JUDGMENT OF 15. 7. 1970 —CASE 45/69 BOEHRINGER MANNHEIM v COMMISSION

In Case 45/69

THE COURT composed of: R. Lecourt, President, R. Monaco and P. Pescatore, Presidents of Chambers, A. M. Donner, A. Trabucchi (Rapporteur), W. Strauß and J. Mertens de Wilmars, Judges, Advocate-General: J. Gand Registrar: A. Van Houtte

gives the following

JUDGMENT

Issues of fact and of law

I — Statement of facts and procedure

The facts which form the basis of the dispute and the procedure may be summarized as follows:

The dispute originated in the activity carried on by certain undertakings in the Community within the framework of an international cartel relating to the production and sale of quinine and quinidine and of their salts and compounds. These products are used in particular in the manufacture of medicines for the treatment of malaria and certain cardiac illnesses. The case relates only to the sale of quinine and quinidine and of their salts and does not concern the marketing of pharmaceutical products under trade-mark.

From 1958 the Boehringer undertaking, which manufactures chemical and pharmaceutical products, was a party to a series of agreements with other European manufacturers of those products. On 30 May and 11 to 13 June 1958, this undertaking, together with its subsidiary, Vereinigte Chininfabriken Zimmer & Co., GmbH, Mannheim, concluded an initial agreement relating to the division of national markets (Germany and the Netherlands) as well as fixing the prices and quotas for the export of quinine and quinidine to all other countries with the following undertakings:

a) Buchler & Co., Braunschweig,

b) NV Amsterdamsche Chininefabriek, Amsterdam, NV Nederlandse Kininefabriek, Maarsen, Bandoengsche Kininefabriek Holland NV, Amsterdam, NV Pharmaceutische Groothandel van de Amsterdamsche Chininefabriek, Amsterdam, NV Bureau voor de Kinineverkoop Buramic, Amsterdam, NV Nederlandse Combinatie voor Chemische Industrie, Amsterdam (hereinafter referred to as ‘Nedchem’).

On 28 February 1959, the Buchler undertaking withdrew from this agreement.

Pursuant to the provisions of Article 85 of the EEC Treaty, the Bundeskartellamt, to which the agreement was notified on 24 January 1959 in accordance with Article 6 (1) of the German Law against restriction of competition, requested the parties to the agreement for information on its territorial scope. Following this request Boehringer and Nedchem concluded a new agreement on 14 July 1959 excluding supplies to other States of the EEC.

Negotiations entered into in 1959 between Buchler, Boehringer, Nedchem, the group of French quinine producers (Nogentaise, Pointet-Girard, Taillandier and Pharmacie Centrale) together with Carnegies of Welwyn Ltd and Lake & Cruickshank Ltd of the United Kingdom resulted in an agreement between all those undertakings. First of all on 10, 24 and 31 March 1960 Boehringer (acting also in the name of its abovementioned subsidiary), Buchler and Nedchem (acting also in the name of all the abovementioned Netherlands undertakings) concluded an agreement providing for:

the fixing by agreement of prices and rebates applicable to exports of quinine and quinidine;

the allocation of export quotas and the reservation of certain markets outside the Community;

the retention of the clause making the agreement inapplicable to exports in the States of the EEC;

a system of compensatory quantities in the event of export quotas being exceeded or unfulfilled;

the prohibition of collaboration outside the Common Market with undertakings which were not parties to the agreement with regard to the production or sale of quinine or quinidine;

application to be made, in case of dispute, at the option of the parties, to. arbitration or to the ordinary courts of law.

It was agreed that this export agreement would terminate on 31 March 1965 but that it might be renewed every five years. Rules drawn up to ensure the strict cooperation of the parties in order to facilitate the implementation of the agreement provided in particular that every month each of the parties to the agreement should supply the other with certain information on the basis of which Nedchem would, for the purposes of quantitative compensation, make periodic calculations of the deliveries in excess of or below the quota of each of the undertakings.

Apart from this agreement, which governed the problem of Buchler's adherence to the agreement concluded on 8 and 14 July 1959 between Boehringer and Nedchem, another agreement was concluded on 7 April 1960 between Boehringer, Buchler, Nedchem, the abovementioned French group and the two British undertakings, Carnegies and Lake & Cruickshank, in order to settle the conditions for the adherence of the French and British undertakings to the abovementioned agreement of 10, 24 and 31 March 1960, in so far as it related to quinine. Parallel with the export agreement two gentlemen's agreements containing substantially identical provisions were concluded on 9 April 1960 and recorded in writing although they were not signed; one was between the French group, Boehringer, Buchler, Nedchem and Carnegies and the other was between the French group, Boehringer, Buchler, Nedchem and Lake & Cruickshank. Those two gentlemen's agreements extended the provisions laid down in the export agreement with regard to price, quotas and compensation for quantities, for both quinine and quinidine, to all sales on domestic markets and abroad, and in particular to all sales within the Common Market. Furthermore, they laid down the principle of protection of domestic markets for each of the producers. The two British undertakings agreed not to manufacture quinidine without the approval of the German and Netherlands parties and to purchase this product exclusively from the German and Netherlands parties and to maintain the agreed prices on resale. The French undertakings entered into the same obligation with regard to synthetic quinidine. Derogations from the gentlemen's agreements could take place only with the agreement of all the parties and disputes were to be settled exclusively by arbitration. It was further decided that failure to comply with or termination of the gentlemen's agreements would automatically be regarded as failure to comply with or termination of the formal export agreements relating to quinine and quinidine, and vice versa.

The gentlemen's agreements were kept secret.

The said agreements were supplemented during 1961 and 1962 by an association relating to the joint purchase of raw materials which, in accordance with the decision taken during a meeting on 26 January 1961, was drafted in conformity with the arrangements laid down in a draft agreement instituting a pool of stocks purchase (‘bark pool’) but which was never signed. The association relating to the joint purchase of raw materials terminated on 31 October 1962.

During a meeting on 2 May 1962 a general increase in prices was decided upon.

Agreements were also concluded for the purchase of reserves from the American stockpile which the General Service Administration had decided to sell. In this connexion, it was decided during the meeting on 20 and 21 April 1962 that the quantities purchased by Nedchem would be divided amongst the members in a specific ratio and that in return Nedchem would receive a commission of 2 %; this commission would be increased to 7 % if the other agreements (the export agreement and the gentlemen's agreements) were terminated in advance. On 4 September 1964 the American General Service Administration gave a definite refusal to make any further deliveries to Nedchem alleging that military requirements had arisen. Following each delivery Nedchem divided it amongs the other members.

The commission was always fixed on the basis of the rate of 2 %. When on 13 March 1962 the first regulation in implementation of Articles 85 and 86 of the EEC Treaty came into force the abovementioned undertakings decided provisionally to continue the export agreement and to continue to implement the gentlemen's agreements.

In the course of a meeting on 29 October 1962 difficulties arose between the parties on the question of the ‘bark-pool’. As a preliminary condition to concluding an agreement on bark, Nedchem requested the abolition of the prohibition on exporting bark which was in force in the Congo although Pharmakina, Boehringer's Congolese subsidiary, was in favour of this prohibition. As a result of this Lake & Cruickshank and Boehringer requested revision of the quotas. The scope of the decisions taken at this meeting with regard to the gentlemen's agreements gave rise to a dispute between the parties to the present proceedings.

On 2 November 1962 Nedchem notified the other members that the export agreement and the gentlemen's agreements should no longer be regarded as binding; it alleged that the proposals made by Boehringer and Lake & Cruickshank with regard to the ‘barkpool’ and the fixing of the new sales quotas were contrary to the spirit of the said agreements.

The other members did not accept those reasons and at the meeting on 14 October 1963, at which all the parties to the agreement were present except Carnegies (which ceased producing quinine in the same month and intimated its withdrawal by letter of 28 October 1963), the parties concerned reached a compromise the purpose and scope of which are disputed by the parties to the present proceedings.

In the course of 1964 the abovementioned undertakings twice made joint decisions to raise the price of quinine, first by 15 % at the meeting on 12 March and subsequently by 25 % at the meeting on 28 October, whilst the prices of quinidine were raised by 20 %. An agreement modifying the length of the validity of the export agreement (which was in the meantime extended for 12 months only instead of the five years initially provided for) was concluded in December 1964 and January 1965 between Boehringer, Buchler, Nedchem, the French group and Lake & Cruickshank. At the beginning of 1967 the Commission's departments obtained more detailed information on the activities of the international quinine cartel through inquiries carried out in the United States of America in connexion with Nedchem's purchase of large quantities from the stockpile. In particular the Commission became acquainted with the report of the American Senate Anti-Trust Sub-Committee. In addition to recording the hearings held by the sub-committee, this document has annexed to it a large number of minutes of the meetings of the members of the cartel, the correspondence exchanged by the parties concerned, the agreements drawn up between them and reports from the director of a British company which was a party to the agreements. These documents date from 1960 to 1963. Consideration of those documents led the Commission to take the view that the implementation of the abovementioned agreements (the export agreement and the gentlemen's agreements) had been continued after October 1963. Communications were exchanged in May and June 1967 with the competent authorities with regard to cartels in the Federal Republic of Germany, France and the Netherlands in connexion with the investigations to be undertaken on the undertakings concerned. In May 1967 the Bundeskartellamt had already undertaken investigations with regard to Boehringer and Buchler and the Netherlands authorities had investigated Nedchem.

On 17 July 1967 the Commission's Director-General for Competition signed the authorizations to carry out investigations the object of which was expressed thus: ‘… to establish whether or not the activities of the international cartel in the quinine industry have infringed the provisions of Article 85 of the Treaty establishing the European Economic Community’. On the basis of those authorizations investigations were carried out on the six undertakings and as a result the decision of the Commission of 16 July 1969 was sent to the said undertakings on the dates indicated at No 17 of that decision. Thereafter investigations were carried out on the two Belgian undertakings and on the five Italian undertakings who were purchasers of quinine, in order to establish the prices maintained in those two countries by the members of the cartel.

On 29 July 1960 the Commission decided on the basis of Article 3 of Regulation No 17 to take proceedings upon its own initiative against the six abovementioned undertakings. This decision was notified to the undertakings concerned by letter of 30 July 1968 together with the complaints made by the Commission on the basis of the investigations.

The undertakings concerned were given a period of two months within which to define their positions with regard to the objections made against them.

At the request of four of those undertakings, including the applicant, the Commission subsequently extended that period to 15 December 1968.

On 11 and 12 February 1969 the undertakings concerned were given the opportunity of submitting their oral observations.

In addition to representatives of the undertakings and of the Commission, officials of the States directly concerned in the international quinine cartel, such as Belgium, the Federal Republic of Germany, France and the Netherlands, were also present at the hearing. Following discussions with the parties concerned, the Commission withdrew its objections concerning the ‘barkpool” and the stockpile agreement and also with regard to the infringements for the period from February 1965 to August 1966 during which period the termination of the export cartel had been notified to the Bundeskartellamt.

During its meeting on 16 July 1969 the Commission adopted a decision imposing on the Boehringer undertaking a fine of 190000 units of account for infringement of the provisions of Article 85 (1) of the Treaty which this undertaking committed until the beginning of February 1965, “by concluding and implementing the agreement on exports of 8 and 14 July 1959, the additional agreements of 10 and 31 March 1960 and of 7 April 1960 (the period of validity of which was extended by the agreement of 14 December 1964 and 19 January 1965), the gentlemen's agreements of 9 April 1960 and the agreements implementing or supplementing those agreements, in particular the agreements with regard to the fixing of prices and of export rebates for quinine and quinidine, the division of domestic markets, the system of quotas and of quantity compensation and the limitation of the production of quinidine”.

For the same reasons this decision imposed :

1) on Nedchem, a fine of 210000 units of account,

2) on Buchler und Co., KG, a fine of 65000 units of account,

3) on the Société Chimique Pointet-Girard SA, a fine of 12500 units of account,

4) on the Société Nogentaise de Produits Chimiques, a fine of 12500 units of account,

5) on the Pharmacie Centrale de France, a fine of 10000 units of account.

On 26 September 1969 the Boehringer undertaking lodged an application at the Court Registry for the annulment of this decision.

At its meeting on 18 March 1970 the Court, on the proposal of the Judge-Rapporteur and after hearing the Advocate-General, decided to join Cases 41/69,44/69 and 45/69 for the purposes of the oral procedure.

At the request of the Court the defendant replied to various questions by written statements lodged at the Court Registry on 4 April and 13 May 1970.

By written statements lodged on 22 May 1970 the applicant submitted its observations on the written statement of the defendant of 13 May 1970.

The parties presented oral argument at the hearing on 15 and 16 April 1970.

In the course of that hearing the defendant lodged documents on which the applicant submitted its observations by a written statement lodged on 23 April 1970. The defendant made its position known with regard to this document by written statement lodged on 2 May 1970.

The Advocate-General delivered his opinion at the hearing on 10 June 1970.

II — Conclusions of the parties

In its application, the applicant claimed that the Court should :

1) annul the decision of the defendant of 16 July 1969 in Procedure No IV/26623 — International Quinine Cartel — to the extent to which it refers to the applicant ; Alternatively: In the discretion of the Court, reduce the fine imposed on the applicant under Article 2 of the contested decision;

2) order the defendant to pay the costs. In its statement of defence, the defendant contended that the Court should:

dismiss the application as unfounded,

order the applicant to pay the costs.

III — Submissions and arguments of the parties

The submissions and arguments of the parties may be summarized as follows :

1 — Complaints concerning the procedure followed by the Commission

(a) General considerations

The applicant maintains that the procedure relating to the imposition of a fine must be governed by stricter rules than the ordinary administrative procedure for applying Article 85. That difference must be reflected in particular as regards the protection of the rights of the defence.

The defendant objects that the Commission, even when it is acting with the purpose of imposing a fine, is an administrative authority and not a court as appears moreover from Regulations Nos 17/62 and 99/63. It is therefore during any subsequent proceedings before the Court of Justice that full and complete protection is ensured for undertakings.

(b) Sufficient indication of the facts and points of evidence in the notice of complaints

The applicant maintains that the Commission infringed Article 19 (1) of Regulation No 17/62, together with Article 4 of Regulation No 99/63 and Article 190 of the Treaty, since the written notice of complaints of 30 July 1968 did not set out in detail the content of the information, statements, reports and inquiries to which the Commission refers. That infringement is due to the fact that the abovementioned provision, in guaranteeing to the persons concerned the right to be heard, presupposes the right to know exactly all the points of evidence and concrete facts which such evidence is intended to prove.

The defendant objects first of all that the provisions relied upon by the applicant speak of complaints and not of proof of concrete facts. It disputes that it is required in the notice of complaints to set out all the evidence in its possession. The applicant is confusing the duties devolving upon the Commission within the framework of an administrative procedure with those which devolve upon it as defendant before a court. The defendant refers further to the notice of complaints, running to 47 pages, in which all the facts and circumstances from which the Commission has deduced that there was an infringement of the prohibition laid down in Article 85 (1) are set out.

As to the submission based on Article 190 of the EEC Treaty, the defendant states that the contested decision sets out in detail all the facts and circumstances as well as the considerations of law which led it to hold that there had been an infringement.

The applicant, referring in particular to the schedules to the statement of defence concerning the results of the enquiries made of the Italian and Belgian undertakings and the allegation contained in the statement of defence concerning the twelve compensatory deliveries which one of the participants in the cartel had received or made during during the years 1960 to 1963, points out that the defendant cannot remedy the abovementioned defect by producing the documents during the proceedings and at the same time putting forward statements which should have been brought to the knowledge of the persons concerned during the administrative procedure.

The interpretation of the concept of complaints maintained by the Commission is incompatible with the letter and the spirit of Article 19 (1) of Regulation No 17 and of Article 4 of Regulation No 99. The persons concerned cannot defend themselves unless they know the concrete facts which prove the alleged infringement of Article 85 of the EEC Treaty.

The defendant, referring to the judgment in Joined Cases 56 and 58/64 according to which those concerned must be informed of all the facts necessary to establish the complaints, states that this condition is satisfled since it has indicated the result of its investigations.

As to the quantitative equalization, the sole purpose of the allegations in the statement of defence was to dispute the applicant's statement that such equalization occurred on only two occasions.

It complains that the applicant has avoided discussion of concrete facts such, for example, as the export prices fixed jointly, as appears from investigations made in Belgium, Luxembourg and Italy.

(c) Refusal of authorization to examine the whole of the administrative file

The applicant complains that the Commission refused to allow examination of the essential part of the file, confining itself to allowing the applicant in principle to acquaint itself with certain documents expressly mentioned in the notice of complaints, although those complaints refer hardly at all to precise documents. This refusal also amounts to an infringement of an essential procedural requirement in relation to the right to be heard provided for in Article 19 of Regulation No 17/62. The undertakings Nedchem and Pharmacie Centrale had approved that request to consult the file without reserve. The business secrets of the other undertakings could easily have been respected by the defendant which could have asked the latter to remove dcouments which might relate to such secrets and which in any case would only have amounted to a small part of the file.

The defendant replies that its departments, by stating that they were inclined to authorize examination of the documents referred to in the notice of complaints, had enabled the undertakings concerned to examine the documents which were of importance for an appraisal of the complaints. The Commission had neither the power nor the duty to authorize examination of the whole of the file and it refers in this respect to the judgment given by the Court in Joined Cases 56 and 58/64. Furthermore, the defendant states that the applicant did not use the opportunity which was offered to it to acquaint itself with the essential documents. The applicant replies that it is justified in criticizing the refusal of its request for communication of all the documents not expressly mentioned in the complaints, which are of importance for the decision, because it is this refusal which prevents it from defending itself properly.

The judgment of the Court in Joined Cases 56 and 58/64 refers to a case in which the Commission had mentioned all the facts which needed to be known; that is not precisely the case in this instance. Furthermore, here it is a matter of a procedure for the imposition of a fine and not a mere administrative procedure, as in the case referred to by that judgment.

The defendant raises the objection that Article 19 (1) of Regulation No 17 guarantees respect for the rights of the defence, but in a definite form, and that the system thus established applies to all the procedures which it mentions, as no particular system is laid down for the procedure leading to a fine. The German law on competition, whilst providing that an administrative authority may impose fines, does not recognize any right of undertakings to obtain information from the file during such a procedure. Neither does there exist in French administrative law an absolute right to production of the file.

(d) Defective consultation of the Advisory Committee owing to the incompleted nature of the minutes of the hearing of the persons concerned

The applicant states that it has still not received any complete copy of the minutes which have not therefore been signed and which apparently do not exist. In view also of the fact that by a letter of 7 July 1969 it sent to the Commission a series of amendments and substantial additions to the draft minutes, the applicant is of the opinion that the Advisory Committee on Restrictive Practices and Monopolies could not have been acquainted with the complete and approved wording of the minutes of the hearing of the persons concerned. This amounts to an infringement of the rules relating to that hearing as well as of an essential procedural requirement in relation to Article 10 (5) of Regulation No 17/62.

The defendant raises the objection that the majority, of the members of the Advisory Committee attended the hearing of the representatives of the undertaking. The Committee had been properly convened and the invitation which was sent to it was accompanied by a note explaining the case and mentioning the most important documents, the draft minutes of the hearing of the persons concerned and the draft decision. It is therefore incorrect to claim that the Committee was not completely informed; further the defence of the interests of this Committee cannot be the concern of the undertakings.

The applicant replies that the requests for the amendment of and addition to the minutes on important points, which were accepted by the Commission, were not received by the latter until the 8 July 1968. Consequently the Advisory Committee was not able to become acquainted with the complete minutes. The fact that members of the Committee attended the hearing of the undertakings cannot compensate for these, procedural defects, for the abovementioned persons were not present at the hearing as members of the Committee but only in their capacity as national officials.

The argument that “the defence of the interests of this Committee cannot be the concern of the undertakings” is quite wrong, as .this Committee was created not to pursue its own interests but for an objective purpose; in this respect it must also ensure the individual protection of undertakings.

The defendant replies that the written observations were amplified only in a minor way during the hearing and that the amendments proposed by the undertakings concerned and accepted in their entirety by the Commission for the final drafting of the minutes were not in any way essential.

The purpose of the Advisory Committee is to ensure liaison between the Commission and the authorities of the Member States. The fact that the opinion of the Committee is not made public shows that this body is not intended to ensure the protection of the individual rights of undertakings. In, any case the infringement of procedural provisions for consulting this Committee cannot be regarded as an infringement of essential procedural requirements.

(e) Defective consultation of the Advisory Committee owing to the lack of any prior indication concerning the amount of the fine

The applicant is of the opinion that the duty to give the Advisory Committee a draft of the decision so that it may give its opinion, in accordance with Article 10 (5) of Regulation No 17/62, necessarily implies in the case of a decision imposing a fine that this draft shall already indicate the amount envisaged by the decision. The applicant considers that the fulfilment of that formality is doubtful in the present case.

The defendant replies that the Advisory Committee gave its opinion on 23 June 1969 with full knowledge of the matter and of the amount of the fines envisaged; as a matter of discretion the Commission had chosen a procedure which avoided a premature disclosure of the amount of the fines.

The applicant in its statement in reply mentions that the Commission has not disputed the infringement of Article 10 abovementioned.

The defendant in its rejoinder states that the amount of the fines envisaged was communicated to the Advisory Committee when it was consulted.

(f) Defective submission of the case to the meeting of the Members of the Commission

The applicant maintains that for the reasons indicated under (d) above it is also doubtful whether the complete minutes of the hearing of the undertakings were submitted to the Members of the Commission when the latter adopted its decision of 16 July 1969. The applicant raises further the question whether or not the guarantee of the fundamental rights of a person threatened by serious financial penalties requires that his hearing should take place before those responsible for deciding upon fines. In any case the body which is required to take the decision must be acquainted with the complete minutes of the hearing.

The defendant replies that the draft decision accompanied by an explanatory memorandum was submitted, with a view to its adoption by Mr Sassen, a member of the Commission competent in matters of competition, to the meeting of the Commissioners. Furthermore Mr Sassen gave precise information to the Commission on this subject during the meeting on 16 July 1969 in a very detailed oral statement. That procedure conforms to the criteria of the division of work, which the Commission has adopted by dividing between its members the duties necessary for the preparation of its decisions. The applicant replies that the expediency of the division of work must never be to the detriment of the legal protection of the parties concerned, which means in particular that the draft decision should be sent before the meeting to all the Members of the Commission and that the most important documents should be communicated to them. In this respect the applicant asks that the defendant should be required to produce to the Court the documents sent to the Members of the Commission for the preparation of the meeting and the minutes of the meeting during which the contested decision was taken.

The defendant states that the final version of the minutes of the meeting was drawn up at the time when the Commission came to its decision and that this document was at the same time sent to the parties concerned. The applicant's statement concerning the failure to send this document to the Commission beforehand is without any foundation. The Commission states that it is prepared, if the Court asks it so to do, to produce the documents concerning its internal procedure.

2 — Complaints relating to the establishment and the confirmation of the facts

(a) General consideration of the export agreement and of the gentlemen's agreements

The applicant refers to the decision of the Court in Joined Cases 56 and 58/64, according to which the prohibition and the nullity of an agreement apply only to those parts of the agreement affected by the prohibition and it deduces from this the duty of the Commission to consider different facts separately and distinctly. The Commission infringed that duty by not distinguishing as clearly as it should have done between the two factors which represented, on the one hand, the agreement concerning the export of quinine and quinidine to third countries and, on the other hand, the gentlemen's agreements applicable to the territory of the EEC. Between these two factors there are different objectives as regards both subjectmatter and time. Further, after October 1962 the export agreement continued to exist independently of the gentlemen's agreements.

The defendant refers to the arguments which it put forward in respect of cooperation between the undertakings and particularly in respect of the application of Article 85 (1) to the facts of the case (cf. No 3 below).

In addition, it raises the objection that the gentlemen's agreements and the export agreement cannot be separated materially and temporally because temporally the conclusion of the export agreement with Buchler (31 March 1960) as well as with the three French undertakings and the two British undertakings (7 April 1960) coincides with the conclusion of the two gentlemen's agreements (7 April 1960) ; materially, the gentlemen's agreements represent the extension to deliveries in the Common Market of cooperation in exporting to third countries with a guarantee of protection of the domestic markets of the parties concerned. The latter regard the export agreement and the gentlemen's agreements as forming an indivisible entity; although they were actually dissociated it was because their content had to remain secret. That does not prevent the parties concerned from being in agreement that an infringement of the gentlemen's agreements must be regarded as an infringement of the export agreement. Their subsequent conduct confirms that view for, when they decided in October 1963 to put the export agreement into abeyance, they expressly agreed to do the same in respect of the gentlemen's agreements. The Commission could not therefore consider separately situations which the parties concerned themselves considered from the beginning and in practice as forming an indivisible entity.

(b) The application of the export agreement

The applicant relies on the submissions of infringement of the Treaty and of misuse of powers resulting from the fact that the findings of fact made by the Commission are incorrect on essential points, which gives an entirely false image of the extent and the intensity of cooperation between the undertakings concerned during the decisive period.

The applicant mentions that the cooperation between the members of the cartel was not continuous until 1965. The exchange of statistical information on sales was suspended following Nedchem's withdrawal from the agreement on 2 November 1962, and was not resumed until after the meeting on 14 October 1963. At this meeting it was also decided to keep common prices for exports but the export agreement as such had to be “shelved”. It was never brought into operation again.

The applicant considers that the Commission gives too much importance to the account of the provisions concerning quotas and compensation for quantities. Contrary to the impression which emerges from the account of the facts by the Commission the compensation for quantities was effected only twice between some of the undertakings before the end of 1962 and never occurred again.

The applicant engages further in a detailed survey of certain facts and in that respect refers to its observations of 6 December 1968 on the notice of complaints as well as all the documents which it has produced to the defendant concerning this case. It refers in particular to the minutes of the meeting on 14 October 1963 to support its assertion that there was never any question of continuing to apply the compensation clauses of the export agreement after the shelving of that agreement. At the meetings on 12 March and 28 October 1964 the undertakings merely fixed new export prices and expressly confirmed the suspension of the export agreement. The subsequent exchange of statistical information on exports to third states could not therefore have been in the nature of economic information concerning the situation of the participants on the market. The Commission therefore wrongly states that the provisions concerning compensation for quantities continued to be applied until the beginning of 1965.

After the interruption of cooperation from October 1962 to October 1963 the undertakings restricted themselves to agreeing common prices for third countries.

The defendant replies that the contested decision contains no declaration that the compensation for quantities during the period of cooperation had major importance. It disputes, further, that compensation between the members of the cartel was effected only twice and it states that it is in a position to prove that one of the undertakings concerned made or received twelve compensatory deliveries during the period from 1960 to the beginning of 1963. Further, what matters is the fact that the possibility of compensation was ensured.

The defendant mentions that when the decision states that the right to compensation was in practice ensured during the period when the agreements were shelved, as appears from the minutes of the meeting on 14 October 1963, it is referring clearly to a moral right rather than to a legal right.

The defendant further disputes the applicant's allegation that the infringements mentioned referred only to the period from the beginning of 1963 to the end of 1964: the infringements committed by the parties concerned began either in 1959 with the export agreement or on 7 April 1960 with the gentlemen's agreements and ended at the beginning of February 1965.

The applicant replies that the passage in the minutes of the meeting on 14 October 1965 mentioned by the defendant, where it is stated that an undertaking exceeding its quota would certainly accept quite willingly the quantity which was offered to it, when considered in relation to the situation of shortage of raw materials which was becoming severe, shows clearly the irony involved.

The applicant asserts further that after the withdrawal of Carnegies there were not more quotas agreed and that at the meeting on 12 March 1964 the controversy concerning the distribution of quotas was left aside as being purely theoretical. The discussions on shelving had nothing to do with the gentlemen's agreement but referred solely to the export agreement.

The defendant complains that the applicant is oversimplifying things: if from 1962 there was really a shortage of bark, there was no shortage of quinine because deliveries from the American strategic stock were carried out until April 1964.

The applicant asks how the imposition of a fine is justified for the quantity compensation since the Commission itself agrees that it is not possible to establish it in respect of the Common Market after 29 October 1962. The applicant points out that the Commismission's “theory of an indivisible entity” cannot in any case apply here because the quantity compensation was abolished as long ago as 1962 even for the export agreement.

The defendant replies that it is not because the applicant took part in compensatory deliveries that it has been fined, but because it took part in agreements restricting competition within the Common Market — agreements providing inter alia for the possibility of quantity compensation as a legal obligation until October 1963 and later on a voluntary basis.

(c) The application of the gentlemen's agreements

The applicant maintains that contrary to the Commission's allegation the gentlemen's agreements were not even shelved like the export agreement but that they were finally ended without reservation as appears from the minutes of the meetings in 1963 and 1964 during which the scope of the suspension was not discussed further except in respect of the export agreement. The applicant mentions that the Commission, in stating in the contested decision that the parties concerned had decided to continue carrying out the gentlemen's agreement at the meeting on 29 October 1962, omitted to take into account the fact that the last part of the minutes of that meeting clearly and unreservedly states: “Therefore the original intention to live according to the gentlemen's agreement cannot be kept”.

By virtue of the principle negativa non sunt probanda, it is neither possible nor reasonable to ask the applicant to prove that the gentlemen's agreement did not continue to be applied. Having regard to the clarity of the wording of the minutes quoted above which records the decision of the parties concerned, it is incumbent rather on the Commission to produce proof to the contrary of the continuance in force of the agreement in question. The exchange of letters which took place between the undertakings at the instigation of the French undertakings at the beginning of November 1963 concerning the protection of the domestic markets cannot be explained if the gentlemen's agreement had continued to be applied. With regard to quantity compensation in the Common Market, the applicant observes that this was impossible, because the exchange of statistical information on sales in this market was not continued after October 1962. As to the restrictions on production, their alleged continuation until the beginning of 1965 is hardly reconcilable with the fact that in 1964 the applicant, without meeting objections from the other undertakings, granted the British company Luke & Cruickshank a licence for the manufacture of synthetic quinidine, whilst according to the gentlemen's agreement that undertaking had to refrain from making quinidine.

The defendant replies that even after the meeting on 29 October 1962 Nedchem complained by letter of 2 November 1962 that the applicant, as well as Lake & Cruickshank, had infringed the gentlemen's agreement. The applicant itself referred to the gentlemen's agreement during the meeting on 14 October 1963, its representative having stated that the agreement was not mandatory but that the situation would not change.

The applicant replies by pointing out that it appears from the minutes of the abovementioned meeting on 29 October 1962 that, if in the first stage of that meeting the parties concerned did not intend entirely to abolish the gentlemen's agreement because they hoped to arrive at a new agreement on the purchase of bark, the final result of the discussion was different, as appears at the end of the minutes:

“Mr Lumley then asked if that meant freedom of action for all the partners. There followed a discussion on the points of view put forward, in particular on the revision of quotas. It was established that the draft agreement on the purchase of bark prepared by the advocates was now meaningless and that the bark-pool had come to an end. Consequently the initial intention of continuing to carry out the gentlemen's agreement could not be pursued. On the other hand nobody proposed to abolish the export agreement; apart from that, everyone had freedom of action.”

As regards the alleged reference to the. gentlemen's agreement at the meeting on 14 October 1963, the applicant states that the statement of its representative mentioned by the defendant solely concerned the field of application of the export agreement. The letter from Nedchem of 2 November 1962 envisaged ending all existing agreements. The observations made in this respect by Buchler and Boehringer refer only to the export agreement and there was no mention of the gentlemen's agreement. The circular of 7 August 1963 from Nedchem confirms that the gentlemen's agreement no longer existed.

The defendant in its rejoinder persists in disputing that the gentlemen's agreement ended on 29 October 1962. It mentioned that the wording of the final passage of the minutes of the meeting on that date, on which the applicant bases its argument, is not clear. There is reason to suppose that during these discussions Nedchem objected that there was no longer any need to observe the gentlemen's agreement in order to change the opinion of the members of the cartel claiming a revision of the quotas. Nedchem used this type of pressure several times, even subsequently, because it could offer its products on the markets of the other participants at lower prices than the latter charged; further a significant quantity of products from the stockpile had not yet been distributed by Nedchem.

In the middle of November 1962, Lake & Cruickshank complained that Nedchem had infringed the gentlemen's agreement (the application of the export agreement to the British market was expressly excluded), which is not reconcilable with the applicant's statement that this gentlemen's agreement had been expressly terminated at the meeting on 29 October 1962. The idea that the gentlemen's agreement was still in force also appears from a letter of 10 December 1962 from Lake & Cruickshank to Nedchem. The defendant emphasized further that Nedchem did not carry out its threat ţo increase its commission on the American strategic stock from 2 % to 7 %.

The compromise reached at the meeting on 14 October 1963 consisted of leaving the agreement in abeyance for a year in order to consider the question of the increase in prices later.

The defendant interprets a statement by Nedchem's representative during that meeting referring to ‘agreements constituting our convention’ as meaning that the suspension concerned not only the export agreement but also the gentlemen's agreements: this follows from the terminology used in the ‘note about equalization’.

It appears further from the whole of the discussion that the parties concerned had no interest in abandoning the spirit of cooperation and in disturbing their relationships.

Boehringer's representative declared :

‘Nobody will be stupid enough to spoil the good relationships existing between the participants. Waldhof (=Boehringer) as no intention of selling on the French market because it would be ridiculous to create confusion’,

which in the opinion of the defendant amounts to a reference to the territorial protection guaranteed by the gentlemen's agreement.

That interpretation is confirmed by the subsequent correspondence on the subject of the protection of domestic markets. In referring to the meeting on 14 October 1963 the applicant in its letter of 25 October 1963 stated that it had on that occasion made an agreement to respect all domestic markets. In its turn it had been able to make increases on its domestic market (increases made on 27 November 1963 and in October 1964) because it was assured of the protection of its market.

Thus, even after the meeting on 29 October 1962, the participants in the cartel kept all the essential restrictions on competition in the Common Market which had been agreed upon in the gentlemen's agreements, that is to say: the protection of domestic markets, restriction on the production of quinidine by three of the participants and the joint fixing of export prices, which they applied in the countries of the Common Market in which there was no production of quinine. Even the rebates granted to certain purchasers in the Common Market were jointly fixed.

With regard to the alleged fixing of common prices, the applicant disputes the reliability of the evidence appearing from inquiries made of Italian and Belgian undertakings provided by the Commission to show the uniform character of the prices charged on export by the undertakings concerned.

In its rejoinder the defendant provides a table containing a comparative examination of the prices charged for sales in Belgium and Luxembourg and in Italy with the export prices jointly fixed.

(d) The declarations of October and November 1963 concerning the protection of domestic markets

The applicant states that the correspondence — which it does not dispute — which was exchanged between the undertakings concerned in October and November 1963 in respect of the protection of domestic markets was without purpose because of the situation with regard to the supply of raw materials; that correspondence amounted only to an act of courtesy towards the French manufacturers. Furthermore considerable difficulties stood in the way of exports to France and the Netherlands. In France there was strong territorial protection; in the Netherlands the domination of the market by Nedchem made access almost impossible for foreign undertakings.

The defendant raises the objection that the correspondence in question has a meaning if it is considered within the framework of the decision of the parties concerned to keep to the gentlemen's agreement. Statements regarding respect for domestic markets were not made solely with regard to the French manufacturers but all the undertakings participating in the cartel guaranteed to one another the protection of the respective domestic markets. It is therefore really a question of confirmation of the abandonment previously agreed upon of competition on the domestic markets.

Without this stipulation deliveries would certainly have been made to Germany from the Netherlands where the level of prices was lower.

The applicant replies that it does not follow from the abovementioned statements concerning the protection of their domestic markets that the parties concerned wished to re-apply the gentlemen's agreement as such, that is to say, the clauses concerning common prices, quotas and the limitation of the production of synthetic quinidine. The minutes give not the slightest indication of it. The Commission has not established that between November 1963 and the end of 1964 because of these statements the applicant gave up deliveries to France and the Netherlands which it would otherwise have made. Although the applicant refrained from making deliveries to France or the Netherlands, this was due exclusively to the shortage of raw materials. Consequently there cannot be any question of imposing a fine for the alleged protection of the domestic markets.

The defendant points out that it is the applicant itself which has insisted that the statements concerning the protection of the domestic markets should not be limited to the French market and should be made for all the domestic markets of the parties concerned. The applicant does not explain why the increase in prices envisaged did not take place every time Nedchem threatened no longer to respect the domestic markets of the other participants.

The defendant emphasizes that the internal price of quinine and quinidine in the Federal Republic of Germany was always higher than the export price: for quinine this difference was 18 % in November 1963 and 24 % at the end of 1964; for quinidine it was 44 % in 1962 and 59 % at the end of 1964.

3 — Applicability of Article 85 (1) of the EEC Treaty

(a) The export agreement

The applicant states that it follows from the wording of the reasons for the contested decision that the Commission considered the making and the application of the agreement of 8 and 14 July 1959 setting up the export cartel as well as the maintenance of common prices for third countries as from October 1963, after the suspension of that agreement, to be contrary to Article 85 and imposed a fine accordingly. Against that appraisal the applicant puts forward the submissions of lack of power, insufficient reasoning and infringement of the Treaty. In fact that agreement, which applies only to third countries, cannot come within the geographical field of application of Article 85 of the EEC Treaty. Although the Commission wished to deduce the applicability of that provision from the consideration that by reason of the compensation for quantities the undertakings could not alter their share of the market in third countries, the applicant states that this was the very machinery which had been expressly abandoned by the undertakings and finally abolished at the meeting on 14 October 1963. No valid reason tending to evidence the possible effects of the agreement on the Common Market has been provided by the Commission.

The factors on which the applicability of Community law are based are therefore entirely lacking. Even in the case of a theoretically conceivable re-exportation, imports to the EEC as such could strictly speaking have been affected, but not trade between the Member States of the EEC. Mere indirect or purely theoretical repercussions do not suffice to show the existence of an obstacle to trade, as appears also from the practice of the Commission in respect of negative clearances of export agreements.

The defendant objects to the distinction drawn by the applicant between the export agreement and the gentlemen's agreement. The following observations are put forward by the defendant in the alternative only. In the case of Grossfillex and DECA, the negative clearance decisions adopted show that it had taken into account the effects which might have resulted from the agreements in question on competition within the Common Market. Nevertheless, after investigation it had not been able to find the existence of such effects in those two cases.

The applicant is therefore wrong in relying upon those precedents. On the other hand, in view of the position of the parties concerned, which control 70 % of the world production of quinine, and the importance of the restriction on competition because of agreements concerning quotas, compensation and prices, the export cartel in question is not comparable to the agreements which have hitherto been the subject of decisions of the Commission.

The applicant raises the objection that the contested decision contains no detailed statement of reasons to show why the export agreement amounts to an infringement of Article 85 (1) of the EEC Treaty. Such a statement of reasons is necessary particularly in relation to the question of the start of the limitation period because the facts quoted in the statement of defence concerning the duration of the cooperation refer only to the export agreement. The Commission's argument that the illegality of the gentlemen's agreement affects the export agreement with which it was connected is the result of confusion between the consequences of the prohibition — as a matter of public law — of Article 85 (1) in Community law and the legal consequences in civil law caused by the partial nullity referred to in Article 85 (2). The clause in the gentlemen's agreement according to which a breach of that agreement must be regarded also as a breach of the export agreement may therefore at the most be important from the point of view of civil law for the question of the keeping in force of the export agreement after the ending of the gentlemen's agreement, but it cannot justify the extension to that agreement of the prohibition in Article 85 (1), in the absence in respect of that agreement of the facts envisaged by that provision.

Furthermore, when the gentlemen's agreement was ended on 29 October 1962, the export agreement continued to exist although largely as an ‘empty envelope’.

During the period from the beginning of November 1962 to the meeting on 14 October 1963 the export agreement was practically suspended because of the withdrawal of Carnegies and the denunciation of the agreement by Nedchem and from October 1963 to the end of 1964 only the agreement concerning the charging of common prices was regarded as still being in force.

The defendant maintains that his presentation of the facts does not correspond to reality: the export agreement cannot be regarded in isolation because from its beginning the regulation of competition which it envisaged was intended to operate also within the Common Market as appears from its origin, from later developments at the time of the accession of Buchler and of the French and British undertakings and from the priority which was given to the gentlemen's agreement. It follows from this that there was an indissoluble link from the point of view of subject-matter and time between the export agreement and the gentlemen's agreement. The object of the participants was to arrive at the total elimination of competition between them by means of two types of agreement which differed only in their form: this is quite a different thing from the inextricable nature of the two contracts from the point of view of civil law alone.

The defendant has never maintained that the illegality of the gentlemen's agreement extended to the export agreement in respect of consequences in civil law in the case of partial nullity resulting from the provisions of Article 85 (2) of the Treaty. In the contested decision, the Commission stated that the export agreement had effects likely to restrict competition in the Common Market and it explained why that agreement cannot be considered independently of the gentlemen's agreements.

(b) The gentlemen's agreement

The applicant disputes that part of the decision which relates to the gentlemen's agreement for lack of reasoning and infringement of the Treaty. In fact, for the reasons set out at 2, (c) above, the Commission refrained from producing any factual proof whatever of the continuation in force of the gentlemen's agreement after the meeting on 29 October 1962 during which it was decided finally to bring it to an end.

In these circumstances, the application of common prices in the Common Market after October 1963 alleged by the Commission may at the most be regarded as a new concerted practice, but it should have been the subject of factual proof by the Commission because by definition a concerted practice can exist only to the extent to which it is actually carried out. No facts have been put forward in this respect by the Commission.

The applicant states that on the contrary at the meeting on 12 March 1964 concerning the fixing of the new prices Nedchem's representative expressly stated ‘that a decision concerning new prices applied exclusively to export markets and not to the Common Market’. The Commission itself admitted that manufacturers residing in the Federal Republic of Germany, the Netherlands and France fixed their prices independently. On the other hand the essentially similar price level does not by itself constitute proof of a concerted practice. Lastly, in the absence of knowledge the documents on which the Commission bases its decision the applicant cannot comment upon the prices charged by the various undertakings in Belgium and Italy.

The defendant maintains that the gentlemen's agreement amounts to an agreement within the meaning of Article 85 (1) of the Treaty and mentions that the applicant does not dispute that that agreement falls under the prohibition of this article. In the event of the Court's considering that the essential elements of an agreement are absent, the defendant states that the fact that the parties to the gentlemen's agreement continued voluntarily to keep to it, as had been provided for at the meeting in October 1962, enables it to be regarded as concerted conduct in the Common Market. As the purpose of that concerted conduct is to restrict competition between the parties concerned in the Common Market, it is not necessary to prove further that there was in fact an actual restriction on competition. It suffices that this was potentially affected, as to which there can be no doubt in the present case if consideration is given to the stipulation concerning the sharing out of domestic markets and the application of identical prices on exports even in trade between Member States until February 1965.

This principle, which was asserted by the Court of Justice in the judgment in Joined Cases 56 and 58/64 in respect of an agreement, should logically apply also to concerted practices. In fact, such practices differ from agreements only in that it is not possible legally to ensure observance of their clauses but they are always based on an undertaking, as with agreements. Consequently, when the content of the agreement is put into writing and when it appears from a reading of it that its object is to restrict competition it is not necessary to examine the actual situation of the market.

The fact that this understanding was actually put into effect follows from the fact that during 1964 the parties concerned actually raised their prices together and not only in respect of exports to third countries but also in respect of the Common Market, that is to say, for Italy and the Belgo-Luxembourg Union. The independent fixing by the parties concerned of their prices in their respective countries is explained by the protection of the domestic market which was precisely ensured for them by the gentlemen's agreement. From 1960 to 1965, the prices of quinine and quinidine were the same for all exports.

(c) Declarations of October and November 1963 concerning the protection of domestic markets

The applicant maintains that the declarations of October and November 1963 concerning the protection of domestic markets may perhaps be regarded as concerted practices but certainly not as agreements. Consequently, only the effective practice and therefore the real effects are relevant in respect of the finding of a restriction on competition. The Commission neglected that requirement. As the applicant showed in its memorandum of 6 December 1968, during the period under consideration (October 1963 to the end of 1964), there is no causal link between the abovementioned declarations and a noticeable restriction of competition in the absence of any additional possibility of delivery because of the shortage of raw materials (cf. No 2 (d) above). There could not therefore have been any noticeable restriction on competition there. The Commission made no finding on this important fact.

The defendant raises the objection that the criterion of the appreciable effect of the restriction can be used only when the undertakings concerned have an unimportant situation in the market or when other facts are not capable of forming the basis for a forecast, thus giving rise to the fear that the agreement might have an appreciable effect on trade between Member States likely to hamper the achievement of a single market. The reciprocal guarantee of non-delivery to the national markets of the other parties had precisely as its aim the prevention of the achievement of a single market which amounts to a serious interference in intra-Community trade. Consequently the Commission had no need to have recourse to the criterion of appreciable effect.

4 — Complaints concerning time-limits

The applicant relies on an infringement of an essential procedural requirement (requirement to give reasons) and an infringement of the Treaty, in that the Commission did not take into account the fact that the alleged infringement was covered by limitation.

It maintains that the defendant does not show the reason for which the period following the end of the alleged infringements is too short to allow the application of the period of limitation;

In view of the fact that the EEC Treaty does not itself govern the question of the limitation period, there is reason, in accordance with the criterion followed by the Court in Case 18/57, to adopt the period of two years laid down by Article 43 of the German Law against restrictions on competition, which applies to infringements prior to 1 October 1968.

Recourse to the general principles of law common to the legal systems of the Member States leads in the main to the same result. In this respect it is necessary to take into account the fact that the fines intended as penalties for the infringements of the competition law of the EEC are not — according to Article 15 (4) of Regulation No 17/62 — of a criminal law nature. It is therefore necessary to exclude consideration of national provisions concerning periods of limitation applicable to crime. On the basis of these criteria and after a comparative examination of national rules, the applicant arrives at an average limitation period of a year and a half. It points out further than an administrative fine, as opposed to a penal fine, does not only penalize a past infringement but must also ensure that the requirements of the law once more prevail.

As regards the decisive date for the interruption of the limitation period, even if reference is made to the enquiries which the Commission has made of undertakings during the second quarter of 1967, the limitation period would still apply, as two years and nine months elapsed between the ending of the infringement (February 1965) and the beginning of the investigations.

However, only the date of the commencement of the procedure, 30 July 1968, is decisive for the interruption of the limitation period, as both the principle of legal certainty and the general principles applicable under the rule of law require a clear and formal act by the administration to determine the date of the interruption of the limitation period, above all in a procedure having as its subject-matter the infliction of a fine.

To the submission based on an alleged lack of reasons, the defendant replies that it did not give reasons for its refusal to accept that a period of limitation had expired because, according to the case-law of the Court, it is required to give reasons only for the decision which it has taken. It has, furthermore, set out in that decision why the objection based on the period of limitation is not valid.

In respect of the submission of infringement of the law concerning limitation, the defendant mentions that the fact that there is no rule concerning limitation in Regulation No 17/62 may mean that the Commission is able in practice within the framework of its discretionary power and subject to review by the Court of Justice to fix limits to the time within which infringements may be subject to proceedings.

The applicant's view in connexion with the application of national law has no foundation in Community law. The judgment of the Court in Case 18/57 cannot support this argument, as the capacity to institute proceedings referred to in that decision in no way relates to Community law. The consequence of the applicant's argument would be that the uniform application of Community law would be hampered in the sphere of competition law.

On the other hand, the defendant concedes that the question is admissible whether, with regard to time-limits, there is a principle common to the legal systems of the Member States.

It emphasizes the fact that Italy and Luxembourg do not so far have any legislation on cartels, with the result that with regard to those two States it is only possible to refer by way of comparison to provisions of a criminal nature applicable to other facts or conduct amounting to infringements in the economic sphere. There is no coincidence of the systems of the four other Member States, since only the Federal Republic of Germany has a strict prohibition on actions which restrict competition comparable to the Community system. In the four Member States with legislation on cartels, infringements of such provisions are given varying legal status: in German law (as in Community law) such infringements are of an administrative nature; on the other hand under French, Belgian and Netherlands law such infringements take on a criminal aspect.

With regard to the interruption of the limitation period the German law on competition does not in general recognize such an effect except in respect of acts taking place after formal proceedings have been commenced, but into this category are placed also provisions or measures of a purely national character. The Belgian, French and Luxembourg laws require for the interruption of the limitation period, ‘a preliminary investigation or the commencement of proceedings’. Contrary to German law the French and Belgian Cours de Cassation have stated that preliminary investigations carried out before public proceedings are commenced are capable of interrupting the limitation period. On the other hand, steps taken within the administrative systems do not have that effect. Italian law enumerates the measures which interrupt the limitation period. According to Netherlands law, every act commencing proceedings of which the accused has been informed interrupts the limitation period. Measures taken by the Public Prosecutor during preliminary inquiries do not have this effect of interruption, which is comparable to the situation existing in German law.

Taking into account the extreme diversity in the various Member States of the nature of infringements, of penalties, of the periods of limitation and of the acts interrupting them, the defendant concludes that no criterion can be derived common to the law of the Member States with regard to the detailed rules of application of the general principle of limitation. In those circumstances, in order to establish a period of limitation for infringements of Articles 85 and 86 of the EEC Treaty only the requirements of Community law may be taken as a basis, taking account also of the importance and the function of the rules on competition under the EEC Treaty. Nor should the fact be ignored that the Commission is obliged to rely on the cooperation of the Member States in investigating infringements.

Applying those considerations to the present case, the defendant maintains that the period of limitation which began to run from February 1965 was interrupted by the investigations which it made on the applicant in October 1967. The official entrusted with the investigations in question produced an authorization signed by the Director-General for Competition indicating in detail the object and the aim of the check to be made in connexion with specific infringements. If the applicant had refused, as it was entitled to do, to submit to the investigation on the basis of that authorization, the Commission would immediately have ordered the investigation by a decision. Consequently, with regard to the interruption of the period of limitation different effects cannot be attributed to investigations made by the Commission depending on whether they were carried out on the basis of an authorization or a decision.

Between the point when the infringements were discontinued and the investigations by the Commission a period of less than three years elapsed which is insufficient to constitute a bar to action since, according to the legal systems of the majority of the Member States, the period of limitation for infringements intentionally committed against provisions relating to cartels is three years.

Even if it is conceded that the period of limitation was only interrupted when the Commission initiated the administrative procedure on 29 July 1968, the period of three and a half years which had thus elapsed is insufficient to establish a bar under Community law since, within the framework of the EEC, the rules on competition assume a greater importance than under national law, as is clear from the fact that ‘the institution of a system ensuring that competition in the Common Market is not distorted’ constitutes one of the objectives of the EEC Treaty. The applicant maintains that it is not acceptable to take into account only competition law in the Member States: that method ignores Italian law and ignores the fact that the fines in question are not of a criminal law nature. The importance of competition law is no greater in the law of the EEC than in German law, as German law against restrictions on competition is in the nature of a ‘fundamental law of the economic system’.

As to the starting point of the limitation period, the applicant points out that the Commission, by putting the end of the infringements in February 1965, in fact takes into consideration the end of cooperation, that is to say, of the application of common prices within the framework of the export agreement. The duration of that agreement is unimportant as regards actions within the Common Market. As the only decisive agreement for the application of Article 85 (1) is the gentlemen's agreement, the Commission should have based its decision on the date of 29 October 1962 which marked the end of that agreement.

As to the interruption of the limitation period the applicant mentions that the investigations made at its premises on 15 November 1967 were not ordered by the persons who were empowered to take decisions and that consequently they were not capable of interrupting the limitation period.

The defendant maintains that no comparative factor can be deduced from the law of the Member States which have no rules on the restriction of competition. It disputes further that there is a general principle of law on the subject of the length of the period of limitation.

As to the alleged ending of the gentlemen's agreement on 29 October 1962 the defendant refers to its statements above in respect of the complaints concerning the application of the gentlemen's agreement.

As to the interruption of the period of limitation the defendant points out that the Commission delegated the power to make the order for investigation to its member responsible for competition questions, which he himself legally delegated to the Director-General for Competition so that an investigation made by an official on the basis of an order signed by that Director-General was capable of interrupting the limitation period.

5 — Complaints concerning the finding of guilt

The applicant complains that the Commission infringed Article 15 of Regulation No 17/62 and the duty to give reasons, by suggesting that it acted deliberately in respect of all the agreements or concerted practices including the undertakings of the export agreements which had been declared to be ‘in abeyance’.

The applicant mentions that it could reasonably accept that the export agreement did not fall under Article 85 and that it need not therefore be notified since the Bundeskartellamt had also considered the compatibility of the said agreement with that provision. It appears from the minutes of the meeting on 29 October 1962 that the various undertakings concerned were convinced that the legality of the export agreement was beyond question. If they had not held that belief they would not have notified the Bundeskartellamt of the amendment decided upon on 28 October 1964 of the period for renouncing that agreement.

With regard to the gentlemen's agreement and the correspondence in the Autumn of 1963 concerning the protection of domestic markets, the applicant disputes the accusation of having deliberately committed an infringement and emphasizes that the representative of its legal department had insisted on ending the gentlemen's agreement, as appears from the minutes of the meeting on 21 September 1962. The applicant points out, furthermore, that for reasons of organization the management of the quinine department, trade in which is a secondary activity within the framework of its undertakings, was entrusted to a person acting in a quite independent manner on the basis of a special contract of cooperation. The new management of the applicant undertaking did not therefore have detailed knowledge of the conduct of business in that department and did not know until later the full situation constituted by the gentlemen's agreement and the exchange of correspondence concerning the protection of the markets. It is possible, consequently, to blame the applicant at the most for a failure of organization and thus for negligence, but in no circumstances for deliberate action. For those reasons the findings of the Commission concerning wrong-doing are incorrect which leads consequently to the necessity of at least altering the amount of the fine.

The defendant objects that, as appears from statements made by Mr Köbner at the meeting on 21 September 1962, the applicant knew perfectly well that the Bundeskartellamt had only examined the export agreement in relation to German law. Furthermore, the gentlemen's agreement had not been notified to the Bundeskartellamt.

It appears further from the minutes of the meeting on 21 September 1962 that the legal representative of the applicant was not unaware of the interdependence existing between the export agreement and the gentlemen's agreement — as is also proved by the minutes of the meeting on 26 January 1961—and that the parties concerned were fully conscious of the fact that in the unanimous opinion of the lawyers the gentlemen's agreement was incompatible with Article 85 (1) of the EEC Treaty and that the legality of the export agreement even regarded in isolation was doubtful. Lastly it is incorrect to claim that the gentlemen's agreement was brought to an end at the behest of the legal representative of the applicant.

The applicant disputes having had doubts on the legality of the export agreement. The statement made by Nedchem's representative on 26 January 1961 concerning the ‘illegality of the agreement’ could refer only to the gentlemen's agreement as appears from what he had stated previously: ‘That means that legally an agreement may be made for all countries with the exception of the Common Market and the United Kingdom’.

That same concept of the legality of the agreement appears equally from the discussion which was held on 21 September 1962 on the basis of the Focsaneanu Report. For the rest, according to the applicant, the whole history of the export agreement, and particularly the intervention of the Bundeskartellamt under Article 88 of the Treaty, as well as the minutes of meeting on 29 October 1966, proves the good faith of the undertakings.

The defendant objects that the action of the undertakings concerned intending completely to eliminate competition between them cannot be subdivided into several parts.

According to the defendant, it appears from the discussions which took place between the participants in the cartel during the years 1961 to 1963 that they had no alternative other than completely to eliminate competition between them or not to eliminate it at all. In other words, the export agreement did not suffice to preserve their interests and it only had any meaning if it were applied jointly with the gentlemen's agreement.

In his report, Mr Focsaneanu excluded the possibility that the export agreement might be automatically considered as not falling under the prohibition of Article 85 because of the large quantities of quinine which were exported abroad.

6 — Complaints concerning the fixing of the fine

The applicant maintains that the Commission should at least have taken into consideration, when fixing the fine, the fact that the alleged infringements already went back several years. By omitting to do so it abused its discretionary power and incorrectly applied Article 15 of Regulation No 17/62. The applicant considers it to be unjustified that the failure of the Commission to take action for a relatively long time should be compensated for by particularly heavy fines imposed without warning, all the more so since it had voluntarily ended the alleged infringements of which it is accused.

By this behaviour the Commission has infringed the principles of proportionality and of legitimate expectation as well as the principle of equality to the extent to which, in respect of other cartels, the Commission has so far refrained from imposing penalties. It is thus guilty of misuse of powers and infringement of the Treaty.

Furthermore, the criterion which according to the applicant the Commission chose in deciding on the total sum of 500000 units of account and then dividing that sum between the various undertakings does not allow the fine to be fixed individually because for the last undertaking there must remain a certain sum which is not individually fixed but which is automatically allocated to it. Such a manner of proceeding amounts to a misuse of powers and an infringement of Article 15 of Regulation No 17/62.

As to the duration of the infringements, the statement contained in the decision that the undertakings committed the acts of which they are accused over a long period, that is to say, from 13 March 1962 to the beginning of May 1965 does not take into account the fact that cooperation was almost completely interrupted from October 1962 to October 1963. It is also important to know which infringements the undertakings are alleged to have committed over a lengthy period.

The applicant puts forward the submissions of misuse of powers, infringement of the Treaty and lack of reasons; it relies on the provision which requires the Commission to take into consideration the seriousness of the infringement in fixing the amount of the fine.

Further, the Commission wrongly blames the undertakings, regarding it as an aggravating circumstance to have continued during 1965 to 1966 to exchange statistical information concerning the amount of their exports and to have omitted notification of the agreement. This conduct does not amount to infringement of Article 85 of the Treaty or of Regulation No 17/62; there is consequently misuse of powers in taking account of them.

By finding that the undertakings ended their cooperation at the beginning of February 1965 only because radical changes occurred in the situation of the market, the Commission appears to have wished to penalize purely potential behaviour, that is to say, the hypothetical maintenance of the export agreement in the case of a different state of the market. That argument is unacceptable in law and incorrect in fact because the tendency toward dissolution had already been manifesting itself for a long time as is proved by the withdrawal of Nedchem in 1962, the abolition of the gentlemen's agreement and of the bark pool, as well as the interruption of cooperation from Autumn 1962 to Autumn 1963.

It is equally incorrect that the products in question have particular importance and are partially irreplaceable.

The seriousness of an infringement should depend not on the nature of the products in dispute but on the magnitude of the obstacle caused to the integration of the Common Market.

The Commission's statement that competition within the Common Market was affected from every important point of view in a particularly serious manner is not supported by any reasons. For the period after 1962 only the statements made in Autumn 1963 concerning the protection of domestic markets could be of importance but the real dimension of the alleged restriction caused to competition is not indicated.

The Commission sees a further ground for increasing the fine in the fact that ‘the development of prices would have been quite different if the cartel had not existed’. The applicant observes in this respect that the trend of prices which occurred when cooperation was terminated at the end of 1964 permits the supposition that prices on the world market in 1964 would have been much higher without the cooperation which still existed at that time. The Commission's allegation that the agreement caused damage to the consumer during the years 1963 to 1964 is absolutely untenable.

The manner in which the Commission appraised the particular situation of the applicant and its participation in the alleged infringements constitutes a misuse of powers towards it and an infringement of Article 15 of Regulation No 17/62. The Commission has first of all omitted to consider as a mitigating circumstance the fact that the director of the applicant's legal department insisted that the gentlemen's agreement should be ended at the meetings in September and October 1962, whilst this fact was accepted as a mitigating circumstance in favour of the French undertakings. Further, the Commission wrongfully imputed exclusively to the applicant its intervention in favour of higher prices. This intervention was in fact economically justified, as appears from the fact that in 1963 the applicant had suffered a loss of DM 250000, as the expenses relating to trading in quinine and quinidine were not covered. That aspect falls furthermore under Article 86 of the EEC Treaty on which the decision is not based. Thus the decision to raise prices was taken in agreement with all the undertakings concerned and it would be unjustifiable to blame this on the applicant alone.

There is unjustified discrimination in the relationship between the amount of the fines imposed on the applicant, on the one hand, and on the other participant undertakings, on the other. In fact, if the criterion of the quotas to which the Commission referred is taken as a basis, the applicant is in comparison with the other undertakings at an almost double disadvantage. In thus respect also the applicant puts forward the submissions of misuse of powers, infringements of the Treaty and of lack of statement of reasons.

The applicant lastly objects to the Commission's statement that it had a preponderant influence in respect of its supplies of raw materials owing to its plantations in the Congo. In fact the plantations, which were mainly acquired only in 1962, were in poor condition, so that the yields were very small in 1963 and 1964. Furthermore, in 1964 the troubles in the Congo at times caused a complete halt to production. It should furthermore be regarded as unjustified discrimination and as a misuse of powers that the attempt to secure supplies of raw materials was regarded as an aggravating circumstance in the case of the applicant alone. It is not in fact cooperation in the raw material sector which forms the subjectmatter of the decision to impose a fine.

Lastly, relying on the submission of infringement of the Treaty, the applicant maintains, that the Commission has not sufficiently taken into account the peculiarities of the quinine market in relation particularly to the long growing periods of the quinquina, and of the effect of stabilization of prices which the export convention had in particular. The statement contained in the decision to the effect that there is no need to take into account the fact that the products in question depend upon quinquina growing are entirely false. Without a complete organization and long term supplies of bark and of the market for finished products it in principle is impossible sufficiently to supply the consumer at stable prices. The requirement of stabilizing the market has been recognized by international agreements concluded under the aegis of the United Nations Organization for numerous industrial products manufactured with the help of agricultural raw materials.

The defendant states that it has indicated in detail in the contested decision the considerations which governed the fixing of the amount of the fines in respect of the various parties concerned. It emphasizes the seriousness of agreements concerning the fixing in common of sale prices, rebates, the protection of domestic markets, delivery quotas, compensation for quantities, and the prohibition imposed on certain of the participants as regards manufacturing synthetic quinidine. It would be difficult to go further in the restriction of competition.

The defendant mentions that the essential purpose of the fines provided for in Article 15 (2) of Regulation No 17/62 is not to lead to the ending of the infringement, because the Commission has powers for that purpose provided for in Article 3 of Regulation No 17. The fines have rather the aim of retribution.

The Commission did not take any ‘surprise decision’, because the parties concerned must have known well that they should expect heavy fines if their cartel were to be discovered.

The defendant disputes having considered the omission of notifying the agreement as an aggravating circumstance. It also disputes the statement that the parties concerned voluntarily ended their infringements, as their previous conduct does not allow of the conclusion that they would have ended the said infringements in order to take account of the requirements of the EEC Treaty. It is therefore only because of the effect of the market situation that they ended their infringements.

The defendant denies that as a preliminary it fixed an aggregate figure of 500000 units of account. It states on the other hand that it laid down a special sum for each of the undertakings concerned as appears from the considerations set out under No 40 in the contested decision. It was motivated in particular by the extent of the obstacle caused to the integration of the Common Market. As concerns the restriction of competition it took into account the dominant position of the undertakings on the market. As to the trend of prices the defendant maintains that if there had not been joint fixing within the framework of the agreement the deliveries made from the reserves of the American stockpile until the summer of 1964 would have led to a greater reduction in prices.

As to the argument of the applicant concerning the respective amounts of the fines imposed on the participants, the Commission refers to the considerations put forward at No 40 in the contested decision. For the rest it 'leaves the matter to the discretion of the Court.

In its statement of reply the applicant complains that the Commission pursued “the quinine case” for political reasons, solely because the American authorities drew attention to it and because it had been the subject of certain publicity in the press, whilst innumerable infringements committed in the period 1963 arid 1964 were not the subject of proceedings.

The applicant regards the fact that during the period in question this has been the only case in which the Commission has imposed a fine on those concerned as well as the disproportionate amount of the fine as a serious injustice and an infringement of the principle of equality of treatment.

As to the total amount of the fine, amounting to 500000 units of account, which was imposed on the cartel, the applicant maintains that the Commission continues to provide no criterion of the calculations in respect of it.

The applicant states that it is contrary to the general principle according to which persons cannot be compelled to make statements which may incriminate them to regard the fact that the “infringements were kept secret” as a particularly aggravating circumstance. Moreover the applicant recalls that the export agreement was notified to the Bundeskartellamt.

The statement of the Commission that if there had not been joint price-fixing by the cartel prices would have decreased considerably until the Summer of 1964 contradicts economic logic and may be refuted by the minutes of the meetings of March 1964 and October 1964, from which it appears that price increases were necessary because of the increase in costs.

The defendant recalls that those concerned, far from having rapidly put an end to their activities after the appearance of Regulation No 17/62, persisted in their illegal behaviour until February 1965. The amount of the fine imposed represents less than a fifth of the maximum permitted and it cannot therefore be regarded as unforeseeable by the applicant.

As to the innumerable infringements which are alleged to have taken place during 1963 and 1964 the defendant states that it did not know of them.

The defendant does not claim that the agreement was terminated as a result of its intervention but it states only that it was the necessities of the market which led those concerned to allow it to lapse.

It is inevitable that the fines imposed on several undertakings belonging to a prohibited cartel should amount to a certain total, but that does not prevent the amount charged to each undertaking from being fixed individually, in accordance with the criteria set out in the present case at No 40 in the contested decision. It emphasizes further that although it is true that in accordance with the distribution of quotas in the cartel the fine of the applicant should have been 118000 units of account, it was nevertheless fixed at 190000 units of account because Boehringer had an im-important position on the raw material market because of its plantations and its processing factory in the Congo, because on several occasions it had spoken in favour of an increase in prices, and lastly because of its very large turnover five times greater than that of Nedchem.

The defendant mentions finally that the applicant put forward no argument capable of invalidating the finding that if those concerned had not restricted competition between them the prices of the products in question would have been reduced further because of the existence of quantities coming from the “strategic stocks”.

7 — The deduction from the fine imposed by the Commission of the fine imposed on the applicant by an American court

The applicant mentions that it had already been ordered by an American court to pay a fine of 80000 dollars based on the same acts as those to which the fine imposed by the Commission refers. The first fine, which has already been completely paid, ought therefore to be deducted from the one imposed later. That is in accordance with the general principles of law as well as with a general principle of natural justice recognized by the Court of Justice in Case 14/68. The defendant considers that this request is not admissible because this point was not the subject of the contested decision. At the time when it adopted its decision on 16 July 1969 the Commission in fact did not know that the applicant had been sentenced on 3 July 1969 by an American court within the framework of a compromise procedure to a fine of 80000 dollars and that it had paid that amount on 11 July 1969. The applicant's advocate did not inform the Commission of it except by a letter of 3 September 1969 and it was then that he asked that this amount should be deducted from the fine imposed by the contested decision. The Commission has not yet ruled upon that request. By letter of 25 September 1969 the Director-General for Competition informed the applicant that in this respect further examination was necessary. In these circumstances the applicant would suffer no damage in respect of legal protection if the Court did not consider its request, because it could later make an application to the Court against any decision by the Commission to reject it.

The applicant in its reply states that it leaves to the discretion of the Court the decision whether the latter can rule upon its request for deduction of the fine imposed by the Southern District Court of New York without a prior decision of the Commission.

The defendant in its rejoinder states that the Commission will shortly decide upon the request of the applicant.

Grounds of judgment

1. In 1958 the applicant entered into an agreement with NV Nederlandse Combinatie voor Chemische Industrie, Amsterdam, (hereinafter referred to as “Nedchem”) together with five other Netherlands undertakings subsequently represented by it, and the undertaking Buchler & Co., Brunswick, whereby those undertakings retained their respective domestic markets and provided for the fixing of the prices and quotas for the export of quinine and quinidine to other countries. Buchler withdrew from this agreement on 28 February 1959. In July 1959, following the intervention of the Bundeskartellamt to which the agreement had been notified, Boehringer and Nedchem amended that agreement in such a way as to exclude deliveries to the Member States of the EEC

2. In 1960 a new cartel was established between Boehringer and the two abovementioned undertakings and shortly afterwards it was extended to certain French ánd British undertakings. This cartel was based in the first place on an agreement relating to trade with third countries (hereinafter referred to as the “export agreement”) and providing inter alia for the fixing by agreement of prices and rebates relating to exports of quinine and quinidine and the allocation of export quotas supported by a system of compensation depending on whether the export quotas were exceeded or not fulfilled. Furthermore, a gentlemen's agreement between the same parties extended the abovementioned provisions to all sales within the Common Market. This agreement also established the principle; of the protection of domestic markets in favour of each of the producers and bound the French members of the cartel to refrain from manufacturing synthetic quinidine.

3. Since the Commission considered that the restrictions on competition therein provided for were capable of affecting trade between Member States, it imposed on the applicant a fine of 190000 units of account by a decision of 16 July 1969 (OJ L 192, p. 5 et seq.).

4. By an application lodged at the Court Registry on 26 September 1969 the Boehrin ger undertaking initiated proceedings against this decision.

A — The submission relating to the limitation period

5. The applicant complains that the Commission did not take into account the fact that proceedings in respect of the alleged infringement are barred having regard to the period which elapsed between the date of the acts and the initiation of the administrative procedure by the Commission.

6. The provisions governing the Commission's power to impose fines for infringement of the rules on competition do not lay down any period of limitation. In order to fulfil their function of ensuring legal certainty limitation periods must be fixed in advance. The fixing of their duration and the detailed rules for their application come within the powers of the Community legislature.

7. Consequently the submission is unfounded.

B — Submissions relating to procedure and form

I — Submissions relating to the notice of complaints

8. It is claimed that the Commission infringed Article 19 (1) of Regulation No 17/62 of the Council, Article 4 of Regulation No 99/63 of the Commission and Article 190 of the Treaty, in that the written notice of complaints of 30 July 1968 did not set out in detail the facts to which the Commission had based its view and the evidence on which it relied.

9. Article 19 (1) of Regulation No 17 obliges the Commission, before taking a decision in connexion with fines, to give the persons concerned the opportunity of putting forward their point of view with regard to the complaints made against them. Article 4 of Regulation No 99/63 of the Commission provides that the Commission shall in its decisions deal only with those objections raised against undertakings and associations of undertakings in respect of which they have been afforded the opportunity of making known their views. The notice of complaints fulfils this requirement since it sets forth clearly, albeit succinctly, the essential facts on which the Commission relies. The requirement imposed on the Commission by Article 19 is met when in the course of the administrative procedure it supplies the details necessary to the defence.

10. In the present case the Commission has clearly set out the essential factors on which it based the complaints listed, referring expressly to statements contained in the minutes of certain meetings of the undertakings concerned and to correspondence relating to the protection of domestic markets which was exchanged between those undertakings in October and November 1963. Furthermore, maintaining on the basis of its investigations that the undertakings concerned had continued to exchange information on their sales with a view to possible quantitative compensation and that up to the end of 1964 they had maintained a policy of uniform prices, the Commission thereby deduced that after 1962 they had continued to apply the gentlemen's agreement on production and sale in the Common Market.

11. Consequently the objections raised with regard to the notice of complaint are unfounded.

II — The objection relating to consultation of the administrative file

12. The applicant maintains that the Commission infringed the rights of the defence by refusing in the course of the administrative procedure to allow it to consult essential documents on which the contested decision was based. The defendant replies that it had enabled the applicant to consult the documents which were of importance for the appraisal of the complaints.

13. The notice of complaints alleges that the applicant together with other producers of quinine had until 1966 adopted a policy of common prices, particularly with regard to sales in Italy, Belgium and Luxembourg. According to this statement this concerted conduct is clear in particular from the uniformity of prices maintained by the undertakings for their sales in the said countries. In support of this statement the notice of complaints (last subparagraph of paragraph 11) refers to the outcome of investigations carried out by the Commission's staff in those countries. In the course of the administrative procedure the applicant requested the Commission to acquaint it with the results of the said investigations. The Commission rejected this request on the ground that it must protect the business secrets of the other undertakings.

14. Nevertheless the Commission itself alleged that those undertakings regularly exchanged information on the amounts sold in the States in question. Furthermore in case of doubt the Commission could have requested the opinion of the other undertakings concerned with regard to the applicant's request for the communication of the documents relating to them. It does not appear that the Commission consulted the said undertakings in this way.

15. Nevertheless, throughout the administrative procedure the applicant did not dispute that it had carried out a concerted policy with regard to prices until the end of October 1964. Consequently the failure to communicate the documents does not appear capable of affecting the applicant's opportunities for defence within the framework of the administrative procedure, except for the month of January 1965. Consequently this matter must be considered in conjunction with the substance of the case.

III — Complaints relating to the drawing up of the minutes of the hearing

16. The applicant maintains that both the Advisory Committee on Restrictive Practices and Monopolies and the Commission acted on the basis of a preliminary version of the minutes of the hearing, which did not take into account the amendments which it had suggested. Such action is incompatible with the principles of the rule of law governing the guarantee of the fundamental rights of an undertaking threatened with sanctions.

17. The preliminary nature of the minutes of the hearing submitted to these two bodies could only amount to a defect in the administrative procedure capable of vitiating the decision which results therefrom, on the ground of illegality, if the document in question was drawn up in such a way as to be misleading in a material respect. A consideration of the amendments to the draft minutes suggested by the applicant shows that the alterations requested did not concern essential factors, with the result that the final text of the minutes containing all the applicant's suggested amendments differs in no material respect from the draft submitted to the Members of the Commission. Thus, this draft was not capable of changing the statements of the undertakings concerned, with the result that it was able to provide the Advisory Committee and the Commission with complete information on the essential content of the statements made at the hearing.

18. This complaint is therefore unfounded.

IV — The complaints concerning the procedure before the Advisory Committee

19. The applicant complains that the Commission did not indicate to the Advisory Committee the amount of the fine envisaged and it has persisted, in its statement in reply, in putting forward this submission despite the defendant's allegation to the contrary.

20. The Members of the Advisory Committee were informed, by letter of 30 May 1969 from the Commission accompanying the preliminary draft decision in question, of the approximate proportion of the fines intended for the various undertakings. The Director who signed that letter added that at the meeting on 23 June 1969 he would specify ‘Orally the amount of the fines now envisaged’. It appears from extracts of the minutes of that meeting that the Members of the Committee received these details and were able to give their opinion thereon.

21. Consequently this complaint is unfounded.

V — The complaint that the Members of the Commission did not take sufficient part in the administrative procedure

22. The applicant maintains that the preliminary inquiry is vitiated by illegality on the ground that the: Members of the Commission who were to decide on the fine had not been present at its hearing.

23. As the purpose of the procedure before the Commission is to apply Article 85 of the Treaty even where it may lead to the imposition of fines, it is an administrative procedure. Within the context of such a procedure there is nothing to prevent the Members of the Commission who are responsible for taking a decision imposing fines from being informed of the outcome of the hearing by such persons as the Commission has appointed to conduct it, in accordance with Article 9 (1) of Regulation No 99/63. Thus, the fact that the applicant was not heard personally by the Members of the Commission at its hearing cannot amount to a defect in the contested decision.

24. The applicant maintains in addition that the administrative procedure is vitiated by the fact that the file of the case was not sent in its entirety to each Member of the Commission.

25. However, the Members of the Commission received complete and detailed information regarding the essential points of the case and had access to the entire file.

26. Therefore, the applicant's complaint is unfounded.

C — Substance

I — The status and duration of the gentlemen's agreement

27. The applicant complains that the Commission considered that the export agreement relating to trade with third countries and the gentlemen's agreement governing the conduct of its members in the Common Market constituted an indivisible entity as far as Article 85 was concerned. The applicant states that the gentlemen's agreement, unlike the export agreement, did not constitute an agreement within the meaning of Article 85 (1) and in any event it definitively ceased to exist from the end of October 1962. The conduct of the parties to the export agreement does not in the applicant's view indicate that they continued the restrictions on competition which were originally provided for in the gentlemen's agreement. The opposite conclusions reached by the contested decision are therefore alleged to be vitiated because they are based on incorrect findings.

28. The gentlemen's agreement, which the applicant admits existed until the end of October 1962, had as its object the restriction of competition within the Common Market. The parties to the export agreement mutually declared themselves willing to abide by the gentlemen's agreement and concede that they did so until the end of October 1962. This document thus amounted to the faithful expression of the joint intention of the parties to the agreement with regard to their conduct in the Common Market. Furthermore it contained a provision to the effect that infringement of the gentlemen's agreement would ipso facto constitute an infringement of the export agreement. In those circumstances account must be taken of this connexion in assessing the effects of the gentlemen's agreement with regard to the categories of acts prohibited by Article 85 (1).

29. The defendant bases its view that the gentlemen's agreement was continued until February 1965 on documents and declarations emanating from the parties to the agreement the tenor of which is indistinct and indeed contradictory so that it is impossible to conclude whether those undertakings intended to terminate the gentlemen's agreement at their meeting on 29 October 1962. The conduct of the undertakings in the Common Market after 29 October 1962 must therefore be considered in relation to the following four points: sharing out of domestic markets, fixing of common prices, determination of sales quotas and prohibition against manufacturing synthetic quinidine.

II — Protection of the producers' domestic markets

30. The gentlemen's agreement guaranteed protection of each domestic market for the producers in the various Member States. After October 1962 when significant supplies were delivered on one of those markets by producers who were not nationals, as for example in the case of sales of quinine and quinidine in France, there was a substantial alignment of prices conforming to French domestic prices which were higher than the export prices to third countries. It does not appear that there were alterations in the insignificant volume of trade between the other Member States referred to by the clause relating to domestic protection in spite of considerable differences in the prices prevailing in each of those States. The divergences between the domestic legislation of those States cannot by itself explain those differences in price or the substantial absence of trade.

31. The correspondence exchanged in October and November 1963 between the parties to the export agreement with regard to the protection of domestic markets merely confirmed the intention of those undertakings to allow this state of affaire to remain unchanged. This intention was subsequently confirmed by Nedchem during the meeting of the undertakings concerned in Brussels on 14 March 1964.

32. From those circumstances it is clear that with regard to the restriction on competition arising from the protection of the producers' domestic markets the producers continued after the meeting on 29 October 1962 to abide by the gentlemen's agreement of 1960 and confirmed their common intention to do so.

33. The applicant maintains that owing in particular to the shortage of raw materials the sharing out of domestic markets, as emerges from the exchange of letters of October and November 1963, had no effect on competition in the Common Market.

34. Despite the scarcity of raw materials and an increase in the demand for the products in question, as the contested decision finds, a serious threat of shortage nevertheless emerged only in 1964 as a result of the interruption of Nedchem's supplies from the American General Service Administration. On the other hand such a situation cannot render lawful an agreement the object of which is to restrict competition in the Common Market and which affects trade between the Member States. The sharing out of domestic markets has as its object the restriction of competition and trade within the Common Market. The fact that, if there were a threatened shortage of raw materials, such an agreement might in practice have had less influence on competition and on international trade than in a normal period in no way alters the fact that the parties did not terminate their activities. Furthermore the applicant has furnished no conclusive evidence capable of proving that it had ceased to act in accordance with the agreement before the date of expiry of the export agreement.

35. Consequently, the submissions concerning that part of the decision relating to the continuation of the agreement on the protection of the producers' domestic markets until the beginning of February 1965 are unfounded.

III — The joint fixing of sales prices

36. With regard to the joint fixing of sales prices for the markets which were not shared out, that is to say, the Belgo-Luxembourg Economic Union and Italy, the gentlemen's agreement provided for the application to such sales of the current prices for exports to third countries fixed by mutual agreement in accordance with the export agreement. The joint fixing of sales prices by the producers of virtually all the quinine and quinidine distributed within the Common Market is capable of affecting trade between Member States and seriously restricts competition within the Common Market. If, as the defendant maintains, the parties to the export prices to supplies to the abovementioned Member States, it would follow that they continued to abide by that part of the gentlemen's agreement relating to the joint fixing of sales prices.

37. With regard to the period from November 1962 to April 1964, the figures supplied by the defendant show a substantial and constant identity between the current prices fixed for export within the framework of the agreement and the prices maintained by the undertakings concerned, including the applicant, for their sales in unprotected domestic markets in the Community. Where such prices deviate from the scale of export prices they do so in terms of rebates or increases corresponding generally to those agreed on under the gentlemen's agreement. The applicant has neither supplied nor offered to supply any evidence relating to the abovementioned period capable of proving that this argument of the Commission is unfounded, although it has done so in respect of a part of the year 1964. Moreover the increase in prices of 15 %, which was jointly decided upon on 12 March 1964 under the export agreement which led Nedchem to withdraw its opposition, was uniformly applied — although that undertaking would have preferred to continue to fix lower prices — with regard to supplies to Italy, Belgium and Luxembourg also.

38. These circumstances show that with regard to sales prices the parties to the export agreement continued after October 1962 to act in the Common Market as if the gentlemen's agreement of 1960 were still in force.

39. The action taken by the parties to the agreement with regard to prices from May 1964 was only discussed in depth as a result of the questions put by the Court to the defendant during the oral procedure. It is clear from the oral procedure, taking into account the information supplied by the parties, that during 1964 and in particular from May onwards, a party to the agreement applied prices which in an increasing number of cases deviated from the current exports prices, and that the defendant has been unable to give a convincing explanation as to how this might be reconciled with the continuation in force of the agreement in question. The failure to communicate to the undertakings concerned the results of the investigations carried out in Italy and Belgium, ‘which excluded any possibility of clarification and discussion at the stage of the administrative procedure, may have contributed to leaving unexplained facts which ought to have been clarified.

40. In these circumstances proof has not been sufficiently established in law that the applicant by mutual agreement with the other producers maintained uniform prices for its sales in the Belgo-Luxembourg Economic Union and Italy after May 1964. Consequently the period from May 1964 to February 1965 must be omitted from the infringement.

IV — The sales quotas

41. With regard to the fixing of sales quotas for the Common Market, which was linked to a system of compensation and which constituted a supplementary guarantee of the sharing out of domestic markets, the applicant maintains that the necessary condition for the functioning of such a system, namely the reciprocal notification of all sales including those effected within the Community, was no longer fulfilled subsequent to October 1962.

42. It is not clear that the communications of the undertakings concerned relating to sales, which the defendant has produced in support of its opposing statement, also relate to supplies within the Common Market. On the contrary, such documents in general refer expressly to “export sales”, an expression habitually employed by the members of the cartel to indicate sales to third countries. Furthermore, it is clear from an exchange of letters in January 1964 between two members of the cartel that even such export sales figures were no longer communicated regularly. The defendant itself admits in the statement of reasons for the contested decision that during 1963 and 1964 the compensation arrangements which were intended to ensure that the quotas were observed were not applied because of the scarcity of raw materials and because of the increase in demand, so that the members of the cartel had no further interest in effecting compensatory deliveries between themselves.

43. At the hearing the defendant produced a table of the amounts of quinine disposed of by Nedchem, Boehringer and Buchler from 1962 to 1964 with the object of proving that those quantities, viewed as a percentage of the total of the quotas, did not deviate perceptibly for that period from the quota assigned to each of the undertakings within the framework of the agreement and thus that the quota arrangement continued to operate after 1962.

44. Nevertheless, this table, which moreover does not include sales of quinidine, shows that, even taking as a basis an average recorded over the previous two years, there are considerable deviations in the case of each of the three undertakings in relation to its own quota. Furthermore, the Commission has supplied comprehensive figures covering all the sales of quinine by the undertakings concerned and it is thus impossible to discern from them the course of conduct of those undertakings in the Common Market. Since there is insufficient proof that the system of quotas for sales within the Common Market was continued after October 1962, it must be concluded that the applicant's complaints with regard to this part of the contested decision are well founded.

V — Restrictions on the manufacture of synthetic quinidine

45. The gentlemen's agreement prohibited the group of French undertakings from manufacturing synthetic quinidine. Owing to the stringency of the restrictions imposed on undertakings from one Member State for the benefit of undertakings on the market in question, these prohibitions clearly have as their object the restriction of competition within the Common Market and are capable of affecting trade between Member States. The fact relied upon that, when the gentlemen's agreement was concluded, the French undertakings were not in a position to manufacture synthetic quinidine does not render lawful such a restriction which entirely precluded them from taking up this activity.

46. That the French undertakings should accede to this restriction of their freedom of action is explicable in terms of their interest — owing to the particularly high prices which they maintained for their products in France — in preserving the territorial protection which they enjoyed on their domestic market. Taking into account the connexion thus existing between those two restrictions on competition, it may reasonably be concluded that the prohibition on production lasted as long as the territorial protection. Although it is true that in March 1964 Boehringer granted a licence to manufacture quinidine to the remaining British member of the cartel, on whom the gentlemen's agreement imposed prohibitions similar to those imposed on the French undertakings, this has no effect on the finding which has already been made with regard to the relationship between the French undertakings and the German and Netherlands members of the cartel. Although it is possible that, owing to the scarcity of raw materials which was established by the contested decision (No 29, last paragraph), in its ultimate period protection of the domestic markets did not have important effects on competition and trade between Member States, this cartel nevertheless lasted until February 1965. In the absence of any indication to the contrary and having regard to the abovementioned connexions between the two aspects of the cartel, it must be considered that the agreement restricting the French undertakings’ freedom to manufacture was of the sanie duration.

47. Consequently the applicant's complaints in this respect are unfounded.

VI. — General appraisal of the agreement within the Common Market

48. It is clear from the foregoing that the applicant participated with other producers of quinine and quinidine in an agreement prohibited by Article 85 of the EEC Treaty. This agreement continued in most of its forms even after the meeting on 29 October 1962. Serious doubts as to the continuation of the agreement after 1962 exist only with regard to the application of sales quotas. Nevertheless, the fact that the undertakings did not continue to apply the system of quotas does not seem perceptibly to have improved the conditions of competition, since they continued jointly to fix prices, to apply uniformly to their deliveries in the Common Market joint price increases arranged in March and October 1964 and decided within the framework of the export agreement and finally to maintain protection of their respective domestic markets and the prohibition on the French undertakings' production of synthetic quinidine. However, the application of uniform prices for deliveries to Italy, Belgium and Luxembourg has only been proved to exist up to April 1964.

49. Finally, even if it must be conceded that the export agreement could have operated independently of the agreement relating to the Common Market, it must be found that in fact the members of the cartel attributed great importance to the joint application of both agreements. Although from October 1963 the export agreement was declared to be ‘in abeyance’, it is clear from the declarations made by the undertakings concerned at their subsequent meetings together with their subsequent conduct as a whole that they continued to have an interest in upholding that agreement, particularly with regard to its possible employment within the Common Market.

VII — Complaints relating to the finding of an infringement

50. The applicant complains that the Commission infringed Article 15 of Regulation No 17, in that the contested decision accuses it of having acted deliberately.

51. Article 15 does not limit the application of the sanctions for which it makes provision merely to cases in which the infringement was committed deliberately. This consideration could only be taken into account for the purpose of fixing the amount of the fine.

VIII — Complaints relating to the fine

52. The applicant complains that the Commission imposed on it a fine for an infringement which had come to an end and that by omitting to take this fact into consideration, at least for the purposes of fixing the amount of the fine, the defendant was guilty of an abuse of powers.

53. The penalties provided for in Article 15 of Regulation No 17 are not in the nature of periodic penalty payments. Their object is to suppress illegal activities and to prevent any recurrence. This object could not be adequately attained if the imposition of a penalty were to be restricted to current infringements alone. The Commission's power to impose penalties is in no way affected by the fact that the conduct constituting the infringement has ceased and that, it can no longer have detrimental effects. For the purpose of fixing the amount of the fine, the gravity of the infringement is to be appraised by taking into account in particular the nature of the restrictions on competition, the number and size of the undertakings concerned, the respective proportions of the market controlled by them within the Community and the situation of the market when the infringement was committed.

54. The applicant complains that the Commission first of all fixed an aggregate amount for the fine on the cartel and then divided it amongst the undertakings. This procedure is incompatible with the requirement of fixing the fine individually. Furthermore, the applicant was subject to discrimination as compared with the other undertakings, by reason of the disproportionate amount of the fine imposed upon it.

55. The prior fixing of a maximum aggregate amount for the fine, fixed in relation to the seriousness of the danger which the agreement represented to competition and trade in the Common Market, is not incompatible with the individual fixing of the penalty. Consideration of the situation and of the individual conduct of each undertaking and of the importance of the rôle which it played in the agreement of the fine.

56. In the present case the contested decision, particularly paragraphs (2) and (4) of No 40, expressly considered the situation and rôle of the applicant within the frameword of the cartel. It took into account the major influence which this undertaking exercised with Nedchem during the working out and implementation of the agreement and above all of its position of strength from the point of view of supplies of raw materials. In the opinion of the Commission, this latter circumstance justifies the imposition on the applicant of a relatively heavier fine than that imposed on the other undertakings. Even taking into account any low output of the applicant's quinquina plantations in the Congo in 1963 and 1964, the fact of being able to count on its own large resources for the future was, in a period of scarcity of raw materials on the internation market, liable to give the applicant undertaking an important influence over the other members of the cartel which found themselves in a weaker position as regards their supplies.

57. This assessment by the Commission is justified.

58. It appears lastly from the minutes of the joint meetings which the members of the cartel held on 25 September and 29 October 1962 that they were aware of the incompatibility of their actions with the prohibitions in Community law. The serious and conscious nature of the infringements therefore justifies a large fine,

59. The findings in the contested decision relating to the infringements alleged against the applicant are thus well founded in their essentials. Since excluding the fixing of sales quotas for the period from November 1962 to February 1965 and of the sales prices for the period from May 1964 to February 1965 does not appreciably diminish the gravity of the restrictions of competition arising from the agreement, it justifies only a slight reduction in the fine. It is appropriate to reduce the fine to 180000 units of account.

60. The applicant maintains that the fine of 80000 dollars which was imposed upon it by a court in the USA, arising out of the same facts, and which was already paid before the contested decision, should be deducted from the amount of the disputed fine.

61. These penalties were imposed in respect of restrictions on competition which occurred outside the Community. Consequently there is no reason to take them into account in these proceedings.

Costs

62. Under the first subparagraph of Article 69 (2) of the Rules of Procedure of the Court of Justice, the unsuccessful party shall be ordered to pay the costs if they have been asked for in the successful party's pleading. Since the applicant has failed in the essential part of its conclusions, it must be ordered to pay the costs.

On those grounds, Upon readings the pleadings; Upon hearing the report of the Judge-Rapporteur; Upon hearing the parties; Upon hearing the opinion of the Advocate-General; Having regard to the Treaty establishing the European Economic Community, especially Article 85; Having regard to Regulations Nos 17/62 of the Council and 99/63 of the Commission of the European Economic Community; Having regard to the Protocol on the Statute of the Court of Justice of the European Economic Community; Having regard to the Rules of Procedure of the Court of Justice of the European Communities, THE COURT hereby:

1 Dismisses the application for annulment;

2 Annuls so much of Article 1 of the decision of the Commission of the European Communities of 16 July 1969 (OJ L 192, p. 5 et seq.) as records that the applicant applied the clauses of the gentlemen's agreement of 9 April 1960 on the system of quotas and compensation during the period from November 1962 to February 1965, and the fixing of prices and rebates for the export of quinine and quinidine during the period from May 1964 to February 1965;

3 Reduces the fine imposed on the applicant by the abovementioned decision to 180000 units of account;

4 Orders the applicant to pay the costs of the proceedings.