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the powers of the Commission;

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the procedure followed by the Commission and the statement of reasons for the contested decision, that is to say, the legality of the procedure ;

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the existence of an infringement of the rules on competition, which forms the central point of the discussion ;

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whether a fine may be imposed on the undertakings and the justification for its amount. Although logically it should be placed first, it is only then that I shall consider the question of limitation, since it is connected with the factual matter of the date when the alleged infringements were terminated.

1.

In the first place they criticize in fairly similar terms the lack of clarity or the incomplete nature of the notice of complaints. These notices are practically identical for all the undertakings concerned and contain about fifty pages; the undertakings complain that they indicate in detail neither the facts to which the Commission referred nor the evidence.

Furthermore, alter this notice was communicated they made various requests to consult the Commission's file; the Commission however refused to produce the entire file although it allowed them to consult the documents mentioned in the notice of complaints.

All the undertakings except Boehringer availed themselves of the opportunity thus afforded them. They maintain in court today that this constituted an infringement of their right of defence and that they ought to have been able to consult all the documents on the file. They allege that this is so in particular because the procedure initiated was capable of resulting in a fine.

More precisely their citicism relates to the results of investigations carried out on Italian and Belgian undertakings, which are annexed to the Commission's statement of defence but which were not communicated to the undertakings at the time. Those investigations are mentioned at page 1 of the notice of complaints in the following terms : ‘Investigations have in addition been carried out on Italian and Belgian undertakings’. The result of those investigations is recorded on page 37 of the same document in the following terms: ‘The prices jointly fixed were uniformly maintained by the members of the cartel within the Common Market, first for exports to countries without a domestic quinine production, namely Belgium, Luxembourg and Italy…’.

In order to reply to the various points covered by those criticisms, a decision must be taken with regard to the nature of the procedure before the Commission and to the extent of the ‘rights of the defence’ which the undertakings may claim at that stage.

The Court has already had to apply Article 19 of Regulation No 17 in the Grundig case and you ruled that the preceedings before the Commission are administrative proceedings, which implies that the undertakings concerned must be enabled in advance to submit their observations on the complaints which the Commission considers that it must make with regard to them, that to this end they must be informed of the facts upon which the complaints of the Commission are based, although it is not necessary that the entire content of the file should be communicated to them.

That judgment was given in a case relating exclusively to the application of Article 85 of the Treaty but it seems equally valid if the Commission imposes the fines under Article 15 (2) of Regulation No 17. No matter what decision it takes (order to terminate an infringement, a decision granting the benefit of Article 85 (3), a fine), the Commission always acts as an administrative authority and the procedure laid down by Regulations Nos 17/62 and 19/63 is virtually the same in all cases.

In those circumstances perusal of the notice of complaints shows that it states clearly the facts which in the Commission's view constitute the infringement alleged against the applicants; in particular, it states that they continued until the beginning of 1965 to maintain a joint policy with regard to prices and to exchange information on their sales with a view to possible compensation; they therefore continued their cartel within the Common Market after 1962. Such information seems to me unequivocally to nofity the undertakings of the complaints against them and indeed to enable them to come to a decision on them.

A more specific point remains to be settled, that is to say, whether the undertakings which were not entitled to have the entire file communicated to the might then require communication of the resulls of the investigations carried out on the Italian and Belgian undertakings. It seems to me that a negative reply must be given as the ‘complaint’ and the ‘facts’ on which it is based — to repeat the terms of the Grundig judgment — is that they had restricted competition by uniformly applying common prices to exports to Belgium and Italy. As I have said, this was communicated to the undertakings which were able to dispute it and make known their points of view, if only by explaining in their written observations the transactions effected and the conditions pertaining to them. The results of the investigations undertaken constitute evidence; because of this, if the decision is contested they must be communicated in the course of the court proceedings, but they do not appear to me to fall under the provisions of Article 19 of Regulation No 17. It therefore seems to me that the submission should be rejected.

Chemiefarma raised other submissions relating to the legality of the procedure at this stage:

2.

The rules of procedure for hearing the persons concerned were laid down by Regulation No 99/63 of the Commission, as it was empowered to do by Article 24 of Regulation No 17 of the Council. The applicant doubts whether such a delegation is proper since ‘such activities are legislative and not executive’ ; in this respect it contradicts both Article 87 and the combined provisions of Articles 155 and 4 of the Treaty; in addition the European Parliament was not consulted on the question whether it was possible and desirable for the Council to delegate its powers in this sphere.

It does not seem that this submission should be upheld.

Although Article 87 requires the Council to adopt ‘any appropriate regulations or directives to give effect to the principles set out in Articles 85 and 86’, it does not follow from this that after the institution itself has laid down general rules in this sphere it may not delegate to the Commission power to adopt the implementing provisions necessary to give effect to those rules. This is indeed the concept contained in Article 155 of the Treaty when it states that the Commission shall ‘exercise the powers conferred on it by the Council for the implementation of the rules laid down by the latter’, for that article does not preclude the exercise of such power in the adoption of regulations. In other words, although the Council may not delegate to the Commission the task of establishing the principles governing a particular sphere, there is nothing to prevent it entrusting the Commission with the task of laying down the detailed rules for the implementation of such principles.

Article 19 of Regulation No 17 recognizes the undertakings' right to be heard before the Commission takes any decision concerning them and thus governs the essential point: the principle of the rights of the defence. Once this is accepted, the rules of procedure of the hearing which the Commission laid down in Regulation No 93/63, no matter how important they are, merely constitute a measure in implementation of the principle enunciated by the Council. Moreover, the preparatory studies in connexion with Regulation No 17 show that the provisions which were approved by Parliament contained a clause similar to Article 24. The submission of illegality raised by the applicant against this article is consequently unfounded.

3.

Another submission of illegality is raised by the same applicant, but this time against Article 9 (1) of Regulation No 99/63, under the terms of which ‘Hearings shall be conducted by the persons appointed by thé Commission for that purpose’. This provision violates the general principle of continuity in the composition of the administrative body before which proceedings are brought which may result in a penalty.

But is there any principle as rigid as this in a sphere which relates above all to practical organization? This must be doubted. The investigation of an administrative matter — above all where it is as complex as that now before us — necessarily presupposes the cooperation of a number of officials operating sometimes alone and sometimes in concert. It is neither possible for a third party to define the duties of each one nor to require that each one participates in such duties as a whole. This is a matter for the internal organization of the departments which must be organized by the Commission within the framework of its duties. And this is so, even though the procedure initiated may result in fines, as it nevertheless maintains its administrative nature.

4.

Chemiefarma again invokes the violation of a general principle of law according to which the administrative body in charge of proceedings is obliged to correct errors jointly with the undertakings concerned, ‘to complete insufficient arguments’ and to allow the undertakings concerned to be heard on all the essential elements of the proceedings. In the present case, since it had not taken into account the observations submitted by the applicant in reply to the notice of complaints, the Commission did not remove from its decision a number of inaccuracies listed by Chemiefarma.

If the latter wishes to restate in another form the submission derived from the infringement of the rights of the defence, it is sufficient to reply to it that they had been respected. If, despite this, inaccuracies remain in the contested decision, they no longer concer the regularity but the substance itself of the procedure, and the Court must consider whether its validity has thereby been affected.

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because it was not in possession of the final minutes of the hearings, but merely the preliminary draft minutes which required substantial amendments (Applications 41/69, 44/69 and 45/69) ;

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because the preliminary draft decision submitted to it did not show the amount of the fines contemplated (Applications 41/69 and 45/69);

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because it did not have a sufficient period in which to consider the matter brought before it (Application 41/69).

In the first place, it is not disputed that the Advisory Committee only had at its disposal a preliminary draft of the minutes, without the amendments proposed by Buchler and Boehringer; but this would only constitute a procedural defect capable of affecting the contested decision if the version submitted to the Committee gave it an incorrect impression of the declarations of the persons concerned. This was certainly not so. In the course of the hearing the Commission's agent gave as an example the amendments requested by Buchler; they are of little importance. You have on the file the draft minutes and the final minutes including all the amendments requested by the various undertakings. A comparison of those two documents shows that although there were unavoidable errors of detail in the original version they do not relate to the substance. In accordance with Article 9 (4) of Regulation No 99/63 it is the ‘essential content’ of the statements made by each person which shall be recorded in the minutes. The Advisory Committee has thus not been inaccurately informed on this point.

What else can be said with regard to the information at the disposal of the Committee in connexion with the amount of the fines contemplated? In its statements the Commission only dealt with this question in general terms, stating that it had chosen a procedure which avoided divulging that amount too early. Its latest documents afford a more detailed view of the position. At the same time as the preliminary decision communicated on 30 May 1969 mentioning the criteria employed in apportioning the fines to be imposed but not their amount, the members of the Committee received a letter informing them of the approximate proportion of the fines which it was intended to impose on the various undertakings and that the amount in figures would be notified to them verbally during the meeting on 23 June. This is in fact what was done. Extracts from the minutes of the consultation show the total amount of the fines proposed, and it is sufficient to employ the scale supplied in the letter of 30 May to work out the figure proposed for each of the undertakings in question; a member of the Committee was moreover critical of the figure. It has thus been established that this body was informed, if not through the preliminary draft of the decision then at least from written and verbal information of the amount of the fine envisaged at this stage in the procedure for each of the undertakings.

It may be wondered whether the secret which the Commission wished to preserve required at this point the employment of such complicated procedures; on the other hand, it must be conceded that the Committee was able to give a ruling with full knowledge of the matter. I might concur with the applicants that the most important factor in a decision such as the present one is the amount of the fine imposed, which must be in accordance with the duration and gravity of the infringement alleged. With regard to those two aspects of the question the preliminary draft decision set forth the Commission's point of view and the schedule thereto realized this through a scale fixing the respective liability of each of the undertakings. From this point the members of the Advisory Committee could prepare themselves for deciding the substance of the proceedings and, unless their ability to do so is doubted, it must be considered that in terms of the factors already at their disposal they were in a position to give a ruling on the proposed fine with full knowledge of the matter even although they were only informed of the amount of the fine in figures during the hearing.

Finally, the foregoing considerations, together with the fact that the period of 14 days which must elapse between convening the meeting and holding it was largely observed, must lead to the rejection of Chemiefarma's objection that the body which was consulted had insufficient time at its disposal to consider the matter.

No matter how they are presented it seems to me that the complaints against the regularity of the procedure before the Advisory Committee must be rejected.

1.

Boehringer considered that lack of detail in the notice of complaints constituted an infringement of Article 19 (4) of Regulation No 17 and levels at the contested decision the same criticism which it now bases on Article 190 of the Treaty. I think that it must meet with the same reply. For this provision to be observed it is sufficient that the statement of reasons should indicate with sufficient clarity the facts constituting the infringements alleged; perusal of the decision which, moreover, follows the statement of objections very closely shows that this was indeed the case in the present proceedings; it is therefore impossible to accept the submission.

2.

Chemiefarma also invokes against the Commission's decision the infringement of an essential procedural requirement and puts forward various submissions in this respect.

3.

This applicant also maintains that the contested decision differs in certain points from the notice of complaints and it considers this an infringement of Article 4 of Regulation No 99/63. Although in accordance with that provision the Commission shall in its decisions deal only with those objections in respect of which undertakings have been afforded the opportunity of making known their views, it does not follow from this that such a decision must reproduce exactly the original notice. Certainly it may not deal with infringements other than those contained in the notice but the Commission may present them differently in order to take into account aspects which come to light in the discussion intitiated. In the present case comparison of the two documents shows that the decision does not differ essentially from the notice of complaints and that in any event, although the decision withdraws' certain complaints initially maintained, it contains no complaint which did not already feature in the feature in the notice. The submission must therefore be rejected.

4.

Finally, to this submission of infringement of an essential procedural requirement must be added Chemiefarma's complaint that the contested decision violated a general principle of law that persons concerned should be made aware of their right to make an application and of the time-limits fixed for so doing; this was done neither in the decision itself nor in the accompanying letter.

It is no doubt sufficient to reply to the applicant that, since it lodged its application within the prescribed period, it is irrelevant to make this submission, but I consider it preferable to settle the question completely. Although the rule relied upon exists in Germany, it is nof known generally in the other Member States and it is thus impossible to consider it as a ‘general principle’ which applies to Community law in the absence of written provisions.

A —

The very complete account given in the report of the hearing of the various aspects presented by the cartel allows me merely to review its essential here. Nevertheless, it is necessary from the outset to emphasize the complexity of the network of agreements drawn up between the members of this cartel and the great strength of the links thereby created between them.

1.

In the beginning an export agreement for quinine and quinidine was drawn up in July 1959 between Boehringer and Nedchem expressly excluding the countries of the Common Market from its scope. Buchler became a party to this agreement in March 1960; then on 7 April 1960 the three applicants on the one part and the French undertakings and the two British undertakings on the other part concluded an agreement governing the conditions for the adherence, with regard to quinine, of the French and British undertakings to the foregoing agreement. That agreement, which was described as an export agreement, was made public. But on the same day a meeting of the members of the cartel approved the provisions of two gentlemen's agreements concluded between the applicants and the French group on the one hand and Carnegies and Lake & Cruickshank on the other. They extend the provisions of the export agreement to all export sales, that is, to those in the countries of the Common Market. The terms are identical and I shall henceforth speak of the gentlemen's agreements. They were reduced to writing, dated 9 April 1960, but were unsigned and above all remained secret. Subsequently, in order to implement these agreements the undertakings concluded others either at their joint meetings or through an exchange of letters, for example in order jointly to fix the date and amount of the increases in price. It must finally be added that in the sphere of purchases as well as sales the undertakings concluded agreements relating to buying quinquina bark (the bark pool) and purchasing quantities of quinine from American strategic resreves (the stockpile agreement).

2.

The Commission raises four points with regard to which the cartel formed by the undertakings is contrary to the provisions of Article 85 (1); they all originate directly or indirectly from the export agreement and the gentlemen's agreements.

3.

In the first place must the gentlemen's agreement be considered as an agreement, as it is by the contested decision, or as a concerted practice? Although both are referred to in Article 85 of the Treaty the distinction is not without significance, at least with regard to proving the infringement. In fact according to the Grundig judgment (Joined Cases 56 and 58/64, [1966] E.C.R. 299) for the purposes of the application of Article 85 there is no need to take account of the concrete effects of an agreement when it has as its object the prevention, restriction or distortion of competition. It is no doubt otherwise in the case of a concerted practice which, according to the prevailing view, presupposes that the agreement is actually carried out so that it is necessary to establish the actual conduct of the undertakings concerned and the existence of a link between such conduct and a prearranged plan.

In order to consider the gentlemen's agreement of 9 April 1960 as an agreement within the meaning of Article 85 (1), the contested decision is based on the fact that although the name is insufficiently precise that agreement expressly lays down written provisions binding the parties with regard to their conduct on the market. Even though I attach less importance than the Commission to the fact that provision was made for the settlement of disputes through arbitration, evidence of the binding nature of the gentlemen's agreement is clearly expressed in the provision stipulating that a breach of the gentlemen's agreement ipso facto constitutes a breach of the gentlemen's agreement ipso facto constitutes a breach of the export agreement. It is stated in the ‘Note about equalization’ of 19 February 1960 that the first of those documents depends on the second and in those circumstances it would be paradoxical to deny it the same nature. It should be added that the decisions of the Bundeskartellamt tend to consider arrangements of this type as actual agreements within the meaning of the legislation on competition.

Let us consider the gentlemen's agremeent as an acutal agreement the object of which, on all the evidence, is to restrict competition.

4.

The second question is equally awkward: it is whether the connexions existing between the export agreement and the gentlemen's agreement cause the former to fall under Article 85 (1). The applicants dispute this: Boehringer in particular complains that the Commission did not give separate consideration to different acts and situations although, according to the Grundig judgment, the infringement may only be found in the elements of the agreement covered by the prohibition. This is all the more true if two distinct agreements, with different content and scope, are concerned. Even if there was anything reprehensible in the gentlemen's agreement in that it extended provisions of the export agreement to the Common Market, the export agreement as such would in any event escape Article 85 (1). In any case, the undertakings considered it lawful which means that they did not intentionally infringe the prohibition.

I shall leave aside for the moment the last aspect which relates to the fine. For the rest the Commission firmly rebuts the applicant's argument and refuses to consider the export agreement apart because of the inseparable link between the various agreements which were different only in form. The Commission says that the system was an entity; it had thus no option but to consider the agreements as parts of a deliberately contrived whole and also to find that the export agreement fell under the prohibition laid down in Article 85 (1). It adds that together the undertakings participating in the international quinine cartel represented 70 % of world production and a veryhigh proportion of the total sales were exports to third countries; consequently the cartel cannot be compared to agreements which were previously granted negative clearance since they did not appreciably restrict competition within the Common Market.

Properly speaking the gentlemen's agreement is incomprehensible unless it is put in juxtaposition to the export agreement; the Commission was thus unable to consider the one without considering the other. Must it follow that this agreement might be the subject of the finding provided for in Article 85 (1) and covered by the prohibition? This is more doubtful but it could be conceded. Not so much owing to the considerable proportion of world production represented by the undertakings participating in the cartel, since it cannot be excluded that an agreement with regard to exports to third countries might have repercussions within the Common Market (the Commission does not endeavour to show that this was so in the present case) but owing to the clear link between the two agreements and the indivisible entity which they constituted. Although the Grundig judgment to which the applicants refer partially annulled the decision pronouncing the prohibition, this was. because the state of affairs held incompatible with Article 85 (1) did not stem ‘from the combined operation of all the clauses of the agreement, that is to say, from the aggreggate of its effects’. In this case it was indeed necessary to join the two agreements in order to produce the state of affairs penalized by the contested decision.

The following statement is to be found in a recent publication by a particularly authoritative writer: ‘The Bundeskartellamt's experiences with the international quinine cartel provide in addition an incentive to ensure that international export cartels which have been notified are not used as the framework for wider illegal restrictions ( 2 )’. Because the agreement was the framework within which the gentlemen's agreement was situated it does not seem to me extraordinary that it should be treated in the same way.

B —

This is the aspect originally presented by the cooperation between the undertakings within the international quinine cartel. Nevertheless, although the applicants concede that the gentlemen's agreement was contrary to the provisions of Article 85 (1) and although they scarcely dispute that its application was continuing on 13 March 1962, the date taken into consideration in fixing the fines, they maintain on the other hand that it was expressly and finally terminated at the meeting on 29 October 1962, that after an almost total interruption the export agreement itself was put ‘in abeyance’ at the meeting on 14 October 1963 and was only applied sporadically in 1964, and that although the declarations of October and November 1963 again guaranteed protection of domestic markets they constituted at the most a concerted practice which did not involve appreciable restriction of competition as the shortage of raw materials at that time excluded any additional supplies. On the other hand, the Commission disputes that the gentlemen's agreement was terminated and maintains that at the most it became dormant like the export agreement and if it were necessary to concede that because of this only a concerted practice is involved the undertakings none the less intended that their respective conduct should continue to conform to the agreements. In sum, the contested decision considers that on the four points which I have described the cartel's policy remained unchanged until the beginning of February 1965.

1.

We must thus consider if and how the cartel developed. The entire dispute, initiated in the written procedure and continued at the bar, rests on conflicting interpretations of the minutes of the cartel's meetings and the correspondence between its members in 1962 and 1963. Before I outline this dispute, I should like to recall the context within which those events took place.

At a general level the entry into force of Regulation No 17 with its requirement of notification of certain agreements before 1 November required difficult choices to be made. Should undertakings do nothing and risks a fine, or terminate the cartel or notify certain agreements, and if so which? On the proposal of a French member of the cartel expert advice was obtained and the undertakings' lawyers agreed to discuss the matter at the meeting of the cartel on 21 September 1962 and subsequently on 29 October. Certain internal problems also arose, however, owing to conflicting interests: certain members requested an increase in their quota whilst Nedchem and Boehringer disagreed on the conditions for establishing a new bark pool.

The least which can be said is that the analysis carried out in the contested decision (No 10) of the meeting on 29 October 1962 is a very free interpretation of the minutes appearing in the file. It is indeed true that, as the Commission says, the meeting fell into two parts: during the first part devoted to legal questions there was discusison in particular on the impossibility of submitting the gentlemen's agreement to the Community authorities and the possibility of renouncing the export agreement which was particularly opposed by Nedchem and the French group; the conclusions of this part are summed up thus by the minutes : ‘After a discussion it proves that the export agreement is not cancelled, that all members intend to live in accordance with the gentlemen's agreement and that the meeting hopes to reach an understanding on a new purchase agreement’.

The provisions of the agreement remained to be drafted but this proved impossible owing to the conflicting points of view of Nechem and Boehringer; the former suspected that the latter wished to retain complete control over its supplies from the Congo and laid down the abolition of the prohibition on exporting bark as a condition precedent of its agreement; (Pharmakina, Boehringer's Congolese subsidiary benefited from this prohibition). Relations deteriorated further when Cruickshank, supported by Boehringer, requested revision of the quotas, which was opposed by Buchler, the French group and Nedchem.

The minutes summarize the conclusion reached in this second part as follows: ‘A general discussion follows in view of the opposing standpoints in particular as regard (sic) quota revision. It is found that no useful purpose would now be served by the lawyers drawing up a purchase agreement and the bark pool has come to an end. Therefore the original intention to live according to the gentlemen's agreement cannot be kept. Nobody however proposed to cancel the export cartel, apart from this all are free’.

The Commission considers that ‘such vague statements … do not allow definite conclusions to be drawn’ which means that the gentlemen's agreement remained unaltered. On the contrary, those statements seem to me precise but contradictory, and since they express the conclusions of the two discussions which preceded them the second must logically take priority over the first. At the hearing the defendant let it be understood more or less clearly that Nedchem drew up the minutes in accordance with its interests and that it endeavoured to intimidate those who were requesting revision of the quotas by threatening to terminate the gentlemen's agreement. This is pure supposition and the question may then be asked why Nedchem did not also ‘arrange’ the first part in order to diminish the contradiction between it and the second part. Finally, the Commission endeavoured to base its argument on an exchange of letters between Nedchem and Boehringer and Lake & Cruickshank in the course of the following weeks. In a circular letter of 2 November Nedchem maintained that its two partners had infringed the gentlemen's agreement and consequently the export agreement as well. It was thus incorrect in saying at the end of the meeting on 29 October that account would no longer be taken of the former but that the second would remain in force. Lake & Cruickshank again complained to Nedchem in the middle of November that it had infringed the gentlemen's agreement by lowering prices in the United Kingdom on 5 November. This exchange of complaints written in rixa seem to me less convincing than the minutes of the meeting. Furthermore it was the practice to send this document to the members of the cartel in order that they might make their corrections within a fortnight and the file indicates that this was done on various occasions. We have never been told that any of them protested against the representation of this as a unanimous decision; I therefore consider that there is no reason to doubt the accuracy of the declaration.

I should add that according to the contested decision (No 12) it was agreed at the meeting of the members of the cartel on 14 October 1963 that the export agreement and the gentlemen's agreements should continue to be valid but that their implementation should be suspended. It is certain that those two decisions were taken with regard to the agreement but it is by no means clear to me from the minutes that they applied to the gentlemen's agreement.

2.

In those circumstances, it seems to me that the only reasonable interpretation of the statement appearing at the end of the minutes of the meeting on 29 October 1962 is that it implies the end of the gentlemen's agreement. After that date there is no longer any formal agreement on a cartel within the Common Market. If nevertheless cooperation continued as the Commission maintains, it did so in the form of a concerted practice. The task of the Court is therefore to consider what the applicants' conduct was until the beginning of February 1965 in the four spheres referred to by the agreements and considered by the decision. According to the decision, cooperation continued up to the said date with regard to the four following points: fixing the sales prices of quinine and quinidine, sharing out of domestic markets for the benefit of the members who were producers in such countries, fixing supply quotas and the existence of an arrangement for compensating deliveries and finally the restrictions on the manufacture of quinidine. Those are the four points which must be successively considered.

Indeed the astonishing factor is that at this stage in the proceedings there is still considerable controversy, that is, facts are still in dispute. The discussion was for a long time restricted to the sphere of principles, and to bring the argument to the level of facts it required the Commission's replies to a number of questions put by the Court and the subsequent exchange of notse. It is largely as a result of the documents lodged in those latter weeks that I am able to deliver my opinion with sufficient certainty.

3.

The first infringement of the provision of Article 85 alleged against the undertakings in the decision — and this is the one which raises the most difficult questions — is that of maintaining until the beginning of 1965 a joint policy for export prices to certain countries of the Common Market where none of the undertakings had its place of business, namely Belgium, Luxembourg and Italy.

Under the provisions of the export agreement, which were extended to all sales by the gentlemen's agreement, prices were to be fixed by the majority and during the period when the agreement was in abeyance it was agreed that nothing should be altered unilaterally. Subsequently prices were altered on two occasions, 12 March and 28 October 1964, by a joint decision.

According to the contested decision, this system was applied in its entirety to the countries which I have just listed; the Commission refuses to consider the similar and simultaneious increases in price as independent decisions taken by their authors because their interests were of necessity identical with regard to supplies of raw materials for, after the termination of the bark pool, their positions on this market were divergent if not conflicting. The applicants dispute that they pursued the joint policy attributed to them. ín fact they scarcely reacted during the administrative procedure when the Commission formulated this objection; it was necessary for the defendant to produce with the rejoinder a list of 72 transactions involving destinations in those States, comparing the prices maintained with the export prices fixed jointly: these were identical in almost all the cases. Other lists were subsequently lodged by some of the applicants.

The Court is now in possession of ample evidence but the solution remains awkward for two reasons. The first is a question of classification in appraising whether such and such a price is to be applied to a transaction, it is necessary to define the product, its characteristics and its degree of purity; furthermore the amount sent and the type of packing may justify increases or reductions in the basic price, all of which factors are difficult to judge without the invoice. The second is a question of degree: in what circumstances may it be said that an undertaking deviates from price-lists? Are a few instances of deviation sufficient or on the contrary does it require, as I am inclined to think, a considerable number of divergences which cannot otherwise be logically explained?

Be that as it may, in reply to the Commission's criticisms and to the table annexed to the rejoinder the applicants have adopted the following attitudes :

It is to be noted that none of the applicants have extended the discussion to a date prior to 1964 and the number of departures from the export price is too low to estimate whether, as it is stated in the contested decision for the period referred to therein, they in fact applied the prices fixed jointly to exports to the said countries.

4.

The contested decision secondly complains that the undertakings resreved domestic markets for the manufacturers of those countries. Such protection was achieved by the gentlemen's agreement but it was renewed in the exchange of letters between the members of the cartel in October and November 1963. If this correspondence is not to be considered as an agreement the object of which was to wall off the domestic markets, in any event it constitutes the basis of a concerted practice. But a reply must then be given to the following objection put forward in particular by Boehringer: according to it those declarations were mere courtesy gestures without any actual content since the extreme scarcity of supplies of raw materials made impossible any increase in exports to which there were additional psychological and legal barriers. The Commission replies to this that the position on the market in raw materials did not alter in essentials during the period taken into consideration in imposing the fines since the sagging of price levels for exports of bark coincided with the purchase from the American stockpile; likewise the purchase price of bark remained largely stable until 1965. It is true that on the basis of internal memoranda from its quinine department the applicant maintained that there was a serious shortage of raw materials and that it was obliged to ration by quotas supplies of quinine and quinidine; the Commission confronts it with other notes from the same department which are appreciably more optimistic. It may be conceded that supplies constituted a permanent source of concern since they were irregular but there was no shortage. Furthermore the alleged legislative and psychological barriers do not explain either why the volume of trade should remain so small after 1962 or why with regard to supplies foreign producers should conform to internal prices. It must therefore be admitted that the provision protecting domestic markets continued to be applied during the period considered by the Commission.

5.

The third complaint in the decision relates to the system of quotas and to its corollary, the compensation arrangements.

The principle and conditions of its operation are known. The quota was originally established in terms of the sales made in the three preceding years and maintained the balance of power as it was when the cartel was created whilst at the same time it precluded the members from pursuing any independent sales policy since they could not alter their respective positions on the export markets.

According to the decision this system continued to operate even after 1962 and was a decisive factor until the beginning of 1965. In fact even during the period in which the agreements of October 1963 were in abeyance the undertakings continued periodically to communicate their sales figures which was a necessary condition for quantitative compensation. This was no doubt merely a moral and not a legal obligation; further, it doubtless had no prrctical effect during this period owing to the conditions on the market but it always remained capable of coming into play if the market situation should alter.

The Commission has however declared that it is unable to prove that there were further compensating deliveries during the period in dispute but it added that the contrary has not been proved; under Article 85 the important factor is that compensation should be guaranteed not that it should be carried out in practice. As it subsequently emerged that after October 1962 the only accounts produced related to sales to third countries the Commission replies that they afford the undertakings concerned a sufficient impression of the observance or otherwise of the quotas.

In the last resort the matter turns on this ultimate point: if the sales made by each of the members are shown to be in accordance with the quota fixed over a sufficient period, it may be supposed that this is not due to chance and that it indicates the existence of an agreement to maintain the situation provided for in the contract and perhaps of compensatory sales more or less concealed. At the hearing the Commission produced a table of the applicants' sales, which was intended to support its argument: in the case of each of the three applicants there is considered the portion which its sales represent of the total actual sales and the difference recorded between this percentage and the quota granted it. For example, for 1963 Nedchem's quinine sales represented 51.7 % of the total sales effected whilst its quota is 57.3 %. The difference is thus minus 5.6 %. In the case of Boehringer, the respective figures are 30.8 % and 25.2 % which give a difference of plus 5.6 %. In the case of Buchler the two figures are the same: 17.5 %. In the case of Nedchem, calculations made on the same basis for 1964 give 58.3 % and 57.3 %, that is a difference of plus 1 %, in the case of Boehringer, 23.3 % and 25.2 %, a difference of minus 1.9 %, and in the case of Buchler, 18.4 % and 17.5 %, giving a difference of plus 0.9 %.

Since those figures indicate only very slight differences the Commission considers that it must be admitted that the arrangements were in operation and that the quotas were observed.

I can indeed accept the accuracy of the figures thus supplied but their presentation is false: the difference must be calculated as a percentage of each individual quota, and not of the total combined quotas as the Commission did. If in 1963 Boehringer's sales were 30.8 % of the total actual sales and its quota was 25.2 % the difference in terms of this quota is not plus 5.6 % but plus 12 % which is far from negligible.

It must further be noted that the table produced by the Commission relates only to sales of quinine and that the same calculation made by Buchler for quinidine gives much more appreciable differences.

In sum, during the period in dispute the members of the cartel only communicated figures for sales to third countries; it has not been proved that they operated compensation arrangements; their sales figures in certain cases display appreciable differences in relation to the theoretical quota. Consequently it has by no means been proved that the members of the cartel continued to apply the system laid down by the agreements; no infringement of Article 85 (1) may be imputed to them under this head.

6.

Finally I shall merely mention for the record the final head of the infringement alleged against the members of the cartel — the prohibition of the British members from producing quinidine and of the French from producing synthetic quinidine. In the case of the French undertakings at least this constituted the consideration for the recognition of the protected market in quinine and it must be admitted that it lasted as long as that protection. It did not merely represent a theoretical interest since after the breach of the last links of the cartel one of the French undertakings began to produce synthetic quinidine.

7.

Consequently it seems to me to have been proved that, apart from the system of quotas and of compensation, the applicants continued after the termination of the genthemen's agreement to apply the restrictive practices which were established in 1960 within the Common Market. There are, moreover, no grounds for surprise that the applicants were always connected by several agreements. Thus the members had held preliminary meetings of the cartel in order to fix the prices which they applied by agreement to exports to Belgium and Italy. That those practices were capable of affecting trade between Member States seems scarcely in dispute despite Chemiefarma's statement; the fixing of prices and protection of domestic markets constituted obstacles to trade preventing consumers from benefiting from the conduct which the undertakings would have adopted had they not been connected as they were.

That those practices also had the effect of preventing or restricting competition seems equally clear. Chemiefarma indeed complains that the contested decision does not make known what degree of competition it considers necessary. The reply to this somewhat theoretical question might be that at any rate a system is required which does not wall off markets and fix prices.

Finally, it appears therefore that the agreements and concerted practices which I have described fall under Article 85 (1) of the Treaty.

A —

A difficult question is immediately encountered; that of the limitation period with regard to infringements of the rules on competition. Article 15 is silent on this point but the applicants maintain that the principle existing in more or less similar legislation of the Member States must also be applied in Community law, and assessment of the situation on the basis of those various provisions led them to conceive that the infringements alleged were time-barred. On the other hand, the contested decision considers that even if the principle is admitted, between the termination of the infringement (February 1965) and the investigations undertaken by the Commission in 1967 on the members of the cartel under Article 14 of Regulation No 17, the period of time is not capable of barring the initiation of proceedings against the undertakings concerned.

B —

For the purposes of the fine the infringement is assumed to have been committed either intentionally or negligently. I shall not dwell long on this point.

After drawing up an agreement in order to comply with the request of the Bundeskartellamt the applicant companies opened discussions on the draft of the gentlemen's agreement; after this date they can no longer invoke their good faith. Their liability is further increased by the fact that shortly after the entry into force of Regulation No 17 they were made aware of the unlawful nature of the cartel from the point of View of Community law.

In fixing the amount of the fine, according to Article 15, regard shall be had both to the gravity and to the duration of the infringement. The Commission has given a clear and full explanation of the considerations guiding it in this connexion and its decision might pass without comment if it had not included amongst the agreements which contributed to restricting competition in all its essential aspects those relating to the fixing of quotas and quantitative compensation, which, as I have said, were in my view no longer applied after the termination of the gentlemen's agreement.

According to the criteria which were indicated at the bar as is permissible, the decision fixes the fines to be imposed on each of the undertakings. Three kinds of criticism are directed against the Commission in this connexion; of having imposed excessive fines on the first occasion on which it applied a penalty, but it may be considered desirable immediately to imbue the fine with its deterrent force; that instead of assessing the fines individually the Commission adopted a total amount of 500000 units of account which it subsequently apportioned amongst the undertakings: this does not constitute an illegal action if the allocation is then carried out taking reasonable account of the respective situations of each of the undertakings which seems to have been done; finally, each of the three applicants complains that it has been treated less favourably than the other two. The contradictory nature of those complaints immediately gives reason to doubt whether they are well founded. More precisely the fixing of very similar sums (210000 and 190000 units of account respectively) for the fines imposed on Nedchem and Boehringer seems to me justified. In fact, although the former on several occasions advocated a relatively low price it was the most influential party in the cartel and held a very important part of the market in the products in dispute; with regard to the latter it maintained a strong position with regard to supplies of raw materials. For those varied reasons their situations and liabilities thus appear somewhat similar. Buchler's lower fine of 65000 units of account corresponds to its quota and sufficiently takes into account its restricted influence within the cartel.

Nevertheless at a general level the decision includes the question of quotas amongst the infringements which rsstricted competition until the beginning of February 1965. The quotas were an important factor in the arrangements restricting competition within the common market; I thus consider that the fines imposed should be reduced by the same proportion for all, perhaps in the region of 20 %.

I should finally like to recall that Boehringer, which was ordered to pay a fine of 80000 dollars by an American court for its infringement of the anti-trust laws, and Buchler, which is involved in proceedings pending before an American court on the same grounds, both request that the fines which have been or will be imposed by the courts of the United States should be deducted from that imposed by the Commission. For various reasons those requests are at present inadmissible.