewise, the statement of
objections showed that the 1987 price increase in the United Kingdom was the
result of collusion (pages 68 and 69 and the annex concerning the fixing of prices
referred to therein).
- 61.
- It observes that the initial statement of objections concerned only the Fides system,
which was linked to the operation of the cartel as a whole. It was not therefore
necessary to make any findings in regard to the unlawfulness of the system in itself.
However, the addendum to the statement of objections explained that the system
implemented after July 1991 continued to infringe Article 85 of the Treaty.
- 62.
- Lastly, there is no inconsistency between the information relating to supply and
demand in the statement of objections and that in the Decision.
Findings of the Court
- 63.
- It is settled law that the statement of objections must be couched in terms that,
albeit succinct, are sufficiently clear to enable the parties concerned properly to
identify the conduct complained of by the Commission. It is only on that basis that
the statement of objections can fulfil its function under the Community regulations
of giving undertakings all the information necessary to enable them properly to
defend themselves, before the Commission adopts a final decision (see, inter alia,
Joined Cases C-89/85, C-104/85, C-114/85, C-116/85, C-117/85 and C-125/85 toC-129/85 Ahlström Osakeyhtiö and Others v Commission [1993] ECR I-1307,
paragraph 42).
- 64.
- In this case, the Court must reject the applicant's argument that a large part of
assertions relating to the alleged 'price before tonnage policy was not set out in
the statement of objections. The applicant does not specify in what respect the
assertions in the Decision differ from those in the statement of objections.
Moreover, the Decision does not contain objections relating to the price before
tonnage policy that were not brought to the attention of the applicant in the
statement of objections.
- 65.
- Nor can the Court uphold the applicant's argument to the effect that in the
statement of objections there was no allegation that the Fides information exchange
system was in itself an infringement of Article 85(1) of the Treaty. It suffices to
hold that, according to the Decision, that information exchange system infringed the
Community competition rules only in that it supported the cartel found (Article 1,
last indent, of the Decision, read in the light of point 134, third paragraph, of the
Decision), even though the Commission considered that 'in fact, in many cases
individual data were shown or could be worked out without much difficulty
(ibidem).
- 66.
- As regards the concerted price increase in the United Kingdom in January 1987,
this allegation was made sufficiently clearly against certain undertakings, including
the applicant, in the statement of objections.
- 67.
- That allegation is set out in particular on page 54 of the statement of objections:
'A handwritten note (appendix 44) in the desk diary of Mr Opladen of Feldmühle
covering three pages from 15-17 January 1987 relates to an exchange of
information on pricing, order backlog and downtime between Feldmühle and
several other producers in the context of the price increase which was being
introduced in the United Kingdom market in December 1986-January 1987 (c.f.
Appendix 61, found at [Mayr-Melnhof]'s UK sales agent Recent Fides meeting
included the representative of Weig, stating they thought 9% too high for the UK
and were settling at 7% ... etc).
- 68.
- Furthermore, the Commission states (page 69 of the statement of objections):
'Details of the concerted price initiatives in West Europe from 1987 to 1991 are
set out in the Pricing Annex which is attached to these objections.
Details are also shown on the price initiative in the United Kingdom market in
early 1987.
- 69.
- In technical appendix A, to which the statement of objections expressly refers, the
Commission sets out its detailed objections relating to the January 1987 price
increase in the United Kingdom. It is stated unambigiously in particular (on
page 4) that it 'is clear ... that this increase had been discussed and planned at the
President level.
- 70.
- It follows that the applicant could not have been unaware that the Commission was
alleging that it had participated in a concerted price initiative in the United
Kingdom in January 1987.
- 71.
- Furthermore, the applicant wrongly claims that the statement of objections does not
show that downtime was taken in 1990.
- 72.
- In fact the statement of objections (page 85) states:
'Subsequently when in 1990 they were faced with a combination of increased
capacity and reduced demand they were able to coordinate the taking of downtime
by each producer and thereby avoid excess production and falling prices.
- 73.
- Lastly, as regards the information on the price increases announced and
implemented by some producers, the Commission does not contest the applicant's
assertion that this information was not set out in the statement of objections or in
the appendices thereto. The applicant was therefore unable to make known its
views properly on those matters of fact. The Commission was not entitled to base
its decision on information which had not been brought to the attention of the
undertakings during the administrative procedure. In consequence, those matters
of fact must be disregarded when considering the validity of the Decision.
- 74.
- However, that infringement of the applicant's right of defence is not in itself such
as to affect the validity of the Decision as a whole, since it was not based solely on
the information in question (see, to the same effect, Joined Cases 100/80, 101/80,
102/80 and 103/80 Musique Diffusion Française and Others v Commission [1983]
ECR 1825, paragraph 30).
- 75.
- This plea must therefore be rejected.
B The pleas grounded on the infringement of substantive rules
The plea that the applicant was not the correct addressee of the Decision
Admissibility of the plea
- 76.
- The Commission questions the applicant's legal interest in submitting that the
Decision should have been addressed to Iggesund Paperboard, when the applicant
acknowledges that it will answer for that company's liability if a fine is ultimately
imposed on it.
- 77.
- It suffices to observe in that regard that the applicant is one of the undertakings
stated in Article 1 of the Decision to have participated in an infringement of Article
85(1) of the Treaty. On that basis, the applicant has a legal interest in disputing
that finding, irrespective of any question of fines, because that finding is at the very
least likely to affect its reputation.
- 78.
- The plea must therefore be declared admissible.
Substance
Arguments of the parties
- 79.
- According to the applicant, the Decision was addressed to the parent company of
a group of companies where more than one company had participated in the
infringement or where there was specific evidence implicating the parent company
in the infringement (point 143 of the Decision). However, neither of those criteria
is satisfied in its own case. In reality, only one undertaking in the MoDo group,
Iggesund Paperboard, is accused of having participated in the infringement and the
applicant itself did not participate in it.
- 80.
- In the present case, the Commission has not even applied the general criteria set
out in the Decision. According to points 152 and 153 of the Decision, the
Commission took the view, first, that there might be difficulties in collecting the
fine if Iggesund Paperboard were the addressee of the Decision and, second, that
Iggesund Paperboard was not really independent of the applicant. In applying
those specific criteria in the applicant's case alone, the Commission infringed the
principles of fairness, equal treatment, non-discrimination and protection of
legitimate expectations.
- 81.
- Moreover, the specific criteria referred to in point 153 of the Decision do not
justify the Commission's approach. First of all, it is incorrect to state that Iggesund
Paperboard was not able to pay the fine. The Commission was also wrong to take
the view that Iggesund Paperboard did not enjoy real independence in relation to
the applicant. The mere fact that Iggesund Paperboard had no assets or employees
did not preclude its being characterised as an undertaking for the purposes of
Community law. The Commission itself conceded that Iggesund Paperboard, as an
autonomous economic entity, fulfilled all the criteria in order to be considered as
an undertaking. Iggesund Paperboard cannot therefore be regarded as a 'shell
company.
- 82.
- Where an undertaking has under its control all the assets necessary to manage its
activities, it is not necessary that it should own those assets. That is confirmed by
Commission Decision 91/50/EEC of 16 January 1991 relating to a proceeding under
Article 85 of the EEC Treaty (IV/32.732 IJsselcentrale (IJC) and Others, OJ 1991
L 28, p. 32). Nor does the fact that the parent company supplies some ancillary
services, such as legal and accounting services, and charges the group companies
for them preclude Iggesund Paperboard from being characterised as an
undertaking.
- 83.
- Lastly, it has not been proved that the applicant was aware of the alleged unlawful
acts and had de facto control over the activities of Iggesund Paperboard. Nor does
the fact that the applicant could issue directions to Iggesund Paperboard or the fact
that it had chosen the directors of that undertaking suffice to render the applicant
liable for the conduct of the undertaking or to conclude that Iggesund Paperboard
and the applicant are a single economic entity.
- 84.
- The Commission contends that an undertaking, within the meaning of competition
law, may be defined as an economic unit consisting of a unitary organisation of
personal, tangible and intangible elements which pursues a specific economic aim
on a long-term basis (Case T-11/89 Shell v Commission [1992] ECR II-757,
paragraph 311).
- 85.
- Several companies in the same group, acting under the same management and
control, may be considered to be part of the same undertaking. In that regard the
Commission has a discretion in determining the level of such a structure to which
it is most appropriate to address a decision. Consequently, even if it had been
possible for the Commission to address the Decision to Iggesund Paperboard, that
would not have meant that it was obliged to do so. Two of the applicant's
subsidiary companies, Iggesund Paperboard (Workington) Ltd. and Iggesunds Bruk,
were indeed involved in the cartel.
- 86.
- Lastly, the Commission rightly relied on the reasons set out in points 152 and 153
of the Decision, because Iggesund Paperboard has no assets or employees. It is
therefore merely a 'shell company with capital of only SKR 50 000.
Findings of the Court
- 87.
- In prohibiting undertakings inter alia from entering into agreements or participating
in concerted practices which may affect trade between Member States and have as
their object or effect the prevention, restriction or distortion of competition within
the common market, Article 85(1) of the Treaty is aimed at economic units which
consist of a unitary organisation of personal, tangible and intangible elements,
which pursues a specific economic aim on a long-term basis and can contribute to
the commission of an infringement of the kind referred to in that provision (Shell
v Commission, cited above, paragraph 311).
- 88.
- In the present case the applicant and the various companies belonging to its
paperboard division, a division which was formally managed by Iggesund
Paperboard, must be regarded as consisting of a unitary organisation of personal,
tangible and intangible elements which pursues, on a long-term basis, the aim inter
alia of producing and selling cartonboard with a view to maximising profits, even,
in some cases, to the detriment of the individual profits of its various components.
In that organisation, each company plays a specific role (see, to the same effect,
Shell v Commission, cited above, paragraph 312).
- 89.
- According to the Decision (see, in particular, the first paragraph of point 153),
Iggesund Paperboard is a 'commission company that is wholly owned by the
applicant, its capital amounting to SKR 50 000.
- 90.
- The second paragraph of point 153 adds:
'Iggesund Paperboard AB neither owns the production facilities for cartonboard
nor employs its labour force. The cartonboard assets formerly owned by Iggesunds
Bruk AB remain owned by that company which is now a dormant company entirely
owned by MoDo. All personnel in Sweden are employed by MoDo itself.
- 91.
- The applicant has not disputed any of those statements.
- 92.
- Moreover, it is apparent from the applicant's replies to the Court's written
questions that at the date when the infringement ended Iggesund Paperboard
(Workington) Ltd, formerly TBM, still owned the cartonboard mill at Workington,
United Kingdom; that it posted the turnover of that mill in its accounts; and that
it still employed the staff at that mill. It is also clear that no turnover was posted
in the annual accounts of Iggesund Paperboard and that, in particular, the turnover
of the Iggesunds Bruk carton mill was posted in the applicant's annual accounts.
- 93.
- Lastly, according to the applicant's annual accounts for 1991, the business of the
MoDo group was conducted through six 'commission companies, including
Iggesund Paperboard, but the applicant supplied certain services, such as legal, data
processing and accountancy services, for all the group companies.
- 94.
- In consequence, the Commission rightly states at the end of the second paragraph
of point 153 of the Decision that 'it is therefore appropriate for the purposes of
the present proceedings to address the decision to the MoDo group itself
[represented by its parent company] rather than to a subsidiary which has no real
independence, owns no assets and employs no staff, and it is unnecessary to
consider whether the other reasons relied on in points 152 and 153 of the Decision
may justify the Commission's choice to address the Decision to the applicant.
- 95.
- Contrary to the applicant's assertion that only Iggesund Paperboard participated
in the infringement, Iggesund Paperboard (Workington) Ltd was also in the list ofthe members of the PG Paperboard, and employees of that company took part in
JMC meetings. In addressing the Decision to the applicant, the Commission
therefore acted in conformity with the criterion set out in point 143 of the Decision,
according to which that decision was to be addressed to the parent company of the
group where more than one company in that group had participated in the
infringement.
- 96.
- In the light of the foregoing considerations, the plea must be rejected.
The plea that the Commission has not proved the existence of collusion on volume
control and limitation of production
- 97.
- This plea is in three parts. The first two parts will be considered together while the
third part will be considered separately.
The first two parts of the plea: no proof of the existence of collusion aimed at
freezing market shares and controlling supply
Arguments of the parties
- 98.
- In the first part of the plea the applicant disputes the Commission's allegations
regarding the existence of volume control measures. Those allegations are, in
effect, based on Stora's statements. Those statements are not, however,
corroborated by any evidence.
- 99.
- The applicant contends that demand continued to increase until May 1991 and that
production capacity in the industry was fully utilised from 1987 until 1990. On that
basis, it disputes the assertion in the Decision that producers were increasingly
forced to take downtime during 1990.
- 100.
- Furthermore, the note of 3 October 1988 (appendix 102 to the statement of
objections) proves that there was no system of volume control at that date.
- 101.
- Lastly, the applicant disputes that the documents relating to meetings of the Paper
Agents' Association ('PAA) can support the Commission's contention. It
considers that they should not be taken into consideration.
- 102.
- In the second part of the plea it contests the Commission's allegations of the
existence of collusion on the freezing of market shares. Several items of evidence
show that Stora's statements, on which the Commission relied, are not reliable.
- 103.
- First, the description of the measures aimed at freezing market shares is
incoherent. The Commission failed to take into account the fact that the producers
could not agree on a freezing of market shares without contact with customers and
without turning away orders. The Decision does not indicate the products to which
the market shares related. It does not specify whether the forecast percentage
growth rate for the following year was determined individually or centrally.
However, those matters ought necessarily to have been at the heart of any
understanding on freezing market shares. Lastly, the information provided by Stora
is not coherent either. Stora stated (appendix 39 to the statement of objections)
that discussions on that topic related to national groupings, whereas in its letter of
23 December 1992 (appendix 43 to the statement of objections) it is alleged that
the agreement related to market shares by producer group.
- 104.
- Second, its national market shares changed significantly and its share of the
continental European market increased considerably. Moreover, the Commission
itself accepts that several of the larger producers were able to increase their market
shares slightly.
- 105.
- Third, the Commission did not duly take into account the low price elasticity of
cartonboard.
- 106.
- Fourth, an agreement to freeze market shares would necessarily have had to be
accompanied by agreements on the taking of downtime and on the creation of new
production capacity. However, several producers increased their production
capacity during the period in question.
- 107.
- The Commission states that the Decision explains that the producers understood
that in the long term it was not possible to control prices without at the same time
controlling volumes in order to ensure a balance between supply and demand. On
that basis, the producers considered it necessary to strengthen the cartel on prices
with an agreement on volume control. Consequently, the fact that it was not
necessary to put that system into practice during a particular period is irrelevant.
Furthermore, there is evidence that measures to control supply had been taken by
Iggesund when necessary (points 94 and 95 of the Decision). The Commission also
observes that it found that the producers agreed to freeze market shares at existing
levels but that this was not an absolute freeze (points 52 to 56 of the Decision).
- 108.
- As regards the reasons for which the volume control scheme was considered
necessary, the Commission states that a substantial increase in volumes would have
entailed a fall in prices. The applicant's argument based on low price elasticity
does not therefore answer the Commission's argument.
- 109.
- The Commission states that the conclusions drawn in the Decision are based on
sound evidence. It refers in that regard to Stora's statements and to the documents
described in points 53 to 55 and 58 to 59 of the Decision.
- 110.
- It maintains that it never alleged that market shares remained constant (points 59
and 60 of the Decision).
Findings of the Court
- 111.
- According to Article 1 of the Decision, the undertakings referred to in that article
infringed Article 85(1) of the Treaty by participating, during the relevant period,
in an agreement and concerted practice whereby the suppliers of cartonboard in
the Community 'reached an understanding on maintaining the market shares of the
major producers at constant levels, subject to modification from time to time and
'increasingly from early 1990, took concerted measures to control the supply of the
product in the Community in order to ensure the implementation of the said
concerted price rises.
- 112.
- According to the Commission, those two types of collusion, dealt with in the
Decision under the heading 'volume control, were initiated during the reference
period by the participants in the PWG meetings. It is apparent from the third
paragraph of point 37 of the Decision that the true purpose of the PWG, as
described by Stora, 'included discussions and concertation on markets, market
shares, prices, price increases and capacity.
- 113.
- As to the PWG's role in relation to the collusion on market shares, the Decision
(point 37, fifth paragraph) states as follows: 'In connection with the moves to
increase prices, the PWG held detailed discussions on the market shares in western
Europe of the national groupings and of individual producer groups. As a result,
certain understandings were reached between the participants as to their
respective market shares, the object being to ensure that the concerted price
initiatives were not jeopardised by excess of supply over demand. The large
producer groups in effect agreed to maintain their market shares at the levels
disclosed for each year by the annual production and sales figures and available in
definitive form through Fides in March of the following year. Market share
developments were analysed in each meeting of the PWG on the basis of the
monthly Fides returns and if significant fluctuations emerged, explanations would
be sought from the undertaking presumed responsible.
- 114.
- According to point 52 of the Decision: 'The agreement reached in the PWG during
1987 included the freezing of the west European market shares of the major
producers at existing levels, with no attempts to be made to win new customers or
extend existing business through aggressive pricing.
- 115.
- The first paragraph of point 56 states: 'The basic understanding between the major
producers on maintaining their respective market shares continued throughout the
period covered by this Decision. According to point 57: 'Market share
development was analysed at each meeting of the PWG on the basis of provisional
statistics. Finally, the last paragraph of point 56 states: 'The undertakings which
took part in these discussions on market shares were those represented in the
PWG, namely Cascades, Finnboard, KNP (until 1988), [Mayr-Melnhof], MoDo,
Sarrió, the two Stora group producers CBC and Feldmühle, and (from 1988)
Weig.
- 116.
- The Court therefore considers that the Commission correctly established the
existence of collusion on market shares between the participants in the meetings
of the PWG.
- 117.
- The Commission's analysis is in essence based on Stora's statements (appendices
39 and 43 to the statement of objections) and is confirmed by appendix 73 to the
statement of objections.
- 118.
- In appendix 39 to the statement of objections, Stora states: 'The PWG met from
1986 to assist in the introduction of discipline in the market. ... Among other
(legitimate) activities, its purpose included discussion and concertation on markets,
market shares, prices, price increases, demand and capacity. Its role included
assessing and explaining to the President Conference the precise state of supply
and demand on the market and the measures to be taken to attempt to bring order
to the market.
- 119.
- As regards more specifically the collusion on market shares, Stora indicates that
'the shares taken by national groups of EC, EFTA and other countries supplied
by members of the PG Paperboard were considered in the PWG and that the
PWG 'discussed the possibility of holding market shares at the previous year's
level (appendix 39 to the statement of objections, point 19). It also states (same
document, point 6) that '[d]iscussions about producers' European market shares
also took place during this period, the first reference period being 1987 levels.
- 120.
- In a reply to a request by the Commission of 23 December 1991, sent on
14 February 1992 (appendix 43 to the statement of objections), Stora also states:
'The understandings on market share levels reached by the PWG members related
to Europe as a whole. The understandings were based on the previous total year
figures, usually definitively available by the following March (point 1.1).
- 121.
- That assertion is confirmed in the same document as follows: '... the discussions led
to understandings usually in March of each year between members of the PWG to
maintain their market shares at the previous year's level (point 1.4). Stora reveals
that 'no measures were taken to ensure respect for the understandings and that
the participants in the meetings of the PWG 'were aware that if they took
exceptional positions in certain markets supplied by others, those others could
retaliate in other markets (ibidem).
- 122.
- Lastly, it states that the applicant ('Iggesund) took part in the discussions
concerning market shares (point 1.2, p. 3).
- 123.
- Stora's assertions concerning collusion on market shares are supported by appendix
73 to the statement of objections. That document, found at FS-Karton (of the
Mayr-Melnhof group), is a confidential note dated 28 December 1988 sent by the
marketing director of the Mayr-Melnhof Group in Germany (Mr Katzner) to the
General Manager of Mayr-Melnhof in Austria (Mr Gröller) concerning the market
situation.
- 124.
- According to that document, cited in points 53 to 55 of the Decision, the closer
cooperation within the 'Presidents' grouping ('Präsidentenkreis) decided on in
1987 had produced 'winners and 'losers. The author of the note considers
Mayr-Melnhof to be amongst the losers for various reasons, including the following:
'(2) An agreement could only be reached by our being punished we were
asked to make sacrifices.
(3) Market shares had to be frozen at 1987 levels, existing contacts
maintained and no new activities or grades obtained via pricing (the result
will be apparent in January 1989 if all are honest).
- 125.
- Those sentences must be read in the more general context of the note.
- 126.
- In that regard, the author of the note refers by way of introduction to the closer
cooperation within the 'Presidents' grouping. That expression was interpreted by
Mayr-Melnhof as a general reference to both the PWG and the PC, that is to say,
without reference to a specific event or meeting (appendix 75 to the statement of
objections, point 2.a). It is unnecessary to consider that interpretation in the
present context.
- 127.
- The author goes on to indicate that this cooperation had led to 'price discipline
which had produced 'winners and 'losers.
- 128.
- It is necessary, therefore, to understand the phrase relating to the market shares
which were to be frozen at 1987 levels against the background of that discipline
decided upon by the 'Presidents' grouping.
- 129.
- Moreover, the reference to 1987 as reference year is consistent with Stora's second
statement (appendix 39 to the statement of objections; see paragraph 119 above).
- 130.
- As to the role played by the PWG in the collusion on the control of supply, which
was a feature of the consideration of machine downtime, the Decision states that
the PWG played a decisive role in implementing downtime when, from 1990,
production capacity increased and demand fell: 'From the beginning of 1990 ... the
industry leaders ... considered it necessary to concert on the need for taking
downtime in the forum of the PWG. The major producers recognised that they
could not increase demand by lowering prices and that maintaining full production
would simply bring prices down. In theory, the amount of downtime required to
bring supply and demand back into balance could be calculated from the capacity
reports (point 70 of the Decision).
- 131.
- It is also observed: 'However, the PWG did not formally allocate the downtime
to be taken by each producer. According to Stora, there were practical difficulties
in reaching a coordinated plan on downtime to cover all the producers. Stora says
that for these reasons only a loose system of encouragement existed (point 71
of the Decision).
- 132.
- The Court finds that the Commission adequately established the existence of
collusion on downtime between the participants in the meetings of the PWG.
- 133.
- The documents it produces support its analysis.
- 134.
- In its second statement (appendix 39 to the statement of objections, point 24),
Stora gives the following explanation: 'With adoption by the PWG of the policy of
price before tonnage and the gradual implementation of an equivalent price system
from 1988, members of the PWG recognised that downtime would have to be taken
to maintain those prices in the face of a reduced growth in demand. Without
taking downtime the producers would have been unable to maintain agreed price
levels in the face of an increasing excess of capacity.
- 135.
- In point 25 of its statement, Stora adds: 'In 1988 and 1989 the industry was able
to run at near full capacity. Downtime in addition to normal closure for repairs
and holidays became necessary from 1990. ... Ultimately downtime had to be taken
when the order flow ceased in order to maintain the price before tonnage policy.
The amount of downtime required to be taken by producers (to maintain the
balance between production and consumption) could be calculated from the
capacity reports. No formal allocation of downtime was made by the PWG,
although a loose system of encouragement existed ...
- 136.
- As to appendix 73 to the statement of objections, the reasons adduced by the
author of the note in order to explain why he considered Mayr-Melnhof to be a
'loser at the time when the note was written are significant evidence of the
existence of collusion on downtime between the participants in the meetings of the
PWG.
- 137.
- The author states:
'(4) It is at this point that there begins to be a difference in opinion between the
parties involved as to what is desired.
...
(c) All sales representatives and European agents were released from
their quantity budgets and a pricing policy followed which admitted of
practically no exceptions (our employees often did not understand our
changed attitude to the market in the past they were just required to go
for tonnage and now the sole objective is price discipline with the danger
of having to stop machines).
- 138.
- Mayr-Melnhof states (appendix 75 to the statement of objections) that the passage
reproduced above refers to its own internal situation. However, when considered
in the light of the more general background to the note, that passage reflects the
implementation, at the level of sales personnel, of a rigorous policy adopted within
the 'Presidents' grouping. The document must therefore be construed as meaning
that the participants in the 1987 agreement, that is to say, the participants in the
meetings of the PWG at least, undoubtedly weighed up the consequences the
agreed policy would have if it were to be applied rigorously.
- 139.
- On the basis of the foregoing, and without the need to consider appendix 102 to
the statement of objections, the Commission has proved to the requisite legal
standard that there was collusion on market shares between the participants in the
meetings of the PWG and that there was collusion on downtime between those
same undertakings. Since TBM/Iggesund Paperboard (Workington) Ltd/Iggesund
Paperboard participated in the meetings of the PWG (see point 370 et seq. below)
and the applicant is expressly referred to in Stora's statements, the Commission was
entitled to hold the applicant liable for participation in those two types of collusion.
- 140.
- The applicant's criticism of Stora's statements, by which it disputes the probative
value of those documents, does not weaken that finding.
- 141.
- It is not disputed that those statements are made by one of the undertakings
regarded as having participated in the alleged infringement and that they contain
a detailed description of the nature of the discussions held in the bodies of the PG
Paperboard, of the objective pursued by the undertakings which met within it, and
of the participation of those undertakings in the meetings of its various bodies.
Since this central evidence is corroborated by other documents, it constitutes a
sound basis for the Commission's assertions.
- 142.
- Nor can the Court accept the applicant's argument that the undertakings' actual
conduct shows that the Commission's allegations are unfounded.
- 143.
- First, the existence of collusion between the members of the PWG on the two
aspects of the 'price before tonnage policy should not be confused with their
implementation. The probative value of the proof adduced by the Commission is
such that information as to the applicant's actual conduct on the market cannot
affect the Commission's conclusions concerning the fact of the existence of collusion
on the two aspects of the policy at issue.
- 144.
- Second, the Commission's conclusions are not contradicted by the information
supplied by the applicant. It must be emphasised that the Commission expressly
accepts that the collusion on market shares involved 'no formal machinery of
penalties or compensation to reinforce the understanding on market shares and
that the market shares of some large producers did creep up from year to year
(see, in particular, points 59 and 60 of the Decision). Moreover, the Commission
acknowledges that since the industry had operated at full capacity until the
beginning of 1990, practically no downtime was required until that date (point 70
of the Decision).
- 145.
- Third, two documents in the file confirm that the applicant implemented the price
before tonnage policy agreed in the PWG.
- 146.
- Thus, according to the minutes of the PAA meeting on 23 January 1990, drawn up
by a representative of Kopparfors (of the Stora group): '... Iggesund said that
Thames had been having some production downtime which was their policy as
opposed to lowering prices (appendix 130 to the statement of objections).
- 147.
- To the same effect, the minutes of the PAA meeting of 4 April 1990, drawn up by
a representative of Mayr-Melnhof Pegg, states as follows:
'Thames Board (Iggesund). 3 weeks lead time. UK demand lower than same
period 1989. Downtime preferred to decreasing prices. April price increase full
(sic) implemented (appendix 131 to the statement of objections).
- 148.
- In the light of the foregoing, the first and second parts of the plea must be rejected.
The third part of the plea: error in assessing the significance of the Fides statistics
Arguments of the parties
- 149.
- The applicant contends that the Commission did not correctly assess the
significance of the Fides statistics. It exaggerated their importance and unlawful
nature. Moreover, those statistics were not sufficiently detailed to allow a quota
system to be monitored.
- 150.
- Although it is true that the statistics gathered by Fides were broken down country-by-country except in the case of the weekly order inflow reports, they did not
enable the deliveries of each producer to be identified.
- 151.
- Furthermore, the applicant states that the Commission acknowledges that during
the year the producers normally used provisional statistics (point 63 of the
Decision). In fact, those statistics provided only general information on trends in
demand. In those circumstances, the participants in the PWG meetings could
hardly have relied on those statistics for rational analysis of market shares and
capacity utilisation.
- 152.
- Moreover, contrary to the Commission's assertion, the state of the order backlog
of each producer is not secret. The statistics supplied by Fides on the state of
order backlogs therefore simply served to provide producers with a Europe-wide
picture.
- 153.
- As regards statistics on capacities and capacity utilisation, those statistics were
imprecise and merely for the purpose of observing dynamic trends in the industry
and of comparing changes in the utilisation rates of each undertaking with changes
in aggregate rates.
- 154.
- Lastly, the statistics concerned were not necessary in order to find that there was
a balance between supply and demand, as that state of affairs was obvious for the
whole industry.
- 155.
- According to the Commission, the applicant's arguments principally aim to show
that the Fides information exchange system was not inherently contrary to Article
85(1) of the Treaty. As that system was used simply to reinforce and facilitate the
implementation of an unlawful cartel, the discussion is purely academic.
Findings of the Court
- 156.
- The third part of the plea must be understood to be a claim that the Commission's
assessment of the significance of the Fides statistics was incorrect, those statistics
being neither necessary nor useful for the purposes of the alleged cartel.
- 157.
- According to Article 1 of the Decision, the undertakings referred to in that article
infringed Article 85(1) of the Treaty by participating in an agreement and
concerted practice whereby the undertakings, inter alia, 'exchanged commercial
information on deliveries, prices, plant standstills, order backlogs and machine
utilisation rates in support of the above measures, that is to say, collusion on
prices, market shares and downtime.
- 158.
- In view of its operative part and the third paragraph of point 134, the Decision
must be interpreted as meaning that the Commission considered the Fides
information exchange system to be contrary to Article 85(1) of the Treaty because
it supported the cartel.
- 159.
- The third paragraph of point 134 of the Decision explains that the Fides
information exchange system 'was an essential aid to:
monitoring market share development,
monitoring conditions of supply and demand so as to maintain full capacity
utilisation,
deciding whether concerted price increases could be introduced,
determining the necessary downtime.
- 160.
- Moreover, it is apparent from the Decision that the Fides statistics were analysed
and discussed in the PWG. The first paragraph of point 57, which also refers to
point 63 of the Decision, states: 'Market share development was analysed at
each meeting of the PWG on the basis of provisional statistics. In addition, the
first paragraph of point 69 states: 'A comparison could be made of the weekly
order backlog and the available capacity, in the light of which the PWG reached
an assessment of the overall state of demand in the cartonboard industry.
- 161.
- The Court finds that those allegations by the Commission are proved.
- 162.
- First, the applicant does not dispute the fact that the Fides statistics were discussed
in the PWG.
- 163.
- Second, the Commission rightly considered that the Fides statistics were used in
that body, first, for the purpose of 'monitoring market share development (point
134, third paragraph, first indent) and, second, of 'monitoring conditions of supply
and demand so as to maintain full capacity utilisation and 'determining the
necessary downtime (point 134, third paragraph, second and fourth indents).
- 164.
- As regards the use of the Fides statistics in order to 'monitor market share
development, Stora acknowledged that 'if it appeared from analysis of the
statistics that the level of sales by national groupings was moving too much,
members of the PWG ... would encourage each other and take it upon themselves
to limit fluctuations in national markets (appendix 39 to the statement of
objections, point 19).
- 165.
- Likewise, according to appendix 43 to the statement of objections (point 1.1):
'Fluctuations in supply to national markets were examined and discussed at eachPWG (ie every two to three months) on the basis of the Fides quick statistics ...
These were produced on a monthly basis with a total per calendar year and not on
a running year total basis. Fluctuations that appeared in the statistics would not
necessarily accurately reflect the final end year position and could not be relied on
with any great certainty. It did not make sense for the major producers
represented in the PWG to discuss market shares on a national basis in detail since
producers were not able to determine the end destination of their deliveries.
...
The understandings on market share levels reached by the PWG members related
to Europe as a whole. The understandings were based on the previous total year
figures, usually definitively available by the following March.
- 166.
- As regards the use of the Fides statistics for the purpose of 'monitoring conditions
of supply and demand so as to maintain full capacity utilisation, reference should
be made to Stora's statement (appendix 39 to the statement of objections, point 5):
'Linked with the pricing initiative from 1987, was the need to maintain a near
balance between production and consumption (price before tonnage policy). In
1988 and 1989, producers were operating at full or near full capacity. In 1990, as
a result of a combination of increased capacity and a reduced growth in demand,
downtime began to be taken by producers in order to maintain the balance
between production and consumption. ... The producers could work out from the
annual capacity reports the amount of downtime necessary and encouraged each
other to take downtime sufficient to maintain the balance between production and
demand ... [N]ot all manufacturers took downtime in this way with the result that
some, usually the larger, producers suffered proportionately greater tonnage losses
in an effort to maintain price levels (to the same effect, ibidem, point 25).
- 167.
- Stora's statements are indirectly confirmed by appendices 73 and 75 to the
statement of objections. It is apparent from appendix 73 (see point 123 et seq.
above) that the marketing director for the Mayr-Melnhof/FS-Karton group in
Germany (Mr Katzner) suggested to the general manager of Mayr-Melnhof in
Austria that the Fides information exchange system then in operation should be
amended (page 5, subparagraph 5, under the heading 'Kontrolle). According to
appendix 75 (page 11), Mayr-Melnhof's reply to a request for information: 'The
Fides rules were subsequently amended, broadly along the lines of the proposals
set out in appendix 73 (see also point 63, second paragraph, of the Decision). In
view of the general tenor of appendix 73, Mr Katzner's request for an amendment
to the Fides information exchange system must be understood in the sense that this
system did not allow adequate control of changes in market shares and/or
examination of downtime and that accordingly it should be improved in order to
ensure better control.
- 168.
- In the light of that evidence, and having regard to the fact that the Commission
rightly considered that the applicant participated in collusion on downtime and on
market shares in the PWG, the third part of the plea must be rejected.
- 169.
- The whole of the plea must therefore be rejected.
The plea that the duration of the cartel was incorrectly assessed
Arguments of the parties
- 170.
- The applicant submits that even on the basis of the allegations made in the
Decision there was no infringement prior to 1988. If Stora's statements are left out
of account, there is no evidence to show that the creation of the PWG in itself
constituted an infringement. Moreover, the evidence does not show that the PWG
was created before 10 November 1986.
- 171.
- Moreover, neither the statement of objections nor the Decision show that the
January 1987 price initiative in the United Kingdom was an infringement.
- 172.
- The Commission maintains that the infringement began in mid-1986 and that this
date must be adopted for the purpose of calculating the fines. That is the
approximate time when the PG Paperboard was reorganised and when discussions
on prices and quantities began. In that regard, it was entitled to rely on Stora's
statements.
Findings of the Court
- 173.
- According to the second paragraph of point 161 of the Decision, the majority of the
undertakings to which the Decision was addressed participated in the infringement
from June 1986 onward, that being the date 'when the PWG was set up and the
collusion between the producers intensified and started to be more effective.
- 174.
- As regards the date on which the PWG was set up, Stora has stated (appendix 39
to the statement of objections, point 8): 'The PWG met from 1986 ....
- 175.
- On that basis, and in the absence of evidence showing the precise date on which
that body was set up, the Commission was entitled to take the view that the PWG
was set up around mid-1986 and that it met regularly from that date onward. The
Court points out in that context that the applicant participated in the PWG
meetings right from the creation of that body (see point 370 et seq. below). In
those circumstances, the applicant cannot, without evidence to support its claim
that the PWG was set up at a later date, validly dispute the Commission's
assessment of the date on which the PWG was set up.
- 176.
- The Commission correctly concluded that the applicant, being an undertaking which
participated in the PWG meetings right from the creation of that body in about
mid-1986, must be held liable for collusion on prices with effect from that date.
- 177.
- The PWG was set up by certain undertakings, including the applicant, for an
essentially anti-competitive purpose. As Stora stated (appendix 39 to the statement
of objections, point 8), it 'met from 1986 to assist in the introduction of discipline
to the market and its purpose included 'discussion and concertation on markets,
market shares, prices, price increases and capacity (appendix 35 to the statement
of objections, point 5(iii)).
- 178.
- The role played by the undertakings meeting in that body in regard to collusion on
market shares and on downtime has been described in the previous plea (see
paragraphs 113 to 139 above). The undertakings which met in that body also
discussed price initiatives. According to Stora (appendix 39 to the statement of
objections, point 10), '[f]rom 1987 the PWG reached an agreement and took broad
decisions on both the timing ... and level of price increases to be introduced by
cartonboard producers.
- 179.
- Consequently, the fact that they had agreed to set up and participate in meetings
of a body whose anti-competitive object, in particular the discussion of future price
increases, was known to and accepted by the undertakings which originally
established it, constitutes a sufficient ground for considering that the applicant is
liable for collusion on prices with effect from mid-1986.
- 180.
- This plea must therefore be rejected.
The plea that the Commission committed an error of assessment in considering that
SBS cartonboard was the subject of the infringement and formed part of the same
market as GC and GD cartonboard and that there are defects in reasoning and
procedural defects in that regard
- 181.
- This plea is in three parts. Each part will be considered separately.
First part: infringement of the rights of the defence
- 182.
- The applicant submits that it was unable to exercise its rights of defence during the
administrative procedure, because the statement of objections did not refer to the
existence of an infringement relating to SBS cartonboard. That product was
mentioned only once, in brackets, in relation to one price increase.
- 183.
- The Court finds that there is no basis for that submission.
- 184.
- It is apparent from the statement of objections (pages 3 and 4) that three main
grades of cartonboard manufactured in western Europe, including SBS cartonboard,
are covered by the definition of 'cartonboard and are the subject of the
proceeding.
- 185.
- Moreover, all the evidence on which the Commission relies in the Decision in order
to demonstrate that SBS cartonboard was the subject of the infringement is
referred to in the statement of objections or in the individual particulars annexed
thereto which were addressed to the applicant (see, in particular, appendices 111,
113 and 117 to the statement of objections).
- 186.
- Lastly, each of the pricing annexes to the statement of objections contain, in regard
to each alleged concerted price initiative, information on the price increases of SBS
cartonboard.
- 187.
- The statement of objections therefore clearly showed that SBS cartonboard was the
subject of the procedure.
- 188.
- The first part of the plea must therefore be rejected.
Second part: Commission's error of assessment in that it considered that SBS
cartonboard was the subject of the infringement, and an inadequate statement of
reasons in that regard
Arguments of the parties
- 189.
- The applicant contends that the Decision and the evidence referred to in it do not
prove that SBS cartonboard was the subject of the infringement. It also submits
that the Decision does not contain adequate explanations to support the
Commission's allegations.
- 190.
- First of all, Stora's statements do not mention SBS cartonboard.
- 191.
- Moreover, none of the allegations relating to the volume control measures concern
SBS cartonboard. The allegation that an agreement was made in the PWG to
observe 1987 market shares relates to a period in which no producer of SBS
cartonboard was represented in that body.
- 192.
- The handwritten notes obtained at Rena concerning a JMC meeting on 6
September 1989 (appendix 117 to the statement of objections) are not relevant,
because Iggesund Paperboard did not take part in that meeting and the note refers
to a price increase which took place more than one month before the meeting.
- 193.
- Nor do the tables relating to price increases annexed to the Decision demonstrate
the existence of collusion in regard to SBS cartonboard. Comparisons between the
price increases announced by the applicant and those announced by Enso-Gutzeit,
the other producer of SBS cartonboard to which the Decision was addressed, and
between those price increase announcements and increases for GC and GD
cartonboard confirm that there was no collusion in regard to SBS cartonboard.
- 194.
- The Decision's statement of reasons relating to SBS cartonboard is also defective
because, contrary to what is indicated in point 4 thereof, the term 'GC grades
does not cover SBS cartonboard.
- 195.
- Furthermore, the statement in the Decision that the price initiatives 'involved
increases in all national markets ..., with SBS usually (but not always) going up in
line with GC grades (point 20, second paragraph) is the only passage in the
Decision, apart from the summary of the infringement and some unclear statements
in points 86 and 97 of the Decision, in which it is stated that the price initiatives
concerned SBS cartonboard.
- 196.
- Contrary to the assertion made in point 4 of the Decision, SBS cartonboard is not
covered by the terms 'GC or 'FBB. Part of Iggesund Paperboard's production
of SBS cartonboard is not even covered by the definition of the product concerned
by the activities of the PG Paperboard, that is to say, according to point 28 of the
Decision, cartonboard 'of 200 g/m2 and more.
- 197.
- Furthermore, the information given in the Decision concerning producers,
purchasers and production volumes of SBS cartonboard is incorrect. There are
European producers of SBS cartonboard other than Enso-Gutzeit and the
applicant, and Enso-Gutzeit's production of SBS cartonboard was over-estimated.
- 198.
- The Commission submits that there is ample proof that the collusion related to SBS
cartonboard, in particular in regard to some of the price increase initiatives. SBS
cartonboard is produced by a small number of manufacturers and in much smaller
quantities than the other cartonboard grades. That may explain the fact that it
figured less in discussions at meetings of the PG Paperboard and that there is less
documentary evidence concerning it.
- 199.
- SBS cartonboard was covered by a large part of the Fides information exchange
system (appendix 5 to the statement of objections) and by the market studies made
by the director general of Finnboard (the 'Kosk studies, appendices 56 and 95 to
the statement of objections). The Commission also refers to appendices 111, 113
and 117 to the statement of objections, which set out all the price increases for SBS
cartonboard (or GZ board, an alternative designation of SBS cartonboard).
- 200.
- As regards the tables relating to the various price increase initiatives annexed to
the Decision, some addressees of the Decision did not provide complete pricedocumentation (see point 118 of the Decision). In particular the undertakings'
replies, and especially those of the applicant's subsidiaries, to requests for
information were incomplete as regards the price increases.
- 201.
- In any event, the documentation on price increase announcements shows that for
each of the initiatives the producers had agreed to increase prices on all the
national markets.
Findings of the Court
- 202.
- It is apparent from the Decision that the Commission's claim that there was price
collusion concerning SBS cartonboard is founded in particular on appendix 111 to
the statement of objections (point 80 of the Decision), a price list in Swedish
obtained at Rena, which contains information relating to price increases in nine
Community countries for GC cartonboard (GC 1 and GC 2 grades) and SBS
cartonboard (referred to as 'GZ, see point 4 of the Decision) implemented in
September/October 1989. It is common ground that, in so far as information is
available relating to that price increase, the particulars in the price list as to the
level and date of price increases for SBS cartonboard are in conformity with the
price increases actually implemented by the applicant.
- 203.
- At the hearing the applicant submitted that because the price list is undated, it
does not have the probative value which the Commission attributes to it.
- 204.
- That submission must be understood in the sense that, in the applicant's view, it
has not been proved that the information in the list relates to future price increase
announcements.
- 205.
- However, the probative value of appendix 111 must be assessed in the light of the
other documentary proof of collusion on prices. As the Commission explains in the
Decision (points 79, 80 and 83), it obtained two other price lists drawn up in the
same format and also in Swedish, namely a price list obtained at Finnboard (UK)
Ltd (hereinafter 'the Finnboard list), and also appendix 110 to the statement of
objections (obtained at Rena), which relate to the price increases implemented in
April 1989 and April 1990 respectively.
- 206.
- In view of the striking similarities in the form of those three price lists, the Court
finds that they have a common origin. Moreover, appendix 110 is dated 3
December 1989, a date prior to the price announcements to which it refers. As a
result, the Commission was justified in inferring that the two other undated price
lists had to be regarded as having been drawn up prior to the dates of the actual
price increase announcements to which those lists refer. Lastly, the Court observes
that Rena and Finnboard produce only GC cartonboard, whereas the three price
lists refer to several other types of cartonboard.
- 207.
- On that basis, the Commission rightly considered that those three price lists, when
taken in conjunction with the other evidence, constituted weighty evidence of price
collusion in the bodies of the PG Paperboard, given that the applicant did not
dispute such collusion except with regard to SBS cartonboard. Moreover, as the
applicant is the only producer of SBS cartonboard which participated in the
meetings of the PWG and of the JMC, the principal bodies of the cartel, the Court
finds that the information on price increases of SBS cartonboard in appendix 111
to the statement of objections demonstrates its participation in collusion on prices
in regard to both GC cartonboard and SBS cartonboard.
- 208.
- That finding is corroborated by appendix 113 to the statement of objections, a note
dated 11 January 1990 obtained at FS-Karton, which, according to the Commission,
relates to a JMC meeting (point 84 of the Decision). That document contains
information on the dates of the price increase announcements for the GC and GD
cartonboard of various producers (Kopparfors (of the Stora group), Mayr-Melnhof,
Finnboard and Cascades). As regards the applicant, the note states as follows:
'Thames: 10 Tg Igges. 15/20 Tg ('Tg for 'Tage indicates the number of days
of order backlog) and 'Th/Ig KW5 GC/GZ +13,- ('KW5 for 'Kalenderwoche
5 indicates that the price increase will have to be announced in the course of the
fifth calendar week of the year).
- 209.
- Consistently with what is stated in that note, the applicant announced a price
increase for its GC and SBS cartonboard of DM 13 per 100 kg on 31 January 1990
(documents F-12-5 and F-12-6).
- 210.
- The Commission therefore correctly considered that that document was proof of
price collusion in regard to GC, GD and SBS cartonboard.
- 211.
- That conclusion is not undermined by the argument which the applicant made at
the hearing, namely that it has not been proved that appendix 113 to the statement
of objections related to a JMC meeting. The Court points out, first, that all the
producers referred to in that document participated in the meetings of the PWG
and of the JMC and, second, that there is no dispute that collusion on prices took
place at meetings of those two bodies. In consequence, even if the Commission
had not proved that appendix 113 to the statement of objections related to a JMC
meeting, that document proves collusion on prices either in that body or in the
PWG.
- 212.
- In the light of the foregoing, the Court considers that it has been proved that the
applicant participated in price collusion in regard to SBS cartonboard and it is not
necessary to consider the other evidence upon which the Commission relies.
- 213.
- It follows that the Commission has proved that the applicant, being an undertaking
which attended meetings of the PWG from the date when that body was set up,
participated in collusion on cartonboard prices from mid-1986 and in collusion on
market shares and on downtime from the end of 1987.
- 214.
- Admittedly, as regards the latter two types of collusion, the Court has not examined
which grades of cartonboard were involved. However, as the purpose of the two
types of collusion was to ensure the success of the price initiatives and the applicant
does not dispute that this was their purpose, it must be held that it participated in
those two aspects of collusion also in regard to its production of SBS cartonboard,
which was the subject of the collusion on prices.
- 215.
- Finally, in as much as the applicant submits that the reasoning of the Decision is
inadequate and/or contains errors concerning SBS cartonboard, the Court finds that
the Decision clearly states that the infringement found related to SBS cartonboard
and clearly sets out the evidence on which that conclusion is based (see, in
particular, points 3, 4, 80, 81, 85 and 97, and the tables on the price initiatives
annexed to the Decision). Furthermore, it is clear from the first and second
paragraphs of point 28 of the Decision that, although the activity of the PG
Paperboard was officially defined as relating to cartonboard 'of 200 g/m2 and
more, this was not an absolute threshold.
- 216.
- On the basis of the foregoing considerations, the second part of the plea must also
be rejected.
Third part: Commission's error of assessment in that it considered that SBS
cartonboard was part of the same market as GC and GD cartonboard
Arguments of the parties
- 217.
- The applicant argues that SBS cartonboard is not part of the same product market
as GC and GD cartonboard.
- 218.
- In the present case, it is necessary to define the relevant product market, because
of the inferences made by the Commission in regard to the gravity of the
infringement and its success on the market. Without a definition of the market, it
is not possible to reach the conclusion in point 168 of the Decision that the cartel
was largely successful in achieving its objectives. A definition of the market is all
the more necessary as SBS cartonboard differs considerably from GC and GD
cartonboard.
- 219.
- Moreover, according to points 168 and 169 of the Decision, when calculating the
fines the Commission took into account the fact that the producers accounted for
'virtually the whole of the market and the importance of the undertakings in 'the
industry. No such assertions can be made, because the Commission denies that
a definition of the market is relevant.
- 220.
- Nor were the characteristics of SBS cartonboard correctly assessed in points 3 and
4 of the Decision. SBS cartonboard is used principally for graphical purposes and
not, as indicated in points 3 and 4 of the Decision, for packaging. There is a very
limited use for the packaging of luxury items.
- 221.
- In view of their very different uses, SBS cartonboard does not compete with GC
cartonboard. That is confirmed by the relationship between the prices of the
different types of cartonboard, the prices of SBS cartonboard being considerably
higher than those of GC and GD cartonboard.
- 222.
- Lastly, it is incorrect to include SBS cartonboard but at the same time to exclude
products which are much more comparable to GC and GD cartonboard, such as
greyboard and the cartonboard used for drinks packaging.
- 223.
- The Commission submits that there is no need for a definition of the product
market in a case such as this, and that what is important is what the producers
actually did. A definition of the relevant product market is not necessary in order
to find that SBS cartonboard was the subject of the cartel. The Decision took
account of the specific circumstances of the relevant market in other respects.
- 224.
- Lastly, it has no evidence of collusion in regard to greyboard. In those
circumstances, the applicant's argument that greyboard is more comparable to GC
and GD cartonboard than SBS cartonboard is irrelevant.
Findings of the Court
- 225.
- Article 85(1) of the Treaty prohibits 'all agreements between undertakings,
decisions by associations of undertakings and concerted practices which may affect
trade between Member States and which have as their object or effect the
prevention, restriction or distortion of competition with the common market ....
- 226.
- In the present case, the Commission has proved that the applicant participated
from mid-1986 in collusion on prices and, from the end of 1987, in collusion on
market shares and on downtime, that is to say, the three constituent elements of
the infringement found in Article 1 of the Decision. As the Court has already held
(see paragraphs 202 to 215 above), the Commission has proved that those three
types of collusion concerned the three types of cartonboard defined in point 4 of
the Decision, namely, GC, GD and SBS cartonboard.
- 227.
- Furthermore, the Commission concluded, and the applicant has not disputed, that
the object of the abovementioned collusion was to restrict competition within the
common market and that the collusion had affected trade between Member States
(points 113 to 138 of the Decision).
- 228.
- In those circumstances the Commission could justifiably find that there was an
infringement of Article 85(1) of the Treaty in regard to GC, GD and SBS
cartonboard without first having defined the relevant product market (see, to the
same effect, Joined Cases 56/64 and 58/64 Consten and Grundig v Commission
[1966] ECR 299, at p. 342, and Case T-29/92 SPO and Others v Commission [1995]
ECR II-289, paragraph 74).
- 229.
- Finally, as the Commission did not have any evidence of an infringement in regard
to greyboard, it correctly took the view that the infringement had not involved that
product.
- 230.
- The third part of the plea cannot therefore be upheld.
- 231.
- In the light of the foregoing, the whole of the plea must be rejected.
The application for annulment of Article 2 of the Decision
Arguments of the parties
- 232.
- The applicant argues that, in issuing the direction in Article 2 of the Decision, the
Commission abused the powers conferred on it by Article 3 of Regulation No 17.
Article 2 prohibits a very broad category of conduct for the future. Such a
prohibition goes beyond what is necessary to bring the conduct in question into line
with what is lawful. In particular, that article deprives it of the possibility of
requesting and obtaining an exemption or negative clearance for a future
information exchange system.
- 233.
- The exchange of information in aggregated form on production, sales, order
backlog, order entries, production capacity and its utilisation were wrongly
characterised as infringements of Article 85. The Commission should have taken
the view that the addressees of the Decision had put an end to the infringement.
They should therefore be able to exchange information as if they had not been held
to have committed an infringement.
- 234.
- Furthermore, the Commission committed an error of law and infringed the rights
of CEPI-Cartonboard and of the applicant by adopting the Decision without
expressing a view on the compatibility with Article 85 of the system noted by CEPI-Cartonboard.
- 235.
- Lastly, Article 2 of the Decision is too imprecise, because any form of statisticalexchange, even in aggregated form, might be used to implement unlawful
agreements. Moreover, the prohibition of any exchange 'of competitive
significance in fact covers any information.
- 236.
- The Commission states that in its judgments in the Polypropylene cases (in
particular Case T-1/89 Rhône-Poulenc v Commission [1991] ECR II-867) and in
Case T-83/91 Tetra Pak v Commission [1994] ECR II-755, the Court upheld two
directions similar to that in Article 2 of the Decision.
- 237.
- The scope of the directions made under Article 3 of Regulation No 17 must be
determined by the unlawful conduct found to have been committed and the
Commission must be in a position to forbid future conduct identical to that found
in the Decision. The Commission considers that when it assesses how information
might be used, it may also take account of the undertakings' past conduct. In that
context, it sets out the findings it made in the Decision as regards the Fides
information exchange system (points 61 to 71 and 134 of the Decision) and those
concerning the first CEPI-Cartonboard information exchange system (points 105,
106 and 166 of the Decision).
- 238.
- A prohibition such as that in Article 2 of the Decision must necessarily be
expressed in general terms, because it covers a range of future conduct. However,
that does not mean that any exchange of information is prohibited or that there is
no possibility of granting an exemption or negative clearance for a system notified
to the Commission.
Findings of the Court
- 239.
- It will be recalled that Article 2 of the Decision provides as follows:
'The undertakings named in Article 1 shall forthwith bring the said infringement
to an end, if they have not already done so. They shall henceforth refrain in
relation to their cartonboard activities from any agreement or concerted practice
which may have the same or a similar object or effect, including any exchange of
commercial information:
(a) by which the participants are directly or indirectly informed of the
production, sales, order backlog, machine utilisation rates, selling prices,
costs or marketing plans of other individual producers; or
(b) by which, even if no individual information is disclosed, a common industry
response to economic conditions as regards price or the control of
production is promoted, facilitated or encouraged;
or
(c) by which they might be able to monitor adherence to or compliance with
any express or tacit agreement regarding prices or market sharing in the
Community.
Any scheme for the exchange of general information to which they subscribe, such
as the Fides system or its successor, shall be so conducted as to exclude not only
any information from which the behaviour of individual producers can be identified
but also any data concerning the present state of the order inflow and backlog, the
forecast utilisation rate of production capacity (in both cases, even if aggregated)
or the production capacity of each machine.
Any such exchange system shall be limited to the collection and dissemination in
aggregated form of production and sales statistics which cannot be used to promote
or facilitate common industry behaviour.
The undertakings are also required to abstain from any exchange of information
of competitive significance in addition to such permitted exchange and from any
meetings or other contact in order to discuss the significance of the information
exchanged or the possible or likely reaction of the industry or of individual
producers to that information.
A period of three months from the date of the communication of this Decision
shall be allowed for the necessary modifications to be made to any system of
information exchange.
- 240.
- As is apparent from point 165 of the Decision, Article 2 was adopted in accordance
with Article 3(1) of Regulation No 17. By virtue of that provision, where the
Commission finds that there is an infringement, inter alia, of Article 85 of the
Treaty, it may require the undertakings concerned to bring the infringement to an
end.
- 241.
- It is settled law that Article 3(1) of Regulation No 17 may be applied so as to
include an order directed at bringing an end to certain acts, practices or situations
which have been found to be unlawful (Joined Cases 6/73 and 7/73 Istituto
Chemicoterapico Italiano and Commercial Solvents v Commission [1974] ECR 223,
paragraph 45, Case C-241/91 P and C-242/91 P RTE and ITP v Commission [1995]
ECR I-743, paragraph 90), and also at prohibiting the adoption of similar conduct
in the future (Tetra Pak v Commission, cited above, paragraph 220).
- 242.
- Moreover, since Article 3(1) of Regulation No 17 is to be applied according to the
nature of the infringement found, the Commission has the power to specify the
extent of the obligations on the undertakings concerned in order to bring an
infringement to an end. Such obligations on the part of the undertakings may not,
however, exceed what is appropriate and necessary to attain the objective sought,
namely to restore compliance with the rules infringed (RTE and ITP v Commission,
cited above, paragraph 93; to the same effect, see Case T-7/93 Langnese-Iglo v
Commission [1995] ECR II-1533, paragraph 209, and Case T-9/93 Schöller v
Commission [1995] ECR II-1611, paragraph 163).
- 243.
- As regards, first, the applicant's argument that the Commission committed an error
of law in adopting Article 2 of the Decision without having first expressed its view
on the compatibility with Article 85 of the information exchange system notified by
CEPI-Cartonboard, the Court observes that the notification made by that
association on 6 December 1993 related to a new information exchange system,
separate from that considered by the Commission in the Decision. When adopting
Article 2 of the contested decision, the Commission could not therefore assess the
legality of the new system in the context of that decision. When it adopted Article
2, it was therefore entitled simply to examine and express a view on the old
information exchange system.
- 244.
- In the present case, in order to verify whether, as the applicant claims, the scope
of the direction in Article 2 of the Decision is too wide, it is necessary to consider
the extent of the various prohibitions it places on the undertakings.
- 245.
- The prohibition in the second sentence of the first paragraph of Article 2, requiring
the undertakings to refrain in future from any agreement or concerted practice
which may have an effect which is the same as, or similar to, those of the
infringements found in Article 1 of the Decision, is aimed solely at preventing the
undertakings from repeating the behaviour found to be unlawful. Consequently,
in adopting such directions, the Commission has not exceeded the powers conferred
on it by Article 3 of Regulation No 17.
- 246.
- The provisions of subparagraphs (a), (b) and (c) of the first paragraph of Article 2
are directed more specifically at prohibiting future exchange of commercial
information.
- 247.
- The direction in subparagraph (a) of the first paragraph of Article 2, which
prohibits any future exchange of commercial information by which the participants
directly or indirectly obtain individual information on competitors, presupposes a
finding by the Commission in the Decision that an information exchange of such
a nature is unlawful under Article 85(1) of the Treaty.
- 248.
- It should be noted that Article 1 of the Decision does not state that the exchange
of individual commercial information in itself constitutes an infringement of
Article 85(1) of the Treaty.
- 249.
- It states more generally that the undertakings infringed that article of the Treaty
by participating in an agreement and concerted practice whereby the undertakings,
inter alia, 'exchanged commercial information on deliveries, prices, plant standstills,
order backlogs and machine utilisation rates in support of the above measures.
- 250.
- However, since the operative part of a decision must be interpreted in the light of
the statement of reasons for it (Joined Cases 40/73 to 48/73, 50/73, 54/73, 55/73,
56/73, 111/73, 113/73 and 114/73 Suiker Unie and Others v Commission [1975] ECR
1663, paragraph 122), it should be noted that the second paragraph of point 134
of the Decision states:
'The exchanging by producers of normally confidential and sensitive individual
commercial information in meetings of the PG Paperboard (mainly the JMC) on
order backlog, machine closures and production rates was patently anti-competitive,
being intended to ensure that the conditions for implementing agreed price
initiatives were as propitious as possible. ...
- 251.
- Consequently, as the Commission duly found in the Decision that the exchange of
individual commercial information in itself constituted an infringement of
Article 85(1) of the Treaty, the future prohibition of such an exchange of
information satisfies the conditions for the application of Article 3(1) of Regulation
No 17.
- 252.
- The prohibitions relating to the exchanges of commercial information referred to
in subparagraphs (b) and (c) of the first paragraph of Article 2 of the Decision
must be considered in the light of the second, third and fourth paragraphs of that
article, which support what is expressed in those subparagraphs. It is in this context
that it is necessary to determine whether, and if so to what extent, the Commission
considered the exchanges in question to be illegal, since the extent of the
obligations on the undertakings must be restricted to that which is necessary in
order to bring their conduct into line with what is lawful under Article 85(1) of the
Treaty.
- 253.
- The Decision must be interpreted as meaning that the Commission considered the
Fides system to be contrary to Article 85(1) of the Treaty in that it underpinned
the cartel (point 134, third paragraph, of the Decision). Such an interpretation is
borne out by the wording of Article 1 of the Decision, from which it is apparent
that the commercial information was exchanged between the undertakings 'in
support of the ... measures considered to be contrary to Article 85(1) of the
Treaty.
- 254.
- The scope of the future prohibitions set out in subparagraphs (b) and (c) of the
first paragraph of Article 2 of the Decision must be assessed in the light of that
interpretation by the Commission of the compatibility, in the present case, of the
Fides system with Article 85 of the Treaty.
- 255.
- In that regard, first, the prohibitions in question are not restricted to exchanges of
individual commercial information, but relate also to certain aggregated statistical
data (Article 2, first paragraph, (b), and second paragraph, of the Decision).
Second, subparagraphs (b) and (c) of the first paragraph of Article 2 prohibit the
exchange of certain statistical information in order to prevent the establishment of
a possible support for future anti-competitive conduct.
- 256.
- Such a prohibition exceeds what is necessary in order to bring the conduct in
question into line with what is lawful because it seeks to prevent the exchange of
purely statistical information which is not in, or capable of being put into, the form
of individual information on the ground that the information exchanged might be
used for anti-competitive purposes. First, it is not apparent from the Decision that
the Commission considered the exchange of statistical data to be in itself an
infringement of Article 85(1) of the Treaty. Second, the mere fact that a system
for the exchange of statistical information might be used for anti-competitive
purposes does not make it contrary to Article 85(1) of the Treaty, since in such
circumstances it is necessary to establish its actual anti-competitive effect.
- 257.
- Consequently, the first to fourth paragraphs of Article 2 of the Decision must be
annulled, save and except as regards the following passages:
'The undertakings named in Article 1 shall forthwith bring the said infringement
to an end, if they have not already done so. They shall henceforth refrain in
relation to their cartonboard activities from any agreement or concerted practice
which may have the same or a similar object or effect, including any exchange of
commercial information:
(a) by which the participants are directly or indirectly informed of the
production, sales, order backlog, machine utilisation rates, selling prices,
costs or marketing plans of other individual producers.
Any scheme for the exchange of general information to which they subscribe, such
as the Fides system or its successor, shall be so conducted as to exclude any
information from which the behaviour of individual producers can be identified.
The application for annulment or reduction of the amount of the fine
A Infringement of the obligation to state reasons regarding the calculation of the
fines
Arguments of the parties
- 258.
- The applicant contends that the basis on which the fines were calculated should
have been set out in the Decision.
- 259.
- The criteria set out in points 167 to 172 of the Decision do not contain an
exhaustive statement of the grounds taken into consideration by the Commission
for the purpose of fixing the amount of the fines. Although the Decision and the
press release issued by the Commission do not contain any information in that
regard, it is clear from the statements made at the press conference given by the
Commissioner responsible for competition policy on 13 July 1994, the day on which
the Decision was adopted, that the Commission applied a precise mathematical
formula in order to determine the amount of the fines. The Commission istherefore wrong to assert that the information given at that press conference
merely gave a 'broad notion of the level of the fine. Where the Commission in
fact applies such a mathematical formula, the addressees should be informed of it
in the grounds of the Decision.
- 260.
- Moreover, the Decision contains no reasoning concerning the deterrent effect
which, according to the Commission, justified the high amount of the fine.
- 261.
- Nor does it adequately demonstrate the link between the applicant's situation and
the criteria adopted for the purpose of determining the amount of the fine.
- 262.
- Lastly, the Commission's failure to explain the basis for its calculation of the fines
impaired the applicant's ability to defend itself.
- 263.
- The Commission submits that points 167 to 172 of the Decision contain an
exhaustive and appropriate description of the criteria used to calculate the fines.
Similar criteria were approved by the Court of First Instance in the Polypropylene
cases (see in particular Rhône-Poulenc v Commission, cited above).
- 264.
- The Commission is not required to state the exact percentage of turnover which the
fine represents. The disclosure of that figure would be undesirable, in particular
because it might reveal confidential business information. Furthermore, although
it chose the turnover of each undertaking as a reference point for calculating the
fines, that does not mean that it used a precise mathematical formula. Moreover,
the use of a mathematical formula might encourage undertakings to seek to
calculate the risks associated with unlawful conduct.
- 265.
- As regards the deterrent effect of fines, that is one of their elementary functions
and it is therefore unnecessary to point this out each time that a fine is imposed.
Findings of the Court
- 266.
- It is settled law that the purpose of the obligation to give reasons for an individual
decision is to enable the Community judicature to review the legality of the decision
and to provide the party concerned with an adequate indication as to whether the
decision is well founded or whether it may be vitiated by some defect enabling its
validity to be challenged; the scope of that obligation depends on the nature of the
act in question and on the context in which it was adopted (see, inter alia, Van
Megen Sports v Commission, cited above, paragraph 51).
- 267.
- As regards a decision which, as in this case, imposes fines on several undertakings
for infringement of the Community competition rules, the scope of the obligation
to state reasons must be assessed in the light of the fact that the gravity of
infringements falls to be determined by reference to a number of factors including,
in particular, the specific circumstances and context of the case and the deterrent
character of the fines; moreover, no binding or exhaustive list of criteria to be
applied has been drawn up (order of 25 March 1996 in Case C-137/95 P SPO and
Others v Commission [1996] ECR I-1611, paragraph 54).
- 268.
- Furthermore, when fixing the amount of each fine, the Commission has a margin
of discretion and cannot be considered obliged to apply a precise mathematical
formula for that purpose (see, to the same effect, Case T-150/89 Martinelli v
Commission [1995] ECR II-1165, paragraph 59).
- 269.
- In the Decision, the criteria taken into account in order to determine the general
level of fines and the amount of individual fines are set out in points 168 and 169
respectively. Moreover, as regards the individual fines, the Commission explains
in point 170 that the undertakings which participated in the meetings of the PWG
were, in principle, regarded as 'ringleaders of the cartel, whereas the other
undertakings were regarded as 'ordinary members. Lastly, in points 171 and 172,
it states that the amounts of fines imposed on Rena and Stora must be considerably
reduced in order to take account of their active cooperation with the Commission,
and that eight other undertakings were also to benefit from a reduction, to a lesser
extent, owing to the fact that in their replies to the statement of objections they did
not contest the essential factual allegations on which the Commission based its
objections.
- 270.
- In its written pleas to the Court and in its reply to a written question put by the
Court, the Commission explained that the fines were calculated on the basis of the
turnover on the Community cartonboard market in 1990 of each undertaking
addressed by the Decision. Fines of a basic level of 9 or 7.5% of that individual
turnover were then imposed respectively on the undertakings considered to be the
cartel 'ringleaders and on the other undertakings. Finally, the Commission took
into account any cooperation by undertakings during the procedure before it. Two
undertakings received a reduction of two-thirds of the amount of their fines on that
basis, while other undertakings received a reduction of one-third.
- 271.
- Moreover, it is apparent from a table produced by the Commission containing
information as to the fixing of the amount of each individual fine that, although
those fines were not determined by applying the abovementioned figures alone in
a strictly mathematical way, those figures were, nevertheless, systematically taken
into account for the purposes of calculating the fines.
- 272.
- However, the Decision does not state that the fines were calculated on the basis
of the turnover of each undertaking on the Community cartonboard market in
1990. Furthermore, the basic rates of 9 and 7.5% applied to calculate the fines
imposed on the undertakings considered to be 'ringleaders and those considered
to be 'ordinary members do not appear in the Decision. Nor does it set out the
rates of reduction granted to Rena and Stora, on the one hand, and to eight other
undertakings, on the other.
- 273.
- In the present case, first, points 169 to 172 of the Decision, interpreted in the light
of the detailed statement in the Decision of the allegations of fact against each of
its addressees, contain a relevant and sufficient statement of the criteria taken into
account in order to determine the gravity and duration of the infringement
committed by each of the undertakings in question (see, to the same effect, Case
T-2/89 Petrofina v Commission [1991] ECR II-1087, point 264).
- 274.
- Second, when assessing the gravity of an infringement for the purpose of fixing the
amount of the fine, the Commission must ensure that its action has a deterrent
effect, given that Community law imposes a duty on it to pursue a general policy
designed to guide the conduct of undertakings in the light of the principles laid
down by the Treaty (Musique Diffusion Française and Others v Commission, cited
above, paragraphs 105 and 106). Accordingly, the deterrent character of its action
is inherent in the exercise of its power to impose fines and the Commission was not
obliged to refer specifically to that objective in the Decision.
- 275.
- Third, where, as in the present case, the amount of each fine is determined on the
basis of the systematic application of certain precise figures, the indication in the
decision of each of those factors would permit undertakings better to assess
whether the Commission erred when fixing the amount of the individual fine and
also whether the amount of each individual fine is justified by reference to the
general criteria applied. In the present case, the indication in the Decision of the
factors in question, namely the reference turnover, the reference year, the basic
rates adopted, and the rates of reduction in the amount of fines would not have
involved any implicit disclosure of the specific turnover of the addressee
undertakings, a disclosure which might have constituted an infringement of Article
214 of the Treaty. As the Commission has itself stated, the final amount of each
individual fine is not the result of a strictly mathematical application of those
factors.
- 276.
- The Commission also accepted at the hearing that nothing prevented it from
indicating in the Decision the factors which had been systematically taken into
account and which had been divulged at a press conference held on the day on
which that decision was adopted. In that regard, it is settled law that the reasons
for a decision must appear in the actual body of the decision and that, save in
exceptional circumstances, explanations given ex post facto cannot be taken into
account (see Case T-61/89 Dansk Pelsdyravlerforening v Commission [1992] ECR
II-1931, paragraph 131, and, to the same effect, Case T-30/89 Hilti v Commission
[1991] ECR II-1439, paragraph 136).
- 277.
- Despite those findings, the reasons explaining the setting of the amount of fines
stated in points 167 to 172 of the Decision are at least as detailed as those
provided in the Commission's previous decisions on similar infringements.
Although a plea alleging insufficient reasons concerns a matter of public interest,
there had been no criticism by the Community judicature, at the moment when the
Decision was adopted, as regards the Commission's practice concerning the
statement of reasons for fines imposed. It was only in the judgment of 6 April 1995
in Case T-148/89 Tréfilunion v Commission [1995] ECR II-1063, paragraph 142, and
in two other judgments given on the same day (Case T-147/89 Société Métallurgique
de Normandie v Commission [1995] ECR II-1057, summary publication, and Case
T-151/89 Société des Treillis et Panneaux Soudés v Commission [1995] ECR II-1191,
summary publication) that the Court stressed for the first time that it is desirable
for undertakings to be able to ascertain in detail the method used for calculating
the fine imposed without having to bring court proceedings against the
Commission's decision in order to do so.
- 278.
- It follows that, when it finds in a decision that there has been an infringement of
the competition rules and imposes fines on the undertakings participating in it, the
Commission must, if it systematically took into account certain basic factors in
order to fix the amount of fines, set out those factors in the body of the decision
in order to enable the addressees of the decision to verify that the level of the fine
is correct and to assess whether there has been any discrimination.
- 279.
- In the specific circumstances set out in paragraph 277 above, and having regard to
the fact that in the procedure before the Court the Commission showed itself to
be willing to supply any relevant information relating to the method of calculating
the fines, the absence of specific grounds in the Decision regarding the method of
calculation of the fines should not, in the present case, be regarded as constituting
an infringement of the duty to state reasons such as would justify annulment in
whole or in part of the fines imposed. Finally, the applicant has not shown that it
was prevented from properly asserting its rights of defence.
- 280.
- Consequently, this plea cannot be upheld.
B Error in assessing the LE report
Arguments of the parties
- 281.
- The applicant disputes that the cartel was 'largely successful in achieving its
objectives (point 168, seventh indent, of the Decision).
- 282.
- The only evidence which the Commission has in regard to the effects of the price
increase announcements on transaction prices is the LE report, which took into
account all the factors liable to influence transaction prices in a competitive market,
such as demand characteristics and production costs. The LE report concluded
that the transaction prices did not differ from those which would have resulted
from the free play of competition.
- 283.
- Despite the information in the LE report and that regarding the transaction prices
of GC cartonboard produced by Iggesund Paperboard supplied by the applicant in
its reply to the statement of objections, the Commission focused on the price
increase announcements, without taking into account factors which explained the
increases in transaction prices.
- 284.
- Moreover, the Commission did not sufficiently take into account individual
negotiations with customers, as a result of which transaction prices were
considerably lower than list prices.
- 285.
- The Commission is wrong in asserting that the announced prices constituted a
market reference price (see point 21 of the Decision). In the present case,
although there were discussions concerning the announced price increases, there
was no collusion on transaction prices; the announced prices were merely part of
the negotiation procedure whereby individual prices were fixed. Moreover, it is
misleading to state, as the Commission does, that list prices were increased by an
overall 42%.
- 286.
- As the producers did not succeed in imposing prices higher than those which would
have resulted from market forces, the cartel must be regarded as generally
unsuccessful, since the Commission considered that the sole objective of the other
alleged forms of collusion was to ensure the success of the price initiatives.
- 287.
- The applicant states that the Decision contains errors in its description of the
increase in transaction prices (see point 21 of the Decision). Thus, net transaction
prices in domestic currencies for GC and GD grades increased by 30%, not by
33%, during the period concerned and the figure of 19% given for actual average
price increases in ecus is also too high (see graph 11 in the LE report).
- 288.
- Furthermore, although the real per unit revenue increased by about twice as much
as production costs during the period concerned, the Decision fails to note that
they were modest increases and that during the same period demand increased by
16%. In addition, the operating margin referred to in point 16 of the Decision is
insufficient to ensure a reasonable return on investment (see LE report, section 5).
- 289.
- The Commission observes that it is not obliged to show that a cartel had an effect
on the market. Nevertheless, in the present case the cartel did actually have such
an effect.
- 290.
- The LE report confirms that net transaction prices increased by about a third
between 1988 and 1991. It is fanciful to allege that the concerted efforts of all the
cartonboard producers in western Europe did not contribute to that result.
Moreover, the author of the LE report expressly acknowledged at the hearing
before the Commission that the changes in transaction prices had closely followed
the price increase announcements, which proves the success of the cartel in that
regard.
- 291.
- The fact that the agreement concerned announced prices and that the transaction
prices were determined on the basis of negotiations between the producers and
their customers cannot affect the conclusion that the cartel had an effect on
transaction prices. The announced price constituted a reference price for the
whole market and it is irrelevant that the larger customers received discounts or
other special conditions.
Findings of the Court
- 292.
- According to the seventh indent of point 168 of the Decision, the Commission
determined the general level of fines by taking into account, inter alia, the fact that
the cartel 'was largely successful in achieving its objectives. It is common ground
that this consideration refers to the effects on the market of the infringement found
in Article 1 of the Decision.
- 293.
- In order to review the Commission's appraisal of the effects of the infringement,
the Court considers that it suffices to consider the appraisal of the effects of the
collusion on prices. As the applicant itself emphasises, consideration of the effects
of the collusion on prices makes it possible, in general terms, to assess the success
of the cartel, because the purpose of collusion on downtime and on market shares
was to ensure the success of the concerted price initiatives.
- 294.
- As regards collusion on prices, the Commission appraised the general effects of this
collusion. Consequently, even assuming that the individual data supplied by the
applicant in its reply to the statement of objections show, as it claims, that the
effects of collusion on prices were, in its case, less significant than those found on
the European cartonboard market taken as a whole, such individual data cannot
in themselves suffice to call into question the Commission's assessment.
- 295.
- Likewise, the Commission cannot be criticised in those circumstances for not having
considered specifically the effects of collusion on the prices for SBS cartonboard,
as sales of that type of cartonboard made up less than 10% of total sales of the
three types of cartonboard with which the Decision is concerned (see point 5, fifth
paragraph, of the Decision).
- 296.
- As is apparent from the Decision and was confirmed by the Commission at the
hearing, a distinction was drawn between three types of effects. Moreover, the
Commission relied on the fact that the price initiatives were considered by the
producers themselves to have been an overall success.
- 297.
- The first type of effect taken into account by the Commission, and not contested
by the applicant, consisted in the fact that the agreed price increases were actually
announced to customers. The new prices thus served as a reference point in
individual negotiations on transaction prices with customers (see, inter alia, points
100 and 101, fifth and sixth paragraphs, of the Decision). The applicant contradicts
itself in that regard in disputing that the announced prices constituted a reference
price for the market while accepting that those prices were taken into account for
the purpose of negotiating transaction prices with customers.
- 298.
- The second type of effect consisted in the fact that changes in transaction prices
followed those in announced prices. The Commission states that 'the producers
not only announced the agreed price increases but also with few exceptions took
firm steps to ensure that they were imposed on the customers (point 101, first
paragraph, of the Decision). It accepts that customers sometimes obtained
concessions in regard to the date of entry into force of the increases or rebates or
individual reductions, particularly on large orders, and that 'the average net
increase achieved after all discounts, rebates and other concessions would always
be less than the full amount of the announced increase (point 102, last paragraph,
of the Decision). However, referring to graphs in the LE report, the Commission
claims that during the period covered by the Decision there was 'a close linear
relationship between changes in announced prices and those in transaction prices
expressed in national currencies or converted to ecus. It concludes from this is
that: 'the net price increases achieved closely tracked the price announcements
albeit with some time lag. The author of the report himself acknowledged during
the oral hearing that this was the case for 1988 and 1989 (point 115, second
paragraph, of the Decision).
- 299.
- When appraising this second type of effect the Commission could properly take the
view that the existence of a linear relationship between changes in announced
prices and changes in transaction prices was proof of an effect by the price
initiatives on transaction prices in accordance with the objective pursued by the
producers. There is, in fact, no dispute that on the relevant market the practice
of holding individual negotiations with customers means that, in general, transaction
prices are not identical to announced prices. It cannot therefore be expected that
increases in transaction prices will be identical to announced price increases.
- 300.
- As regards the very existence of a relationship between announced price increases
and transaction price increases, the Commission was right in referring to the LE
report, which consists of an analysis of changes in the price of cartonboard during
the period to which the Decision relates, based on information supplied by several
producers, including the applicant itself.
- 301.
- However, that report only partially confirms, in temporal terms, the existence of a
'close linear relationship. Examination of the period 1987 to 1991 reveals three
distinct sub-periods. At the oral hearing before the Commission the author of the
LE report summarised his conclusion as follows: 'There is no close relationship,
even with a lag, between announced price increase and market prices in the early
part of the period, in 1987 through 1988. There is such a relationship in 1988/1989,
and then the relationship breaks down and behaves rather oddly over the period
1990/1991 (transcript of the oral hearing, p. 28). He also observed that those
temporal variations were closely linked to variations in demand (see, in particular,
transcript of the oral hearing, p. 20).
- 302.
- Those conclusions expressed by the author at the hearing are in accordance with
the analysis set out in his report, and in particular with the graphs comparing
changes in announced prices and changes in transaction prices (LE report, graphs
10 and 11, p. 29). The Commission has therefore only partially proved the
existence of the 'close linear relationship on which it relies.
- 303.
- At the hearing the Commission stated that it had also taken into account a third
type of effect of the price collusion, namely the fact that the level of transaction
prices was higher than that which would have been achieved in the absence of any
collusion. Pointing out that the dates and order of the price increase
announcements had been planned by the PWG, the Commission takes the view in
the Decision that 'it is inconceivable in such circumstances that the concerted price
announcements had no effect upon actual price levels (point 136, third paragraph,
of the Decision). However, the LE report (section 3) drew up a model which
enabled a forecast to be made of the price level resulting from objective market
conditions. According to that report, the level of prices determined by objective
economic factors in the period 1975 to 1991 would have evolved, with minor
variations, in an identical manner to the level of transaction prices applied,
including those during the period covered by the Decision.
- 304.
- Despite those conclusions, the analysis in the report does not justify a finding that
the concerted price initiatives did not enable the producers to achieve a level of
transaction prices above that which would have resulted from the free play of
competition. As the Commission pointed out at the hearing, it is possible that the
factors taken into account in that analysis were influenced by the existence of
collusion. So, the Commission rightly argued that the collusive conduct might, for
example, have limited the incentive for undertakings to reduce their costs.
However, the Commission has not argued that there is a direct error in the analysis
in the LE report nor submitted its own economic analysis of the hypothetical
changes in transaction prices had there been no collusion. In those circumstances,
its assertion that the level of transaction prices would have been lower if there had
been no collusion between the producers cannot be upheld.
- 305.
- It follows that the existence of that third type of effect of collusion on prices has
not been proved.
- 306.
- The above findings are in no way altered by the producers' subjective appraisal, on
which the Commission relied in reaching the view that the cartel was largely
successful in achieving its objectives. In that regard, the Commission referred to
a list of documents which it produced at the hearing. However, even supposing
that it could base its appraisal of the success of the price initiatives on documents
showing the subjective opinions of certain producers, it must be observed that
several undertakings, including the applicant, rightly referred at the hearing to a
number of other documents in the file showing the problems encountered by the
producers in implementing the agreed price increases. In those circumstances, the
Commission's reference to the statements of the producers themselves is
insufficient for a conclusion that the cartel was largely successful in achieving its
objectives.
- 307.
- Having regard to the foregoing considerations, the effects of the infringement
described by the Commission are only partially proved. The Court will consider the
implications of that conclusion as part of its exercise of its unlimited powers in
regard to fines, when it assesses the seriousness of the infringement found in the
present case (see paragraph 358 below).
- 308.
- Finally, the errors which, according to the applicant (see paragraphs 287 and 288
above), are to be found in the grounds of the Decision cannot affect the above
conclusions, even if it were proven that such errors had been made. Consequently,
there is no purpose in considering whether the applicant's arguments in that regard
are well founded.
C Error in assessing the gravity of the infringement
- 309.
- This plea is in two parts, each of which will be considered separately.
The first part: error of assessment of the form and objectives of the alleged cartel
Arguments of the parties
- 310.
- The applicant contends that the Commission wrongly took the view that the alleged
cartel was the most serious on which it had had to impose penalties.
- 311.
- It disputes the assertion that the JMC's terms of reference included the fixing of
equivalent prices for certain major customers (see point 44 of the Decision).
- 312.
- It also disputes that the object of price collusion was to achieve a system of
equivalent prices in Europe. As Stora has stated, the reduction in price differences
between the national markets was the result of market conditions.
- 313.
- Furthermore, contrary to the allegations made in the Decision, the main function
of the PG Paperboard was not to organise the market. The PG Paperboard
exercised many perfectly legitimate functions.
- 314.
- The Commission observes that it found that the cartel had not only put into
operation a sophisticated system of concerted price increases but also incorporated
an agreement on the freezing of market shares and on the control of production.
- 315.
- It states that the characteristics which the applicant claims were not found in the
present case are misleading or peripheral. In any event, the alleged errors are
insignificant or do not exist and are hardly of such a nature as to alter the
assessment of the gravity of the infringement.
- 316.
- Lastly, the applicant's argument that there was no attempt to fix uniform prices in
Europe is a pure assertion and contrary to the evidence.
Findings of the Court
- 317.
- The applicant's line of argument is unclear but must be understood as meaning that
the infringement attributed to it is not as serious as the Commission claims,
because some elements of that infringement have not been proved. It claims thatthis justifies a reduction in the amount of the fine.
- 318.
- The Commission rightly considered that the applicant had infringed Article 85(1)
of the Treaty by participating from mid-1986 until at least April 1991 in an
agreement and concerted practice originating in mid-1986 which consisted of
several separate constituent elements. In that regard, the Commission found that
the applicant had participated in collusion on prices, downtime and market shares.
- 319.
- It is apparent from the first indent of point 168 of the Decision that the
Commission determined the general level of fines by taking into account, inter alia,
the consideration that 'collusion on pricing and market sharing are by their very
nature serious restrictions on competition.
- 320.
- The Court finds that the applicant's arguments in support of this part of the plea
are not such as to mitigate the gravity of the infringements already found and, in
consequence, to justify a reduction in the fine. Those arguments are in any event
unfounded.
- 321.
- First, the argument that the PG Paperboard exercised legitimate functions is
irrelevant, because it has been found that constituent bodies of that trade
association, particularly the PWG and the JMC, had an essentially anti-competitive
purpose.
- 322.
- Second, the assertion that the object of the JMC did not include the fixing of
equivalent prices for the major customers is refuted by Stora's statements (appendix
39 to the statement of objections, point 14). Furthermore, the applicant does not
dispute that, as is asserted in the Decision (points 80 and 87), appendices 117 and
118 to the statement of objections relate to JMC meetings. Those two documents
contain information regarding the prices to be applied to various categories of
customers according to their size.
- 323.
- Lastly, since it does not dispute that the effect of the price increases agreed in the
PG Paperboard was to reduce the initial differences between the prices applied on
the various national markets, the applicant cannot argue that the object of the
collusion on prices was not to establish a system of equivalent prices in Europe.
- 324.
- Having regard to the foregoing, the first part of the plea must be rejected.
Second part: error of assessment as regards the existence of a single infringement
Arguments of the parties
- 325.
- The applicant disputes that all the elements to which objections have been raised
can constitute one single infringement. Certain links have not been proved. Others
have not been described in sufficiently clear terms in the statement of objections.
Some others are illogical. Lastly, some allegations should have no effect on the
fine imposed.
- 326.
- The allegations relating to SBS and to the 1987 price increase announcements in
the United Kingdom should not have appeared in the Decision.
- 327.
- According to the Decision, national meetings whose object was to implement the
price increases decided in the PG Paperboard took place regularly in Germany,
France and the United Kingdom. However, the Decision contains no other
evidence of the applicant's participation in the meetings in Germany or France, no
link between the national meetings and the PG Paperboard is demonstrated and
the evidence relating to the meetings of the PAA (see points 94 et seq. of the
Decision) and those of the Association of Cartonboard Manufacturers ('ACBM,
see points 98 and 99 of the Decision) in the United Kingdom was misinterpreted.
Moreover, the Decision is silent in regard to the meetings held in Scandinavia. The
Commission's erroneous findings concerning the national meetings thus influenced
the amount of the fine, because point 168 of the Decision stated that the existence
of 'regular institutionalised meetings was one of the factors taken into
consideration in order to determine the general level of fines.
- 328.
- Furthermore, the Commission's claim that the meetings of the PAA and of the
ACBM and the activities of the PG Paperboard were part of the same general
infringement are the result of its application of the doctrine of 'common purpose
(see in particular Shell v Commission, cited above). However, that doctrine is
applicable only in cases where some evidence is missing but the Commission's
allegations are otherwise based on cogent evidence.
- 329.
- The Commission observes that the applicant seems merely to be contesting the
existence of the necessary links between the various elements of the single
infringement in regard to some national meetings in some countries. In reply to
the applicant's arguments that the allegations relating to SBS and the 1987 United
Kingdom price increase should not have been included in the Decision, the
Commission refers to its arguments concerning the inclusion of SBS in the Decision
and adds that the link between the abovementioned price increase and the PG
Paperboard is shown by the note referred to in point 75 of the Decision (appendix
62 to the statement of objections).
- 330.
- As regards the national meetings concerning the implementation of the price
initiatives, there is sufficient evidence to show that such meetings took place in
Germany, France, the United Kingdom and Scandinavia. Those meetings formed
part of the structure of the cartel and should therefore be regarded as an extension
of it.
- 331.
- However, even if there were no evidence of the applicant's participation in
meetings in Germany or France, the assessment of the gravity of the cartel would
be fundamentally the same. In that regard, the Commission refers to the criteria
set out in point 168 of the Decision, which concern in essence the actual substance
of the infringement.
- 332.
- As regards the arguments relating to the 'common purpose doctrine, the
Commission refers to point 116 of the Decision, which explains the approach it
adopted.
Findings of the Court
- 333.
- As regards, first of all, the submission that the 'links are not described with
sufficient precision (paragraph 325 above), the Court points out that under Article
44(1) of the Rules of Procedure the application must contain a summary of the
pleas in law on which it is based. That summary must be sufficiently clear and
precise to enable the defendant to prepare its defence and the Court to rule on the
action, if necessary without any other supporting information. The application
must, accordingly, specify the nature of the grounds on which it is based, so that a
mere abstract statement of the grounds does not satisfy the requirements of the
Rules of Procedure (Case T-102/92 Viho v Commission [1995] ECR II-17,
paragraph 68). Similar requirements are called for where a submission is made in
support of a plea in law.
- 334.
- In this case, the submission in question is worded too imprecisely to enable the
Court to identify its substance. This submission must therefore be rejected as
inadmissible.
- 335.
- The applicant's argument to the effect that the allegations relating to SBS and the
January 1987 price announcements in the United Kingdom should not have been
included in the Decision must be rejected. It suffices to point out that the
Commission correctly considered that SBS cartonboard was the subject of the cartel
(paragraph 228 above) and that the duration of the infringement attributed to the
applicant was duly established (paragraph 173 et seq. above).
- 336.
- The argument, first, that there is no evidence of the existence of national meetings
relating to the implementation of decisions adopted in the committees of the PG
Paperboard and, second, that there is no evidence of links between those meetings
and the activities of the PG Paperboard, cannot lead to the annulment of Article
1 of the Decision. The Commission rightly considered that the applicant had
infringed Article 85(1) of the Treaty by participating, as a member of the PWG, in
collusion on prices, downtime and market shares.
- 337.
- It follows that the applicant's argument can result only in a reduction in the fine.
- 338.
- The Court must therefore assess whether the Commission took those national
meetings into account when it assessed the gravity of the infringement committed.
- 339.
- According to the fifth indent of point 168 of the Decision, the Commission took
into account, inter alia, the fact that 'the cartel [had been] operated in the form of
a system of regular institutionalised meetings which set out to regulate in explicit
detail the market for cartonboard in the Community.
- 340.
- That consideration relates, in effect, to the meetings of the bodies of the PG
Paperboard.
- 341.
- According to the second and third paragraphs of point 91 of the Decision:
'It is not known whether, besides national meetings to prepare for the Economic
Committee ..., there was also an institutionalised system throughout Europe of
regular local meetings in each country to implement the increases previously agreed
for each Community national market.
This was, however, certainly the case in several important national markets [namely
the German, French and United Kingdom markets].
- 342.
- In those circumstances, the Court finds that the fact that the national meetings
were an extension of the collusion between the members of the PG Paperboard in
several Member States could not materially affect the assessment of the gravity of
the infringement.
- 343.
- It follows that the second part of the plea must be rejected.
- 344.
- The plea must therefore be rejected in its entirety.
D The plea that the level of the fine is disproportionate
Arguments of the parties
- 345.
- The applicant states that the Member of the Commission responsible for
competition policy stated at his press conference on 13 July 1994 that the fines
were close to the ceiling fixed by Article 15(2) of Regulation No 17. However,
neither the gravity of the alleged infringement nor its duration justified such a high
level.
- 346.
- The Commission has already discovered more serious infringements than that in
the present case. A comparison between the Decision and the decision with which
the judgment in Tetra Pak v Commission, cited above, was concerned shows that
the infringement found in that case was more serious and of a longer duration.
- 347.
- Furthermore, the Commission has already been faced with infringements of a
considerably longer duration than that found in the Decision and, contrary to the
submissions in its defence, the Commission cannot take into account the fact that
the infringement was intended to be of indefinite duration. The Commission's
approach is incompatible with Article 15(2) of Regulation No 17 because regard
may be had only to the actual duration of the infringements found.
- 348.
- Moreover, the Decision does not state the reasons for which the level of the fine
was increased in relation to those in the Commission's previous decisions. It must
therefore be concluded that the criteria set out in the Decision cannot justify the
level of the fine.
- 349.
- The Commission observes that the fine imposed on the applicant represents
approximately 9% of its turnover in the Community cartonboard sector in 1990.
The applicant has not produced any evidence that the fine approaches 10% of its
total turnover, the maximum level fixed by Article 15(2) of Regulation No 17. The
Commission stated that the infringement was a particularly serious one, but never
claimed that it was the most serious infringement ever discovered. Lastly, the
Commission may at any moment increase the general level of fines in order to
ensure their deterrent effect.
- 350.
- The Commission never stated that it had increased the general level of fines, the
fine imposed on the applicant not being significantly higher than the level of fines
imposed on the ringleaders in Commission Decision 86/398/EEC of 23 April 1986
relating to a proceeding under Article 85 of the EEC Treaty (IV/31.149
Polypropylene, OJ 1986 L 230, p. 1, hereinafter 'the Polypropylene decision). In
any event, it is not necessary to indicate in the Decision that there has been any
increase in the general level of fines.
- 351.
- Finally, as regards the duration of the infringement, the rapid discovery of an
infringement such as the infringement found in the present case does not make it
inherently less serious. That does not mean that the Commission imposed a fine
in respect of a period following the Decision (see point 167 of the Decision).
Finding of the Court
- 352.
- Under Article 15(2) of Regulation No 17, the Commission may by decision impose
on undertakings fines ranging from ECU 1 000 to 1 000 000, or a sum in excess
thereof but not exceeding 10% of the turnover in the preceding business year of
each of the undertakings participating in the infringement where, either
intentionally or negligently, they infringe Article 85(1) of the Treaty. In fixing the
amount of the fine, regard is to be had to both the gravity and the duration of theinfringement. As has already been observed, according to the case-law of the
Court of Justice the gravity of infringements falls to be determined by reference to
a number of factors including, in particular, the specific circumstances and context
of the case and the deterrent character of the fines; moreover, no binding or
exhaustive list of the criteria which must be applied has been drawn up (order in
SPO and Others v Commission, cited above, paragraph 54).
- 353.
- In the present case, the Commission determined the general level of fines by taking
into account the duration of the infringement (point 167 of the Decision) and the
following considerations (point 168):
' collusion on pricing and market sharing are by their very nature serious
restrictions on competition,
the cartel covered virtually the whole territory of the Community,
the Community market for cartonboard is an important industrial sector
worth some ECU 2 500 million each year,
the undertakings participating in the infringement account for virtually the
whole of the market,
the cartel was operated in the form of a system of regular institutionalised
meetings which set out to regulate in explicit detail the market for
cartonboard in the Community,
elaborate steps were taken to conceal the true nature and extent of the
collusion (absence of any official minutes or documentation for the PWG
and JMC; discouraging the taking of notes; stage-managing the timing and
order in which price increases were announced so as to be able to claim
they were following, etc.),
the cartel was largely successful in achieving its objectives.
- 354.
- Furthermore, it is common ground that the fines of a basic level of 9 or 7.5% of
the turnover on the Community cartonboard market in 1990 of each undertaking
addressed by the Decision were imposed on the undertakings regarded as the
'ringleaders of the cartel and on its 'ordinary members respectively.
- 355.
- It should be pointed out, first, that when assessing the general level of fines the
Commission is entitled to take account of the fact that clear infringements of the
Community competition rules are still relatively frequent and that, accordingly, it
may raise the level of fines in order to strengthen their deterrent effect.
Consequently, the fact that in the past the Commission applied fines of a certain
level to certain types of infringement does not mean that it is estopped from raising
that level, within the limits set out in Regulation No 17, if that is necessary in order
to ensure the implementation of Community competition policy (see, inter alia,
Musique Diffusion Française and Others v Commission, cited above, paragraphs 105
to 108, and Case T-13/89 ICI v Commission [1992] ECR II-1021, paragraph 385).
- 356.
- Second, the Commission rightly argues that, on account of the specific
circumstances of the present case, no direct comparison could be made between
the general level of fines adopted in the present decision and those adopted in the
Commission's previous decisions, in particular in the Polypropylene decision, which
the Commission itself considered to be the most similar to the decision in the
present case. Unlike in the case of the Polypropylene decision, no general
mitigating circumstance was taken into account in the present case when
determining the general level of fines. Moreover, the adoption of measures to
conceal the existence of the collusion shows that the undertakings concerned were
fully aware of the illegality of their conduct. Accordingly, the Commission was
entitled to take those measures into account when assessing the gravity of the
infringement, since they constituted a particularly serious aspect of it which
differentiated it from infringements previously found by the Commission.
- 357.
- Third, the Court notes the lengthy duration and obviousness of the infringement
of Article 85(1) of the Treaty which was committed despite the warning which the
Commission's previous decisions, in particular the Polypropylene decision, should
have provided. There is no basis for concluding that in order to determine the
level of the fines the Commission, contrary to the indications given in point 167 of
the Decision, took into account a lengthier duration of the infringement than that
stated in Article 1 of the Decision.
- 358.
- On the basis of those factors, the criteria set out in point 168 of the Decision justify
the general level of fines set by the Commission. Admittedly, the Court has already
held that the effects of the collusion on prices, which the Commission took into
account when determining the general level of fines, are proved only in part.
However, in the light of the foregoing considerations, that conclusion cannot
materially affect the assessment of the gravity of the infringement found. The fact
that the undertakings actually announced the agreed price increases and that the
prices so announced served as a basis for fixing individual transaction prices suffices
in itself for a finding that the collusion on prices had both as its object and effect
a serious restriction of competition. Accordingly, in the exercise of its unlimited
jurisdiction, the Court considers that the findings relating to the effects of the
infringement do not justify any reduction in the general level of fines set by the
Commission.
- 359.
- Finally, in setting the general level of fines in the present case, the Commission did
not so depart from its previous line of decisions as to oblige it to give a more
detailed account of the reasons for its assessment of the gravity of the infringement
(see, inter alia, Case 73/74 Groupement des Fabricants de Papiers Peints de Belgique
and Others v Commission [1975] ECR 1491, paragraph 31).
- 360.
- Consequently, this plea must be rejected.
E Erroneous assessment of the role played by Iggesund Paperboard
Arguments of the parties
- 361.
- The applicant contends, first, that it was wrongly characterised as a 'ringleader of
the cartel. Representatives of Iggesund Paperboard participated in only some
meetings of the bodies of the PG Paperboard and they never acted as chairman of
those bodies.
- 362.
- Iggesund Paperboard did not take part in any PWG meeting before the end of
November 1989. It is thus for the Commission to prove that Iggesunds Bruk or
TBM participated before that date. Furthermore, no representative of Iggesund
Paperboard attended the PWG meetings of 6 February 1990, 12 April 1991, 27
May 1991 or 5 June 1991. That company therefore took part in only five of the
nine meetings of the PWG held from November 1989 onwards.
- 363.
- Stora's statements that TBM participated in meetings of the PWG right from the
creation of that body are not reliable. In breach of the principles of fairness and
proportionality, the Commission therefore failed to take due account of the fact
that Iggesund Paperboard had participated only occasionally in PWG meetings
from November 1989 onwards.
- 364.
- As regards the JMC, contrary to what is stated in table 4 annexed to the Decision,
Iggesund Paperboard did not participate in the meetings of 6 and 7 September
1989.
- 365.
- As regards Iggesunds Bruk, that mill principally produced SBS cartonboard, its
production of high-quality GC cartonboard having always been of less importance
for it. That explains the fact that it was never more than an occasional participant
in meetings of the committees of the PG Paperboard and that it was not a member
of the PG Paperboard after 1985. Before November 1988, except for general
assemblies of the PG Paperboard, Iggesunds Bruk participated in only nine out of
20 meetings of the PC and four out of 18 meetings of the Economic Committee.
- 366.
- Second, there is no basis for alleging that downtime taken by the applicant was the
result of collusion. Iggesunds Bruk's mill closed routinely in autumn for technical
reasons. In 1990, however, the routine shut-down was deferred, because Iggesunds
Bruk was producing record volumes during the last third of 1990 and the first third
of 1991. As regards the Workington mill, downtime took place only when orders
were limited.
- 367.
- The Commission states that it was the participants in the PWG meetings which
were considered to be the cartel 'ringleaders. The question whether Iggesund
Paperboard's representative was one of the officers of the committees is therefore
irrelevant. TBM and, later, Iggesund Paperboard participated in meetings of all
the committees of the PG Paperboard, including the PWG. Consequently, the
applicant's arguments relating to Iggesunds Bruk's role prior to 1988 are irrelevant.
- 368.
- As to the applicant's assertions relating to downtime in respect of SBS cartonboard,
they are irrelevant, because the Commission never asserted that there was a
downtime system specifically for SBS cartonboard. Moreover, demand for SBS
cartonboard was strong throughout the period in question and there was therefore
no need to stop production of that product.
- 369.
- Lastly, the argument that downtime was taken at the Workington mill only when
orders were low is unconvincing, since downtime is necessary only in such
circumstances.
Findings of the Court
- 370.
- It is apparent from the Court's ruling on the applicant's pleas in support of its
application for annulment of the Decision that the nature of the PWG's functions,
as described in the Decision, has been proved by the Commission.
- 371.
- In those circumstances the Commission rightly concluded that the undertakings
which participated in the meetings of that body should be regarded as the
'ringleaders of the infringement found and that they should accordingly bear
special responsibility (see point 170, first paragraph, of the Decision).
- 372.
- In the present case, it is not disputed that Iggesund Paperboard participated in the
meetings of the PWG with effect from November 1989. In that regard, the
applicant's argument that Iggesund Paperboard was only an occasional participant
in PWG meetings must be rejected. It is apparent from table 2 annexed to the
Decision that Iggesund Paperboard took part in five of the seven meetings held
during the period from November 1989 until April 1991, the date on which the
Commission carried out simultaneous investigations without prior notice at the
premises of several undertakings and trade associations in the cartonboard sector
pursuant to Article 14(3) of Regulation No 17.
- 373.
- As regards the period from mid-1987 until November 1989, Stora states: 'One
other producer was represented at the PWG: the UK Workington mill was
represented at the PWG from when it was set up. The Workington mill has been
bought by Iggesund/MoDo (appendix 37 to the statement of objections, p. 2).
Moreover, in a reply by Iggesund Paperboard (Workington) Ltd of 20 August 1991
to a request for information it is stated (page 12) in regard to the participation in
PWG meetings of TBM/Iggesund Paperboard (Workington) Ltd: 'It is assumed
that Mr P.L. Herring attended some or all such meetings.
- 374.
- In those circumstances, since Iggesund Paperboard (Workington) Ltd itself assumed
in its reply that Mr Herring had participated in the PWG meetings on behalf of
TBM/Iggesund Paperboard (Workington) Ltd, the Commission rightly relied on
Stora's statements that the Workington mill had been represented in the PWG
from the date on which it was set up.
- 375.
- The Court has already held that the Commission was entitled to address the
Decision to the applicant in regard to the infringements of Iggesund Paperboard,
Iggesund Paperboard (Workington) Ltd and TBM. The applicant, as a participant
in meetings of the PWG throughout the period of the infringement, was therefore
correctly regarded as one of the 'ringleaders of the infringement. In that context,
it is irrelevant that, for its part, Iggesunds Bruk did not participate in the PWG
meetings.
- 376.
- Lastly, it has been proved that the applicant participated in collusion on downtime
and that it even took actual downtime in the Workington mill when, with effect
from 1990, production capacity increased and demand fell (paragraphs 145 to 147
above). The applicant's argument that downtime was not taken at Iggesunds Bruk's
mill because demand for SBS cartonboard was strong throughout the period
covered by the Decision must be rejected. The Commission never contended that
collusion on downtime implied that the undertakings participating in that collusion
had to take downtime when demand was strong.
- 377.
- In the light of the foregoing, the plea cannot be upheld.
F Breach of the principle of equal treatment
Arguments of the parties
- 378.
- This plea is in two parts.
- 379.
- In the first part the applicant asserts that the fine imposed on it is excessive in
comparison with those imposed on undertakings which did not contest the essential
factual allegations. The distinction drawn between those two groups of
undertakings is unclear, because it is not based on any rule or policy previously
declared by the Commission.
- 380.
- A mere failure to contest the Commission's allegations does not justify the
distinction so made, as such conduct does not constitute cooperation within the
meaning of the case-law. By contrast, notwithstanding any failure by someundertakings to contest allegations, it is for the Commission to prove its allegations
of fact in all cases. Even an express admission by some undertakings cannot be
used to prove the allegations against undertakings which do not admit them. The
undertakings to which the statement of objections is addressed should be able to
reply to the Commission's allegations in it, without the risk of their being penalised
for that conduct by an increase in their fine (or by a smaller reduction in it).
- 381.
- The distinction drawn by the Commission therefore infringes the rights of the
defence, the principle of fairness, the principle of due process and the presumption
of innocence.
- 382.
- Even supposing that the Commission was entitled to impose a larger fine on the
applicant than on the undertakings which did not contest the essential factual
allegations, the 50% increase in the fine imposed on it is excessive and
disproportionate. In ICI v Commission, cited above, the Court of First Instance
held, in the exercise of its unlimited jurisdiction, that a reduction of about 20% in
the fine was reasonable in the case of an undertaking which had fully cooperated
with the Commission.
- 383.
- In the second part of the plea the applicant contends that the fine imposed on it
is excessive in comparison with the fines imposed on the undertakings held to have
actively assisted the Commission (Rena and Stora). Its fine, in terms of percentage
of turnover, is three times higher than those imposed on Rena and Stora. That
difference is excessive and discriminatory.
- 384.
- The Decision does not contain an adequate statement of reasons for that
substantial reduction in the fines (see point 172 of the Decision). Furthermore,
according to the judgment in ICI v Commission, cited above, active cooperation
justifies only a small difference in treatment.
- 385.
- The reductions awarded to Rena and Stora can also be regarded as an abuse of
power, because all the undertakings were not necessarily in possession of
appropriate information so as to be able to provide active assistance to the
Commission.
- 386.
- Moreover, it is questionable whether the Commission is entitled to obtain
information in return for a reduction in the fine. In the present case, the
Commission, speaking through the Member of the Commission responsible for
competition policy, acknowledged that it could not have established the existence
of the cartel without the information provided by Stora. Consequently, if
undertakings receive a financial incentive to provide information to the Commission
in circumstances in which the Commission cannot require them to provide it (see
Case 374/87 Orkem v Commission [1989] ECR 3283 and Case 27/88 Solvay v
Commission [1989] ECR 3355, summary publication), it cannot be ruled out that,
in order to obtain the maximum financial advantage, some undertakings may be
over-enthusiastic in their admissions, thereby undermining the credibility of their
statements.
- 387.
- Lastly, Stora's cooperation was not spontaneous, since it cooperated only after the
investigations had been carried out pursuant to Article 14 of Regulation No 17 and
it had received the Commission's written questions concerning the PG Paperboard.
- 388.
- In reply to the first part of the plea the Commission states that the recognition by
certain undertakings of the essential elements of the allegations against them made
its task easier and should therefore be regarded as a form of cooperation justifying
a reduction in the fine (ICI v Commission, cited above, paragraph 393).
- 389.
- Contrary to its assertion, the applicant was not penalised for a lack of cooperation.
It was the undertakings which actually acknowledged the infringements which in
fact benefited from a reduction of one-third in the amount of the fine. There is no
basis for considering that the reductions were too large. In any event, if the Court
were to consider that the reduction given to some undertakings was too large, it
could, in the exercise of its unlimited jurisdiction, increase the fines in question.
- 390.
- Lastly, the applicant's arguments that there was discrimination against undertakings
which did not possess documents is without foundation.
- 391.
- As regards the second part of the plea, the Commission considers that its attitude
towards Rena and Stora was fully justified.
- 392.
- Stora in particular spontaneously provided a detailed account of the operation of
the cartel. The applicant's assertion that undertakings might be tempted to
exaggerate the unlawful conduct of their competitors in order to obtain significant
reductions is unfounded. Although the Commission must closely scrutinise evidence
supplied by members of a cartel, that does not mean that it may not take frank and
complete cooperation into account.
Findings of the Court
- 393.
- As regards the first part of the plea, the Court observes that in the administrative
procedure before the Commission the applicant acknowledged that it had
participated in collusion on price increase announcements concerning GC
cartonboard but that it otherwise disputed that it had participated in the alleged
infringement.
- 394.
- The Commission correctly considered that the applicant, by replying in that way,
did not conduct itself in a manner which justified a reduction in the fine on grounds
of cooperation during the administrative procedure. A reduction on that ground
is justified only if the conduct enabled the Commission to establish an infringement
more easily and, where relevant, to bring it to an end (see ICI v Commission, cited
above, paragraph 393).
- 395.
- An undertaking which expressly states that it is not contesting the factual
allegations on which the Commission bases its objections may be regarded as
having furthered the Commission's task of finding infringements of the Community
competition rules and bringing them to an end. In its decisions finding
infringements of those rules, the Commission is entitled to take the view that such
conduct constitutes an acknowledgement of the factual allegations and thus proves
that those allegations are correct. Such conduct may therefore justify a reduction
in the fine.
- 396.
- The situation is different where an undertaking does not reply to the statement of
objections, merely states that it is not expressing any view on the factual allegations
made by the Commission in that document, or, as the applicant did, contests the
essential points of those allegations in its reply. By adopting such an attitude
during the administrative procedure the undertaking does not further the
Commission's task of finding infringements of the Community competition rules
and bringing them to an end.
- 397.
- Consequently, when the Commission states in the first paragraph of point 172 of
the Decision that it has awarded reductions in the fines to be imposed on
undertakings which did not contest the essential factual allegations upon which it
relied against them, those reductions can be considered to be lawful only in so far
as the undertakings concerned have expressly stated that they are not contesting
those allegations. It should be added in that context that, by reducing by one-third
the fines imposed on those undertakings, the Commission did not overstep the
limits of its discretion when determining the amount of fines.
- 398.
- Even if the Commission applied an unlawful criterion by reducing the fines imposed
on undertakings which had not expressly stated that they were not contesting the
factual allegations, it is necessary that respect for the principle of equal treatment
be reconciled with the principle of legality, according to which a person may not
rely, in support of his claim, on an unlawful act committed in favour of a third
party (see, for example, Case 134/84 Williams v Court of Auditors [1985] ECR 2225,
paragraph 14). For that reason, as the applicant's argument is directed specifically
at establishing its right to an unlawful reduction in the fine, the first part of the
plea cannot be upheld.
- 399.
- As regards the second part of the plea, the Court observes that Rena and Stora
received a two-thirds reduction in their fines on account of their active cooperation
with the Commission during the administrative procedure (see, in that regard, point
171 of the Decision). In pointing out the active cooperation of those undertakings
during the administrative procedure, the Decision adequately explains the reasons
for the award of a substantial reduction in the fine imposed on those two
undertakings.
- 400.
- The Court points out that the applicant could itself have obtained a reduction in
the fine by demonstrating its active cooperation with the Commission. As its
participation in the infringement has been proved, its argument that it did not have
the necessary information to provide active assistance to the Commission cannot
but be rejected.
- 401.
- Inasmuch as the applicant contends that the fine imposed is excessive in
comparison with that imposed on Stora, the Court points out that Stora supplied
the Commission with statements containing a highly detailed description of the
nature and object of the infringement, the operation of the various bodies of the
PG Paperboard, and the participation of the various producers in the infringement.
Through those statements, Stora supplied information well in excess of that which
the Commission may require to be supplied under Article 11 of Regulation No 17.
Although the Commission states in the Decision that it obtained evidence
corroborating the information contained in Stora's statements (points 112 and 113
of the Decision), it is clear that Stora's statements constituted the principal
evidence of the existence of the infringement. Without those statements, it would
therefore have been, at the very least, much more difficult for the Commission to
establish or to put an end to the infringement with which the Decision is
concerned.
- 402.
- In those circumstances, and even though Stora cooperated only after the
Commission had initiated investigations at the undertakings pursuant to Article
14(3) of Regulation No 17, the Commission, by reducing by two-thirds the fine
imposed on Stora, did not overstep the limits of its discretion when determining the
amount of fines.
- 403.
- As regards the reduction in Rena's fine, it suffices to hold that the applicant has
not disputed the statement in the second paragraph of point 171 of the Decision
that Rena 'provided important documentary evidence to the Commission on a
voluntary basis.
- 404.
- Lastly, the applicant has not adduced any evidence in support of its assertion that
the reductions in the fines received by Rena and Stora constitute an abuse of
power.
- 405.
- The fine imposed on the applicant cannot therefore be regarded as
disproportionate in comparison with those imposed on Rena and Stora.
- 406.
- Consequently, the second part of the plea cannot be accepted either.
- 407.
- The plea must therefore be rejected.
G The plea alleging that the applicant cooperated and that other mitigating
circumstances exist
Arguments of the parties
- 408.
- The applicant claims that it cooperated with the Commission in its investigation.
- 409.
- That cooperation is shown by the fact that (a) Iggesund Paperboard stayed away
from meetings of the PG Paperboard's committees after the Commission had
carried out its investigations; (b) in its reply to the statement of objections the
applicant did not contest the essential facts; (c) it acknowledged the existence of
discussions on the price announcements; and (d) the undertakings in the MoDo
group have implemented a compliance programme in order to ensure observance
of the competition rules.
- 410.
- Moreover, the applicant furnished detailed information concerning the participation
of undertakings from its group in meetings of the PG Paperboard's committees,
even though the Commission had not made any reference to the provisions of
Regulation No 17 in its requests.
- 411.
- In those circumstances, since the applicant did not dispute the documents relating
to prices referred to in the statement of objections, it should be placed in the same
category as the undertakings which did not contest the essential allegations of fact.
- 412.
- Lastly, to impose a fine at a level never previously imposed is unjustified because
the cartonboard sector has never been the subject of a Commission investigation
and the applicant itself has never previously committed an infringement.
- 413.
- The Commission disputes that the applicant can be considered to have cooperated.
In particular, since the applicant continues to contest almost all of the
Commission's findings, it cannot claim to have admitted the essential factual
allegations. Moreover, its reticence in replying to requests for information did not
demonstrate a willingness to cooperate.
Findings of the Court
- 414.
- The Court has already held that in its reply to the statement of objections the
applicant contested the essential allegations of fact on which the Commission had
based the objections against it and that its reply cannot therefore be considered toconstitute cooperation with the Commission which would justify a reduction in the
amount of its fine.
- 415.
- Even if, without a request by the Commission to that effect under Regulation No
17, the applicant had supplied information concerning the undertakings in its group
which had participated in meetings of bodies of the PG Paperboard, such conduct
could not be considered to justify a reduction in the fine either. The applicant
contested the Commission's essential allegations relating to the anti-competitive
discussions held at the meetings in question.
- 416.
- As regards the compliance programme implemented by the MoDo group after the
cessation of the infringement, the Court has already pointed out that the gravity of
the infringement falls to be determined by reference to a number of factors
including, in particular, the specific circumstances and context of the case and the
deterrent character of the fines; moreover, no binding or exhaustive list of the
criteria which must be applied has been drawn up (order in SPO and Others v
Commission, cited above, paragraph 54).
- 417.
- Consequently, although the implementation of a compliance programme
demonstrates the intention of the undertaking in question to prevent future
infringements and thus better enables the Commission to accomplish its task of
applying the principles laid down by the Treaty in competition matters and of
influencing undertakings in that direction, the mere fact that in certain of its
previous decisions the Commission took the implementation of a compliance
programme into consideration as a mitigating factor does not mean that it is
obliged to act in the same manner in this case.
- 418.
- The Commission was therefore entitled to take the view that in the present case
it should treat as mitigation only conduct of the undertakings which enabled it to
prove the infringement in question more easily. Consequently, since the essential
allegations of fact on which the Commission relied as against the applicant were
contested by the applicant during the administrative procedure, the Commission
cannot be criticised for not having reduced the amount of the fine imposed on it.
- 419.
- Moreover, while it is important that the applicant should take steps to prevent
fresh infringements of Community competition law from being committed in the
future by members of its staff, that circumstance does not alter the the fact that an
infringement has been found to have been committed in this case (Case T-7/89
Hercules Chemicals v Commission [1991] ECR II-1711, paragraph 357).
- 420.
- In those circumstances, when determining the amount of the fine imposed on the
applicant, the Commission rightly also took no account of the fact that the
applicant did not attend meetings of the PG Paperboard's committees after the
Commission carried out its investigations under Article 14(3) of Regulation No 17.
- 421.
- Lastly, the Court holds that the fact that the Commission has already found an
undertaking guilty of infringing the competition rules in the past and has penalised
it for that infringement may be treated as an aggravating factor as against that
undertaking but that the absence of any previous infringement is a normal
circumstance which the Commission does not have to take into account as a
mitigating factor, especially since the present case involves a particularly clear
infringement of Article 85(1) of the Treaty (see Case T-8/89 DSM v Commission
[1991] ECR II-1833, paragraph 317).
- 422.
- It follows that the plea must be rejected.
H Infringement of Article 6(1) of the European Convention for the Protection of
Human Rights and Fundamental Freedoms of 4 November 1950
- 423.
- In its application the applicant observes, under the heading 'Closing submissions,
that the application of Community competition law in relation to proceedings
leading to the imposition of fines is of such a nature as to make it subject to Article
6(1) of the European Convention for the Protection of Human Rights and
Fundamental Freedoms ('the ECHR) (or analogous principles of Community
law), which require that charges of this nature be determined by an independent
and impartial tribunal.
- 424.
- It submits that, as the relevant tribunal, the Court of First Instance should therefore
make a full examination of the facts and all the legal aspects of the case. It follows
that 'the Court should come to its own, independent view on the facts of the case
or, at least, that it 'should be quick rather than reluctant to form its own
independent view of the appropriate penalty.
- 425.
- At the hearing the applicant submitted that its submissions as so presented
constituted a plea in law.
- 426.
- However, as the Court has already observed, in order to satisfy the requirements
of Article 44(1) of the Rules of Procedure the application must specify the nature
of the grounds on which the action is based, so that a mere abstract statement of
those grounds is insufficient (paragraph 333 above). In the present case, the
submissions concerning Article 6(1) of the ECHR made by the applicant in its
application are so unspecific that the Court is not able to evaluate them. The plea
must therefore be rejected as inadmissible.
- 427.
- As none of the pleas relied on in support of the application for annulment or
reduction of the fine has been upheld, the fine imposed on the applicant should not
be reduced.
- 428.
- Having regard to all the foregoing, the plea of illegality of Article 2 of the Decision
must be upheld in part and the remainder of the application must be dismissed.
Costs
- 429.
- Under Article 87(2) of the Rules of Procedure, the unsuccessful party is to be
ordered to pay the costs if they have been applied for in the successful party's
pleadings. As the applicant has been largely unsuccessful, it must be ordered to
pay the costs, as sought by the Commission.
On those grounds,
THE COURT OF FIRST INSTANCE (Third Chamber, Extended Composition)
hereby:
1. Annuls, as regards the applicant, the first to fourth paragraphs of Article
2 of Commission Decision 94/601/EC of 13 July 1994 relating to a
proceeding under Article 85 of the EC Treaty (IV/C/33.833 Cartonboard)
save and except for the following passages:
'The undertakings named in Article 1 shall forthwith bring the said
infringement to an end, if they have not already done so. They shall
henceforth refrain in relation to their cartonboard activities from any
agreement or concerted practice which may have the same or a similar
object or effect, including any exchange of commercial information:
(a) by which the participants are directly or indirectly informed of the
production, sales, order backlog, machine utilisation rates, selling
prices, costs or marketing plans of other individual producers.
Any scheme for the exchange of general information to which they
subscribe, such as the Fides system or its successor, shall be so conducted
as to exclude any information from which the behaviour of individual
producers can be identified;
2. Dismisses the application as regards the remaining claims;
3. Orders the applicant to pay the costs.
Vesterdorf Briët Lindh
Potocki Cooke
|
Delivered in open court in Luxembourg on 14 May 1998.
H. Jung
B. Vesterdorf
Registrar
President
Summary
Facts
II - 2
Procedure
II - 6
Forms of order sought
II - 7
The application for annulment of the Decision
II - 8
A The pleas alleging infringements of essential procedural requirements
II - 8
The plea that the statement of reasons is defective
II - 8
Arguments of the parties
II - 8
Findings of the Court
II - 9
The plea grounded upon infringement of the rights of the defence
II - 11
Arguments of the parties
II - 11
Findings of the Court
II - 11
B The pleas grounded on the infringement of substantive rules
II - 13
The plea that the applicant was not the correct addressee of the Decision
II - 13
Admissibility of the plea
II - 13
Substance
II - 14
Arguments of the parties
II - 14
Findings of the Court
II - 15
The plea that the Commission has not proved the existence of collusion on
volume control and limitation of production
II - 17
The first two parts of the plea: no proof of the existence of collusion aimed
at freezing market shares and controlling supply
II - 17
Arguments of the parties
II - 17
Findings of the Court
II - 19
The third part of the plea: error in assessing the significance of the Fides
statistics
II - 24
Arguments of the parties
II - 24
Findings of the Court
II - 25
The plea that the duration of the cartel was incorrectly assessed
II - 27
Arguments of the parties
II - 27
Findings of the Court
II - 28
The plea that the Commission committed an error of assessment in considering that
SBS cartonboard was the subject of the infringement and formed part of the
same market as GC and GD cartonboard and that there are defects in reasoning
and procedural defects in that regard
II - 29
First part: infringement of the rights of the defence
II - 29
Second part: Commission's error of assessment in that it considered that
SBS cartonboard was the subject of the infringement, and an inadequate
statement of reasons in that regard
II - 30
Arguments of the parties
II - 30
Findings of the Court
II - 31
Third part: Commission's error of assessment in that it considered that SBS
cartonboard was part of the same market as GC and GD cartonboard
II - 34
Arguments of the parties
II - 34
Findings of the Court
II - 35
The application for annulment of Article 2 of the Decision
II - 36
Arguments of the parties
II - 36
Findings of the Court
II - 37
The application for annulment or reduction of the amount of the fine
II - 41
A Infringement of the obligation to state reasons regarding the calculation of the
fines
II - 41
Arguments of the parties
II - 41
Findings of the Court
II - 42
B Error in assessing the LE report
II - 45
Arguments of the parties
II - 45
Findings of the Court
II - 46
C Error in assessing the gravity of the infringement
II - 50
The first part: error of assessment of the form and objectives of the alleged
cartel
II - 50
Arguments of the parties
II - 50
Findings of the Court
II - 50
Second part: error of assessment as regards the existence of a single
infringement
II - 51
Arguments of the parties
II - 51
Findings of the Court
II - 53
D The plea that the level of the fine is disproportionate
II - 54
Arguments of the parties
II - 54
Finding of the Court
II - 55
E Erroneous assessment of the role played by Iggesund Paperboard
II - 58
Arguments of the parties
II - 58
Findings of the Court
II - 59
F Breach of the principle of equal treatment
II - 60
Arguments of the parties
II - 60
Findings of the Court
II - 62
G The plea alleging that the applicant cooperated and that other mitigating
circumstances exist
II - 64
Arguments of the parties
II - 65
Findings of the Court
II - 65
H Infringement of Article 6(1) of the European Convention for the Protection of
Human Rights and Fundamental Freedoms of 4 November 1950
II - 67
Costs
II - 67