61974J0017

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1 . COMPETITION - AGREEMENTS - PROCEDURE FOR HEARINGS - COMMUNICATION IN WRITING OF OBJECTIONS - SCOPE

( REGULATION NO 99/63, ARTICLES 2 AND 4 )

2 . COMPETITION - AGREEMENTS - PROCEDURE FOR HEARINGS - RIGHT OF THOSE CONCERNED TO MAKE KNOWN THEIR VIEWS

3 . COMPETITION - AGREEMENTS - PROHIBITION - EXEMPTION - CONDITIONS - INFORMING THOSE CONCERNED

( EEC TREATY, ARTICLE 85 ( 3 ); REGULATION NO 17, ARTICLE 8 )

1 . THE OBLIGATION IMPOSED UPON THE COMMISSION BY ARTICLES 2 AND 4 OF REGULATION NO 99/63 TO INFORM AN UNDERTAKING, IN WRITING OR BY GIVING NOTICE IN THE OFFICIAL JOURNAL, OF THE OBJECTIONS RAISED AGAINST IT AND TO DEAL, IN ITS DECISIONS, ONLY WITH THESE OBJECTIONS, IS ESSENTIALLY CONCERNED WITH THE STATEMENT OF THE REASONS WHICH LEAD IT TO APPLY ARTICLE 85 ( 1 ).

ON THE OTHER HAND, THE COMMISSION CANNOT BE EXPECTED TO ANTICIPATE THE CONDITIONS AND OBLIGATIONS TO WHICH IT IS ENTITLED TO SUBJECT THE EXEMPTION LAID DOWN IN ARTICLE 85 ( 3 ).

2 . IT IS CLEAR, HOWEVER, BOTH FROM THE NATURE AND OBJECTIVE OF THE PROCEDURE FOR HEARINGS, AND FROM ARTICLES 5, 6 AND 7 OF REGULATION NO 99/63, THAT THIS REGULATION, NOTWITHSTANDING THE CASES SPECIFICALLY DEALT WITH IN ARTICLES 2 AND 4, APPLIES THE GENERAL RULE THAT PERSONS WHOSE INTERESTS ARE PERCEPTIBLY AFFECTED BY A DECISION TAKEN BY A PUBLIC AUTHORITY MUST BE GIVEN THE OPPORTUNITY TO MAKE THEIR POINT OF VIEW KNOWN .

3 . SINCE ARTICLE 85 ( 3 ) CONSTITUTES, FOR THE BENEFIT OF UNDERTAKINGS, AN EXCEPTION TO THE GENERAL PROHIBITION CONTAINED IN ARTICLE 85 ( 1 ), THE COMMISSION MUST BE IN A POSITION AT ANY MOMENT TO CHECK WHETHER THE CONDITIONS JUSTIFYING THE EXEMPTION ARE STILL PRESENT .

ACCORDINGLY, IN RELATION TO THE DETAILED RULES TO WHICH IT MAY SUBJECT THE EXEMPTION, THE COMMISSION ENJOYS A LARGE MEASURE OF DISCRETION, WHILE AT THE SAME TIME HAVING TO ACT WITHIN THE LIMITS IMPOSED UPON ITS COMPETENCE BY ARTICLE 85 .

ON THE OTHER HAND, THE EXERCISE OF THIS DISCRETIONARY POWER IS LINKED TO A PRELIMINARY CANVASSING OF OBJECTIONS WHICH MAY BE RAISED BY THE UNDERTAKINGS .

IN CASE 17/74

SADOLIN OG HOLMBLAD A/S, 2300 COPENHAGEN S ., DENMARK;

F.A.C . VAN DER LINDEN AND CO ., 2153 HAMBURG-NEU WULMSTORF, GERMANY;

KONINKLIJKE BRINK/MOLYN BV, ROTTERDAM, NETHERLANDS;

STORRY, SMITHSON AND CO . LTD ., HULL HU5 1 SQ, YORKSHIRE, GREAT BRITAIN;

DE CONINCK NV, B-2060 MERKSEM, BELGIUM;

ASTRAL, SOCIETE DE PEINTURES, VERNIS ET ENCRES D'IMPRIMERIE, PARIS XVIE/FRANCE;

URROZOLA SA, MADRID 5, SPAIN;

VENEZIANI ZONCA VERNICI SPA, TRIESTE 34147, ITALY;

DURMUS YASAR VE OGULLARI PAINT, VARNISH AND RESIN WORKS, IZMIR, TURKEY;

PATTERSON-SARGENT, NEW BRUNSWICK N . J . 08903, USA;

ANTILLIAANSE VERFFABRIEK NV, WILLEMSTAD, CURACAO, DUTCH WEST INDIES;

NIPPON PAINT CO . LTD ., OSAKA, JAPAN;

NIPPON PAINT ( SINGAPORE ) CO . PTY . LTD ., SINGAPORE 3;

NIPPON PAINT CO . LTD ., HONGKING;

PACIFIC PRODUCTS INC ., MANILA, PHILIPPINES;

SPARTAN PAINTS PTY LTD ., MELBOURNE, VICTORIA, AUSTRALIA,

MEMBERS OF THE TRANSOCEAL MARINE PAINT ASSOCIATION, OF

DELFTSE PLAIN, 37, ROTTERDAM, NETHERLANDS, REPRESENTED BY F . SALOMONSON AND P . VOGELENZANG, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE CHAMBERS OF ERNEST ARENDT, 34B, AVENUE PHILIPPE II APPLICANT,

V

COMMISSION OF THE EUROPEAN COMMUNITIES, 200, RUE DE LA LOI, BRUSSELS, REPRESENTED BY ITS LEGAL ADVISER, D . R . GILMOUR, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE OFFICES OF ITS LEGAL ADVISER, PIERRE LAMOUREUX, 4, BOULEVARD ROYAL DEFENDANT,

APPLICATION FOR THE ANNULMENT OF PART OF THE DECISION OF THE COMMISSION OF 21 DECEMBER 1973 ( OJ L 19 OF 23 . 1 . 1974, P . 18 ),

1 BY DECISION OF 21 DECEMBER 1973 THE COMMISSION, PURSUANT TO ARTICLE 85 ( 3 ) OF THE EEC TREATY, RENEWED, SUBJECT TO NEW CONDITIONS, THE EXEMPTION FROM THE PROHIBITION CONTAINED IN ARTICLE 85 ( 1 ), WHICH HAD BEEN GRANTED, BY DECISION OF 27 JUNE 1967, TO AN AGREEMENT RESTRICTING COMPETITION ON THE MARKET IN MARINE PAINTS, CONCLUDED BETWEEN THE UNDERTAKINGS CONSTITUTING THE TRANSOCEAL MARINE PAINT ASSOCIATION ( HEREINAFTER REFERRED TO AS THE ASSOCIATION ).

2 INTER ALIA, ARTICLE 3 ( 1 ) ( D ) OF THE DECISION REQUIRES MEMBERS OF THE ASSOCIATION TO INFORM THE COMMISSION WITHOUT DELAY OF 'ANY LINKS BY WAY OF COMMON DIRECTORS OR MANAGERS BETWEEN A MEMBER OF THE ASSOCIATION AND ANY OTHER COMPANY OR FIRM IN THE PAINTS SECTOR OR ANY FINANCIAL PARTICIPATION BY A MEMBER OF THE ASSOCIATION IN SUCH OUTSIDE COMPANIES OR VICE-VERSA INCLUDING ALL CHANGES IN SUCH LINKS OR PARTICIPATIONS ALREADY IN EXISTENCE '.

3 THIS ACTION HAS BEEN BROUGHT FOR THE PURPOSE OF ANNULLING THAT SINGLE PROVISION .

4 THE APPLICANTS FIRSTLY STATE THAT THE OBLIGATION IN ISSUE WAS MENTIONED NEITHER IN THE 'NOTICE OF OBJECTIONS' OF 27 JULY 1973, NOR AT THE TIME OF THE HEARING ON 27 SEPTEMBER 1973, AND THAT FURTHERMORE IT WAS NOT MENTIONED IN ANY LETTER OR MEMORANDUM FROM THE COMMISSION, PRIOR TO THE DECISION, SO THAT THEY WERE NEVER GIVEN THE OPPORTUNITY TO MAKE THEIR VIEWS KNOWN ON THIS SUBJECT . ACCORDINGLY, AS REGARDS THE CLAUSE IN ISSUE, THE COMMISSION IS SAID TO HAVE INFRINGED RULES OF PROCEDURE LAID DOWN BY REGULATION NO 99/63 OF THE COMMISSION OF 25 JULY 1963 ( OJ 127 OF 20 . 8 . 1963 ), ON THE HEARINGS PROVIDED FOR IN ARTICLE 19 OF REGULATION NO 17 OF THE COUNCIL OF 6 FEBRUARY 1962 ( OJ 13 OF 21 . 2 . 1962 ) AND IN PARTICULAR ARTICLES 2 AND 4 OF THE SAID REGULATION NO 99/63 .

5 SECONDLY, THE APPLICANTS ALLEGE AN INFRINGEMENT OF ARTICLE 85 OF THE TREATY AND OF ARTICLE 8 ( 1 ) OF REGULATION NO 17, IN THAT THE OBLIGATION IMPOSED UPON THE UNDERTAKINGS IS WIDER IN SCOPE THAN ANYTHING WHICH MAY BE IMPOSED UPON THEM UNDER ARTICLE 85 .

6 IN A COMMUNICATION OF 27 JULY 1973 ENTITLED 'NOTICE OF OBJECTIONS', DRAWN UP IN DUTCH, THE COMMISSION STATED THAT A SIMPLE RENEWAL OF THE EXEMPTION COULD NOT BE ENVISAGED, SINCE THE POSITION OF THE MEMBERS OF THE ASSOCIATION ON THE MARINE PAINTS MARKET HAD CHANGED AS A RESULT OF THE INCREASE IN THE NUMBER OF UNDERTAKINGS COMPOSING THE ASSOCIATION, THE INCREASED SIZE OF CERTAIN OF THEM AND THE LINKS WHICH TWO OF THE MEMBERS, ASTRAL AND URRUZOLA, HAD FORGED WITH LARGE INDUSTRIAL CHEMICAL CONCERNS .

7 THE COMMISSION ADDED THAT IT WAS NEVERTHELESS WILLING TO RENEW THE EXEMPTION FOR A PERIOD OF FIVE YEARS, BUT AT THE SAME TIME MAKING IT SUBJECT TO FRESH CONDITIONS AND OBLIGATIONS, ONE OF WHICH WAS FORMULATED SO AS TO INVOLVE, FOR THE MEMBERS OF THE ASSOCIATION, APART FROM THE OBLIGATIONS CONTAINED IN ARTICLE 4 OF THE DECISION OF 27 JUNE 1967, THE FURTHER OBLIGATION TO NOTIFY TO THE COMMISSION WITHOUT DELAY 'IEDERE WIJZIGING IN DE DEELNEMINGSVERHOUDINGEN VAN DE LEDEN' ( LITERALLY : ANY CHANGE IN THE PARTICIPATORY RELATIONSHIPS OF THE MEMBERS ).

8 THE APPLICANTS CLAIM THAT AT NO TIME COULD THEY INFER FROM THIS STATEMENT THAT THE COMMISSION INTENDED TO IMPOSE ON THEM A CONDITION SUCH AS THAT CONTAINED IN THE PROVISION IN ISSUE, AND ONE TO WHICH THEY WOULD NOT BE ABLE, BY REASONS OF ITS BREADTH, TO ADHERE AND WHICH, WITHOUT GOOD REASON, WOULD HARM THEIR INTERESTS . IF THEY HAD BEEN IN A POSITION TO REALIZE THE COMMISSION'S INTENTIONS THEY WOULD NOT HAVE FAILED TO MAKE KNOWN THEIR OBJECTIONS ON THIS MATTER SO AS TO DRAW THE COMMISSION'S ATTENTION TO THE INCONVENIENCE WHICH WOULD RESULT FROM THE OBLIGATION IN ISSUE AND TO THE ILLEGALITY BY WHICH IT IS VITIATED . SINCE THEY WERE NOT GIVEN THIS OPPORTUNITY, THEY ALLEGE THAT THE DECISION, INSOFAR AS THE OBLIGATION IN ISSUE IS CONCERNED, MUST BE ANNULLED SINCE IT IS VITIATED BY A PROCEDURAL DEFECT .

9 THE DEFENDANT REPLIES, FIRSTLY, THAT THE REQUIREMENT LAID DOWN IN ARTICLE 2 OF REGULATION NO 99/63, ACCORDING TO WHICH 'THE COMMISSION SHALL INFORM UNDERTAKINGS AND ASSOCIATIONS OF UNDERTAKINGS IN WRITING OF THE OBJECTIONS RAISED AGAINST THEM', IN THE SAME WAY AS THE OBLIGATION IMPOSED UPON IT BY ARTICLE 4 OF THE SAME REGULATION, TO DEAL ONLY WITH 'THOSE OBJECTIONS RAISED AGAINST UNDERTAKINGS AND ASSOCIATIONS OF UNDERTAKINGS IN RESPECT OF WHICH THEY HAVE BEEN AFFORDED THE OPPORTUNITY OF MAKING KNOWN THEIR VIEWS', DO NOT RELATE TO THE CONDITIONS WHICH THE COMMISSION INTENDS TO ATTACH TO A DECISION GRANTING EXEMPTION .

10 THE COMMISSION ADDS THAT THE CONCERN WHICH IS GIVEN EXPRESSION IN THE CLAUSE IN ISSUE WAS KNOWN TO THE APPLICANTS, IN PARTICULAR BECAUSE OF THE IMPORTANCE ATTACHED TO THE CASE OF THE COMPANIES ASTRAL AND URRUZOLA, AND THIS BOTH IN THE COMMUNICATION OF 27 JULY 1973 AND DURING THE COURSE OF THE HEARING .

11 ACCORDING TO ARTICLE 19 OF REGULATION NO 17 OF THE COUNCIL, THE COMMISSION, BEFORE TAKING DECISIONS AS PROVIDED FOR IN ARTICLES 2, 3, 6, 7, 8, 15 AND 16 OF THAT REGULATION, SHALL GIVE THE UNDERTAKINGS OR ASSOCIATIONS OF UNDERTAKINGS CONCERNED THE OPPORTUNITY OF BEING HEARD ON THE MATTERS TO WHICH THE COMMISSION HAS TAKEN OBJECTION . IN REFERRING TO ARTICLE 6, THIS PROVISION RELATES TO DECISIONS TAKEN PURSUANT TO A REQUEST FOR THE APPLICATION OF ARTICLE 85 ( 3 ).

12 ACCORDING TO ARTICLE 24 OF THE SAME REGULATION THE COMMISSION SHALL HAVE POWER TO ADOPT IMPLEMENTING PROVISIONS IN THIS CONTEXT, WHICH IT DID IN REGULATION NO 99/63 .

13 IT IS CLEAR BOTH FROM THE TITLE AND FROM THE FIRST RECITAL OF THIS REGULATION THAT IT IS CONCERNED WITH ALL THE HEARINGS PROVIDED FOR IN ARTICLE 19 OF REGULATION NO 17 OF THE COUNCIL AND, ACCORDINGLY, ALSO APPLIES TO PROCEDURES WITH REGARD TO ARTICLE 85 ( 3 ). HOWEVER, THE OBLIGATION IMPOSED UPON THE COMMISSION BY ARTICLES 2 AND 4 OF REGULATION NO 99/63 TO INFORM AN UNDERTAKING, IN WRITING OR BY GIVING NOTICE IN THE OFFICIAL JOURNAL, OF THE OBJECTIONS RAISED AGAINST IT AND TO DEAL, IN ITS DECISIONS, ONLY WITH THESE OBJECTIONS, IS ESSENTIALLY CONCERNED WITH THE STATEMENT OF THE REASONS WHICH WOULD LEAD IT TO APPLY PARAGRAPH ( 1 ) OF ARTICLE 85, EITHER BY ORDERING THAT AN INFRINGEMENT BE TERMINATED OR IMPOSING A FINE UPON THE UNDERTAKINGS, OR BY REFUSING TO GIVE THE LATTER NEGATIVE CLEARANCE OR THE BENEFIT OF PARAGRAPH ( 3 ) OF THE SAME PROVISION .

14 ON THE OTHER HAND, THE COMMISSION CANNOT BE EXPECTED TO ANTICIPATE THE CONDITIONS AND OBLIGATIONS TO WHICH IT IS ENTITLED TO SUBJECT THE EXEMPTION LAID DOWN IN ARTICLE 85 ( 3 ). IN FACT, THE INVESTIGATION OF A REQUEST FOR EXEMPTION MAY BRING TO LIGHT VARIOUS WAYS IN WHICH THE OPERATION OF AN AGREEMENT OR THE CONTROL OF THAT OPERATION MAY BE UNDERTAKEN, THIS PROMPTING THE COMMISSION TO WITHDRAW THE OBJECTIONS WHICH IT HAD RAISED AGAINST THE REQUEST AND JUSTIFYING THE GRANT, POSSIBLY SUBJECT TO CERTAIN CONDITIONS, OF THE BENEFIT OF ARTICLE 85 ( 3 ).

15 IT IS CLEAR, HOWEVER, BOTH FROM THE NATURE AND OBJECTIVE OF THE PROCEDURE FOR HEARINGS, AND FROM ARTICLES 5, 6 AND 7 OF REGULATION NO 99/63, THAT THIS REGULATION, NOTWITHSTANDING THE CASES SPECIFICALLY DEALT WITH IN ARTICLES 2 AND 4, APPLIES THE GENERAL RULE THAT A PERSON WHOSE INTERESTS ARE PERCEPTIBLY AFFECTED BY A DECISION TAKEN BY A PUBLIC AUTHORITY MUST BE GIVEN THE OPPORTUNITY TO MAKE HIS POINT OF VIEW KNOWN . THIS RULE REQUIRES THAT AN UNDERTAKING BE CLEARLY INFORMED, IN GOOD TIME, OF THE ESSENCE OF CONDITIONS TO WHICH THE COMMISSION INTENDS TO SUBJECT AN EXEMPTION AND IT MUST HAVE THE OPPORTUNITY TO SUBMIT ITS OBSERVATIONS TO THE COMMISSION . THIS IS ESPECIALLY SO IN THE CASE OF CONDITIONS WHICH, AS IN THIS CASE, IMPOSE CONSIDERABLE OBLIGATIONS HAVING FAR-REACHING EFFECTS .

16 SINCE ARTICLE 85 ( 3 ) CONSTITUTES, FOR THE BENEFIT OF UNDERTAKINGS, AN EXCEPTION TO THE GENERAL PROHIBITION CONTAINED IN ARTICLE 85 ( 1 ) THE COMMISSION MUST BE IN A POSITION AT ANY MOMENT TO CHECK WHETHER THE CONDITIONS JUSTIFYING THE EXEMPTION ARE STILL PRESENT . ACCORDINGLY, IN RELATION TO THE DETAILED RULES TO WHICH IT MAY SUBJECT THE EXEMPTION, THE COMMISSION ENJOYS A LARGE MEASURE OF DISCRETION, WHILE AT THE SAME TIME HAVING TO ACT WITHIN THE LIMITS IMPOSED UPON ITS COMPETENCE BY ARTICLE 85 . ON THE OTHER HAND, THE EXERCISE OF THIS DISCRETIONARY POWER IS LINKED TO A PRELIMINARY CANVASSING OF OBJECTIONS WHICH MAY BE RAISED BY THE UNDERTAKINGS .

17 IT IS CLEAR FROM THE FILE THAT THIS REQUIREMENT WAS NOT FULFILLED IN RESPECT OF THE OBLIGATION IN ISSUE .

18 THE STATEMENT CONTAINED IN THE COMMUNICATION OF 27 JULY 1973 COULD BE INTERPRETED IN WIDELY DIFFERING WAYS, INTER ALIA, AS REQUIRING MERELY THAT THE INFORMATION WHICH HAD ALREADY TO BE SUPPLIED UNDER ARTICLE 4 OF THE DECISION OF 27 JUNE 1967 BE SUPPLEMENTED BY THE NOTIFICATION OF ANY LINKS WHICH MIGHT EXIST BETWEEN THE UNDERTAKINGS WHICH ARE MEMBERS OF THE ASSOCIATION . THE AMBIGUITY OF THIS STATEMENT IS HIGHLIGHTED BY THE FACT THAT DURING THE PROCEEDINGS BEFORE THE COURT THE COMMISSION SUGGESTED DIFFERENT VERSIONS OF IT BOTH IN ENGLISH, WHICH IS THE LANGUAGE CHOSEN BY THE APPLICANTS AS THE LANGUAGE OF THE CASE, AND IN FRENCH, IN THE TRANSLATION IN THE STATEMENT OF DEFENCE AND IN THE CORRECTION PROPOSED DURING THE ORAL PROCEDURE .

19 ALTHOUGH IT IS CLEAR FROM THE MINUTES OF THE HEARING THAT THE LINKS BETWEEN TWO MEMBERS OF THE ASSOCIATION, THE COMPANIES ASTRAL AND URRUZOLA, AND TWO IMPORTANT INDUSTRIAL CHEMICAL CONCERNS WERE EXAMINED IN DEPTH - WHICH MOREOVER PROMPTED THE COMMISSION TO DISPENSE WITH ITS REQUIREMENT THAT THESE TWO MEMBERS SHOULD LEAVE THE ASSOCIATION - THE SAID MINUTES SHOW THAT AT NO TIME WAS THE GENERAL CONDITION LATER CONTAINED IN THE DECISION THE SUBJECT OF AN EXCHANGE OF POINTS OF VIEW . THIS FACT CONFIRMS THE APPLICANTS' ASSERTION THAT THEY WERE CONVINCED THAT THE OBLIGATION AS STATED IN THE 'NOTICE OF OBJECTIONS' CONCERNED ONLY THE MUTUAL RELATIONS BETWEEN MEMBERS OF THE ASSOCIATION AND NOT SUCH LINKS AS MIGHT EXIST WITH OUTSIDE UNDERTAKINGS, INCLUDING THOSE OPERATING OUTSIDE THE COMMON MARKET AND CONCERNED WITH THE MANUFACTURE OF PAINTS OTHER THAN MARINE PAINTS .

20 ACCORDINGLY, THE CONDITION STATED IN ARTICLE 3 ( 1 ) ( D ) OF THE DECISION WAS IMPOSED IN BREACH OF PROCEDURAL REQUIREMENTS AND THE COMMISSION MUST BE GIVEN THE OPPORTUNITY TO REACH A FRESH DECISION ON THIS POINT AFTER HEARING THE OBSERVATIONS OR SUGGESTIONS OF THE MEMBERS OF THE ASSOCIATION .

21 NOTWITHSTANDING THE IMPORTANCE OF THE SUBJECT MATTER OF THIS PART OF THE DECISION, IT IS NEVERTHELESS CAPABLE OF BEING SEVERED, FOR THE TIME BEING, FROM THE OTHER PROVISIONS, AND A PARTIAL ANNULMENT IS THEREFORE POSSIBLE AND IS JUSTIFIED BY THE FACT THAT, TAKEN AS A WHOLE, THE DECISION IS FAVOURABLE TO THE INTERESTS OF THE UNDERTAKINGS CONCERNED .

22 THE PROVISION IN ISSUE SHOULD THEREFORE BE ANNULLED AND THE CASE REMITTED TO THE COMMISSION .

23 UNDER ARTICLE 69 ( 2 ) OF THE RULES OF PROCEDURE, THE UNSUCCESSFUL PARTY SHALL BE ORDERED TO PAY THE COSTS, IF A SUBMISSION HAS BEEN MADE TO THAT EFFECT .

24 THE DEFENDANT PARTY HAS FAILED IN ITS PLEAS .

25 THE DEFENDANT PARTY SHOULD THEREFORE BE ORDERED TO PAY THE COSTS .

THE COURT

HEREBY :

1 . ANNULS ARTICLE 3 ( 1 ) ( D ) OF THE DECISION OF 21 DECEMBER 1973;

2 . REFERS THE CASE BACK TO THE COMMISSION .

3 . ORDERS THE COMMISSION TO PAY THE COSTS .