JUDGMENT OF THE COURT OF FIRST INSTANCE (First Chamber,Extended Composition)

21 October 1997 (1)

(Competition — Carriage by rail of maritime containers — Regulation (EEC) No1017/68 — Agreements, decisions and concerted practices — Dominant position —Abuse — Fine — Criteria of assessment — Principle of proportionality — Rights ofthe defence — Access to the file — Principle of legal certainty)

In Case T-229/94,

Deutsche Bahn AG, a company incorporated under German law, established inFrankfurt (Germany), represented by Jochim Sedemund, Rechtsanwalt, Cologne,with an address for service in Luxembourg at the Chambers of Aloyse May, 31Grand-Rue,

applicant,

v

Commission of the European Communities, represented initially by NorbertLorenz, of its Legal Service, and Géraud de Bergues, a national civil servant onsecondment to the Commission, subsequently by Klaus Wiedner, of its LegalService, acting as Agent, assisted by Heinz-Joachim Freund, of the Brussels Bar,

with an address for service in Luxembourg at the office of Carlos Gómez de laCruz, of its Legal Service, Wagner Centre, Kirchberg,

defendant,

APPLICATION for the annulment of Commission Decision 94/210/EC of 29 March1994 relating to a proceeding pursuant to Articles 85 and 86 of the EC Treaty(IV/33.941 — HOV-SVZ/MCN, OJ 1994 L 104, p. 34) or, in the alternative, theannulment or reduction of the fine imposed by that decision on the applicant,

THE COURT OF FIRST INSTANCE

OF THE EUROPEAN COMMUNITIES (First Chamber, ExtendedComposition),

composed of: A. Saggio, President, A. Kalogeropoulos, V. Tiili, R.M. Moura Ramosand M. Jaeger, Judges,

Registrar: A. Mair, Administrator,

having regard to the written procedure and further to the hearing on 28 January1997,

gives the following

Judgment

Facts

1.

    On 1 April 1988 the undertakings Deutsche Bundesbahn ('DB‘, which wassucceeded in 1994 by Deutsche Bahn, hereinafter 'the applicant‘), the SociétéNationale des Chemins de Fer Belges ('SNCB‘), Nederlandse Spoorwegen ('NS‘),Intercontainer and Transfracht concluded an agreement relating to the setting upof a cooperative network known as the 'Maritime Container Network (MCN)‘('the MCN Agreement‘).

2.

    The term 'maritime container‘ describes a container which is carried essentially bysea, but also requires on-carriage and off-carriage by land. The MCN Agreementrelates to carriage by rail of maritime containers to or from Germany which passthrough a German, Belgian, or Netherlands port. Among the German ports,referred to in the MCN Agreement as the 'northern ports‘, were Hamburg,Bremen and Bremerhaven. The Belgian and Netherlands ports, known as the'western ports‘, included Antwerp and Rotterdam.

3.

    DB, now the applicant in the present case, SNCB and NS are the national railwayundertakings operating in Germany, Belgium and the Netherlands respectively. Intercontainer and Transfracht are undertakings which are active in the maritimecontainer transport sector and which purchase, to that end, from railwayundertakings, essential railway services such as railway traction services and accessto railway infrastructure. Intercontainer is a company incorporated under Belgianlaw and is a joint subsidiary of 24 European railway undertakings. Transfracht isa company incorporated under German law, 80% of which is owned by DB, andnow by the applicant in the present case.

4.

    Before the MCN Agreement was concluded, the organization of the transportservices covered by the agreement was in fact already shared between the fiveabovementioned undertakings. Under that distribution, which remained unchangedby the MCN Agreement, Transfracht effected the carriage of maritime containersto or from Germany passing through German ports. Intercontainer, for its part,effected the international carriage of maritime containers to or from Germanythrough Belgian or Netherlands ports. In order to provide a complete service totheir clients, Transfracht and Intercontainer were obliged to purchase certainrailway services from DB (Transfracht) and from SNCB and NS (Intercontainer),given the statutory monopoly which those companies held, within their owncountries, for the provision of railway services, such as the provision of locomotives,drivers and access to railway infrastructure.

5.

    The MCN Agreement established two coordination structures without legalpersonality, namely a steering committee and a 'bureau commun‘. The membersand staff of those two bodies were appointed by Transfracht and by Intercontainer. Among the six members of the Steering Committee there were required to be threerepresentatives of DB and/or Transfracht, a representative of SNCB and arepresentative of NS. The Committee was intended to be the MCN'sdecision-making and supervisory body, while the Bureau Commun functioned as theadministrative body. Specifically, the Steering Committee was empowered to takedecisions concerning the services and prices to be offered for the transport ofmaritime containers and the Bureau Commun was responsible for developing andmarketing, buying, selling and fixing rates and tariffs on behalf of Transfracht andIntercontainer. Certain other activities, such as invoicing clients, were carried outseparately by Transfracht and Intercontainer.

6.

    Under paragraph 9 of the MCN Agreement, decisions taken by the SteeringCommittee were to be unanimous.

7.

    By a complaint of 16 May 1991 Havenondernemersvereniging SVZ ('HOV-SVZ‘),an association of undertakings operating in the port of Rotterdam, pointed out tothe Commission that the tariffs applied by DB to the carriage of maritimecontainers to and from Germany via Belgian and Netherlands ports were muchhigher than those applied to the carriage of maritime containers via the German

ports. According to HOV-SVZ, DB's intention was to promote carriage for whichit provided all the railway services. It claimed that the practice constituted anabuse of a dominant position prohibited by Article 86 of the EC Treaty. HOV-SVZ also considered that the MCN Agreement infringed Article 85 of the Treaty.

8.

    On 31 July 1992 the Commission sent a statement of objections to the undertakingsbound by the MCN Agreement which, upon receiving it, terminated thatagreement. After receiving the statement of objections, DB also acknowledged thatit imposed tariffs for carriage via the northern ports which were different fromthose it applied in respect of transport via the western ports, but it denied thatthose differences were discriminatory. It pointed out that the tariffs wereobjectively set and took into account the distance covered, the production costs andthe competitive situation of the market.

9.

    On 25 August 1992 DB's counsel was given the opportunity of consulting DB's fileat the Commission and took copies of most of the documents on the file.

10.

    A hearing took place at the Commission on 15 December 1992. Present at thathearing were representatives of the Commission, DB and Transfracht, SNCB, NS,Intercontainer and seven Member States.

11.

    On 29 March 1994 the Commission adopted Decision 94/210/EC relating to aproceeding pursuant to Articles 85 and 86 of the EC Treaty (IV/33.941 — HOV-SVZ/MCN) (OJ 1994 L 104, p. 34, hereinafter 'the Decision‘). The decision isbased on the EC Treaty and on Regulation (EEC) No 1017/68 of 19 July 1968applying rules of competition to transport by rail, road and inland waterway (OJ,English Special Edition 1968 (I), p. 302, 'Regulation No 1017/68‘).

12.

    So far as concerns the MCN Agreement's compatibility with the Community ruleson competition, the Decision considers that the MCN Agreement had, in breachof Article 85(1) of the Treaty, the object and effect of restricting competition onthe market for the inland transport of sea-borne containers between Germanterritory and the ports situated between Antwerp and Hamburg, since it eliminatedcompetition between Intercontainer and Transfracht for the sale of combinedtransport services to shippers and shipping companies, competition between therailway undertakings for the sale of combined transport services direct to shippersor shipping companies and competition between the railway undertakings on theone hand and Transfracht and Intercontainer on the other, for the sale of transportservices to shippers and shipping companies, and since it made access more difficultfor new competitors to Transfracht and Intercontainer (paragraphs 76 to 89 of theDecision). In this respect, the Decision adds that the agreement is not covered bythe exception provided for in Article 3 of Regulation No 1017/68, since it is notintended either to apply directly technical improvements or to achieve directlytechnical cooperation (paragraphs 91 to 98 of the Decision), and that, furthermore,an exemption under Article 5 of Regulation 1017/68 could not be contemplatedsince the agreement was not found to have improved the quality of the railway

transport service or promoted the productivity of the undertakings or technical andeconomic progress (paragraphs 99 to 103 of the Decision).

13.

    So far as concerns the compatibility of tariffs applied by DB with the Communityrules on competition, the Decision states, first, that, in view of its statutorymonopoly, DB held a dominant position on the market for the supply of railtransport services in Germany, and, further, that DB abused that dominant positionby acting in such a way that tariffs for carriage between a Belgian or Netherlandsport and Germany are appreciably higher than for carriage between points withinGermany and the German ports. In that regard, the Decision states that DBcontrolled not only the level of tariffs charged for carriage of containers to andfrom northern ports, but also the level of tariffs for carriage to and from thewestern ports. In the first place, DB, as the compulsory supplier of rail services forthe part of the journey performed in Germany, had the power to control the levelof the selling tariffs charged by Intercontainer. Secondly, in view of thecomposition of the Steering Committee and of the fact that the Bureau Communhas its offices on Transfracht's premises, it had the power to block any decision inthe context of the MCN Agreement. Thirdly, it had unilaterally introduced outsidethe framework of the MCN Agreement and shortly after the conclusion thereof anew tariff structure known as 'Kombinierter Ladungsverkehr-Neu‘ (hereinafter'the KLV-Neu Structure‘) which provided for price reductions for journeys to andfrom northern ports, but not for journeys to and from the western ports(paragraphs 139 to 187 of the Decision).

14.

    The Decision further holds that the differences noted in the tariffs could not bejustified either by the fact that railway transport is subject to fiercer competitionfrom road haulage and inland waterway on journeys via the western ports than onthe journeys via the northern ports, or by the fact that the production costs aregreater for the journeys via the western ports than for the journeys via the northernports. In this regard, the Decision explains that the fiercer competition on thejourneys via the western ports could only justify a tariff difference in favour ofthose routes and that DB has not proved that there is a logical connection betweenthe differences in costs and the differences in tariffs (paragraphs 199 to 234 of theDecision).

15.

    Finally, the Decision considers it proven that DB infringed Article 86 of the Treatyat least in the period from 1 October 1989 to 31 July 1992 and that a fine shouldbe imposed on DB, taking into account the fact that it did not give any undertakingthat it would adjust its tariff practices, that the infringement was committeddeliberately and that it is particularly serious, among other reasons because itimpeded the development of rail transport, which is an important objective of theCommunity's transport policy (paragraphs 255 to 263 of the Decision).

16.

    Article 1 of the Decision finds that DB, SNCB, NS, Intercontainer and Transfrachthave infringed the provisions of Article 85 of the Treaty by concluding the MCN

Agreement providing for the marketing, by a 'bureau commun‘, on the basis oftariffs agreed within the Bureau, of all carriage by rail of sea-borne containers toor from Germany via a German, Belgian or Netherlands port. In Article 2 itfurther finds that DB has infringed the provisions of Article 86 of the Treaty byusing its dominant position on the rail transport market in Germany to imposediscriminatory tariffs on the market for the inland carriage of sea-borne containersto or from Germany via a German, Belgian or Netherlands port. Finally, inArticle 4, it imposes, pursuant to Article 22 of Regulation (EEC) No 1017/68, afine of ECU 11 million on DB in respect of its infringement of Article 86 of theTreaty (see also paragraphs 255 and 256 of the Decision).

17.

    The Decision was notified to the applicant on 8 April 1994.

18.

    By letter of 27 April 1994 counsel for the applicant asked the Commission to beallowed to consult the file on which the Decision was based in order better toprotect his client's interests. By letter dated 5 May 1994 the Commission refusedthat request on the ground that DB had already been permitted to consult the fileduring the pre-litigation procedure.

Procedure and forms of order sought by the parties

19.

    It is in those circumstances that the applicant, by application lodged at the CourtRegistry on 14 June 1994, brought the present action.

20.

    By letter of 31 August 1994 the applicant sent to the Court of First Instance anexpert's report entitled 'Kosten- und Marktanalyse für Containerverkehre in dieWest- und Nordhäfen ex BRD für den Zietraum 1989-1992 im Auftrag derDeutschen Bahn AG (Analysis of the costs and of the market in respect ofcontainer traffic from the FRG in the western and northern ports for the period1989-1992, requested by Deutsche Bahn AG)‘. The Court agreed to include thatreport in the case-file and, on 15 September 1994, a copy of the report was sentto the defendant.

21.

    Upon hearing the report of the Judge-Rapporteur, the Court decided to open theoral procedure without any preparatory inquiry. In the context of measures oforganization of procedure, however, the parties were requested to reply in writingto a number of questions prior to the hearing.

22.

    At the hearing in open court on 28 January 1997 the parties presented oralargument and replied to the Court's oral questions.

23.

    The applicant claims that the Court should:

—    annul the Decision;

—    in the alternative, annul the Decision in so far as it imposes a fine;

—    in the further alternative, reduce the amount of the fine;

—    order the defendant to pay the costs.

24.

    The defendant contends that the Court should:

—    dismiss the application;

—    order the applicant to pay the costs.

The claim for annulment of the contested decision

25.

    In its application the applicant relies essentially on four pleas in law in support ofits claim for annulment. The first plea alleges infringement of Article 85 of theTreaty and of the acts adopted by the Council with a view to specifying the scopeof Article 85 of the Treaty in the field of the carriage of goods. The second pleaalleges infringement of Article 86 of the Treaty. The third and fourth pleas allegeinfringement of the rights of the defence and breach of the principles of legalcertainty and sound administration respectively.

First plea, alleging infringement of Article 85 of the Treaty and acts adopted by theCouncil with a view to specifying the scope of Article 85 of the Treaty in the field oftransport

Arguments of the parties

26.

    The applicant maintains that the MCN Agreement is a technical agreement withinthe meaning of Article 3(1)(c) of Regulation No 1017/68 and that therefore it doesnot fall under the prohibition of restrictive practices laid down in Article 2 ofRegulation No 1017/68 and Article 85 of the Treaty. It points out, in thisconnection, that the purpose of the agreement was to establish cooperation intechnical matters such as the setting of timetables, the changing of locomotives andof crews at frontiers and the choice of terminals.

27.

    In so far as the agreement was intended for the joint fixing of tariffs, the applicantpoints out that Article 3 of Regulation No 1017/68 as well as Article 4 of CouncilDecision 82/529/EEC of 19 July 1982 on the fixing of rates for the internationalcarriage of goods by rail (OJ 1982 L 234, p. 5, 'Decision 82/529‘) and Articles 1and 4 of Council Recommendation 84/646/EEC of 19 December 1984 onstrengthening the cooperation of the national railway companies of the Member

States in international passenger and goods transport (OJ 1984 L 333, p. 63,'Recommendation 84/646‘) expressly allow the fixing of tariffs jointly betweenseveral railway undertakings for the combined transport of goods.

28.

    In the alternative, the applicant submits that the MCN Agreement should havebeen exempt from the prohibition of restrictive practices by virtue of Article 5 ofRegulation No 1017/68 and that the Decision does not explain the reasons forwhich no use was made of that provision.

29.

    In the further alternative, the applicant submits that the Commission's conclusionthat the MCN Agreement eliminates competition is flawed since Intercontainer andTransfracht operate on different routes and are therefore not competitors and sincethe national railway undertakings are likewise not in competition.

30.

    According to the defendant, Article 3 of Regulation No 1017/68 permits only theconclusion of agreements the exclusive object and effect of which is to applytechnical improvements or to achieve technical cooperation. The MCN Agreementexceeded that technical parameter, since it was intended to establish a joint tariffsystem.

31.

    In this respect, the defendant states that the authorization, granted by Article 3 ofRegulation No 1017/68, for 'the fixing and application of inclusive rates andconditions ... including special competitive rates‘ does not amount to authorizationto collude on prices with the aim of eliminating competition and sharing markets. The same applies to Article 4 of Decision 82/529. That article does not permitrailway undertakings to organize jointly the whole of cross-border railway transportof containers, but authorizes only those forms of cooperation which are intendedto prevent monopolies in rail haulage and access to the rail infrastructure fromimpeding the proper functioning of cross-border transport. The defendant observesthat the MCN Agreement is not covered by Recommendation 84/646, since theagreement concerned not only three railway undertakings but also two transportoperators, whereas the recommendation is addressed only to railway undertakingsand, in any event, it is only intended to encourage the forms of cross-bordercooperation made necessary by the existence of monopolies.

32.

    As regards the applicant's argument that the MCN Agreement should have beenexempt under Article 5 of Regulation No 1017/68, the defendant states that theconditions for application defined by that provision were not fulfilled because of themajor restrictions on competition brought about by the MCN Agreement.

33.

    Finally, the defendant states that there was genuine competition between DB,SNCB and NS and between Intercontainer and Transfracht, in particular in thatDB and Transfracht had an interest in effecting as many transport operations aspossible on journeys to the northern ports, while SNCB, NS and Intercontainer hada commercial interest in concentrating traffic towards the west. The defendantrefers in that context to 'competition between routes‘.

Findings of the Court

34.

    It should be pointed out, in limine, that one of the purposes of the MCNAgreement was to set up a common administration for the fixing of prices andtariffs for the carriage by rail of maritime containers to or from Germany througha Belgian, Netherlands or German port. It is clear from the wording of theagreement itself that it allocated to the Steering Committee the task of 'definitionor amendment of the short, medium and long-term business policy concerning thetraffic covered by the agreement, and in particular the definition or amendment ofthe policy on sales and prices‘ and to the Bureau Commun that of 'buying/price-setting/selling‘.

35.

    The Court considers that that common initiative consisted in 'directly or indirectlyfixing prices‘ within the meaning of Article 85(1)(a) of the Treaty and ofArticle 2(a) of Regulation No 1017/68. It follows from the case-law that anagreement establishing a common system for fixing prices falls within the scope ofthose provisions (as regards Article 85(1)(a) of the Treaty, see Case 8/72Cementhandelaren v Commission [1972] ECR 977, paragraphs 18 and 19, and CaseT-6/89 Enichem Anic v Commission [1991] ECR II-1623, paragraph 198; as regardsArticle 2(a) of Regulation No 1017/68, see Case T-14/93 Union Internationale desChemins de Fer v Commission [1995] ECR II-1503, paragraph 50), irrespective ofthe extent to which the provisions of the agreement had in fact been observed (seeCase 246/86 Belasco and Others v Commission [1989] ECR 2117, paragraph 15, andCementhandelaren v Commission, paragraph 16).

36.

    The reason for this is that the joint fixing of prices restricts competition, inparticular by enabling every participant to predict with a reasonable degree ofcertainty what the pricing policy pursued by its competitors will be(Cementhandelaren v Commission, paragraph 21). The MCN Agreement cannotavoid being characterized in those terms. Since each of the undertakings concernedhas an obvious commercial interest in as many transport operations as possiblebeing effected on the routes on which it is most active, there is a competitiverelationship between DB and NS and between DB and SNCB. Likewise, NS is incompetition with SNCB and Transfracht with Intercontainer. Therefore, byestablishing a common pricing system, those undertakings have appreciablyrestricted or even eliminated all competition on prices as referred to in the case-lawcited above.

37.

    The Court considers, furthermore, that, contrary to the applicant's assertions, theMCN Agreement is not covered by the legal exception provided for inArticle 3(1)(c) of Regulation No 1017/68 which authorizes 'agreements, decisionsor concerted practices the object and effect of which is to apply technicalimprovements or to achieve technical co-operation by means of ... the organisationand execution of ... transport operations, and the fixing and application of inclusive

rates and conditions for such operations, including special competitive rates‘. Theintroduction of a legal exception for agreements of a purely technical nature cannotamount to an authorization, on the part of the Community legislature, allowingagreements to be concluded whose purpose is the joint fixing of prices. If it wereotherwise, any agreement establishing a joint price-fixing system in the railway, roador inland waterway transport sector would have to be regarded as a technicalagreement within the meaning of Article 3 of Regulation No 1017/68, andArticle 2(a) of that regulation would be rendered nugatory.

38.

    Furthermore, the independent determination by each economic operator of hiscommercial policy and in particular of his pricing policy corresponds to the conceptinherent in the competition provisions of the Treaty (Case 26/76 Metro vCommission [1977] ECR 1875, paragraph 21; Case T-1/89 Rhône-Poulenc vCommission [1991] ECR II-867, paragraph 121). It follows that the exceptionprovided for in Article 3 of Regulation No 1017/68, and in particular the words'inclusive rates‘ and 'competitive rates‘, must be construed with caution. TheCourt has already pointed out that, having regard to the general principleprohibiting agreements restrictive of competition which is laid down in Article 85(1)of the Treaty, provisions of an exempting regulation which derogate from thatprinciple must be strictly construed (Joined Cases T-24/93, T-25/93, T-26/93 and T-28/93 Compagnie Maritime Belge Transports and Others v Commission [1996]ECR II-1201, paragraph 48, and Case T-9/92 Peugeot v Commission [1993] ECR II-493, paragraph 37).

39.

    In view of the foregoing considerations, the Court finds that the term 'inclusiverate‘ must be understood to mean the 'whole-journey‘ price, including the variousnational parts of a transnational journey, and the term 'competitive price‘, whichis linked by the expression 'including‘ to the abovementioned term 'inclusiverates‘, must be understood as allowing the various undertakings operating on asingle transnational route to fix inclusive rates not only by adding together thetariffs for each of them, but also by incorporating common adjustments to ensurethe competitiveness of the transport in question in relation to other modes oftransport, without however altogether eliminating the independence of eachundertaking with regard to the fixing of its own tariffs in accordance with itscompetitive interests. However, the MCN Agreement did result in such eliminationand exceeded the scope of action permitted by the abovementioned terms, sinceit entrusted, without restriction, pricing policy and price formation to a joint bodyand since, furthermore, the inclusive rates for each journey covered by the MCNAgreement were jointly fixed by an undertaking which did not even operate on thatjourney.

40.

    It is clear from the foregoing paragraphs that the Commission was right indetermining that the MCN Agreement exceeded the framework set down inArticle 3(1)(c) of Regulation No 1017/68.

41.

    That interpretation of Article 3(1)(c) of Regulation No 1017/68 does not conflictwith Article 4 of Decision 82/529; on the contrary, it is in conformity with thatarticle. Article 4 of Decision 82/529 authorizes the establishment by railwayundertakings of 'tariffs with common scales offering rates for whole journeys‘, andadds that 'the rates set out in those tariffs may be independent of those obtainedby adding the rates of the national tariffs‘, the purpose of that independence beingto protect the competitive position of railway transport vis-à-vis other modes oftransport, as stated in the fourth recital in the preamble to Decision 82/529. Nonethe less, Article 4 likewise assumes that the railway undertakings take account of'their own interest‘. As is clear from its second recital, Decision 82/529 accordsa definite value to a 'sufficient commercial independence‘ of the railwayundertakings.

42.

    Recommendation 84/646, which is also relied upon by the applicant, cannot castdoubt on that conclusion. Article 4 of the recommendation again confirms that itis possible to establish inclusive tariffs that are not equal to the sum of the nationaltariffs and encourages the establishment of joint sales offices with forwardingagents, but does not allow, as the MCN Agreement did, unlimited power in mattersof commercial management and price formation to be conferred to such bodies.

43.

    Finally, the Court considers that, in relation to the MCN Agreement, theCommission was in no way obliged to apply Article 5 of Regulation No 1017/68,which provides that '[T]he prohibition in Article 2 may be declared inapplicable... to any agreement or category of agreement between undertakings ... whichcontributes towards ... improving the quality of transport services, or promotinggreater continuity and stability in the satisfaction of transport needs on marketswhere supply and demand are subject to considerable temporal fluctuation, orincreasing the productivity of undertakings, or furthering technical or economicprogress ... (without making) ... it possible for such undertakings to eliminatecompetition in respect of a substantial part of the transport market concerned‘. In that regard, it should be stated at the outset that, contrary to the applicant'sassertions, the Commission provided reasons for its refusal to exempt the MCNAgreement, by pointing out in paragraphs 99 to 103 of the Decision that it had notbeen established that the agreement provided technical or economic progress, animprovement in the quality of the railway services or an increase in productivity,whereas it imposed significant restrictions on competition, so that the conditionsrequired by Article 5 of Regulation No 1017/68 were in any event not fulfilled. Furthermore, it must be held that, as is evident from the findings already made bythe Court (paragraphs 34 to 40), by declaring Article 2 of Regulation No 1017/68to be inapplicable to the MCN Agreement, the Commission made it possible forthe undertakings concerned to eliminate competition between themselves.

44.

    It follows from all the foregoing that the Commission was right to consider that theMCN Agreement was incompatible with the common market. Accordingly, the firstplea must be rejected.

The second plea, alleging infringement of Article 86 of the Treaty

45.

    There are two parts to this plea. The applicant claims, first of all, that DB did notoccupy a dominant position within the common market or in a substantial part ofit. It maintains, secondly, that the conduct complained of in the Decision did notconstitute an abuse.

The first part of the plea, concerning the absence of a dominant position

—    Arguments of the parties

46.

    The applicant considers that the Decision wrongly defines the relevant market andcomes to the mistaken conclusion that DB held a dominant position.

47.

    According to the applicant, the relevant market covers carriage of maritimecontainers not only by rail, but also by road and inland waterway. In thisconnection, it relies on the case-law according to which the material definition ofthe market must include all the services and goods which are interchangeable witheach other. Applying that case-law to the present case, the applicant considers thatthe definition of the market in which the Commission found that DB held adominant position contains two errors.

48.

    First, by limiting the market solely to railway services, the Commission disregardedthe fact that Transfracht was a subsidiary of DB and that, since parent andsubsidiary companies constitute a single economic entity, the economic activities ofDB included, throughout Germany, not only rail transport services such as accessto the railway network and the provision of locomotives and drivers but also theother components of carriage by rail of maritime containers.

49.

    Furthermore, by excluding from the market carriage by road and inland waterway,the Commission disregarded the fact that, for nearly all container-forwardingagents, those modes of transport are interchangeable with carriage by road. Suchinterchangeability is illustrated in particular by the fact that there is significantcompetition on prices between rail transport operators, road hauliers and inlandwaterway transport operators.

50.

    Considering therefore that the relevant market must cover all the components ofcarriage by rail of maritime containers and also carriage by road and inlandwaterway, the applicant claims that the fact that DB held a statutory monopolywithin Germany for the provision of rail services was not sufficient to prove thatit held a dominant position. It points out that the holding of a statutory monopolyamounts to a dominant position within the meaning of Article 86 of the Treaty onlywhere that monopoly encompasses the whole of the relevant market and where theservices concerned are not subject, in that relevant market, to real competition. As

a result of competition between road hauliers and inland waterway transportoperators, DB held only a 6% share of the container transport market despite itsstatutory monopoly.

51.

    The defendant observes that the Court of Justice has repeatedly held that anundertaking which has a statutory monopoly in a Member State is, by virtue of thatfact, in a dominant position and that the territory of a Member State over whichthe monopoly extends must be considered to be a substantial part of the commonmarket within the meaning of Article 86 of the Treaty.

52.

    The applicant's argument that DB only held a 6% share of the container transportmarket is based on an altogether different delimitation of the market which is notin conformity with the case-law. The defendant states, in this connection, that thecase-law requires that the interchangeability of the provision of services be assessedfrom the consumer's point of view and according to the characteristics of theservices in question and to the structure of supply and demand. From all thosepoints of view, the rail services provided by DB are not shown to beinterchangeable with the other services provided in the context of the carriage ofmaritime containers.

—    Findings of the Court

53.

    In order to establish whether at the material time DB held a dominant position, itis necessary to examine first of all the definition of the market in the services inissue. To that end, it should be borne in mind that the Commission defined themarket on which it found the existence of a dominant position as being, materially,that of rail services, which are sold by the railway undertakings to the transportundertakings and which consist essentially in making locomotives available,providing traction therewith and access to the railway infrastructure and, as regardsgeography, as covering the whole of Germany. Notwithstanding the use in Article 2of the decision of a wider definition of the actual market ('rail transport‘), thedelimitation referred to above corresponds to that used in the recitals in thepreamble to the Decision and to that understood by the applicant. TheCommission moreover confirmed that definition in reply to a question put by theCourt before the hearing.

54.

    So far as concerns the material definition of the market, the Court observes that,in order to be considered the subject of a sufficiently distinct market, it must bepossible to distinguish the service or the good in question by virtue of particularcharacteristics that so differentiate it from other services or other goods that it isonly to a small degree interchangeable with those alternatives and affected bycompetition from them (see the judgments of the Court of Justice in Case 66/86Ahmed Saeed Flugreisen and Silver Line Reisebüro v Zentrale zur Bekämpfungunlauteren Wettbewerbs [1989] ECR 803, paragraphs 39 and 40, and Case 27/76

United Brands v Commission [1978] ECR 207, paragraphs 11 and 12, and of theCourt of First Instance in Case T-30/89 Hilti v Commission [1991] ECR II-1439,paragraph 64). In that context, the degree of interchangeability between productsmust be assessed in terms of their objective characteristics, as well as the structureof supply and demand on the market, and competitive conditions (see the judgmentof the Court of Justice in Case 322/81 Michelin v Commission [1983] ECR 3461,paragraph 37, and the judgment of the Court of First Instance in Case T-83/91Tetra Pak v Commission [1994] ECR II-755, paragraph 63).

55.

    The Court finds that the rail services market constitutes a sub-market distinct fromthe rail transport market in general. It offers a specific range of services, inparticular the provision of locomotives, traction and access to the railwayinfrastructure which, while admittedly provided according to the demands of therailway transport operators, is in no way interchangeable or in competition withtheir services. The distinct character of railway services also derives from thedemand and supply factors that are specific to those services. On the one hand,it is not possible for transport operators to provide their services if they do nothave railway services available to them. On the other hand, the railwayundertakings held, at the material time, a statutory monopoly as regards theprovision of railway services within their respective countries. Thus, it is not indispute between the parties that, until 31 December 1992, DB had a statutorymonopoly as regards the provision of railway services within Germany.

56.

    As may be seen from the case-law, a sub-market which has specific characteristicsfrom the point of view of demand and supply and which offers products whichoccupy an essential and non-interchangeable place in the more general market ofwhich it forms part must be considered to be a distinct product market (see CaseT-69/89 RTE v Commission [1991] ECR II-485, paragraphs 61 and 62). In the lightof that case-law and having regard to the foregoing considerations, the Commissionwas justified in not taking into consideration, in its material definition of themarket, the services provided by the rail transport operators and, even more so,those provided by road hauliers and inland waterway transport operators.

57.

    Next, it is clear from the case-law that where, as in the present case, the servicescovered by the sub-market are the subject of a statutory monopoly, placing thoseseeking the services in a position of economic dependence on the supplier, theexistence of a dominant position on a distinct market cannot be denied, even if theservices provided under a monopoly are linked to a product which is itself incompetition with other products (Case 26/75 General Motors v Commission [1975]ECR 1367, paragraphs 5 to 10, and Case 226/84 British Leyland v Commission[1986] ECR 3263, paragraphs 3 to 10).

58.

    So far as concerns the geographic delimitation of the market, it is sufficient to pointout that a Member State may constitute, in itself, a substantial part of the commonmarket on which an undertaking may hold a dominant position, in particular where

it enjoys a statutory monopoly over that territory (Case 127/73 BRT v Sabam andFonior [1974] ECR 313, paragraph 5).

59.

    It follows from all the foregoing considerations that the first part of the plea mustbe rejected.

The second part of the plea, that there was no abuse of a dominant position

—    Arguments of the parties

60.

    The applicant claims that even assuming that the Court finds that there was adominant position, it should still be held that DB did not abuse that position. Inso far as the contested decision is based on the level of the tariff for carriage by railto and from western ports and states that it is higher than that for carriage by railto and from the northern ports, it is essentially criticizing Intercontainer's tariffpractices and not those of DB. In that context, the applicant pointed out at thehearing that the tariffs charged by DB for the provision of its rail services toIntercontainer have always been lower than the tariffs charged by DB toTransfracht and than the tariffs charged by NS to Intercontainer, whereas, in itsapplication, it had stated that it did not deny that the level of its tariffs for trafficvia the western ports was higher than that of those charged for traffic via thenorthern ports (page 25 of the application). The applicant concludes that DBcould not be held responsible for the average tariff applied to carriage to and fromthe western ports being higher compared to the tariffs applied to carriage to andfrom the northern ports. It observes, moreover, that, for a large number ofjourneys via the western ports, a major part of the component of the tariff relatingto the rail services had nothing to do with DB but concerned the services suppliedby NS or SNCB (pages 31 and 32 of the reply).

61.

    In the same context, the applicant denies that DB blocked, in the context of theMCN Agreement, any reduction of Intercontainer's tariffs and that it had in factrequired those tariffs to be maintained. On that point, the applicant points outthat, under the MCN Agreement, every price change required unanimity in theSteering Committee, including, therefore, the consent of the other railwaycompanies and Intercontainer, and that it had not been proved that it was DBwhich had prevented a reduction of the difference between the rail transport tariffsapplied on western journeys and those on northern journeys.

62.

    The applicant adds that, in any event, each of the parties to the MCN Agreementwas entitled, under the terms of the agreement, to terminate it. It claims that theparties to the MCN Agreement were therefore in a position to avoid beinginfluenced by DB if they so wished (page 31 of the reply).

63.

    The applicant then maintains that the difference between the tariffs applied on thewestern journeys and those applied on the northern journeys were, in any event,objectively justified by a difference in the competitive situation and in costs.

64.

    In order to illustrate that difference with regard to the competitive situation, theapplicant states that, on northern journeys, competition from inland waterways isweak and that competition from road hauliers is limited to German lorries,whereas, on western journeys, inland waterways is the cheapest mode of transportand competition from road hauliers is also very strong. In particular, the tariffsapplied by road hauliers and inland waterway transport operators on westernjourneys were 20 to 40% lower than the tariffs applied by DB/Transfracht onnorthern journeys. The applicant states that it is not possible for it, as a smallcompetitor on the transport market on western journeys, to cope with such ratesand to cover its own costs at the same time. It had been making a loss for yearson the western journeys and that loss had become more serious after DB took thestep in 1989 and 1991 of bringing the tariffs applied to the western journeys a littlecloser to those applied to northern journeys. A temporary joint initiativeundertaken by DB and NS at the end of 1993 for the purpose of applying the samerates as those of the road hauliers on one of the western journeys also failedcompletely in that it did not win new customers for carriage by rail.

65.

    The applicant considers, moreover, that the consequence of the difference betweenthe competitive situation on the western journeys and that on the northern journeysis that the Commission's definition of the market on which DB allegedly abused itsdominant position is fundamentally flawed. It states, in this regard, that theCommission defined a market covering the inland transport of sea-borne containersboth on western journeys and northern journeys, whereas it is settled case-law thatonly geographical areas in which the objective competitive conditions are similarmay be considered to constitute a uniform market. The applicant considers thatsuch a flaw in the definition of the market is in itself sufficient to justify annullingthe contested decision.

66.

    So far as concerns transport costs and in particular the costs of rail services, theapplicant states that they are not determined exclusively by length of journey butalso depend on other factors such as the number and duration of the shuntingoperations, customs formalities, the time worked by the crews and the length oftime during which locomotives and wagons are used. It follows that transport costscan be very different for journeys whose length is identical. In the present case, thedifferences in the costs arise from the fact that rail traffic is denser on the northernjourneys and from the fact that, on western journeys, the crossings by trains of theBelgian and Netherlands borders give rise to costs.

67.

    In particular, the large volume of transport on the northern journeys enables blocktrains to be used to transport containers bound for the same destination, such trainsnot needing therefore to be shunted. Moreover, on northern journeys it is notnecessary to change locomotives since DB is responsible for traction over the whole

length of the journey. Costs are therefore lower for the northern journeys, whichmakes it possible to apply lower tariffs to those journeys.

68.

    Finally, the fact that, with the introduction of the KLV-Neu structure, the DBfurther reduced costs and, therefore, the rates for rail services on northern journeysmakes no difference because, in the Decision, the Commission based its conclusionson a comparison of Intercontainer's tariffs with those of Transfracht and, moreover,the Commission did not prove that the reduction of prices in Germany under theKLV-Neu structure was not economically justified.

69.

    The defendant points out, in limine, that the Court has consistently held that anabuse within the meaning of subparagraph (c) of the second paragraph ofArticle 86 of the Treaty is committed where an undertaking uses its dominantposition in order to apply dissimilar conditions to equivalent transactions with thepurpose of placing its own services at an advantage.

70.

    The defendant states, first of all, that it considered the carriage by Intercontainerof containers from and to the western ports, on the one hand, and the carriage byTransfracht of containers from and to the northern ports, on the other, to be'equivalent transactions‘.

71.

    The defendant goes on to state that it considered the differences between rates perkilometre charged for Intercontainer's and Transfracht's services to be 'dissimilarconditions‘. Those differences ranged from 2 to 77% in respect of the carriage ofempty containers and from 4 to 42% in respect of full containers, according tofigures supplied by the undertakings concerned on the basis of Intercontainer'stariffs for the carriage of containers to the port of Rotterdam and on the basis ofTransfracht's tariffs in respect of carriage to the port of Hamburg, figures whichappear in Annexes 3 to 9 to the Decision and which are analysed in paragraphs 162to 171 thereof. The defendant established those differences on the basis ofcomparisons whose only variable was the length of journey. It justified this methodof comparison by reference to information provided by Transfracht at the hearing,according to which the length of journeys is the decisive criterion.

72.

    According to the defendant, there is no objective justification for the difference inrates which was found to exist.

73.

    So far as concerns the competitive situation, the defendant observes that theexistence of inter-modal competition which is stronger on the western journeyscould account for the tariffs applied by Intercontainer being lower than thoseapplied by Transfracht, but cannot account for a difference in the opposite sense. Furthermore, DB was not in competition with road hauliers and inland waterwaytransport operators, since its services are by nature rail services and are nottherefore, from the point of view of Intercontainer and Transfracht,

interchangeable with the services offered by road hauliers and inland waterwaytransport operators.

74.

    So far as concerns production costs, the defendant considers that the applicant hasnot demonstrated that traffic via the western ports entails higher costs than thetraffic via northern ports. In particular, it has not been proved that bordercrossings significantly increase transport costs, and the data available on the volumeof traffic and the type of consignments disclose no logical relation with thetransport costs and tariffs. Furthermore, the average price per kilometre chargedby DB to Intercontainer is lower than the average price charged by DB toTransfracht and this suggests that the costs of the rail services provided for carriageto and from the western ports are lower than the costs of the rail services providedfor carriage to and from the northern ports (pages 38 and 39 of the defence).

75.

    As to whether the abovementioned differences in tariffs can be attributed to DB,the defendant repeats the analysis which it had already set out in paragraphs 143to 156 of the Decision, according to which DB had the power to block decisionswithin the bodies set up by the MCN Agreement and used that agreement in orderto prevent a decrease in Intercontainer's tariffs, while applying to the northernjourneys a new tariff system unilaterally created by itself. The defendant furtherstates that the dissatisfaction of Intercontainer, NS and SNCB with the attitudeadopted by DB within the framework of the MCN Agreement emerges clearly fromthe minutes of the meetings held by Intercontainer and of the meetings held underthe MCN Agreement.

76.

    The defendant concludes that DB imposed tariff differences and that thosedifferences constitute discrimination. It states that the economic effects of suchdiscrimination are not to be found in the dealings between the rail transportoperators and the other transport operators but in the dealings between DB andNS and SNCB and in those between Transfracht and Intercontainer. According tothe defendant, it is clear that, in those dealings, DB and Transfracht gained fromthe abovementioned discriminatory tariffs.

—    Findings of the Court

77.

    It should be pointed out in limine that the first paragraph and subparagraph (c) ofthe second paragraph of Article 8 of Regulation No 1017/68 reproduce the wordingof the first paragraph and subparagraph (c) of the second paragraph of Article 86of the Treaty and prohibit, in so far as trade between Member States may beaffected thereby, any abuse of a dominant position within a substantial part of thecommon market through the application of 'dissimilar conditions to equivalenttransactions with other trading parties, thereby placing them at a competitivedisadvantage‘. Moreover, none of the recitals in or the provisions of RegulationNo 1017/68 confers upon Article 8 of the regulation a purpose which is substantiallydifferent from that of Article 86 of the Treaty. Accordingly, by finding that

Article 86 of the Treaty and not Article 8 of Regulation No 1017/68 had beeninfringed, the Commission did not commit an error without which the content ofthe decision might have been different. The choice of Article 86 of the Treaty asthe article of reference in the Decision was not, moreover, criticized by theapplicant.

78.

    It should next be pointed out that the concept of abuse of a dominant positionamounts to prohibiting a dominant undertaking from strengthening its position byusing methods other than those which come within the scope of competition on thebasis of quality (see, to that effect, Case C-62/86 AKZO v Commission [1991]ECR I-3359, paragraph 70). Thus, an undertaking may not apply artificial pricedifferences such as to place its customers at a disadvantage and to distortcompetition (Tetra Pak v Commission, cited above, paragraph 160).

79.

    Furthermore, the existence of an abuse of a dominant position cannot be ruled outby the fact that the undertaking which holds the dominant position has formallyentered into an agreement the object of which is the joint fixing of tariffs and whichthus falls within the scope of the prohibition of restrictive agreements. Theexistence of such an agreement does not preclude the possibility that one of theundertakings bound by the agreement might unilaterally impose discriminatorytariffs (see, by analogy, Ahmed Saeed Flugreisen and Silver Line Reisebüro, citedabove, paragraphs 34 and 37).

80.

    In the present case the Court finds that several factors enabled the Commission toconclude that, in spite of the MCN Agreement and its primary objective, whichwas, as the applicant confirmed at the hearing, to lower Intercontainer's tariffs andthus restore the competitive position of rail transport on the western journeys, DBacted unilaterally in a manner which thwarted that objective.

81.

    First, the Commission had in its possession a set of documents, to which it refersin paragraphs 152 to 154 of the Decision, the existence of which was not disputedby the applicant and the content of which tended to confirm that DB was, in fact,responsible for fixing tariffs within the framework of the MCN Agreement and,accordingly, for maintaining the differences in tariffs. Thus, the minutes of aplenary meeting of Intercontainer's Management Board mention a statement madeby a representative of SNCB according to which the Steering Committee 'had beenshort-circuited by DB‘. Likewise, an internal memorandum of Intercontainer statesthat 'northern port traffic is being handled directly and exclusively by Transfrachtand DB without any participation by [the Steering Committee]. In practice, it hasin addition emerged that the power of decision-making as regards tariffs does notemanate from [the Steering Committee]‘. Finally, certain proposals formulated byDB and recorded in the minutes of a meeting between the representatives of thewestern ports and DB, SNCB and NS unequivocally imply that DB had the powerenabling it to control the level of tariffs both on the western and on the northernjourneys. DB in particular proposed during that meeting '[to re-examine] the level

of prices ... in the light of the German political context‘ with a view to obtainingthereby a '50% reduction in the difference on 1 January 1990‘ and a 'furtherreduction on 1 July 1990‘.

82.

    There was therefore some evidence to support the Commission's finding to theeffect that DB and Transfracht took advantage of their ability to block decisions,acquired by them through the requirement for unanimity in the SteeringCommittee's decision-making procedure (see paragraph 6 above), in order toprevent a decrease in Intercontainer's tariffs. Contrary to what the applicantmaintains, SNCB, NS and Intercontainer were not able to avoid such blockingtactics by terminating the MCN Agreement. In the first place, termination of theMCN Agreement would not have altered the fact that, for each journey betweenthe port of Antwerp or Rotterdam and a German town, the railway and transportundertakings operating in Belgium and the Netherlands depended on DB'scooperation in order to continue the journey within Germany. Secondly,termination of the agreement would not have altered the fact that DB set, incomplete independence, the level of the tariffs for carriage on the northernjourneys and that it thus influenced the difference between the tariffs in respect ofwestern journeys and those in respect of northern journeys.

83.

    In the second place, it is not disputed that DB unilaterally introduced on 1 June1988, that is to say barely three months after the entry into force of the MCNAgreement, a new tariff structure, namely the KLV-Neu structure. That wasconfirmed by the applicant in reply to a question put by the Court before thehearing. In that reply, the applicant also confirmed that the KLV-Neu structureled to a decrease in rates which worked only to the benefit of forwarding agents forthe carriage by rail of maritime containers passing through German ports, giventhat that tariff system was based on rationalization measures which, in practice,were applied only to container traffic passing through the northern ports.

84.

    It follows from the Court's findings in the foregoing paragraphs that the conductof DB during the period under investigation directly contributed to the maintenanceof a difference between the rates per kilometre applicable to carriage via thewestern ports and those applicable to carriage via the northern ports.

85.

    At this stage in the Court's reasoning the abovementioned difference in rates perkilometre should be examined in order to ascertain whether it was discriminatoryand thus affected the competitive position of certain operators.

86.

    For the purpose of that examination, the figures appearing in Annexes 3 to 9 to theDecision should be analysed. Those figures show that, apart from Saarbrücken, foreach destination which was substantially nearer to Rotterdam than to Hamburg andin respect of which carriage via Rotterdam was therefore objectively moreadvantageous, that commercial advantage by comparison with carriage viaHamburg was in each case counterbalanced either by higher total prices forcarriage to Rotterdam or by the application of equal total prices. The dissimilar

total prices include, for example, those applied to carriage of empty containersbetween 1 October 1990 and 31 December 1991 (Annex 3) to Duisburg, Bochum,Wuppertal, Mannheim and Karlsruhe. Those total prices result in differences inprices per kilometre of 77.6% (Duisburg), 56.5% (Bochum), 42% (Wuppertal),16.5% (Mannheim) and 22.6% (Karlsruhe). The equal total prices include, forexample, those applied from 1 January 1992 (Annex 7) in respect of the carriageof full containers to Frankfurt, Karlsruhe, Duisburg, Düsseldorf, Wuppertal andBochum. Those prices result in differences in price per kilometre of 4.6%(Frankfurt), 11.35% (Karlsruhe), 58% (Düsseldorf), 28% (Wuppertal) and 20.9%(Bochum). Furthermore, it appears that, with the sole exception of Saarbrücken,the total prices applied to carriage between Rotterdam and any town in Germany,whether it was nearer to Rotterdam or Hamburg, was not lower than the totalprices applied to carriage from or to Hamburg. That was the case, for example,with respect to the KLV prices applied to the carriage of containers as from 1 July1991 (Annex 9) to Frankfurt (a total price of DM 857 to Rotterdam, as against DM833 to Hamburg), Düsseldorf (DM 653 as against DM 618) and Mainz (DM 867as against DM 843), on the one hand (towns closer to Rotterdam than toHamburg), and to Augsburg (DM 1 456 as against DM 1 415), Munich (DM 1 520as against DM 1 410) and Regensburg (DM 1 386 as against DM 1 334), on theother hand (towns closer to Hamburg). The Court finds that that practiceartificially consolidated a protective system of tariffs for carriage by rail passingthrough the northern ports and must be regarded as an imposition of dissimilartariff conditions to the detriment of the competitive position of undertakingsoperating on the western rail journeys by comparison with those operating on thenorthern rail journeys.

87.

    The applicant stated that the differences in price per kilometre were due to thefact that the costs of providing the services were higher on the western journeysthan on the northern journeys and to the fact that carriage by rail was subject tostronger inter-modal competition on the western journeys than on the northernjourneys.

88.

    The Court finds, in the first place, that the difference in costs relied on by theapplicant was partially created by DB itself. In particular, DB adopted severalrationalization measures within the framework of the KLV-Neu tariff structure suchas increasing the use of direct and block trains and concentrating on night trafficand on carriage to certain terminals operated on rationalized lines. Thosemeasures enabled costs to be reduced, but only for traffic to and from Germanports (see paragraph 83).

89.

    It should be pointed out, in this respect, that the applicant has not put forward anyargument to show that the provision of rail services for the carriage of goods toBelgian and Netherlands ports had necessarily to be excluded from therationalization measures adopted under the KLV-Neu system and, consequently,from the complete range of the cost-reduction measures taken by DB. In this

regard, the argument that the rationalization measures introduced by the KLV-Neusystem could not be applied to traffic via the western ports because its volume wassmall and that it was therefore impossible to assemble direct and block trains is notpersuasive. The applicant moreover stated on two occasions, in reply to questionsput by the Court at the hearing, that block trains were assembled on the westernjourneys.

90.

    In so far as the applicant alleges that certain costs are specific to the westernjourneys, namely those entailed by locomotive changeover and reassembling ofwagons at the border, the Court finds that such costs can represent only a smallpart of the costs incurred in the provision of the services in question as a whole(every aspect of the provision of locomotives and traction) and cannot thereforejustify the price differences noted. It is clear, moreover, from the figures whichappear in Annex 15 to the Decision and which are not disputed by the parties thatthe total tariffs charged by DB and NS to Intercontainer for providing rail serviceson the journeys linking the German towns to the port of Rotterdam were, onaverage, lower than the tariff charged by DB to Transfracht for providing railservices on the northern journeys. Accordingly, the costs directly relating to theservices provided by the rail undertakings should logically be lower on the westernjourneys than those incurred on the northern journeys.

91.

    Secondly, the Court finds that the greater intensity of competition between railtransport operators, on the one hand, and road hauliers and inland waterwaytransport operators, on the other, on the western journeys cannot account for thelevel of tariffs applied by Intercontainer on those journeys being higher than thatof the tariffs applied by Transfracht on the northern journeys. Assuming that themore intense nature of inter-modal competition on the western journeys couldjustify a difference in price, it must be stated that, from a commercial point of view,this could give rise logically only to a difference in favour of the tariffs applied onthe western journeys.

92.

    Inasmuch as the applicant submits that the Commission's definition of thegeographical market is undermined by the difference in the competitive situation,it is sufficient to state that the definition of the geographical market does notrequire the objective conditions of competition between traders to be perfectlyhomogeneous. It is sufficient if they are 'similar‘ or 'sufficiently homogeneous‘and, accordingly, only areas in which the objective conditions of competition are'heterogenous‘ may not be considered to constitute a uniform market (UnitedBrands v Commission, cited above, paragraphs 11 and 53, and Tetra Pak vCommission, cited above, paragraphs 91 and 92). In the present case the greaterintensity of inter-modal competition on the western journeys cannot mean that theobjective conditions of competition which exist on those journeys are'heterogenous‘ by comparison to those existing on the northern journeys.

93.

    It is clear from the foregoing considerations that the Commission has adducedsufficient evidence to substantiate its conclusions concerning DB's conduct and that

it has proved to the requisite legal standard that, by its conduct, DB imposeddissimilar conditions for equivalent services, thus placing the other parties operatingon the western journeys at a disadvantage in competition with itself and itssubsidiary Transfracht. Accordingly, the second part of the plea must also berejected.

94.

    It follows that the second plea in law must be rejected in its entirety.

95.

    That conclusion cannot be invalidated by the additional complaint, raised by theapplicant in its reply and at the hearing, that the Commission gave inadequatereasons for its conclusions relating to the finding that DB had abused its dominantposition and that it thus infringed Article 190 of the Treaty. In this respect, itshould be borne in mind that, under Article 48(2) of the Rules of Procedure, nonew plea in law may be introduced in the course of proceedings unless it is basedon matters of law or of fact which come to light in the course of the procedure. The Court finds that the complaint that Article 190 of the Treaty was infringedconstitutes a new plea in law which is not based on matters of law or of fact whichhave come to light in the course of the procedure, with the result that it could notbe raised for the first time in the course of the proceedings.

96.

    In any event, by analysing in turn 'the key role of DB in the setting of tariffs forthe carriage of sea-borne containers from or to Germany‘ (paragraphs 143 to 156of the Decision), the 'tariffs of Transfracht and Intercontainer‘ (paragraphs 162to 177 of the Decision), the 'position of the undertakings regarding thediscriminatory nature of the tariff differences‘ and in particular the 'position of theDB/Transfracht group‘ (paragraphs 185 to 190 of the Decision), and thecompetitive situations and production costs (paragraphs 199 to 248 of the Decision)and by establishing a link between those analyses, the Commission explained indetail in its Decision why it considered DB to have abused its dominant position,thus enabling the Court to exercise its power of review. Similarly, both in itsapplication and during the course of the proceedings, the applicant replied toarguments put forward by the Commission in the Decision with regard to thefinding of abuse of a dominant position, which shows that the Decision providedit with the information necessary to enable it to defend its rights. Accordingly, itcannot be held that the statement of reasons was defective (Case C-350/88 Delacreand Others v Commission [1990] ECR I-395, paragraph 15, and Case T-150/89Martinelli v Commission [1995] ECR II-1165, paragraph 65).

Third plea, alleging infringement of the rights of the defence

Arguments of the parties

97.

    The applicant states that it asked the Commission, after notification of theDecision, for permission to consult the file and that the Commission refused its

request. It points out that such consultation was essential in order to enable itscounsel to prepare its case properly for the pre-litigation procedure. The fact thatconsultation was authorized during that procedure is not relevant in this respect,since at that time both the undertaking concerned and its counsel were different. In any event, the applicant maintains that it does not have in its possession thecopies made by DB's counsel after examining the file.

98.

    The applicant states furthermore that the German Law of 27 December 1993 forthe reorganization of the railways created a new body, the'Bundeseisenbahnvermögen‘, as the official successor to DB. It concludes fromthis that neither its identity or its rights may be assimilated to those of DB. Accordingly, the Commission's refusal to grant access to the file deprived theapplicant, which only came into existence in January 1994, of all rights in thatrespect. That amounts to a breach of the rights of the defence, causing theDecision to be vitiated by a breach of an essential procedural requirement.

99.

    The Commission's refusal to take account of the change of identity of theundertaking resulted, moreover, in a breach of the obligation to state reasons. Onthe basis in particular of the case-law of the Court of First Instance, the applicantsubmits that, where a decision taken in application of Article 85 or 86 of the Treatyimposes a fine on an undertaking which is considered liable for the infringementcommitted by another undertaking, it must contain a detailed account of thegrounds for holding the undertaking on which the fine is imposed liable for theinfringement (Case T-38/92 AWS Benelux v Commission [1994] ECR II-211,paragraphs 26 and 27). However, the contested decision contains no suchstatement of reasons.

100.

    The defendant states that the right of access to the file is extinguished once theadministrative procedure is closed. As soon as a decision is adopted and notified,the rights of defence of the person to whom it is addressed are protected by thepossibility of challenging the decision before the Court.

101.

    The defendant maintains moreover that, in any event, a change of lawyer cannothave any repercussion on the right of access to the file, since access to the file isa right conferred on the undertaking concerned and not on the individual lawyersengaged by it. The fact that, in this case, the identity of the undertaking itselfchanged is not relevant either, since the applicant is the successor both in economicand legal terms to DB and, accordingly, its rights and obligations are notdistinguishable from the rights and obligations of DB, including the right to consultthe file, which DB exercised during the pre-litigation procedure.

Findings of the Court

102.

    The Court finds that the applicant's request for access to the file was made to theCommission after adoption and notification of the Decision and thus post-dates the

Decision; consequently, the legality of the Decision cannot in any circumstances beaffected by the Commission's refusal to grant the requested access (see T-145/89Baustahlgewebe v Commission [1995] ECR II-987, paragraph 30, and Joined Cases209/78 to 215/78 and 218/78 Van Landewyck and Others v Commission [1980]ECR 3125, cited above, paragraph 40).

103.

    The third plea in law must therefore be rejected.

104.

    That conclusion cannot be invalidated by the fact that the applicant raised anothercomplaint of a procedural nature alleging that inadequate reasons were given forholding it responsible for the infringement found. That complaint was submittedfor the first time in the applicant's reply. Although it was submitted in the contextof the arguments on the matter of access to the file, the Court finds that it issubstantively different from the matter of access to the file and from the othermatters raised in the application and that it must therefore be held to constitutea separate and new plea in law. Since it is not based on matters of law or of factwhich have come to light during the procedure, the Court holds that the applicantwas not entitled to raise it in the course of the proceedings (see, on a similar point,paragraph 95).

105.

    In any event, the complaint, formulated by the applicant in its reply, that thestatement of reasons was inadequate cannot be upheld. The Commission stated,in paragraph 13 of the Decision, that on 1 January 1994 the applicant became DB'ssuccessor. The Court finds that that statement sufficiently explains the reason forwhich the Commission considered that it was entitled to enjoin the applicant to putan end to the infringement of Article 86 of the Treaty committed by DB and toorder it to pay a fine on account of that infringement (Articles 3 and 4 of theDecision). That assessment by the Commission is, moreover, entirely correct in thecontext of the present case, since it is clear from the German law concerning thereorganization of the railways and creating the Bundeseisenbahnvermögen that theapplicant acquired, through the Bundeseisenbahnvermögen, DB's assets to theextent necessary for the provision of railway services and for the operation of therailway infrastructure.

106.

    The facts of the present case are different, moreover, from those in AWS Beneluxv Commission, cited above, in which the Court held that a detailed account of thegrounds for holding the fined undertaking to be responsible for the infringementwas necessary because the alleged conduct concerned more than one undertaking. In that case, several undertakings were involved in the administrative procedure,and this gave rise to complex questions as to responsibility for the infringementwhen it was finally established. However, in the present case, the infringement forwhich the Commission imposed a sanction was committed by a single undertaking,DB. The reason for holding the applicant responsible for that infringement couldthus be reduced to the mere finding that it was the successor to DB.

Fourth plea, alleging breach of the principles of legal certainty and properadministration

Arguments of the parties

107.

    The applicant states that the Commission had known for a long time of DB's tariffpolicy and that it had described that policy on several occasions as conforming toCommunity law.

108.

    In that context, the applicant recalls that, by Parliamentary Written Question No1720/81 of 9 February 1982, the Commission had been asked to say when and howit would put an end to 'the distortion of competition between West German andNetherlands North Sea ports due to the discriminatory rates applied by the GermanFederal Railways‘ and that in reply to that question it had stated that 'all theenquiries made into the tariffs or tariff system in question to date have come to theconclusion that there is no discrimination behind the difference between the ratesfor freight bound for ports in the Netherlands and Germany respectively. The DBhas fixed its rates to meet competition, calculating them strictly on the basis of theprevailing market conditions and of its own costs and business interests‘ (OJ 1982C 198, p. 2). In its reply to a further Parliamentary Question in 1983, theCommission repeated that definition of its position (answer to Written Question No664/83, OJ 1983 C 308, p. 13).

109.

    In 1986, in answer to another parliamentary question, the Commission againconfirmed the differences between the prices charged on the German domestictransport market and those charged on the international transport market byreplying that '[i]n these distinct, highly competitive markets [Transfracht andIntercontainer] ... charge freight rates which take into account those of competingcarriers‘ and that, accordingly, 'Transfracht's rates ... [cannot] be considered ”aform of subsidy that distorts competition”‘ (answer to Written Question No 911/86,OJ 1987 C 198, p. 6).

110.

    The applicant states that the contested decision flatly contradicts the stance takenby the Commission before the Parliament, as described above. It considers that,by changing its transport policy so radically and suddenly, without even announcingsuch a change by a notice in the Official Journal, the Commission seriouslyinfringed the principles of legal certainty and proper administration.

111.

    The defendant considers that it did not create any expectation on the part of theapplicant. On none of the three occasions on which it defined its position beforethe Parliament, as referred to by the applicant, did it express a definite view on thelawfulness of the tariffs applied by DB in the light of the Community rules oncompetition: it only pointed out that it did not have, at the time, any informationwhich would enable it to conclude that those rules had been infringed. Thedefendant adds that it again defined its position before the Parliament, on the same

subject, in April 1989 in reply to Written Question No 2172/88 (OJ 1989 C 255,p. 23). On that occasion it had again abstained, for lack of information, fromexpressing a definite view as to the lawfulness of DB's conduct and it remarkedthat 'should the interested parties be prepared to inform the Commission of theirgrounds for considering these tariffs discriminatory, the matter can be investigatedwith the competent authorities‘.

112.

    The defendant observes, in addition, that the definitions of position referred toabove are not relevant to the present case, since they date back to 1982, 1983 and1986 and from April 1989, whereas the contested decision concerns DB's conductin the context of the MCN Agreement between 1 October 1989 and 31 July 1992.

Findings of the Court

113.

    It is settled case-law that the principle of legal certainty aims to ensure thatsituations and legal relationships governed by Community law remain foreseeable(Case C-63/93 Duff and Others v Minister for Agriculture and Food, Ireland, and theAttorney General [1996] ECR I-569, paragraph 20). To that end, it is essential thatthe Community institutions observe the principle that they may not alter measureswhich they have adopted and which affect the legal and factual situation of persons,so that they may amend those acts only in accordance with the rules oncompetence and procedure (Joined Cases T-79/89, T-84/89, T-85/89, T-86/89,T-89/89, T-91/89, T-92/89, T-94/89, T-96/89, T-98/89, T-102/89 and T-104/89 BASFand Others v Commission [1992] ECR II-315, paragraph 35, and Joined CasesT-80/89, T-81/89, T-83/89, T-87/89, T-88/89, T-90/89, T-93/89, T-95/89, T-97/89,T-99/89, T-100/89, T-101/89, T-103/89, T-105/89, T-107/89 et T-112/89 BASF andOthers v Commission [1995] ECR II-729, paragraph 73).

114.

    The Court finds that the Commission's answers to the parliamentary questionsreferred to by the applicant did not produce binding legal effects and were not suchas to affect DB's legal and factual situation. Moreover, the Commission's answers,in so far as they concern DB's tariffs, were formulated with great circumspection. In particular, in Written Question No 1720/81, the Commission added to itsassessment of DB's tariff policy the words 'to date‘ and stressed that it was 'readyand willing to look into the case raised by the Honourable Member, provided itreceives fuller details of the routes concerned and the rates and conditions ofcarriage which apply‘. Accordingly, the contested decision, which is basedspecifically on such 'fuller details‘, does not contradict the answers given by theCommission to the Parliament and does not, therefore, modify their scope.

115.

    It follows that the applicant could neither found a requirement of legal certaintyon the definitions of the Commission's position before the Parliament nor claim tohave entertained legitimate expectations on the basis of them.

116.

    Finally, the fact that the Commission made its answers to the Parliament subjectto reservations and subsequently, when it was in possession of fuller details as aresult of a complaint and of the measures of inquiry adopted in the course of theadministrative procedure, took a firmer and more critical line is not incompatiblewith the requirements of proper administration but constitutes rather an illustrationof it.

117.

    Consequently, the fourth plea must also be rejected.

The alternative claims for annulment or reduction of the fine

Arguments of the parties

118.

    The applicant considers that the fine imposed upon it offends against the principleof proportionality. That is so, first, because the Commission did not find, for 20years, that any infringement had been committed in the field of rail transport, eventhough it was fully aware of the practices of the railway undertakings. Accordingto the applicant, a fine must be annulled, or at least reduced, if the Commissionhas hesitated in taking action against alleged distortions of competition (JoinedCases 6/73 and 7/73 Istituto Chemioterapico Italiano and Commercial Solvents vCommission [1974] ECR 223, paragraphs 51 and 52).

119.

    The amount of the fine is also out of proportion to the gravity of the allegedinfringement. The consequences of infringement which are regarded by theCommission as proven did not, in fact, occur. The tariff practices examined did notentail any loss whatsoever for the undertakings comprised in the complainantassociation and they did not result, in the market for transport via the westernports in general, in Belgian and Netherlands forwarding agents migrating to othermodes of transport. Furthermore, such a move was, even theoretically, hardlypossible, since transport by road and inland waterway were already the most heavilyused modes of transport in that market.

120.

    Finally, the applicant criticizes the Commission for having, contrary to itsadministrative practices in the calculation of fines, calculated the limits set byArticle 22(2) of Regulation No 1017/68 on the basis of DB's total turnover (ECU12.9 thousand million for 1993), and not on the turnover for container traffic (DM461 million for 1993).

121.

    The defendant confirms that the contested fine is the first that has been imposedon the basis of Regulation No 1017/68, but it considers that this could not influencethe amount fixed. The amount of the fine is fully justified since DB was well awareof the discrimination which it practised and did not show itself willing to bring it toan end.

122.

    Moreover, DB's conduct had serious consequences. The defendant observes, inthat regard, that during the period from 1989 to 1991 the traffic via the northernports increased by 20% and the traffic via the western ports decreased by 10%. The defendant admits that the expert's report suggests that the flow of trafficremained more or less constant during the period under investigation, but addsthat, even supposing that those calculations are accurate, DB's conduct should stillbe considered to have prevented carriage of containers by rail from increasing onthe western journeys, which constitutes, in itself, a serious infringement of the rulesof competition.

123.

    The defendant further states that, according to the case-law of the Court of FirstInstance, the Commission is not required to announce that it intends to impose afine. It also emphasizes that it opened the inquiry as soon as it received acomplaint. Finally, it points out that the amount of the fine imposed is within thelimits laid down by Article 22 of Regulation No 1017/68.

Findings of the Court

124.

    It should be pointed out in limine that Article 22 of Regulation No 1017/68 enablesthe Commission to impose a fine for infringement of Article 8 of that regulation. The Court considers that the fact that the Commission found that Article 86 of theTreaty had been infringed rather than Article 8 of Regulation No 1017/68 did notpreclude it from imposing a fine under Article 22 of Regulation No 1017/68, sincethe relevant provisions of Article 8 of Regulation No 1017/68 have the samewording and the same scope as those of Article 86 of the Treaty (see paragraph77). The choice of Article 22 of Regulation No 1017/68 as the legal basis forimposing the fine was, moreover, not challenged by the applicant.

125.

    Also in limine, it should be pointed out that, pursuant to Article 24 of RegulationNo 1017/68, the Court has unlimited jurisdiction within the meaning of Article 172of the Treaty in proceedings brought against decisions in which the Commission hasfixed the amount of a fine or periodic penalty payment.

126.

    So far as concerns calculation of the fine, the Court finds that the Commissionobserved the upper limit of 10% indicated in Article 22(2) of Regulation No1017/68. Under that article the Commission may impose fines of up to 10% of the'turnover in the preceding business year of each of the undertakings participatingin the infringement‘. According to settled case-law, it is permissible, in thatcontext, to have regard both to the total turnover of the undertaking and to theturnover accounted for by the services in respect of which the infringement wascommitted (Compagnie Maritime Belge Transport and Others v Commission, citedabove, paragraph 233). In the light of the information provided by the parties, thefine of ECU 11 million corresponds to less than 0.1% of DB's turnover for 1993and to less than 5% of DB's turnover in 1993 in respect of container traffic. It

follows that the Commission remained in every respect below the limit prescribedby Article 22 of Regulation No 1017/68.

127.

    As regards the setting of the amount of the fine within the quantitative limitsprovided for in Article 22 of Regulation No 1017/68, it should be pointed out thatfines constitute an instrument of the Commission's competition policy and that thatinstitution must therefore be allowed a margin of discretion when fixing theiramount, in order that it may direct the conduct of undertakings towards compliancewith the competition rules (Martinelli, cited above, paragraph 59, and Case T-49/95Van Megen Sports v Commission [1996] ECR II-1799, paragraph 53). Nevertheless,the Court must verify whether the amount of the fine imposed is in proportion tothe duration of the infringements and to the other factors capable of affecting theassessment of the gravity of the infringements, such as the influence which theundertaking was able to exert on the market, the profit which it was able to derivefrom those practices, the volume and the value of the services concerned and thethreat that the infringement poses to the objectives of the Community (see JoinedCases 100/80, 101/80, 102/80 and 103/80 Musique Diffusion Française and Others vCommission [1983] ECR 1825, paragraphs 120 and 129).

128.

    In the present case, the Court finds that DB could not have been unaware that, byits extent, its duration and its systematic nature, its conduct considerably promotedcarriage via the German ports and thus resulted in serious restriction ofcompetition. It follows that the Commission lawfully considered that theinfringement had been committed deliberately (see, to this effect, Case T-61/89Dansk Pelsdyravlerforening v Commission [1992] ECR II-1931, paragraph 157). TheCommission moreover rightly took account of the relatively long duration (at leasttwo years and ten months) of the infringement, of the fact that DB in no wayundertook to change its practices following the forwarding of the statement ofobjections and of the commercial advantage which DB was able to derive from itsinfringement.

129.

    It follows from the foregoing considerations that the Commission had in itspossession information which showed that the abuse established was of a very gravenature and that therefore the amount of the fine imposed, and in particular thepercentage of the turnover which it represents, is not disproportionate.

130.

    Contrary to the applicant's assertion, the Commission was not required to fix amore moderate amount because no fines had previously been imposed in the sectorconcerned. In that regard, it should be pointed out that the unprecedented natureof a decision cannot be pleaded as a ground for a reduction of the fine, providedthat the gravity of the abuse of a dominant position and of the resulting restrictionsof competition are undisputed (Tetra Pak v Commission, cited above, paragraph239; Case C-333/94 P Tetra Pak v Commission [1996] ECR I-5951, paragraphs 46to 49). Nor is it open to the applicant to criticize the Commission for havinghesitated to take action and for having thus itself contributed to the duration of theinfringement. In this respect, it is sufficient to note that the Commission opened

an inquiry as soon as it received a complaint regarding the applicant's tariffpractices.

131.

    The Court therefore finds that there are no grounds for annulling or reducing thefine imposed on the applicant.

132.

    It follows from all the foregoing that the application must be dismissed.

Costs

133.

    Under Article 87(2) of the Rules of Procedure, the unsuccessful party is to beordered to pay the costs, if they have been asked for in the successful party'spleadings. Since the applicant has been unsuccessful and the Commission has askedfor costs, the applicant must be ordered to pay the costs.

On those grounds,

THE COURT OF FIRST INSTANCE (First Chamber, Extended Composition)

hereby:

1.    Dismisses the application;

2.    Orders the applicant to pay the costs.

SaggioKalogeropoulos Tiili Moura Ramos Jaeger

Delivered in open court in Luxembourg on 21 October 1997.

H. Jung

A. Saggio

Registrar

President

1: Language of the case: German.

ECR