Court of Justice of the European Communities (including Court of First Instance Decisions)

Facts

Buchmann GmbH, Cascades SA, Enso-Gutzeit Oy, Europa Carton AG, Finnboard - the Finnish Board Mills Association, Fiskeby Board AB, Gruber & Weber GmbH & Co KG, Kartonfabriek de Eendracht NV (trading as BPB de Eendracht NV), NV Koninklijke KNP BT NV (formerly Koninklijke Nederlandse Papierfabrieken NV), Laakmann Karton GmbH & Co KG, Mo Och Domsjö AB (MoDo), Mayr-Melnhof Gesellschaft mbH, Papeteries de Lancey SA, Rena Kartonfabrik A/S, Sarrió SpA, SCA Holding Ltd (formerly Reed Paper & Board (UK) Ltd), Stora Kopparbergs Bergslags AB, Enso Española SA (formerly Tampella Española SA) and Moritz J. Weig GmbH & Co KG have infringed Article 85(1) of the EC Treaty by participating,

- in the case of Buchmann and Rena from about March 1988 until at least the end of 1990,

- in the case of Enso Española, from at least March 1988 until at least the end of April 1991,

- in the case of Gruber & Weber from at least 1988 until late 1990,

- in the other cases, from mid-1986 until at least April 1991,

in an agreement and concerted practice originating in mid-1986 whereby the suppliers of cartonboard in the Community

- met regularly in a series of secret and institutionalised meetings to discuss and agree a common industry plan to restrict competition,

- agreed regular price increases for each grade of the product in each national currency,

- planned and implemented simultaneous and uniform price increases throughout the Community,

- reached an understanding on maintaining the market shares of the major producers at constant levels, subject to modification from time to time,

- increasingly from early 1990, took concerted measures to control the supply of the product in the Community in order to ensure the implementation of the said concerted price rises,

- exchanged commercial information on deliveries, prices, plant standstills, order backlogs and machine utilisation rates in support of the above measures.

The undertakings named in Article 1 shall forthwith bring the said infringement to an end, if they have not already done so. They shall henceforth refrain in relation to their cartonboard activities from any agreement or concerted practice which may have the same or a similar object or effect, including any exchange of commercial information:

(a) by which the participants are directly or indirectly informed of the production, sales, order backlog, machine utilisation rates, selling prices, costs or marketing plans of other individual producers; or

(b) by which, even if no individual information is disclosed, a common industry response to economic conditions as regards price or the control of production is promoted, facilitated or encouraged;

or

(c) by which they might be able to monitor adherence to or compliance with any express or tacit agreement regarding prices or market sharing in the Community.

Any scheme for the exchange of general information to which they subscribe, such as the Fides system or its successor, shall be so conducted as to exclude not only any information from which the behaviour of individual producers can be identified but also any data concerning the present state of the order inflow and backlog, the forecast utilisation rate of production capacity (in both cases, even if aggregated) or the production capacity of each machine.

Any such exchange system shall be limited to the collection and dissemination in aggregated form of production and sales statistics which cannot be used to promote or facilitate common industry behaviour.

The undertakings are also required to abstain from any exchange of information of competitive significance in addition to such permitted exchange and from any meetings or other contact in order to discuss the significance of the information exchanged or the possible or likely reaction of the industry or of individual producers to that information.

A period of three months from the date of the communication of this Decision shall be allowed for the necessary modifications to be made to any system of information exchange.

The following fines are hereby imposed on the undertakings named herein in respect of the infringement found in Article 1:

...

(xvii) Stora Kopparbergs Bergslags AB, a fine of ECU 11 250 000;

...

'9 According to the Decision, the infringement took place within a body known as the Product Group Paperboard (hereinafter the PG Paperboard), which comprised several groups or committees.

10 In mid-1986 a group entitled the Presidents Working Group (hereinafter the PWG) was established within that body. This group brought together seniorrepresentatives of the main suppliers of cartonboard in the Community (some eight suppliers).

11 The PWG's activities consisted, in particular, in discussion and collaboration regarding markets, market shares, prices and capacities. In particular, it took broad decisions on the timing and level of price increases to be introduced by producers.

12 The PWG reported to the President Conference (hereinafter the PC), in which almost all the managing directors of the undertakings in question participated (more or less regularly). The PC met twice each year during the period in question.

13 In late 1987 the Joint Marketing Committee (hereinafter the JMC) was set up. Its main task was, on the one hand, to determine whether, and if so how, price increases could be put into effect and, on the other, to prescribe the methods of implementation for the price initiatives decided by the PWG, country-by-country and for the major customers, in order to achieve a system of equivalent prices in Europe.

14 Lastly, the Economic Committee discussed, inter alia, price movements in national markets and order backlogs, and reported its findings to the JMC or, until the end of 1987, to the Marketing Committee, the predecessor of the JMC. The Economic Committee was made up of marketing managers of most of the undertakings in question and met several times a year.

15 According to the Decision, the Commission also took the view that the activities of the PG Paperboard were supported by an information exchange organised by Fides, a secretarial company, whose registered office is in Zurich, Switzerland. The Decision states that most of the members of the PG Paperboard sent periodic reports on orders, production, sales and capacity utilisation to Fides. Under the Fides system, those reports were collated and the aggregated data were sent to the participants.

16 The applicant, Stora Kopparbergs Bergslags AB (Stora), was already owner of Kopparfors, one of the major European cartonboard producers, when in 1990 it acquired the German paper group Feldmühle-Nobel (FeNo), which included the Feldmühle cartonboard operation (point 11 of the Decision). At that date Feldmühle already owned Papeteries Béghin-Corbehem (CBC).

17 According to the Decision, Feldmühle, Kopparfors and CBC participated in the cartel throughout the period covered by the Decision. Feldmühle and CBC also took part in the PWG meetings.

18 The former Kopparfors and Feldmühle cartonboard operations were subsequently integrated and now form the Billerud Division of the Stora Group.

19 According to point 158 of the Decision, Stora accepts that it is responsible for the involvement in the infringement of its subsidiary companies Feldmühle, Kopparfors and CBC both before and after their acquisition by the group. Moreover, the Commission considered that, because of the participation of Feldmühle and CBC in the PWG meetings, the applicant was one of the ringleaders and as such had to bear special responsibility.

The contested judgment

The application for annulment of the Decision

- first, responsibility for the infringement in question was not imputable to it as a legal successor to the companies which had committed the infringement, since those companies were still in existence;

- second, in view of the Commission's previous practice and the case-law, the conditions for attributing to the appellant responsibility for infringements committed within the group were not satisfied. During the period covered by the Decision Stora had no effective control over the commercial policy of the three companies concerned (Koppafors, Feldmühle and CBC). Stora also disputed the Commission's contention that a parent company may be held responsible for a subsidiary's anti-competitive conduct on the sole ground that the subsidiary is wholly owned by it.

'78 As this Court has already held, it is necessary to refer to the individual particulars annexed to the statement of objections in order to assess the reasons which led the Commission to address the Decision to the applicant. It is apparent from those particulars that the conduct of Kopparfors, Feldmühle and CBC was imputed to the applicant in its capacity as parent company of the Stora Group.

'The undertakings named in Article 1 shall forthwith bring the said infringement to an end, if they have not already done so. They shall henceforth refrain in relation to their cartonboard activities from any agreement or concerted practice which may have the same or a similar object or effect, including any exchange of commercial information:

(a) by which the participants are directly or indirectly informed of the production, sales, order backlog, machine utilisation rates, selling prices, costs or marketing plans of other individual producers.

Any scheme for the exchange of general information to which they subscribe, such as the Fides system or its successor, shall be so conducted as to exclude any information from which the behaviour of individual producers can be identified.

The application for annulment or reduction of the fine

First part of the plea: infringement of the obligation to state reasons regarding the amount of the fines

'117 It is settled law that the purpose of the obligation to give reasons for an individual decision is to enable the Community judicature to review the legality of the decision and to provide the party concerned with an adequate indication as to whether the decision is well founded or whether it may be vitiated by some defect enabling its validity to be challenged; the scope of that obligation depends on the nature of the act in question and on the context in which it was adopted (see, inter alia, Case T-49/95 Van Megen Sports v Commission [1996] ECR II-1799, paragraph 51).

118 As regards a decision which, as in this case, imposes fines on several undertakings for infringement of the Community competition rules, the scope of the obligation to state reasons must be assessed in the light of the fact that the gravity of infringements falls to be determined by reference to numerous factors including, in particular, the specific circumstances and context of the case and the deterrent character of fines; moreover, no binding or exhaustive list of criteria to be applied has been drawn up (order in Case C-137/95 P SPO and Others v Commission [1996] ECR I-1611, paragraph 54).

119 Moreover, when fixing the amount of each fine, the Commission has a margin of discretion and cannot be considered to be obliged to apply a precise mathematical formula for that purpose (see, to the same effect, the judgment in Case T-150/89 Martinelli v Commission [1995] ECR II-1165, paragraph 59).

120 In the Decision, the criteria taken into account in order to determine the general level of fines and the amount of individual fines are set out in points 168 and 169 respectively. Moreover, as regards the individual fines, the Commission explains in point 170 that the undertakings which participated in the meetings of the PWG were, in principle, regarded as ringleaders of the cartel, whereas the other undertakings were regarded as ordinary members. Lastly, in points 171 and 172, it states that the amounts of fines imposed on Rena and the applicant must be considerably reduced in order to take account of their active cooperation with the Commission, and that eight other undertakings were also to benefit from a reduction, to a lesser extent, owing to the fact that in their replies to the statement of objections they did not contest the essential factual allegations on which the Commission based its objections.

121 In its written pleas to the Court and in its reply to a written question put by the Court, the Commission explained that the fines were calculated on the basis of the turnover on the Community cartonboard market in 1990 of each undertaking addressed by the Decision. Fines of a basic level of 9 or 7.5% of that individual turnover were then imposed, respectively, on the undertakings considered to be the cartel ringleaders and on the other undertakings. Finally, the Commission took into account any cooperation by undertakings during the procedure before it. Two undertakings received a reduction of two-thirds of the amount of their fines on that basis, while other undertakings received a reduction of one-third.

122 Moreover, it is apparent from a table produced by the Commission containing information as to the fixing of the amount of each individual fine that, although those fines were not determined by applying the abovementioned figures alone in a strictly mathematical way, those figures were, nevertheless, systematically taken into account for the purposes of calculating the fines.

123 However, the Decision does not state that the fines were calculated on the basis of the turnover of each undertaking on the Community cartonboard market in 1990. Furthermore, the basic rates of 9% and 7.5% applied to calculate the fines imposed on the undertakings considered to be ringleaders and those considered to be ordinary members do not appear in the Decision. Nor does it set out the rates of reduction granted to Rena and the applicant, on the one hand, and to eight other undertakings, on the other.

124 In the present case, first, points 169 to 172 of the Decision, interpreted in the light of the detailed statement in the Decision of the allegations of fact against each of its addressees, contain a relevant and sufficient statement of the criteria taken into account in order to determine the gravity and duration of the infringement committed by each of the undertakings in question (see, to thesame effect, Case T-2/89 Petrofina v Commission [1991] ECR II-1087, paragraph 264).

125 Second, where, as in the present case, the amount of each fine is determined on the basis of the systematic application of certain precise figures, the indication in the decision of each of those factors would permit undertakings better to assess whether the Commission erred when fixing the amount of the individual fine and also whether the amount of each individual fine is justified by reference to the general criteria applied. In the present case, the indication in the Decision of the factors in question, namely the reference turnover, the reference year, the basic rates adopted, and the rates of reduction in the amount of fines would not have involved any implicit disclosure of the specific turnover of the addressee undertakings, a disclosure which might have constituted an infringement of Article 214 of the Treaty. As the Commission has itself stated, the final amount of each individual fine is not the result of a strictly mathematical application of those factors.

126 The Commission also accepted at the hearing that nothing prevented it from indicating in the Decision the factors which had been systematically taken into account and which had been divulged by the Commissioner responsible for competition policy at a press conference held on the day on which that decision was adopted. In that regard, it is settled law that the reasons for a decision must appear in the actual body of the decision and that, save in exceptional circumstances, explanations given ex post facto cannot be taken into account (see Case T-61/89 Dansk Pelsdyravlerforening v Commission [1992] ECR II-1931, paragraph 131, and, to the same effect, Case T-30/89 Hilti v Commission [1991] ECR II-1439, paragraph 136).

'137 According to the seventh indent of point 168 of the Decision, the Commission determined the general level of fines by taking into account, inter alia, the fact that the cartel was largely successful in achieving its objectives. It is common ground that this consideration refers to the effects on the market of the infringement found in Article 1 of the Decision.

138 In order to review the Commission's appraisal of the effects of the infringement, the Court considers that it suffices to consider the appraisal of the effects of the collusion on prices. First, it is apparent from the Decision that the finding concerning the large measure of success in achieving objectives is essentially based on the effects of collusion on prices. While those effects are considered in points 100 to 102, 115, and 135 to 137 of the Decision, the question whether the collusion on market shares and collusion on downtime affected the market was, by contrast, not specifically examined in it.

139 Second, consideration of the effects of the collusion on prices makes it possible, in any event, also to assess whether the objective of the collusion on downtime was achieved, since the aim of that collusion was to prevent the concerted price initiatives from being undermined by an excess of supply.

140 Third, as regards collusion on market shares, the Commission does not submit that the objective of the undertakings which participated in the meetings of the PWG was an absolute freezing of their market shares. According to the second paragraph of point 60 of the Decision, the agreement on market shares was not static but was subject to periodic adjustment and re-negotiation. In view of that point, the fact that the Commission took the view that the cartel was largely successful in achieving its objectives, without specifically examining in the Decision the success of that collusion on market shares, is not therefore open to objection.

141 As regards collusion on prices, the Commission appraised the general effects of this collusion.

142 It is apparent from the Decision, as the Commission confirmed at the hearing, that a distinction was drawn between three types of effects. Moreover, the Commission relied on the fact that the price initiatives were considered by the producers themselves to have been an overall success.

143 The first type of effect taken into account by the Commission, and not contested by the applicant, consisted in the fact that the agreed price increases were actually announced to customers. The new prices thus served as a reference point in individual negotiations on transaction prices with customers (see, inter alia, points 100 and 101, fifth and sixth paragraphs, of the Decision).

144 The second type of effect consisted in the fact that changes in transaction prices followed those in announced prices. The Commission states that the producers not only announced the agreed price increases but also with few exceptions took firm steps to ensure that they were imposed on the customers (point 101, first paragraph, of the Decision). It accepts that customers sometimes obtained concessions in regard to the date of entry into force of the increases or rebates or individual reductions, particularly on large orders, and that the average net increase achieved after all discounts, rebates and other concessions would always be less than the full amount of the announced increase (point 102, last paragraph, of the Decision). However, referring to graphs in an economic study produced, for the purposes of the procedure before the Commission, on behalf of several addressee undertakings of the Decision (hereinafter the LE report), the Commission claims that during the period covered by the Decision there was a close linear relationship between changes in announced prices and those in transaction prices expressed in national currencies or converted to ecus. It concludes from this that: the netprice increases achieved closely tracked the price announcements albeit with some time lag. The author of the report himself acknowledged during the oral hearing that this was the case for 1988 and 1989 (point 115, second paragraph, of the Decision).

145 When appraising this second type of effect the Commission could properly take the view that the existence of a linear relationship between changes in announced prices and changes in transaction prices was proof of an effect by the price initiatives on transaction prices in accordance with the objective pursued by the producers. There is, in fact, no dispute that on the relevant market the practice of holding individual negotiations with customers means that, in general, transaction prices are not identical to announced prices. It cannot therefore be expected that increases in transaction prices will be identical to announced price increases.

146 As regards the very existence of a relationship between announced price increases and transaction price increases, the Commission was right in referring to the LE report, which consists of an analysis of changes in the price of cartonboard during the period to which the Decision relates, based on information supplied by several producers.

147 However, that report only partially confirms, in temporal terms, the existence of a close linear relationship. Examination of the period 1987 to 1991 reveals three distinct sub-periods. At the oral hearing before the Commission the author of the LE report summarised his conclusion as follows: There is no close relationship, even with a lag, between announced price increase and market prices in the early part of the period, in 1987 through 1988. There is such a relationship in 1988/89, and then the relationship breaks down and behaves rather oddly over the period 1990/91 (transcript of the oral hearing, p. 28). He also observed that those temporal variations were closely linked to variations in demand (see, in particular, transcript of the oral hearing, p. 20).

148 Those conclusions expressed by the author at the hearing are in accordance with the analysis set out in his report, and in particular with the graphs comparing changes in announced prices and changes in transaction prices (LE report, graphs 10 and 11, p. 29). The Commission has therefore only partially proved the existence of the close linear relationship on which it relies.

149 At the hearing the Commission stated that it had also taken into account a third type of effect of the price collusion, namely the fact that the level of transaction prices was higher than that which would have been achieved in the absence of any collusion. Pointing out that the dates and order of the price increase announcements had been planned by the PWG, the Commission takes the view in the Decision that it is inconceivable in such circumstances that the concerted price announcements had no effect upon actual price levels (point136, third paragraph, of the Decision). However, the LE report (section 3) drew up a model which enabled a forecast to be made of the price level resulting from objective market conditions. According to that report, the level of prices determined by objective economic factors in the period 1975 to 1991 would have evolved, with minor variations, in an identical manner to the level of transaction prices applied, including those during the period covered by the Decision.

150 Despite those conclusions, the analysis in the report does not allow a finding that the concerted price initiatives did not enable the producers to achieve a level of transaction prices above that which would have resulted from the free play of competition. As the Commission pointed out at the hearing, it is possible that the factors taken into account in that analysis were influenced by the existence of collusion. So, the Commission rightly argued that the collusive conduct might, for example, have limited the incentive for undertakings to reduce their costs. However, the Commission has not argued that there is a direct error in the analysis in the LE report nor submitted its own economic analysis of the hypothetical changes in transaction prices had there been no concertation. In those circumstances, its assertion that the level of transaction prices would have been lower if there had been no collusion between the producers cannot be upheld.

151 It follows that the existence of that third type of effect of collusion on prices has not been proved.

152 The above findings are in no way altered by the producers' subjective appraisal, on which the Commission relied in reaching the view that the cartel was largely successful in achieving its objectives. In that regard, the Commission referred to a list of documents which it produced at the hearing. However, even supposing that it could base its appraisal of the success of the price initiatives on documents showing the subjective opinions of certain producers, it must be observed that several undertakings, including the applicant, rightly referred at the hearing to a number of other documents in the file showing the problems encountered by the producers in implementing the agreed price increases. In those circumstances, the Commission's reference to the statements of the producers themselves is insufficient for a conclusion that the cartel was largely successful in achieving its objectives.

153 Having regard to the foregoing considerations, the effects of the infringement described by the Commission are only partially proved. The Court will consider the implications of that conclusion as part of its exercise of its unlimited powers in regard to fines, when assessing the seriousness of the infringement found in the present case (see paragraph 170 below).

The fifth part of the plea: the Commission took 'extraneous considerations into consideration when determining the amount of the fine

'165 In the present case, the Commission determined the general level of fines by taking into account the duration of the infringement (point 167 of the Decision) and the following considerations (point 168):

- collusion on pricing and market sharing are by their very nature serious restrictions on competition,

- the cartel covered virtually the whole territory of the Community,

- the Community market for cartonboard is an important industrial sector worth some ECU 2 500 million each year,

- the undertakings participating in the infringement account for virtually the whole of the market,

- the cartel was operated in the form of a system of regular institutionalised meetings which set out to regulate in explicit detail the market for cartonboard in the Community,

- elaborate steps were taken to conceal the true nature and extent of the collusion (absence of any official minutes or documentation for the PWG and JMC; discouraging the taking of notes; stage-managing the timing and order in which price increases were announced so as to be able to claim they were 'following, etc.),

- the cartel was largely successful in achieving its objectives.

166 Moreover, according to the Commission's reply to a written question from the Court, fines of a basic level of 9 or 7.5% of the turnover of each undertaking addressed by the decision on the Community cartonboard market in 1990 were imposed on the undertakings regarded as the ringleaders of the cartel and on the other undertakings respectively.

- infringement of Article 85 of the Treaty, Article 15(2) of Regulation No 17 and general principles of Community law;

- inadequate statement of reasons as regards the calculation of the fine;

- that the Court of First Instance erred in law in that it found that assessment of the gravity of the infringement could not be affected by the absence of the alleged effects on prices.

The first plea

- in that it held that the infringement of Article 85 of the Treaty committed by its subsidiary Kopparfors had to be attributed to the appellant without having taken into consideration the Commission's inability to establish whether the appellant had actually exercised an influence on Kopparfors' commercial policy (paragraph 80 of the contested judgment);

- in that it held that the infringements committed by Feldmühle and CBC before and after their acquisition by the appellant had to be attributed to it because it could not have been unaware of their participation in the infringement and did not adopt the appropriate measures to prevent the continuation of the infringement (paragraph 83 of the contested judgment).

The attribution to the appellant of Kopparfors' conduct

The attribution to the appellant of the conduct of Feldmühle and CBC

The second plea

'points 169 to 172 of the Decision, interpreted in the light of the detailed statement in the Decision of the allegations of fact against each of its addressees, contain a relevant and sufficient statement of the criteria taken into account in order to determine the gravity and duration of the infringement committed by each of the undertakings in question (see, to the same effect, Case T-2/89 Petrofina v Commission [1991] ECR II-1087, paragraph 264).

The third plea