JUDGMENT OF THE COURT (Fifth Chamber)
29 April 2004(1)

(Appeal – Competition – Sugar market – Article 85(1) of the EC Treaty (now Article 81(1) EC) – Agreement – Effect on trade between Member States – Fine – Proportionality)

In Case C-359/01 P,

British Sugar plc, established in Peterborough (United Kingdom), represented by T. Sharpe QC,and D. Jowell, barrister, and by A. Nourry, solicitor, with an address for service in Luxembourg,

applicant,

appeal against the judgment of the Court of First Instance of the European Communities (Fourth Chamber) in Joined Cases T-202/98, T-204/98 and T-207/98 Tate & Lyle and Others v Commission [2001] ECR II-2035, seeking the annulment of that judgment,

the other parties to the proceedings being:

Tate & Lyle plc, established in London (United Kingdom), Napier Brown & Co. Ltd, established in London (United Kingdom),

applicants at first instance,

Commission of the European Communities, represented by K. Wiedner, acting as Agent, assisted by N. Khan, barrister, with an address for service in Luxembourg,

defendant at first instance,

THE COURT (Fifth Chamber),,

composed of P. Jann, acting for the President of the Fifth Chamber, C.W.A Timmermans and S. von Bahr (Rapporteur), Judges,

Advocate General: C. Stix-Hackl,
Registrar: L. Hewlett, Principal Administrator,

after hearing oral argument from the parties at the hearing on 10 July 2003, at which British Sugar plc was represented by T. Sharpe and K. Fisher, solicitor, and the Commission by K. Wiedner and N. Khan,

after hearing the Opinion of the Advocate General at the sitting on 21 October 2003,

gives the following

Judgment

‘78.

It is settled case-law that, for an agreement between undertakings or a concerted practice to be capable of affecting trade between Member States, it must be possible to foresee with a sufficient degree of probability and on the basis of objective factors of law or fact that it may have an influence, direct or indirect, actual or potential, on the pattern of trade between Member States, such as might prejudice the realisation of the aim of a single market between the Member States (Case 5/69 Völk v Vervaecke [1969] ECR 295, paragraph 5; Joined Cases 209/78 to 215/78 and 218/78 Van Landewyck and Others v Commission [1980] ECR 3125, paragraph 171; Joined Cases C-89/85, C-104/85, C-114/85, C-116/85, C-117/85 and C-125/85 to C-129/85 Ahlström Osakeyhtiö and Others v Commission [1993] ECR I-1307, paragraph 143; Joined Cases T-213/95 and T-18/96 SCK and FNK v Commission [1997] ECR II-1739, paragraph 175; Joined Cases T-24/93 to T-26/93 and T-28/93 Compagnie Maritime Belge Transports and Others v Commission [1996] ECR II-1201, paragraph 201). Accordingly, it is not necessary that the conduct in question should in fact have substantially affected trade between Member States. It is sufficient to establish that the conduct is capable of having such an effect (Case T-29/92 SPO and Others v Commission [1995] ECR II-289, paragraph 235).

79.

Moreover, the fact that a cartel relates only to the marketing of products in a single Member State is not sufficient to exclude the possibility that trade between Member States might be affected. Since the market concerned is susceptible to imports, the members of a national price cartel can retain their market share only if they defend themselves against foreign competition (Case 246/86 Belasco and Others v Commission [1989] ECR 2117, paragraphs 33 to 34).

80.

In the present case, it is undisputed that the sugar market in Great Britain is susceptible to imports, notwithstanding that Community regulation of the sugar market and transport costs contribute to making them more difficult.

81.

Moreover, it is apparent from the contested decision and all the evidence before the Court that one of the major preoccupations of British Sugar and Tate & Lyle was to limit imports to a level which would not threaten their ability to sell their production in the national market (recitals 16 and 17 in the preamble to the contested decision). In the first place, British Sugar itself has stated (in paragraphs 257 and 258 of its application) that, during the period in question, it knowingly adopted a policy designed to prevent imports, its priority being to sell the whole of its A and B quotas on the market in Great Britain. Second, recital 17 in the preamble to the contested decision shows that, during the period in question, Tate & Lyle had actively engaged in a policy designed to reduce the risk of a rise in the level of imports.

82.

In those circumstances, the Commission was not wrong to take the view that the agreement in question, which covered almost the whole of the national territory and had been put into effect by undertakings representing about 90% of the relevant market, was capable of having an effect on trade between Member States.

83.

British Sugar argues that the potential effect on the pattern of trade between Member States is not appreciable.

84.

In that respect, it is accepted in case-law that the Commission is not required to demonstrate that an agreement or concerted practice has an appreciable effect on trade between Member States. All that is required by Article 85(1) of the Treaty is that anti-competitive agreements and concerted practices should be capable of having an effect on trade between Member States (Case T-7/89 Hercules Chemicals v Commission [1991] ECR II-1711, paragraph 279).

85.

In view of the above, the Commission was therefore right to hold that the agreement complained of was capable of having an influence on intra-Community trade.

86.

The third plea in law must therefore be dismissed in its entirety.’

98.

Under Article 15(2) of Council Regulation No 17 of 6 February 1962, First Regulation implementing Articles 85 and 86 of the Treaty (OJ, English Special Edition 1959-1962, p. 87, the Commission may impose fines of from EUR 1 000 to EUR 1 000 000, or a sum in excess thereof but not exceeding 10% of the turnover in the preceding business year of each of the undertakings participating in the infringement. In fixing the amount of the fine within those limits, that provision provides that regard shall be had both to the gravity and to the duration of the infringement.

99.

According to settled case-law, the amount of a fine must be fixed at a level which takes account of the circumstances and the gravity of the infringement and, in order to fix its amount, the gravity of the infringement is to be appraised by taking into account in particular the nature of the restrictions on competition (see, in particular, Case T-77/92 Parker Pen v Commission [1994] ECR II-549, paragraph 92).

100.

It should also be remembered that the Commission’s power to impose fines on undertakings which, intentionally or negligently, infringe Articles 85(1) or 86 of the Treaty is one of the means conferred on the Commission in order to enable it to carry out the task of supervision conferred on it by Community law. That task certainly includes the duty to investigate and punish individual infringements, but it also encompasses the duty to pursue a general policy designed to apply, in competition matters, the principles laid down by the Treaty and to guide the conduct of undertakings in the light of those principles (Joined Cases 100/80 to 103/80 Musique Diffusion française and Others v Commission [1983] ECR 1825, paragraph 105).

101.

It follows that, in assessing the gravity of an infringement for the purpose of fixing the amount of the fine, the Commission must take into consideration not only the particular circumstances of the case but also the context in which the infringement occurs and must ensure that its action has the necessary deterrent effect, especially as regards those types of infringement which are particularly harmful to the attainment of the objectives of the Community (Musique Diffusion française, paragraph 106).

102.

In the present case, as regards the proportionality of the fines imposed, the applicants in Cases T-204/98 and T-207/98 essentially argue that the disproportionate nature of the fines is the consequence of the classification of the infringement as “serious”. Their argument can be summarised as being that, in the light of the Guidelines [on fines], their agreement, although of the horizontal type, should be classified as “minor” because of the absence of substantial anti-competitive effects on the market.

103.

In response to that argument, it is sufficient to note, first, that the agreement complained of should be regarded as horizontal, since the merchants participated in it in their capacity as competitors of the producers, and, second, that it concerned the fixing of prices. Such an agreement has always been regarded as particularly harmful and is classified as “very serious” in the Guidelines [on fines]. Moreover, as the Commission has emphasised in its pleadings, the classification of the agreement in question as “serious”, because of its limited impact on the market, already represents an attenuated classification in relation to the criteria generally applied when fixing fines in price cartel cases, which should have led the Commission to classify the agreement as very serious.

104.

As regards British Sugar’s complaint concerning the proportionality of raising the fine by reference to the duration of the infringement, the second subparagraph of Article 15(2) of Regulation No 17 provides that “[i]n fixing the amount of the fine, regard shall be had both to the gravity and to the duration of the infringement”. Under the terms of that provision, therefore, the duration of the infringement constitutes one of the factors to be taken into account in assessing the amount of the financial penalty to be imposed on undertakings which have committed infringements of the competition rules (Case T-43/92 Dunlop Slazenger v Commission [1994] ECR II-441, paragraph 154). The Commission was therefore right, when fixing the fines to be imposed, to make an assessment of the duration of the infringement.

105.

In that assessment, the Commission held that it was dealing with an infringement of medium duration and therefore applied an increase of about 40% of the amount determined in relation to the seriousness. In that respect it should be noted that, according to settled case-law, the Commission has a margin of discretion when fixing the amount of each fine and cannot be considered obliged to apply a precise mathematical formula for that purpose (Case T-150/89 Martinelli v Commission [1995] ECR II-1165, paragraph 59; Case T-352/94 Mo och Domsjö v Commission [1998] II-1989, paragraph 268, confirmed on appeal in Case C-283/98 P Mo och Domsjö v Commission [2000] ECR I-9855, paragraph 45).

106.

It is nevertheless for the Community judicature to review whether the amount of the fine imposed is proportionate in relation to the duration of the infringement and the other factors capable of entering into the assessment of the seriousness of the infringement (see, to that effect, Case T-229/94 Deutsche Bahn v Commission [1997] ECR II-1689, paragraph 127). In that respect, this Court cannot share the opinion of British Sugar, according to which the Commission could raise a fine by reference to the duration of the infringement only if, and to the extent that, there is a direct relation between the duration and serious harm caused to the Community objectives referred to in the competition rules, such relation being excluded in the absence of any effects of the infringement on the market. On the contrary, the impact of the duration of the infringement on the calculation of the amount of the fine must also be assessed by reference to the other factors characterising the infringement in question (see, to that effect, Dunlop Slazenger, paragraph 178). In this case, the increase of 40% applied by the Commission to the amount calculated by reference to the gravity of the infringement is not disproportionate in character.

107.

British Sugar’s argument that the concept of aggravating circumstances appearing in the Guidelines is contrary to Article 15(2) of Regulation No 17 is also devoid of all foundation.

108.

First, it is necessary to analyse the relevant provisions of the Guidelines. Point 1 A states that ‘In assessing the gravity of an infringement, account must be taken of its nature, its actual impact on the market, where this can be measured, and the size of the relevant geographic market’. Point 2, under the heading ‘Aggravating circumstances’, sets out a non-exhaustive list of circumstances which may lead to the basic amount, calculated by reference to the seriousness and the duration of the infringement, being raised, such as repeated infringement, refusal to cooperate, a role as instigator of the infringement, the implementation of retaliatory measures, and the need to take account of gains improperly made as a result of the infringement.

109.

The provisions cited above show that assessment of the gravity of the infringement is carried out in two stages. In the first, the gravity is assessed solely by reference to factors relating to the infringement itself, such as its nature and its impact on the market; in the second, the assessment of the gravity is modified by reference to circumstances relating to the undertaking concerned, which, moreover, leads the Commission to take into account not only possible aggravating circumstances but also, in appropriate cases, attenuating circumstances (see point 3 of the Guidelines). Far from being contrary to the letter and the spirit of Article 15(2) of Regulation No 17, that step allows the Commission, particularly in the case of infringements involving many undertakings, to take account in its assessment of the gravity of the infringement of the different role played by each undertaking and its attitude towards the Commission during the course of the proceedings.

110.

Second, concerning the proportionality of the increase applied to the fine imposed on British Sugar by reference to aggravating circumstances, it must be held that, taking account of the circumstances referred to by the Commission in paragraphs 207 to 209 of the contested decision, an increase of 75% is not to be regarded as disproportionate.

…

112.

The plea by British Sugar and Tate & Lyle in relation to the allegedly disproportionate character of the fines must therefore be rejected.

113.

As regards the complaint that insufficient consideration was given to the structure of the relevant market, it should be noted that, in Joined Cases 40/73 to 48/73, 50/73, 54/73 to 56/73, 111/73, 113/73 and 114/73 Suiker Unie and Others v Commission [1975] ECR 1663, paragraphs 615 to 619, the Court of Justice considered that the legislative and economic context of the sugar market was capable of justifying less severe treatment of practices that were potentially anti-competitive. However, the Commission has correctly pointed out that the agreements that form the subject-matter of the Suiker Unie judgment did not concern an increase in prices but the sharing of markets in accordance with certain quotas. Moreover, the Court of Justice itself indicated in the Suiker Unie judgment that, in the case of a price cartel, its conclusions would have been different. It adds in that respect that “the damage which the users and consumers suffered as a result of the conduct to which exception is taken was limited, because the Commission itself has not blamed the parties concerned for any concerted or improper increase in the prices applied and because, even though the restrictions on the freedom to choose suppliers caused by the partitioning of the market deserve censure, they are not so oppressive in the case of a product like sugar which is mainly homogenous” (paragraph 621). Since this case is precisely concerned with an agreement on prices, the Commission was right to distance itself from the conclusions of the Suiker Unie judgment.

114.

The complaint alleging failure to consider the structure of the market surrounding the infringements must therefore also be rejected.

115.

This plea in law must therefore be dismissed in its entirety.

–

set aside the judgment under appeal;

–

annul the contested decision in whole or, alternatively, in part;

alternatively:

–

annul Articles 3 and 4 of the contested decision or reduce the fine, and

–

order the Commission to pay the costs incurred by British Sugar in relation to this appeal and the costs relating to Case T-204/98, including those relating to the proceedings for interim relief.

–

dismiss the appeal as inadmissible in part and as unfounded as to the remainder or, alternatively, as wholly unfounded, and

–

order the appellant to pay the costs incurred by the Commission in relation to the appeal.

On those grounds,

THE COURT (Fifth Chamber)