JUDGMENT OF 14.7.1972 — CASE 54/69 FRANCOLOR v COMMISSION

In Case 54/69

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

gives the following

JUDGMENT

Issues of fact and of law

I — Statement of the facts

The facts may be summarized as follows:

On the basis of information supplied by trade associations of the various industries using dyestuffs, the Commission made inquiries as to whether increases in prices for these products which had occurred since the beginning of 1964 in the countries of the Community were made by mutual agreement between the undertakings concerned.

In particular, by a letter of 18 August 1964 addressed to the applicant, the Commission's Directorate-General for Competition, referring to the increases in the selling prices of dyestuffs introduced by that undertaking during the course of that year, asked it for information on a certain number of points with a view to examining whether those measures fell within the scope of Article 85 of the EEC Treaty. Francolor replied to this questionnaire by letter of 17 September 1964.

As a result of these inquiries the Commission found that three uniform price increases had taken place. An increase of 15 % affecting most aniline dyes took place between 7 and 20 January 1964 in Italy, the Netherlands, Belgium and Luxembourg and on 1 January 1965 it was extended to Germany. On that same day almost all producers introduced, in Germany and the other countries already affected by the increase of 1964, a uniform increase of 10 % on dyes and pigments not covered by the first increase. Finally, on 16 October 1967 an increase of 8 % on all dyes was introduced by almost all producers in Germany, the Netherlands, Belgium and Luxembourg. In France this increase amounted to 12 %; in Italy no such increase was introduced at all.

On 31 May 1967 the Commission decided upon its own initiative to commence proceedings under Article 3 of Regulation No 17/62 of the Council for presumed infringement of Article 85 of the Treaty against the undertakings, including the Francolor undertaking, which had participated in a concerted practice for the purpose of fixing prices for dyestuffs.

By letter of 11 December 1967 the Commission informed Francolor of its decision. This letter was accompanied by a notice of objections made by the Commission against the undertakings which had participated in the abovementioned increases. There were sixty recipients of the said letter and notice. They were producers of dyestuffs established both inside and outside the Community, and their subsidiaries and representatives established within the Common Market.

In the notice of objections the Commission declared that within the Common Market the price increases had been introduced by the following producers, and by their subsidiaries or representatives:

Azienda Colon Nazionali Affini S.p.A. (ACNA), Milan (Italy),

Industria Piemontese dei Colon di Anilina S.p.A. (IPCA), Milan (Italy),

Fabbrica Lombarda Colori Anilina S.p.A. (FLCA), Milan (Italy),

Industria Electro-Chimica Bergamasca, Bergamo (Italy),

Farbenfabriken Bayer AG, Leverkusen (Federal Republic of Germany),

Farbewerke Hoechst AG, Frankfurt am Main (Federal Republic of Germany),

Badische Anilin- und Soda-Fabrik AG (BASF), Ludwigshafen (Federal Republic of Germany),

Cassella Farbwerke Mainkur AG, Frankfurt am Main (Federal Republic of Germany),

Société Française des Matières Colorantes SA (Francolor), Paris (France),

Fabriek van Chemische Produkten Vondelingenplaat NV, Rotterdam (Netherlands),

Ciba SA, Basel (Switzerland),

Sandoz SA, Basel (Switzerland),

J. R. Geigy SA, Basel (Switzerland),

Fabrique de Matières Colorantes Durand et Huguenin SA, Basel (Switzerland),

imperial Chemical industries Ltd. (ICI), Manchester (United Kingdom),

Yorkshire Dye ware and Chemical, Leeds (United Kingdom),

E. I. Du Pont de Nemours Company Inc., Wilmington, Del. (United States of America).

By letter of 10 April 1968, in reply to this notice of objections, Francolor submitted its written observations in refutation of the objections set out against it.

On 10 September 1968, Francolor Submitted its oral observations in the presence of representatives of the Commission and of the Member States.

At its meeting on 24 July 1969, the Commission adopted a decision ordering Francolor to pay a fine of 50000 u.a. for infringements of the provisions of Article 85(1) of the Treaty, which it had allegedly committed as a participant with other undertakings in concerted practices for the purpose of fixing the amount of price increases and the circumstances in which these increases were to be introduced in the dyestuffs industry in 1964, 1965 and 1967.

For the same reasons the decision ordered that fines of 50000 u.a. be paid by:

Badische Anilin- und Soda-Fabrik AG,

Cassella Farbwerke Mainkur AG,

Farbenfabriken Bayer AG,

Farbwerke Hoechst AG,

Ciba SA,

J. R. Geigy SA,

Sandoz SA,

Imperial Chemical Industries Ltd.,

and that a fine of 40000 u.a. be paid by Azienda Colori Nazionali Affini S.p.A.

On 3 October 1969 Francolor lodged an application at the Court Registry for the annulment, or alternatively the reversal, of that decision.

II — Conclusions of the parties

The applicant claims that the Court should:

‘(a) Annul, or in any event reverse, the measure adopted by the Commission of the European Communities on 24 July 1969 entitled “Decision of the Commission relating to proceedings under Article 85 of the EEC Treaty” (IV/26.267 — Dyestuffs); (b) Order the Commission of the European Communities to bear the whole costs of the present proceedings.’

The defendant contends that the Court should:

‘(a) Dismiss Application No 54/69 lodged at the Court Registry on 3 October 1969; (b) Order the applicant to bear the costs.’

III — Submissions and arguments of the parties

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

A — Submissions as to form

First submission, concerning the commencement of the administrative procedure and the publication of the decision adopted

The applicant argues that the contested decision is vitiated by infringement of essential procedural requirements, misuse of powers, infringement of the Treaty and infringement of Regulation No 17/62 of the Council because:

a) It involves the simultaneous application of Article 3 and of Article 15 of the regulation, whereas the decision of 31 May 1967 to commence the procedure resulting in the contested decision referred only to Article 3 of Regulation No 17;

b) The Commission published the contested decision in the Journal Officiel of the European Communities, whereas decisions mentioned in Article 15 of the said regulation are not included amongst those for which publication is envisaged by Article 21.

The defendant objects that:

a) The decision of 31 May 1967 to commence the administrative procedure was taken in application of Regulation No 17 as a whole, and not just on the basis of Articles 3 and 9. The reason why that decision referred ‘especially’ to Article 3 of Regulation No 17 was in order to forestall the future application of the concurrent jurisdiction of the national authorities to apply Article 85(1);

b) The publication of the decision in the Journal Officiel, for which no provision was made in the operative part of that decision, constitutes a measure subsequent to the occurrence of the measure in question and cannot as such entail its annulment. As a subsidiary point, the defendant observes that although Article 21 of Regulation No 17 does not require publication, it does not say anything which might prevent it. It is alleged that in cases not covered by that provision the Commission has a general power to decide, under its discretionary powers, whether it is appropriate to publish a measure.

The applicant replies that:

a) The phrase ‘especially Article 3’ appearing in the decision of 31 May 1967 does not reappear in the notification of 11 December 1967, the wording of which is as follows: ‘On 31 May 1967 the Commission decided on its own initiative to commence proceedings pursuant to Article 3 of Regulation No 17/62 of the Council’. Nor does the word ‘especially’ appear in the letter addressed to the Prime Minister of France on 22 November 1967 informing him that proceedings had been commenced. It is argued that since the decision of 31 May 1967 was not as such notified to the applicant, it cannot take effect with regard to it. Furthermore, according to the quotation from it given by the defendant, the decision does not appear to mention the applicant undertaking as an addressee. Moreover, by reason of the express and exclusive mention of Article 3 of Regulation No 17, the Commission is barred from imposing a fine on the applicant. Finally, by reason of the wording of the first line of paragraph 21 of the notice of objections, the applicant was not, it is argued, able to submit adequate defence;

b) The formalities relating to publication of decisions taken pursuant to Article 85 of the Treaty are of a substantive nature. It is asserted that publicity is required for decisions capable of affecting the rights of third parties, and that therefore the formality of publication is a substantive requirement in this respect, because it alone ensures that such decisions have more than merely relative legal force. This function and this purpose are not relevant to decisions imposing fines, the scope of which is necessarily limited to their addressees. It is argued that the provisions of Article 21 are mandatory and, in so far as they require publication of individual measures, should be interpreted restrictively, even where the decision applying Article 85 is intended to have a collective effect, going beyond the consequences of a typical decision affecting an individual.

Having emphasized the point that infringement of a given formal requirement of secondary Community law does not necessarily constitute an infringement of an essential procedural requirement, the defendant argues that:

a) There is no rule that a decision commencing a procedure under Regulation No 17 must be notified to the undertakings concerned. Outside the administration such a decision is only relevant to the relationship between the Commission and the Member States. As regards the relationship between the Commission and the undertakings concerned, it is the notice of objections alone which determines the subject-matter of the procedure. The applicant's argument based on paragraph 21 of the notice of objections is unfounded; the Commission's intentions appear very clearly since the said notice of objections includes ample explanations concerning the fines imposed under Article 15 of Regulation No 17. Even supposing that the decision of 31 May 1967 was taken exclusively and not ‘especially’ pursuant to Article 3 of Regulation No 17, such a decision would not give rise to rights or duties as regards the undertakings concerned. Finally, the application of Article 3 as a whole also implies the application of the reference clause found in Article 3(3);

b) On the subject of the publication of the decision, the provision of Article 191 of the Treaty, according to which decisions shall take effect upon notification to those to whom they are addressed, does not in any way imply that the Community bodies may not publish such decisions as they may choose in the Official Journal, provided that they have been duly notified. There is no reason for regarding the system of publication otherwise than in terms of a discretionary power given to the Commission, which is qualified by Article 21 of Regulation No 17 only to a limited extent in that it lays down a duty to publish certain kinds of decision. Moreover, the decision taken was also taken in application of Article 3 of the said regulation, because that decision, in Article 1, finds that an infringement of Article 85 has been committed. For that reason publication was mandatory under Article 21 mentioned above.

Second submission, concerning the inquiries subsequent to the communication of the notice of objections

The applicant asserts that the contested decision was taken in violation of the rights of the defence, which it regards as a rule of law relating to the application of the Treaty, because it was not given any means of knowing whether the information obtained during inquiries carried out following the communication of the notice of objections was taken into consideration in reaching the decision and in stating the reasons for it. The fact that the Commission undertook successive examinations proves that the measures of inquiry concerning the applicant had not been brought to a close when the notice of objections was drawn up, and this is said to constitute an infringement of Article 19 (1) of Regulation No 17, and of Regulation No 99/63 of the Commission, and in particular the preambles to those regulations, which expressly provide that undertakings must have the right on conclusion of the inquiry to submit their comments on the whole of the objections which the Commission proposes to raise against them.

The defendant replies that the sole purpose of the inquiries in question was to check the accuracy of certain statements made by those concerned, either orally in the presence of officials of the Commission or in written statements in reply to the notice of objections. Some of the undertakings claimed that every time there was a general increase prices slid quickly downwards as a result of discounts given to certain customers. It was on this particular point that the checks in question were made.

Alternatively, the defendant argues that neither Article 19 of Regulation No 17 nor Regulation No 99 was infringed because the inquiries to which the applicant refers (those of 13.12.1967, 25.1.1968 and 6.2. 1968) all took place before the meeting of10 December 1968 organized for the very purpose of enabling the undertakings concerned to submit their oral observations on the objections as a whole. In any event the contested decision was not based on any objection other than those set out in the notice of 11 December 1967.

The applicant replies that it was not informed of the result of the abovementioned investigations and that that result formed part of the elements of fact on which the contested decision was based. This appears notably from the difference in style between the notice of objections, which was couched in somewhat cautious terms, and the contested decision, which is to be noted for its forthright tone on the subject of the infringements. That part of the decision dealing with the responsibility attributable to the applicant was never discussed during the administrative procedure, and the inquiries certainly, so it is said, yielded information on this point.

The defendant objects that the information supposedly obtained as a result of the inquiries mentioned above did not even constitute aggravating circumstances in relation to the objections previously set out in the notice or as regards fixing the amount of the fine. Therefore for the purposes of Article 19 of Regulation No 17 and Article 4 of Regulation No 99 there was no reason to inform the applicant of the result of the inquiries in question. Moreover, during the meeting of 10 December 1968, the position on the points covered by the additional investigations was made clear in answer to a question put by the applicant. The phenomenon at which the inquiries in question were directed, namely the price erosion which occurred after each increase, was mentioned in the statement of reasons for the decision not as a result of the inquiries but as an assertion of the interested parties themselves, who had mentioned it during the course of the procedure.

Third submission, concerning the incomplete nature of the notice of objections

The applicant argues that the contested decision is vitiated by infringement of an essential procedural requirement, infringement of the rights of the defence and infringement of Article 4 of Regulation No 99 in that the notice of objections sent to the applicant on 11 December 1967 did not include a sufficient exposition of the elements of fact and of the documents used in support of the objections, contrary to the principle confirmed by the Court of Justice in Cases 42 and 49/59.

The applicant complains that the notice of objections omits four specific facts which appear in the contested decision. They are: the times at which the Telex messages were sent to Italy, the effects of the attitude of the ACNA undertaking on the Italian market in 1965 and 1967, a meeting in London and the decision announced by Geigy during the meeting in Basel on 18 August 1967 to increase the prices of its dyes by 8 % with effect from 16 October 1967.

The defendant replies that according to the judgment in the Grundig-Consten case, it is not necessary for the whole contents of the file to be made available, and that it is sufficient for the Commission to inform the undertakings concerned of the elements, knowledge of which is necessary to ascertain which objections were taken into consideration. This was done in the present case in the second section of the notice of objections. Furthermore, it would have been wrong, because of the risk of betrying business secrets, to allow those concerned to consult the files or to send them the full text of the circulars sent by them to their subsidiaries or representatives. The facts which the contested decision took into account in favour of the ACNA undertaking cannot in any way affect the situation of the other undertakings, since the decision taken against them was in no way based on considerations relating to the conduct of ACNA. The meeting in Basel in August 1967 was mentioned at page 9 of the notice of objections. The only reason for the mention of the meeting in London was to introduce the facts set out in the third paragraph.

In its reply, the applicant, having observed that the Grundig-Consten case states that those concerned must be informed of the elements of fact on which the objections are based, points to further silences in the notice of objections, concerning in particular the subject-matter and results of the inquiries carried out subsequent to the notice of objections, as well as certain documents appearing in the annexes to the statement of defence and the report of the National Board for Prices and Incomes produced during the proceedings in English.

Furthermore, the notice of objections does not contain the slightest indication of the way in which the defendant intended the individual liability of the parties to be defined. On this point, the applicant refers to the special situation resulting from the price control exercised by the authorities in France. The alterations in prices to which the decision takes objection took place following talks with the French administration.

The defendant replies that the duties incumbent upon the Commission acting as an administrative authority cannot simply be copied from those of a judge. The purely administrative character of the procedure before the Commission affects both the duty to state reasons for the decision concluding the procedure and the duty to give notice of the objections during the course of the aforesaid procedure. In effect the notice of objections need not necessarily include the supporting evidence in the Commission's possession for the facts on which those objections are based. The Commission must have a certain discretion as to the information on the file which must be made available to the interested party.

It is argued that it would have been premature for the Commission to take up a position in the notice of objections as to the individual liability of each of the undertakings concerned.

The new system of controlled freedom of price formation introduced in the dyestuffs sector by the French Order of 7 February 1967 cannot possibly be used as an excuse for a concerted practice contrary to Article 85 of the EEC Treaty. It is not the price increase itself which is at issue in the present case, but the concerted practice, which is contrary to the abovementioned article of the Treaty, and which resulted in that increase. Accordingly, the fact that the price increase is in conformity with national regulations cannot have any effect on the compatibility with the EEC Treaty of the concerted practice which was at the origin of that increase. The French authorities approved the alteration in prices and not the concerted practice which preceded it.

Fourth submission, concerning the reference made by the contested decision to a decision of a national authority

The applicant argues that the contested decision is vitiated by an infringement of the Treaty, an infringement of the rights of the defence, an infringement of Article 4 of Regulation No 99 of the Commission and an infringement of the legal principles relating to the application of the Treaty, in that that decision, in support of the assertion that there existed an agreement and a concerted practice prohibited by Article 85 of the Treaty, relies on a decision of a national authority, the Bundeskartellamt, dated 28 November 1967, which was not mentioned in the notice of objections. Furthermore, that national decision was not final and has since been annulled. Moreover, the Commission is said to be guilty of a misuse of the powers conferred on it in order to apply Article 85 by contenting itself with adopting as its own, without any inquiry, the finding of a national authority.

The defendant replies that the statements concerning the decision of the Bundeskartellamt are superfluous in the context of the contested decision. In any event there was no reason why it should not have been referred to in that decision, especially since it seems undeniable that Geigy announced an increase, as the Kammergericht Berlin also held in its decision of 28 August 1969, which overruled the abovementioned decision of the Bundeskartellamt for reasons relating to substantive German law.

The defendant offers, alternatively, to produce proof that Farbenfabriken Bayer AG considers as accurate the version according to which Geigy announced on 18 August 1967 that it envisaged raising its selling prices by 8 % on 16 October 1967.

The applicant opposes this offer of proof, which would tend in practice to remove all effect from the order of the Court rejecting the joinder of the cases concerning the contested decision. Furthermore, it is argued that this offer of proof does not answer the submission put forward by the applicant. The latter also criticizes the reference made in the statement of defence to the judgment of the Kammergericht which, because of the relative nature of res judicata, cannot be set up against it.

In its rejoinder, the defendant observes that the objection in question does not result from the decision of the Bundeskartellamt, but from the meeting held in August 1967 at the initiative of Geigy during the course of which the price increase for that year was decided upon. That meeting and its subject-matter were clearly mentioned in the notice of objections of 11 December 1967 at point XII(a). The decision of the Bundeskartellamt could not have been mentioned therein, because it was not known to the defendant at the time when that notice was prepared. The grounds of the judgment of the Kammergericht were put forward purely as a factual argument concerning the evidence adduced in the contested decision concerning the subject-matter of the meeting in Basel on 18 August 1967.

Fifth submission, concerning the period of limitation

The applicant argues that the contested decision infringes a rule of law which must be respected in applying the Treaty in that the Commission did not take account of the effect of limitation, although in the field of criminal law limitation is a matter of public policy and must therefore be considered automatically. Taking into account the rules applicable on this point in the Member States and the importance of the penalties at issue, the applicant considers it just and equitable to adopt a period of limitation of two years. It is asserted that this period was only suspended with effect from 11 December 1967, the date when the notice of objections was sent to the applicant. Therefore all facts prior to 11 December 1965 should be excluded from the proceedings. The infringement to which the Commission takes objection can only, it is said, be in the nature of a momentary or periodical infringement as opposed to a continuous infringement. The consequence of this is that time must start to run from the termination of each of the alleged and proven infringements, and not from the last date on which the last of the infringements was noted and proven.

The applicant declares that it raises this submission on an alternative basis as a submission for the annulment or in any event the reversal of the contested decision.

The defendant objects that the three uniform increases of January 1964, January 1965 and October 1967 are the result of a continuous concerted practice which extended over the whole period from January 1964 to October 1967. Therefore the problem of limitation does not arise in the present case.

Secondly, the defendant observes that from the absence of provisions governing time-limits in the law in force, it follows that the Commission has retained complete authority as part of its duties and in exercise of its discretionary power to determine more precisely, subject to review by the Court of Justice, the limitation periods that appear appropriate as regards proceedings against infringements. To apply national law to a fact pertaining to Community law in cases where the Community legislation is silent would render it impossible to apply Community law on a uniform basis.

The laws of the Member States have in common only the principle that there should be a limitation period. However, as regards putting that principle into practice there are important differences.

In view of this diaparity the Commission reaches the conclusion that it is impossible to discern any precise criteria and that therefore as regards limitation periods for infringements of the provisions of Article 85 of the Treaty it is the needs of Community law alone that should be taken into consideration.

Even if it were accepted that each of the three successive price increases occurred by reason of a new concerted practice, this would not mean that the limitation period had expired because it has been suspended on several occasions since 1964 by written requests for information made under Article 11 of Regulation No 17 and by investigations carried out by officials of the Commission under Article 14 of Regulation No 17 at the registered offices of several undertakings, including that of the applicant.

The defendant is of the opinion that, taking into account the legal and practical difficulties of the question, a limitation period of even three years cannot be considered as appropriate in cases of infringement of the Community's rules on competition.

The applicant replies that it appears from the text of the notice of objections, from the minutes of the hearing and from the contested decision itself that until the time when it lodged its statement of defence the Commission considered each of the increases as constituting a distinct concerted practice. The proof of this is that in the preamble the contested decision expressly speaks of ‘differentes pratiques concertées’.

The facts at issue could not possibly relate to a continuous concerted practice because of the intense competition which is to be found on the dyestuffs market, and which has brought about a constant erosion of prices between the various increases.

As lor the length of the period of limitation, the applicant observes that by reason of the administrative character of the fines for which Community law makes provision, it would be equitable and in accordance with the principle of legal certainty to adopt a period of limitation of two years in Community law, following the example of German law.

As for the measures which can suspend the limitation period, the applicant makes a distinction between measures of inquiry and measures forming part of a procedure which may result in a fine, following the case-law of the French Cour de Cassation (Judgment of 31 October 1963 of the Criminal Chamber, annexed to the reply). In the present case the possibility of fines was first mentioned in the notice of objections. Therefore, no inquiry or measure carried out by the defendant prior to the notice of objections can be considered to have the quality of measures of inquiry.

The defendant asserts that whilst it is true that the contested decision mentions ‘concerted practices’ and ‘infringements’ in several places, it is nevertheless true that there was a close relationship and a unity of purpose between those practices or infringements, which were merely the reflection of one and the same longstanding concertation, constituting a continuous infringement.

As regards the length of the limitation period the defendant observes that if it were necessary to follow German law, it would be necessary to take account of the further period of three years laid down for infringements committed deliberately. Although the contested decision does not say that the applicant acted deliberately, it makes it clear nevertheless that the applicant had committed serious infringements at the least through negligence.

As for the suspension of the period of limitation, the defendant asserts that the criterion which the applicant deduces from the case-law does not correspond to the national solutions, since even in the case of a public prosecution the court may order a nonsuit or grant an order of nolle prosequi.

B — Substantive submissions

Sixth and eighth submissions, concerning the concept and existence of concerted practices

The applicant argues that the decision infringes Article 85(1) of the Treaty in that it describes and punishes as concerted practices situations of ‘conscious parallelism’ which are proper to an oligopolistic market on which intense competition occurs, and which is characterized by a natural alignment of the prices of the various undertakings on those of the undertaking occupying the most important place on that market. It is not necessary, the applicant asserts, to suppose that concertation existed in order to explain, in each of the cases envisaged, the possibility of a unilateral and autonomous decision by the applicant to align its prices on those of its competitors on some of the export markets where the applicant operates. For it was in the applicant's interest to align its prices on those of its competitors in order to compensate for the difficult selling conditions which were imposed on it on its national market by the application of a rigorous freeze on producer prices.

The applicant claims that the decision infringes Article 85(1) of the Treaty and the rules of law governing its application in that the Commission took the view that a common attitude can be regarded as a concerted practice, although such an attitude does not prove, or at least not with a degree of probability bordering on certainty, that a mutual will existed. In particular, the Commission has not proved that the representatives of the applicant acquiesced in the declaration made by the representative of Geigy SA, Mr Fischer, recorded in the minutes of the meeting held in Basel on 18 August 1967, according to which his undertaking seriously envisaged increasing its charges. No reaction on the part of the applicant is recorded in those minutes. Yet in French law, according to the case-law of the Civil Chamber of the Cour de Cassation, a ‘consensus’ cannot result from silence, but must, on the contrary, be clearly and unambiguously apparent.

The defendant objects that although parallel conduct alone does not amount to concertation, at the other end of the scale the parties concerned need not necessarily have drawn up a common plan with a view to adopting a given course of behaviour. It is enough that they let each other know beforehand what attitude they intended to adopt, so that each of them could regulate his conduct, safe in the knowledge that his competitors would act in a similar fashion.

The defendant maintains that the price increases in question cannot be explained by the oligopolistic structure of the market. In referring to what is expected to happen in such a market in theory, the applicant has failed to consider the postulates of price theory employed in the analysis of parallel conduct. These factors are not applicable in the case of the dyestuffs industry.

The defendant observes that the modern theory of oligopolies starts from the principle that in the oligopoly situation there are many ways of arriving at prices, and that it would certainly not be right to equate the oligopoly situation with consciously parallel conduct by participants. The theorists accept that undertakings knowingly adopt parallel conduct only in respect of oligopolies involving a very high degree of interdependence between undertakings, such that one undertaking cannot take a measure without its competitors being immediately and considerably affected and reacting in consequence. In this latter situation an undertaking only increases its prices when it expects that the others will also do so. It is mainly with reference to their marginal costs, taking into account their demand curve, that undertakings decide whether and to what extent they will follow a price increase. Therefore, even when the degree of interdependence is very high, the uncertainty in which an undertaking increasing its prices is placed as to whether the others will follow does not automatically disappear. In order for there to be conscious parallelism it is necessary for a certain number of factors to be present. These include: a limited number of sellers, high fixed costs, high mobility of demand, homogeneity and transparency of prices, ability to adapt capacity at short notice, little elasticity of demand compared with supply from all competing undertakings, technical obstacles to announcements of alterations to prices and customer resistence to frequent variations in prices. Another condition should also be added: it is that the market should be in a period of stagnation such that the interdependence of the sellers is not affected by notable increases in demand.

In America both the text-book writers and the case-law attribute a leading role to homogeneity of products in deciding if conduct is consciously parallel. According to several writers, when the products are diversified the effects of changes in prices are much slower and much less foreseeable. Furthermore, even in the case of homogeneous products, where the prices actually charged usually differ from the prices publicly quoted, conduct can no longer automatically be absolutely parallel.

The High Authority of the ECSC also adopted the principle that homogeneity of products is not of itself a bar to supposing that a uniform increase in prices made by several undertakings constitutes a concerted practice within the meaning of Article 65(1) of the ECSC Treaty, as appears from the fines which it imposed on certain steel works by a decision of 4 February 1959, which has not been contested by the parties concerned.

If the criteria elaborated by the text-book writers concerning conscious parallelism are applied to the dyestuffs industry it will be seen that no such parallelism is possible. Competition between undertakings on the dyestuffs market cannot in any way be considered as covering similar products; this is clear from Report No 100 of the National Board for Prices and Incomes on the dyestuffs industry, dated 21 January 1969 annexed to the statement of defence, from the opinion of Professors Bombach and Hill, annexed to the application, from documents produced during the preparatory inquiries by the undertakings ICI, Geigy and Sandoz, and from various statistical data produced by the Commission (Tables annexed to the statement of defence).

The market for the products in question covers about six thousand different products. Each of the undertakings concerned manufactures from 1500 to 3500 products and these, at least in part, display various qualities, mixtures and physical forms. The differences in strength, shade, fastness and solubility are such that when the products of various manufacturers are compared it is rare to find two dyes that are perfectly identical. The degree of similarity varies considerably: it runs from a fairly high degree of comparability in standard dye-stuffs to the existence of near monopolies, often protected by patents, for products having special characteristics. Furthermore, the competitive position of the various dyes and the extent to which one can be substituted for another are constantly undergoing rapid change because of technical progress. A notable feature of the market for the products in question is a low level of transparency mainly owing to the large number of products involved, the differences between them and the variety of users (inter alia the textile, leather, paper, food, rubber and synthetic materials industries, and manufacturers of paints, ink, cosmetics and so on). A further reason is the fact that technical services are provided for purchasers, which differ in degree according to the customer. It follows that there is no single, standard price for each dye since prices are negotiated individually with each customer, with considerable differences between one purchaser and another. The result of this practice is that the prices calculated for each product by each undertaking are not known, in most cases, to the other undertakings, nor even amongst the purchasers themselves, as ICI has agreed. Therefore changes in prices introduced by one manufacturer are only imperfectly known on the market or only become known long after the event.

As for the rate of expansion of the market, which constitutes another test for deciding whether conscious parallelism can exist, it appears that on the whole the dyestuffs industry is expanding at a fast rate, approximately corresponding to that of expansion in the chemicals industry as a whole.

As for mobility of demand, according to Professors Bombach and Hill price competition on the market in question is particularly intense and purchasers are inclined to change supplier if more favourable terms are offered to them.

This tendency seems to have increased during the course of the last few years, according to the abovementioned Report of the National Board for Prices and Incomes, at page 5. This mobility is rendered easier by the fact that normally purchasers only maintain low stocks and only buy in small quantities.

Since purchasers carry low stocks, manufacturers must themselves maintain large stocks as this makes it easy for them to adapt themselves to changes in demand. Because competition between manufacturers is intense and undertakings are constantly trying to increase their share of the market, they find it necessary to build up their stocks in such a way as to be able to take advantage of all chances of selling their products. It is relatively easy for them to adapt themselves in the medium term by changes in the production programme because the production plant can be used for many different purposes.

In view of the particular conditions on the market, the situation of manufacturers differs from one undertaking to another. It follows that some undertakings have much more success than others in obtaining the prices at which they aim to sell their products.

The respective rates of expansion and the fluctuations in these rates are different for undertakings in the various Member States. Thus German manufacturers are benefiting from the constant increase in the value of goods produced, according to information supplied by Cassella and Hoechst, whereas, for example, the Italian undertaking ACNA is going through a crisis (declining work force between 1964 and 1967, closure of one of its factories).

This disparity between undertakings means that there are important differences as regards costs.

This necessarily results in differences in profits. The widest profit margins are obtained with speciality products, so long as they remain so. Profits vary in relation to the level of prices for the different products on the market. The volume of sales has an influence on profits: thus for example, ACNA can only begin to make a profit on its production of special dyestuffs if the quantity produced reaches a volume higher than that of present demand in Italy.

Taking into account these characteristics of the market in dyestuffs and of the criteria drawn from the theory of oligopolies, one is forced to conclude that it is inconceivable for undertakings on the dyestuffs market to behave with conscious parallelism.

Since several of the products in question are not interchangeable or only to a small extent, an undertaking putting up its prices cannot assume that its competitors will follow suit, at least for the products in question. The price increases at issue were introduced indiscriminately for all products and this cannot possibly be explained by the pressures of the market and by the logic of the oligopoly situation.

Moreover, the defendant argues that an analysis of conditions on the dyestuffs market shows that on that market, which is characterized by a high rate of expansion and rapid technical progress, a general alignment of price increases, announced without prior concertation, would not be possible for interchangeable products. The defendant refers to the example of the ACNA company, which for the most part manufactures standard types and which, after eight of the ten undertakings in question had announced a general increase in prices of pigments and had begun to apply this increase as from 1 January 1965, did not fall in line with this increase in prices, so that thereafter the other undertakings withdrew their increases. This shows, in the Commission's view, that even in the case of products towards which sellers react in a sensitive way, interests are so varied on the dyestuffs market that parallel action does not take place automatically.

In these circumstances it is inconceivable that one undertaking would decide unilaterally on a large general increase in prices without first consulting its competitors. Supposing that there were unilateral, independent increases on the part of certain undertakings, each of the other undertakings would have been able, by setting different prices and by taking account of the position occupied on the market by the various products being manufactured by it, to attempt to obtain the best results. In order to prevent competitors from immediately withdrawing their increase, each undertaking would at the most have had to tell the purchasers of totally interchangeable products that it was falling in line with this increase as regards these products, but this would not have been necessary for all the other products since, because of the lack of transparency of the market for those products, the various purchasers would not immediately have been able to react to the new prices.

Finally, the defendant stresses the fact that certain passages of communications said to have been addressed almost simultaneously by the various undertakings concerned to their subsidiaries or representatives in Italy and in Belgium are the same almost word for word.

The applicant observes, in its reply, that the defendant does not deny that by reason of the current economic situation on the market on which Francolor operates, the profit margins of that undertaking had been particularly eroded, and that it had seriously lost ground on the French market, which meant that it had to strive for the greatest profit in all circumstances.

The applicant also refers to certain models of oligopolies in which concerted coordination does not occur. For example, there are the ‘barometer undertakings’ which, without necessarily being the most powerful, can ensure that their rivals follow their prices where those prices reflect changes in the conditions on the market with sufficient speed. This model, together with that of the ‘oligopoly in series’ which, since certain products cannot be substituted one for another, places each seller in an oligopolistic subgroup, (each subgroup having a different composition because each has different neighbours), applies exactly to the market in dyestuffs. An analysis of the theoretical behaviour of the participants in an oligopoly necessarily remains imperfect, because knowledge of it cannot be directly deduced from any fundamental principle.

Having thus criticized the theoretical presumption set up by the defendant, the applicant attempts to show that the elements of fact are also in contradiction with the theory criticized.

(a) The 1964 increase

As regards Belgium, the initial rate of the increase which the applicant had intended to put into effect was higher than that of its competitors; it was in fact 16 % (see letter of 13 January 1964 from Francolor to its Belgian subsidiary, annexed to the statement of defence). This percentage had to be lowered to 15 % because of the reaction of the Belgian customers. It is also the case that as regards Italy and the Netherlands, the applicant was informed by its distributors only at the moment when its competitors changed their prices, a point which the defendant did not deny in 1964 when it was informed of these facts by Francolor.

(b) The 1965 increase

Here again, its distributors informed Francolor about the price movements of its competitors. The applicant refers to page 7 of its reply to the notice of objections, annexed to the application.

(c) The 1967 increase

As regards France, the applicant refers to the explanations already put forward under the third submission. As regards Belgium, Luxembourg, the Netherlands and Germany, the applicant observes that no evidence has been supplied in the statement of defence, and that the defendant admits that the results of the inquiries undertaken after the notice of objections was sent were not made available to the applicant during the administrative procedure.

The defendant replies that according to the results of its examination of the structure of the market in question there exist on that market conditions which do not correspond to those which, in the opinion of academic writers, must be fulfilled before non-concerted parallel practices can be expected. The applicant has not demonstrated that the market in dyestuffs corresponds to the models of oligopolies called ‘barometer undertakings’ or oligopolies ‘in series’, which allegedly do not imply prior concerted coordination. The defendant refers to a study undertaken at its request by Professor Kantzenbach, who excludes the possibility that the phenomenon of the barometer undertaking is relevant to the present case.

The defendant observes that the number of manufacturers making up the greater part of the supply (80 %) is relatively high (ten). The remainder is produced by seven other manufacturers. In most cases, the ten principal manufacturers of dyestuffs are undertakings with a varied production. Apart from dyestuffs, they sell a whole series of other chemical products. They have large amounts of capital available, occupy a solid position on the market, and have an exact knowledge of conditions on the market and of competition.

It is asserted that despite the interdependence of reaction of the sellers, the structure of the market is wide enough to prevent price competition from being paralysed.

This competition takes place, it is said, product by product and purchaser by purchaser. By reason of the lack of transparency of the market and of the relatively high number of sellers, the reciprocal interdependence of the relationships between them is sufficiently loose for real competition to exist. The competition takes the form of considerable differences in the prices at which one and the same manufacturer offers its products to its customers, and in the prices charged on the various territorial markets, the difference from one country to another ranging up to 40 %. In this context, the conduct of the undertakings concerned upon the occasion of the three price increases of 1964, 1965 and 1967 contrasts strikingly with their usual conduct on the market, as has been noted by Professor Kantzenbach in his report.

The 1964 increase

As regards Belgium, the defendant accuses the applicant of attempting to introduce confusion between wholesale prices and selling prices to the customers. The defendant also opposes the applicant's assertions to the effect that its increases always followed those of its competitors. On this point it refers to the dates, mentioned in the notice objections, on which the other undertakings concerned announced their increases.

The increases of 1965 and 1967

As regards these increases, the evidence for the concerted practice is no longer to be found in the coincidence of the dates on which the instructions were sent and of their content, as was the case for the preceding price increase. Nor is the evidence to be found in an immediate applicability of the increases announced. It is to be found in the identity of the dates upon which identical increases were put into effect in the various countries, subject to the few exceptions mentioned on page 2 of the decision. In effect, following the request for information sent by the Commission to the interested parties on 18 August 1964, the latter were much more circumspect; and the announcements of the increases were spread over a longer period and were for the most part effected otherwise than in writing.

As for the specific evidence for the objection with regard to Francolor, the defendant produces a table proving, with reference to that undertaking, the identity of the dates on which the increases in question were put into effect. It appears from that table that the dates announced by Francolor's competitors for the entry into force of the increases coincided with the dates announced not only by the Francolor parent company, but also by its subsidiaries.

In its rejoinder, the defendant asks, on the basis of Article 49 of the Rules of Procedure, that Erhard Kantzenbach, Professor at the University of Frankfurt am Main, be appointed as an expert on the problems relating to the structure of the dyestuffs market, and on the relationship existing between a heterogeneous oligopoly, effectiveness of competition and parallel conduct.

Seventh submission, on the statement of the objections adopted against the applicant in the contested decision and of the evidence put forward in support of them

The applicant argues that the contested decision is vitiated by an infringement of Article 85(1) of the Treaty, misuse of powers and infringement of the rules relating to the application of the Treaty in that the Commission did not set out with precision the objections adopted against it, the consequence of which has been that the applicant has not been able effectively to discuss them and to refute them, and that the Court of Justice is not in a position to exercise its powers of review within the meaning of Article 17 of Regulation No 17. As an example of this lack of precision, the applicant cites paragraphs (b) and (c) of the second recital of the preamble to the first part of the decision: ‘Almost all the producers introduced into these countries, as also into the countries already affected by the increase of 1964, a uniform increase of 10 % …” and, as regards 16 October 1967: ‘An increase of 8 % for dyestuffs was introduced by almost all the producers in Germany, the Netherlands, Belgium and Luxembourg…”. The decision regards the concerted character of these increases as proven, first, by the identity of the rates applied in each country, apart from very rare exceptions, without, however, indicating what those exceptions are.

The Commission regards the concerted character of the increases as proven, secondly, by the fact that they were introduced on or about the same date, without, however, giving sufficiently precise information to enable the applicant to compare its position with that of its competitors on each of the markets and for each of the increases.

The Commission regards the matter as proven, thirdly, by the similarity of the content of the orders sent by the producers to their subsidiaries. The applicant wonders whether the Commission also means the instructions sent by Francolor to its subsidiaries. In any event, the duty imposed on the subsidiaries or representatives to put the increase into effect immediately and to refuse to make out antedated bills is in agreement, so it is argued, with generally accepted commercial practice.

According to the defendant, its observations made in respect of the sixth and eighth submissions also suffice to establish that the contested decision is based on sufficient reasons. The criticisms put forward by the applicant on this point are based on too wide a conception of the extent of the duty to provide a statement of reasons. The defendant refers to the judgment of the Court in Case 24/62, according to which for the purpose of stating the reasons for a measure it is sufficient to set out, in a concise but clear and relevant manner, the principal issues of law and of fact upon which it is based and which are necessary in order that the reasoning may be understood.

The applicant, in its reply, complains of the fact that it has not been given the opportunity to submit its observations on an important part of the decision concerning its share of responsibility, which the Commission says was identical to that of the other undertakings concerned, without in any way justifying this statement.

In order to enable the Court, in exercising its unlimited jurisdiction, to review the interpretation of the facts, the Commission must set out those facts in complete detail and explain, with reference to each one, why in its opinion that fact constitutes an element of the infringement of Article 85(1). In the present case, the Commission should explain more particularly how and why, in the absence of specific facts attributable to the applicant, it was able to reach a finding that Article 85(1) had been infringed, since it is not possible to extract from the general and theoretical discussion relating to the sixth and eighth submissions any precise fact or action specifically attributable to the applicant.

The defendant objects that the submission that 'no reasons are given in the notice of objections as to the responsibility of the applicant's was raised for the first time in the reply. Therefore it is inadmissible by virtue of Article 42(2) of the Rules of Procedure.

Furthermore, the provisions in force do not require the Commission to discuss with the parties concerned its intentions as to the amount of the fines which it proposes to impose.

As for the complaint that it has not attributed precise facts or actions specifically to the applicant, the defendant observes that the Telex messages and the letter from Francolor, dated 9 and 13 January 1964, reproduced as an annex to the statement of defence, constitute specific documents or facts emanating from or attributable to the applicant for the year 1964. As for the increases of 1965 and 1967, the defendant refers to the table produced as part of its reply to the sixth and eighth submissions. The requirements relating to the statement of the reasons for its measures did not, in its opinion, make it necessary for it to reproduce that table as part of the reasons given for the decision adopted.

IV — Procedure

The procedure took the following course:

By order of 11 December 1969 the Court decided that the defendant should lodge separate statements of defence without reference to the other cases pending on the subject of dyestuffs.

By order of 8 July 1970, the Court, having regard to the report of the Judge-Rapporteur and the views of the Advocate-General, ordered as follows:

1) An expert's report shall be obtained in respect of the following questions:

a) Taking into account the characteristics of the dyestuffs market in the European Economic Community, especially during the period 1964 to 1967, would it have been a practical possibility, according to normal commercial criteria, for a producer acting independently who wished to increase his prices to do so otherwise than by a general uniform and public increase, by fixing different rates for each product in his individual relationships with each customer?

b) For a producer acting independently, what advantages and disadvantages result from effecting a general and linear increase in prices, as compared with an increase differing in respect of each customer, product and market? The answer to this question is to be given both on the hypothesis that the producer is taking the initiative in making an increase and on the hypothesis that the producer is faced with a general and uniform increase announced by a competitor.

c) Taking into account in particular the degree of transparency of the market, are dyestuffs other than speciality dyes practically interchangeable and, if so, to what extent? What is the approximate proportion of speciality dyes compared with the total production of dyes for each of the undertakings concerned?

2) The parties may, by agreement between themselves, propose the name of an expert to the Court before 1 October 1970.

By order of the same date the Court joined Cases 48/69, 49/69, 51/69, 52/69, 53/69, 54/69, 55/69, 56/69 and 57/69 for the purposes of the expert's report.

By order dated 13 November 1970 the Court, having regard to the proposal made by common agreement between the parties on the names of two experts, instructed Horst Albach, Professor of Business Management at the University of Bonn, and Wilhelm Norbert Kloten, Professor of Political Economy at the University of Tübingen, to prepare the report jointly.

The experts' joint report was lodged at the Court Registry on 23 April 1971. The experts summarized the results of their report in the following terms:

Question (a) should be answered in the affirmative; according to normal commercial criteria a producer of dyestuffs acting independently could in principle have increased his prices on a variable basis in relation to each customer and each product.

An affirmative answer may also be given to the question whether it would have been a practical possibility for such a producer to increase his prices on a variable basis in relation to each customer and product, subject to the following proviso: the average increase in prices that a producer acting independently could have achieved by means of a policy of differentiated prices in a given field would probably have been lower than the average increase in prices achieved by a general and uniform price increase.

A general and linear increase in prices involves opportunities and risks both for the producer who takes the initiative in putting prices up and for the producer of dyestuffs who has to fall in with a general and uniform increase announced by a competitor. Both as regards the producer who determines the price and as regards those who follow him, the conclusion to be drawn is that during the period in question the advantages to be obtained from a general and uniform increase in prices were greater than the disadvantages.

The appropriate answer to Question (c) is that the degree of interchangeability of dyestuffs varies: it ranges from products which are perfectly interchangeable to products for which to all intents and purposes there is no substitute. If, for the purposes of the question asked, speciality dyestuffs are those who are not interchangeable for practical purposes, it can be said that the proportion that they represent of the total production of dyestuffs in each of the undertakings concerned is very low. However, the results of the study show that the distinction is of but little use in assessing the facts envisaged.

Observations on the experts' report were lodged at the Court Registry on 3 July 1971 by the applicant and on 21 June 1971 by the defendant.

On 28 September 1971 the experts named by the Court took the oath in accordance with Article 49(6) of the Rules of Procedure.

The parties presented oral argument at the hearings on 28, 29 and 30 September 1971 and on 2 May 1972.

During the course of the procedure Mr Advocate-General Mayras replaced Mr Advocate-General Dutheillet de Lamothe, deceased. He delivered his opinion at the hearing on 2 May 1972.

Grounds of judgment

1. It is common ground that from January 1964 to October 1967 three general and uniform increases in the prices of dyestuffs took place in the Community.

2. Between 7 and 20 January 1964, a uniform increase of 15 % in the prices of most dyes based on aniline, with the exception of certain categories, took place in Italy, the Netherlands, Belgium and Luxembourg and in certain third countries.

3. On 1 January 1965 an identical increase took place in Germany.

4. On the same day almost all producers in all the countries of the Common Market except France introduced a uniform increase of 10 % on the prices of dyes and pigments excluded from the increase of 1964.

5. Since the ACNA undertaking did not take part in the increase of 1965 on the Italian market, the other undertakings did not maintain the announced increase of their prices on that market.

6. Towards mid-October 1967, an increase for all dyes was introduced, except in Italy, by almost all producers, amounting to 8 % in Germany, the Netherlands, Belgium and Luxembourg, and 12 % in France.

7. By a decision of 31 May 1967 the Commission commenced proceedings under Article 3 of Regulation No 17/62 on its own initiative concerning these increases for presumed infringement of Article 85(1) of the EEC Treaty against seventeen producers of dyestuffs established within and outside the Common Market, and against numerous subsidiaries and representatives of those undertakings.

8. By a decision of 24 July 1969, the Commission found that the increases were the result of concerted practices, which infringed Article 85(1) of the Treaty, between the undertakings Badische Anilin- und Soda-Fabrik AG (BASF), Ludwigshafen, Cassella Farbwerke Mainkur AG, Frankfurt am Main, Farbenfabriken Bayer AG, Leverkusen, Farbwerke Hoechst AG, Frankfurt am Main, Société Française des Matières Colorantes SA, Paris, Azienda Colori Nazionali Affini S.p.A. (ACNA), Milan, Ciba SA, Basel, J. R. Geigy SA, Basel, Sandoz SA, Basel, and Emperial Chemical Industries Ltd. (ICI), Manchester.

9. It therefore imposed a fine of 50000 u.a. on each of these undertakings, with the exception of ACNA, for which the fine was fixed at 40000 u.a.

10. By application lodged at the Court Registry on 3 October 1969 the undertaking SA Française des Matières Colorantes, now SA Produits Chimiques Ugine Kuhlmann, has brought an application against that decision.

Submissions relating to procedure and to form

The submissions concerning the administrative procedure

(a) The complaint relating to the commencement of the administrative procedure

11. The applicant argues that the contested decision is vitiated by infringement of essential procedural requirements, misuse of powers, infringement of the Treaty and infringement of Regulation No 17/62 of the Council in that it constitutes a simultaneous application of Articles 3 and 15 Regulation No 17, whereas the decision of 31 May 1967 concerning the commencement of the procedure does not mention Article 15 relating to fines.

12. It is the notice of objections alone and not the decision to commence proceedings which is the measure stating the final attitude of the Commission concerning undertakings against which proceedings for infringement of the rules on competition have been commenced.

13. The notice of objections sent to the applicant expressly referred to Article 15(2) of Regulation No 17 relating to fines.

14. These submissions therefore are unfounded.

(b) The complaint relating to a continuation of inquiries following notification of the objections

15. The applicant asserts that the Commission, in continuing its inquiries following communication of the notice of objections and in not informing it of the information thus obtained, disregarded the rights of the defence guaranteed by Article 19(1) of Regulation No 17/62 and by Regulation No 99/63.

16. The Commission has the right and where appropriate the duty to institute fresh inquiries during the administrative procedure if it appears from the course of that procedure that additional investigations are necessary.

17. Such inquiries would render it necessary to send an additional statement of objections to the undertakings concerned only if the result of the investigations led the Commission to take new facts into account against the undertakings or to alter materially the evidence for the contested infringements.

18. The rights of the defence of the undertakings are not infringed by such inquiries if the decision terminating the administrative procedure does not hold against the undertakings concerned any facts other than those set out in the notice of objections.

19. This submission is therefore unfounded.

(c) The complaints relating to the incomplete state of the notice of objections

20. The applicant claims that the contested decision is vitiated by infringement of essential procedural requirements, infringement of the rights of the defence and infringement of Article 4 of Regulation No 99/63 in that the notice of objections did not contain an adequate statement of the elements of fact and of the documents on which the objections were based.

21. In particular, it is argued that the contested decision is vitiated by these infringements in that it relies on a decision of the Bundeskartellamt, which was not mentioned in the notice of objections, in support of the assertion relating to the existence of concerted practices.

22. In order to protect the rights of the defence during the course of the administrative procedure, it is sufficient that undertakings should be informed of the essential elements of fact on which the objections are based.

23. However, it is not necessary for the contents of the file to be made available in their entirety.

24. It appears from the notice of objections that the facts taken into consideration against the applicant were clearly stated therein.

25. That notice contains all the information necessary for deciding as to the objections put forward with regard to the applicant, in particular the circumstances in which the increases of 1964, 1965 and 1967 were announced and implemented.

26. Additional evidence for the facts taken into consideration and amendments made to the contested decision concerning the precise course of those facts pursuant to information furnished by the interested parties to the Commission during the course of the administrative procedure cannot constitute an infringement of the rights of the defence.

27. Although the interested parties are entitled to dispute the facts alleged by the Commission in support of its objections, there is nothing to prevent the latter, in applying the Community rules on competition, from using the results of investigations carried out by the national authorities.

28. These submissions are therefore unfounded.

The submission concerning the publication of the contested decision

29. The applicant complains that the Commission published the contested decision in the Official Journal of the Communities, although decisions taken pursuant to Article 15 of Regulation No 17/62 are not amongst those which must be published according to Article 21 of the same regulation.

30. Article 21 of Regulation No 17/62, which provides that certain decisions shall be published, does not include those taken pursuant to Article 15 of the said regulation.

31. Although the Commission was not required to publish the contested decision, there was nothing in the letter or in the spirit of the abovementioned Article 21 to prevent it from effecting publication, if to do so did not involve revealing trade secrets of the undertakings.

32. The present submission is therefore unfounded.

The submission as to the limitation period

33. The applicant argues that the contested decision is contrary to the Treaty and to the rules relating to its application because the Commission, in commencing on 31 May 1967 proceedings concerning the price increase of January 1964, exceeded any reasonable limitation period.

34. 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.

35. In order to fulfil their function, limitation periods must be fixed in advance.

36. The fixing of their duration and the detailed rules for their application come within the powers of the Community legislature.

37. Although, in the absence of any provisions on this matter, the fundamental requirement of legal certainty has the effect of preventing the Commission from indefinitely delaying the exercise of its power to impose fines, its conduct in the present case cannot be regarded as constituting a bar to the exercise of that power as regards participation in the concerted practices of 1964 and 1965.

38. Therefore the submission is unfounded.

Substantive submissions as to the existence of concerted practices

Arguments of the parties

39. The applicant complains that the Commission has not proved the existence of concerted practices within the meaning of Articles 85(1) of the EEC Treaty in relation to any of the three increases mentioned in the contested decision.

40. That decision states that prima facie evidence that the increases of 1964, 1965 and 1967 took place as the result of concerted action is to be found in the facts that the rates introduced for each increase by the different producers in each country were the same, that with very rare exceptions the same dyestuffs were involved, and that the increases were put into effect over only a very short period, if not actually on the same date.

41. It is contended that these increases cannot be explained simply by the oligopolistic character of the structure of the market.

42. It is said to be unrealistic to suppose that without previous concertation the principal producers supplying the Common Market could have increased their prices on several occasions by identical percentages at practically the same moment for one and the same important range of products including speciality products for which there are few, if any, substitutes, and that they should have done so in a number of countries where conditions on the dyestuffs market are different.

43. The Commission has argued before the Court that the interested parties need not necessarily have drawn up a common plan with a view to adopting a certain course of behaviour for it to be said that there has been concertation.

44. It is argued that it is enough that they should previously have informed each other of the attitude which they intended to adopt so that each could regulate his conduct safe in the knowledge that his competitors would act in the same way.

45. The applicant argues that the contested decision is based on an inadequate analysis of the market in the products in question and on an erroneous understanding of the concept of a concerted practice, which is wrongly identified by the decision with the conscious parallelism of members of an oligopoly, whereas such conduct is due to independent decisions adopted by each undertaking, determined by objective business needs, and in particular by the need to increase the unsatisfactorily low rate of profit on the production of dyestuffs.

46. It is argued that in fact the prices of the products in question displayed a constant tendency to fall because of lively competition between producers which is typical of the market in those products, not only as regards the quality of the products and technical assistance to customers, but also as regards prices, particularly the large reductions granted individually to the principal purchasers.

47. It is argued that it was in the applicant's interest to align its prices on those of its competitors in order to counterbalance the difficult selling conditions which were imposed on it on its national market by the application of a vigorous freeze on producer prices.

48. The fact that the rates of increase were identical was the result, it is said, of the existence of the ‘price-leadership’ of one undertaking.

49. It is asserted that academic writers accept the proposition that in an oligopolistic market such as the dyestuffs market so-called ‘barometer’ undertakings, although not necessarily the most powerful, can ensure that their rivals follow their prices where those prices reflect changes in conditions on the market with sufficient rapidity.

50. It is argued that in these circumstances, since there is no conclusive proof of the existence of a common will, it would be quite wrong to regard a common approach as a concerted practice.

The concept of a concerted practice

51. Article 85 draws a distinction between the concept of ‘concerted practices’ and that of ‘agreements between undertakings’ or of ‘decisions by associations of undertakings’; the object is to bring within the prohibition of that article a form of coordination between undertakings which, without having reached the stage where an agreement properly so-called has been concluded, knowingly substitutes practical cooperation between them for the risks of competition.

52. By its very nature, then, a concerted practice does not have all the elements of a contract but may inter alia arise out of coordination which becomes apparent from the behaviour of the participants.

53. Although parallel behaviour may not by itself be identified with a concerted practice, it may however amount to strong evidence of such a practice if it leads to conditions of competition which do not correspond to the normal conditions of the market, having regard to the nature of the products, the size and number of the undertakings, and the volume of the said market.

54. This is especially the case if the parallel conduct is such as to enable the persons concerned to attempt to stabilize prices at a level different from that to which competition would have led, and to consolidate established positions to the detriment of effective freedom of movement of the products in the Common Market and of the freedom of consumers to choose their suppliers.

55. Therefore the question whether there was a concerted action in this case can only be correctly determined if the evidence upon which the contested decision is based is considered, not in isolation, but as a whole, account being taken of the specific features of the market in the products in question.

The characteristic features of the market in dyestuffs

56. The market in dyestuffs is characterized by the fact that 80 % of the market is supplied by about ten producers, very large ones in the main, which often manufacture these products together with other chemical products or pharmaceutical specialities.

57. The production patterns and therefore the cost structures of these manufacturers are very different, and this makes it difficult to ascertain competing manufacturers' costs.

58. The total number of dyestuffs is very high, each undertaking producing more than a thousand.

59. The average extent to which these products can be replaced by others is considered relatively good for standard dyes, but it can be very low or even non-existent for speciality dyes.

60. As regards speciality products, the market tends in certain cases towards an oligopolistic situation.

61. Since the price of dyestuffs forms a relatively small part of the price of the final product of the user undertaking, there is little elasticity of demand for dyestuffs on the market as a whole and this encourages price increases in the short term.

62. Another factor is that the total demand for dyestuffs is constantly increasing, and this tends to induce producers to adopt a policy enabling them to take advantage of this increase.

63. In the territory of the Community, the market in dyestuffs in fact consists of five separate national markets with different price levels which cannot be explained by differences in costs and charges affecting producers in those countries.

64. Thus the establishment of the Common Market would not appear to have had any effect on this situation, since the differences between national price levels have scarcely decreased.

65. On the contrary, it is clear that each of the national markets has the characteristics of an oligopoly and that in most of them price levels are established under the influence of a ‘price-leader’, who in some cases is the largest producer in the country concerned, and in other cases is a producer in another Member State or a third State, acting through a subsidiary.

66. According to the experts this dividing-up of the market is due to the need to supply local technical assistance to users and to ensure immediate delivery, generally in small quantities, since, apart from exceptional cases, producers supply their subsidiaries established in the different Member States and maintain a network of agents and depots to ensure that user undertakings receive specific assistance and supplies.

67. It appears from the data produced during the course of the proceedings that even in cases where a producer establishes direct contact with an important user in another Member State, prices are usually fixed in relation to the place where the user is established and tend to follow the level of prices on the national market.

68. Although the foremost reason why producers have acted in this way is in order to adapt themselves to the special features of the market in dyestuffs and to the reeds of their customers, the fact remains that the dividing-up of the market which results tends, by fragmenting the effects of competition, to isolate users in their national market, and to prevent a general confrontation between producers throughout the Common Market.

69. It is in this context, which is peculiar to the way in which the dyestuffs market works, that the facts of the case should be considered.

The increases of 1964, 1965 and 1967

70. The increases of 1964, 1965 and 1967 covered by the contested decision are interconnected.

71. The increase of 15 % in the prices of most aniline dyes in Germany on 1 January 1965 was in reality nothing more than the extension to another national market of of the increase applied in January 1964 in Italy, the Netherlands, Belgium and Luxembourg.

72. The increase in the prices of certain dyes and pigments introduced on 1 January 1965 in all the Member States, except France, applied to all the products which had been excluded from the first increase.

73. The reason why the price increase of 8 % introduced in the autumn of 1967 was raised to 12 % for France was that there was a wish to make up for the increases of 1964 and 1965 in which that market had not taken part because of the price control system.

74. Therefore the three increases cannot be isolated one from another, even though they did not take place under identical conditions.

75. In 1964 all the undertakings in question announced their increases and immediately put them into effect, the initiative coming from Ciba-Italy which, on 7 January 1964, following instructions from Ciba-Switzerland, announced and immediately introduced an increase of 15 %. This initiative was followed by the other producers on the Italian market within two or three days.

76. On 9 January ICI-Holland took the initiative in introducing the same increase in the Netherlands, whilst on the same day Bayer took the same initiative on the Belgo-Luxembourg market.

77. With minor differences, particularly between the price increases by the German undertakings on the one hand and the Swiss and United Kingdom undertakings on the other, these increases concerned the same range of products for the various producers and markets, namely, most aniline dyes other than pigments, food colouring and cosmetics.

78. As regards the increase of 1965 certain undertakings announced in advance price increases amounting, for the German market, to an increase of 15 % for products whose prices had already been similarly increased on the other markets, and to 10 % for products whose prices had not yet been increased. These announcements were spread over the period between 14 October and 28 December 1964.

79. The first announcement was made by BASF, on 14 October 1964, followed by an announcement by Bayer on 30 October and by Cassella on 5 November.

80. These increases were simultaneously applied on 1 January 1965 on all the markets except for the French market because of the price freeze in that State, and the Italian market where, as a result of the refusal by the principal Italian producer, ACNA, to increase its prices on the said market, the other producers also decided not to increase theirs.

81. ACNA also refrained from putting its prices up by 10 % on the German market.

82. Otherwise the increase was general, was simultaneously introduced by all the producers mentioned in the contested decision, and was applied without any differences concerning the range of products.

83. As regards the increase of 1967, during a meeting held in Basel on 19 August 1967, which was attended by all the producers mentioned in the contested decision except ACNA, the Geigy undertaking announced its intention to increase its selling prices by 8 % with effect from 16 October 1967.

84. On that same occasion the representatives of Bayer and Francolor stated that their undertakings were also considering an increase.

85. From mid-September all the undertakings mentioned in the contested decision announced a price increase of 8 %, raised to 12 % for France, to take effect on 16 October in all the countries except Italy, where ACNA again refused to increase its prices, although it was willing to follow the movement in prices on two other markets, albeit on dates other than 16 October.

86. Viewed as a whole, the three consecutive increases reveal progressive cooperation between the undertakings concerned.

87. In fact, after the experience of 1964, when the announcement of the increases and their application coincided, although with minor differences as regards the range of products affected, the increases of 1965 and 1967 indicate a different mode of operation. Here, the undertakings taking the initiative, BASF and Geigy respectively, announced their intentions of making an increase some time in advance, which allowed the undertakings to observe each other's reactions on the different markets, and to adapt themselves accordingly.

88. By means of these advance announcements the various undertakings eliminated all uncertainty between them as to their future conduct and, in doing so, also eliminated a large part of the risk usually inherent in any independent change of conduct on one or several markets.

89. This was all the more the case since these announcements, which led to the fixing of general and equal increases in prices for the markets in dyestuffs, rendered the market transparent as regards the percentage rates of increase.

90. Therefore, by the way in which they acted, the undertakings in question temporarily eliminated with respect to prices some of the preconditions for competition on the market which stood in the way of the achievement of parallel uniformity of conduct.

91. The fact that this conduct was not spontaneous is corroborated by an examination of other aspects of the market.

92. In fact, from the number of producers concerned is it not possible to say that the European market in dyestuffs is, in the strict sense, an oligopoly in which price competition could no longer play a substantial role.

93. These producers are sufficiently powerful and numerous to create a considerable risk that in times of rising prices some of them might not follow the general movement but might instead try to increase their share of the market by behaving in an individual way.

94. Furthermore, the dividing-up of the Common Market into five national markets with different price levels and structures makes it improbable that a spontaneous and equal price increase would occur on all the national markets.

95. Although a general, spontaneous increase on each of the national markets is just conceivable, these increases might be expected to differ according to the particular characteristics of the different national markets.

96. Therefore, although parallel conduct in respect of prices may well have been an attractive and risk-free objective for the undertakings concerned, it is hardly conceivable that the same action could be taken spontaneously at the same time, on the same national markets and for the same range of products.

97. Nor is it any more plausible that the increases of January 1964, introduced on the Italian market and copied on the Netherlands and Belgo-Luxembourg markets, which have little in common with each other either as regards the level of prices or the pattern of competition, could have been brought into effect within a period of two to three days without prior concertation.

98. As regards the increases of 1965 and 1967 concertation took place openly, since all the announcements of the intention to increase prices with effect from a certain date and for a certain range of products made it possible for producers to decide on their conduct regarding the special cases of France and Italy.

99. In proceeding in this way, the undertakings mutually eliminated in advance any uncertainties concerning their reciprocal behaviour on the different markets and thereby also eliminated a large part of the risk inherent in any independent change of conduct on those markets.

100. The general and uniform increase on those different markets can only be explained by a common intention on the part of those undertakings, first, to adjust the level of prices and the situation resulting from competition in the form of discounts, and secondly, to avoid the risk, which is inherent in any price increase, of changing the conditions of competition.

101. The fact that the price increases announced were not introduced in Italy and that ACNA only partially adopted the 1967 increase in other markets, far from undermining this conclusion, tends to confirm it.

102. The function of price competition is to keep prices down to the lowest possible level and to encourage the movement of goods between the Member States, thereby permitting the most efficient possible distribution of activities in the matter of productivity and the capacity of undertakings to adapt themselves to change.

103. Differences in rates encourage the pursuit of one of the basic objectives of the Treaty, namely the interpenetration of national markets and, as a result, direct access by consumers to the sources of production of the whole Community.

104. By reason of the limited elasticity of the market in dyestuffs, resulting from factors such as the lack of transparency with regard to prices, the interdependence of the different dyestuffs of each producer for the purpose of building up the range of products used by each consumer, the relatively low proportion of the cost of the final product of the user undertaking represented by the prices of these products, the fact that it is useful for users to have a local supplier and the influence of transport costs, the need to avoid any action which might artificially reduce the opportunities for interpenetration of the various national markets at the consumer level becomes particularly important on the market in the products in question.

105. Although every producer is free to change his prices, taking into account in so doing the present or foreseeable conduct of his competitors, nevertheless it is contrary to the rules on competition contained in the Treaty for a producer to cooperate with his competitors, in any way whatsoever, in order to determine a coordinated course of action relating to a price increase and to ensure its success by prior elimination of all uncertainty as to each other's conduct regarding the essential elements of that action, such as the amount, subject-matter, date and place of the increases.

106. In these circumstances and taking into account the nature of the market in the products in question, the conduct of the applicant, in conjunction with other undertakings against which proceedings have been taken, was designed to replace the risks of competition and the hazards of competitors' spontaneous reactions by cooperation constituting a concerted practice prohibited by Article 85(1) of the Treaty.

The fine

107. In view of the frequency and extent of the applicant's participation in the prohibited practices, and taking into account the consequences thereof in relation to the creation of a Common Market in the products in question, the amount of the fine is appropriate to the gravity of the infringement of the Community rules on competition.

Costs

108. Under Article 69(2) of the Rules of Procedure the unsuccessful party shall be ordered to pay the costs.

109. The applicant has failed in its submissions.

110. Therefore it must be ordered to bear the costs.

On those grounds, Upon reading 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 Articles 85 and 173; Having regard to Regulation No 17/62 of the Council of 6 February 1962; Having regard to Regulation No 99/63 of the Commission of 25 July 1963; Having regard to the Protocol on the Statute of the Court of Justice of the European Communities; Having regard to the Rules of Procedure of the Court of Justice of the European Communities, THE COURT hereby:

1 Dismisses the application;

2 Orders the applicant to bear the costs.