CJEC, July 15, 1970, No 41-69

1 NV Nederlandse Combinatie voor Chemische Industrie, Amsterdam, (hereinafter referred to as "Nedchem") of which the applicant is the successor, together with five other Netherlands undertakings which were subsequently always represented by it, entered into an agreement in 1958 with the undertakings C. F. Boehringer und Soehne, Mannheim, and Vereinigte Chininefabriken Zimmer und Co., GmbH, Mannheim (hereinafter referred to as "Boehringer") and Buchler and Co, Brunswick, whereby those undertakings retained their respective domestic markets and provided for the fixing of the prices and quotas for the export of quinine and quinidine to other countries.

2 Buchler withdrew from this agreement of 28 February 1959.

3 In July 1959, following the intervention of the Bundeskartellamt to which the agreement had been notified, Boehringer and Nedchem amended that agreement in such a way as to exclude deliveries to the Member States of the EEC.

4 In 1960 a new cartel was established between Nedchem and the two abovementioned undertakings and shortly afterwards it was extended to certain French and British undertakings.

5 This cartel was based in the first place on an agreement relating to trade with third countries (hereinafter referred to as the "export agreement") and providing inter alia for the fixing by agreement of prices and rebates relating to exports of quinine and quinidine and the allocation of export quotas supported by a system of compensation depending on whether the export quotas were exceeded or not fulfiled.

6 Furthermore, a gentlemen's agreement between the same parties extended the abovementioned provisions to all sales within the common market.

7 This agreement also established the principle of the protection of domestic markets in favour of each of the producers and bound the French members of the cartel to refrain from manufacturing synthetic quinidine.

8 Since the Commission considered that the restrictions on competition therein provided for were capable of affecting trade between Member States, it imposed on the applicant a fine of 210,000 units of account by a decision of 16 July 1969 (OJ L 192, p. 5 et seq.).

9 By an application lodged at the court registry on 13 September 1969 the undertaking Chemiefarma NV initiated proceedings against this decision.

A - The submission of the Commission's lack of powers

10 Relying upon the fact that the export agreement had been notified to the competent national authorities without objections being raised, the applicant requests the Court to consider to what extent Articles 88 and 89 of the treaty and, if appropriate, Regulation No 17-62 of the Council deny the Commission power to appraise agreements so notified.

11 Under Article 9 (3) of Regulation No 17 "the authorities of the Member States shall remain competent to apply Article 85 (1)", but only "as long as the Commission has not initiated any procedure under Articles 2, 3 or 6" of the Regulation.

12 The provisional character thus conferred on steps taken by national authorities cannot call in question the Commission's exercice to the full of its powers within the framework of the common market.

13 In any event the gentlemen's agreements which governed the actions of the members of the cartel in question in the common market were not included in the above-mentioned notification.

14 Consequently the submission is unfounded.

15 The applicant maintains that the Commission has not established its powers through its failure to provide the necessary evidence to prove the existence of the conditions necessary for the application of Article 85.

16 This submission relates to the infringement of an essential procedural requirement and not to the powers of the Commission.

B - The submission relating to the limitation period

17 The applicant complains that the Commission did not take into account the fact that proceedings in respect of the alleged infringement are barred having regard to the period which elapsed between the date of the acts and the initiation of the administrative procedure by the Commission.

18 The provisions governing the Commission's power to impose fines for infringement of the rules on competition do not lay down any period of limitation.

19 In order to fulfil their function of ensuring legal certainty limitation periods must be fixed in advance.

20 The fixing of their duration and the detailed rules for their applications come within the powers of the community legislature.

21 Consequently the submission is unfounded.

C - Submissions relating to procedure and form

I - Submissions relating to the notice of complaints

22 The applicant claims that in the notice of complaints communicated to it on 30 May 1968 the Commission failed to give sufficient information on the objections made against it and the evidence on which they were based.

23 By this omission the Commission is said to have hampered review by the Court of the legality of the contested decision.

24 Article 19 (1) of Regulation No 17 obliges the Commission, before taking a decision in connexion with fines, to give the persons concerned the opportunity of putting forward their point of view with regard to the complaints made against them.

25 Article 4 of Regulation No 99-63 of the Commission provides that the Commission shall in its decisions 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.

26 The notice of complaints fulfils this requirement since it sets forth clearly, albeit succinctly, the essential facts on which the Commission relies.

27 The requirement imposed on the Commission by Article 19 is met when in the course of the administrative procedure it supplies the details necessary to the defence.

28 In the present case the Commission has clearly set out the essential factors on which it based the complaints listed, referring expressly to statements contained in the minutes of certain meetings of the undertakings concerned and to correspondence relating to the protection of domestic markets which was exchanged between those undertakings in October and November 1963.

29 Furthermore, maintaining on the basis of its investigations that the undertakings concerned had continued to exchange information on their sales with a view to possible quantitative compensation and that up to the end of 1964 they had maintained a policy of uniform prices, the Commission thereby deduced that after 1962 they had continued to apply the gentlemen's agreement on production and sale in the common market.

30 Consequently the objections raised with regard to the notice of complaints are unfounded.

II - The objection relating to consultation of the administrative file

31 The applicant maintains that the Commission infringed the rights of the defence by refusing in the course of the administrative procedure to allow it to consult essential documents on which the contested decision was based.

32 The defendant replies that it had enabled the applicant to consult the documents which were of importance for the appraisal of the complaints.

33 The notice of complaints alleges that the applicant together with other producers of quinine had until 1966 adopted a policy of common prices, particularly with regard to sales in Italy, Belgium and Luxembourg.

34 According to this statement this concerted conduct is clear in particular from the uniformity of prices maintained by the undertakings for their sales in the said countries.

35 In support of this statement the notice of complaints (last subparagraph of paragraph 11) refers to the outcome of investigations carried out by the Commission's staff in those countries.

36 In the course of the administrative procedure the applicant requested the Commission to acquaint it with the facts referred to.

37 The Commission rejected this request on the ground that it must protect the business secrets of the other undertakings.

38 Nevertheless the Commission itself alleged that those undertakings regularly exchanged information on the amounts sold in the states in question.

39 Furthermore in case of doubt the Commission could have requested the opinion of the other undertakings concerned with regard to the applicant's request for the communication of the documents relating to them.

40 It does not appear that the Commission consulted the said undertakings in this way.

41 Nevertheless, throughout the administrative procedure the applicant did not dispute that it had carried out a concerted policy with regard to prices until the end of October 1964.

42 Consequently the failure to communicate the documents does not appear capable of affecting the applicant's opportunities for defence within the framework of the administrative procedure, except for the period from November 1964 to January 1965.

43 Consequently this matter must be considered in conjunction with the substance of the case.

III - Complaints relating to the drawing up of the minutes of the hearing

44 The applicant complains that the Commission failed to observe Article 9 (4) of Regulation No 99 by omitting to submit to the undertakings concerned within a reasonable time the complete and accurate minutes of the hearing, by fixing too short a period of time for it to submit its observations and by failing to ensure, prior to adopting the contested decision, that it concurred with the draft minutes.

45 In the course of the administrative procedure the applicant, which had been given a period of three weeks within which to submit its observations on the draft minutes which the Commission had submitted to it, neither exercised its right to propose amendments nor requested an extension of the period allowed.

46 There is thus no foundation in the complaint now made against the Commission that it concurred with the minutes before adopting the contested decision.

47 The applicant further maintains that by its failure to submit the minutes to it in dutch, the Commission infringed the principles contained in Articles 217 and 248 of the EEC treaty together with the provisions of Regulation no 1 of the Council.

48 Under the terms of Article 3 of Regulation no 1 of the Council, documents which an institution of the community sends to a person subject to the jurisdiction of a member state shall be drafted in the language of such state.

49 The failure to communicate a dutch version of the draft minutes thus constitutes an irregularity in drawing up that document which is capable of affecting its validity.

50 It is clear, however, from the arguments put forward by the applicant that it was able in due time to acquaint itself with the contents of the minutes.

51 The applicant has not alleged that this resulted in the minutes containing substantial inaccuracies or omissions with regard to it.

52 It must therefore be concluded that the irregularity which has been found did not in this case have harmful consequences capable of vitiating the administrative procedure.

53 In these circumstances the abovementioned complaints must be rejected.

IV - Complaints that the applicant did not take sufficient part in the administrative procedure

54 The applicant complains that the Commission has failed to observe a general principle of law requiring it to allow persons concerned to participate closely in the administrative procedure in order that they May together correct any inaccuracies and supplement inadequate arguments.

55 It is alleged that the failure of the Commission to co-operate in this way arises in particular from the fact that the contested decision retained patent inaccuracies since account was not taken of the observations submitted by the applicant in its reply to the notice of complaints.

56 The rights of the defence are respected when each of the persons concerned has had the opportunity to submit its written and oral observations on the complaints made against it by the Commission.

57 It is not disputed that in the course of the administrative procedure the applicant had such an opportunity.

58 Consequently this complaint is unfounded.

V - Complaints concerning the legal basis of Regulation no 99 of the Commission

59 The applicant maintains that the delegation to the Commission of the power to draft provisions relating to the hearing of the persons concerned and of third parties, conferred by Article 24 of Regulation No 17, concerns a legislative activity and is thus incompatible with Article 87 and with the combined provisions of Articles 155 and 4 of the treaty.

60 Article 87 confers on the Council the task of adopting "any appropriate regulations or directives to give effect to the principles set out in Articles 85 and 86".

61 It is impossible to deduce from this that the Council is prohibited from confering on the Commission the power to adopt the regulations necessary for the implementation of the rules which the Council has adopted within the framework of its tasks.

62 Article 155 of the treaty which provides that the Council shall confer powers on the Commission for this purpose does not restrict this authority to powers other than those of drawing up regulations.

63 In Article 19 of Regulation No 17 the Council has provided that undertakings which were parties to one of the procedures provided for by that Regulation shall have the opportunity of being heard by the Commission.

64 In Article 24 of the same Regulation the Council has conferred on the Commission power to adopt implementing provisions concerning such hearings.

65 Since the principle that the persons concerned shall be given the opportunity of being heard by the Commission was adopted by the Council the rules laying down the procedure to be followed in this connexion, however important they May be, constitute implementing provisions within the meaning of the above-mentioned Article 155.

66 Consequently it was lawful for the Council to entrust the institution authorized to apply this procedure with the task of laying down its details.

67 Consequently the objection of illegality put forward by the applicant with regard to Article 24 of Regulation No 17 is unfounded.

68 The applicant further maintains that the draft of Regulation No 17 which was submitted to the parliament did not provide for power to be conferred on the Commission so that it was unable to give its opinion on this point.

69 In Article 20 of the abovementioned draft in the version approved by Parliament (OJ 1961, p. 1416) there is a provision substantially identical to Article 24 of Regulation No 17.

70 Consequently this complaint is unfounded.

VI - Complaint relating to the composition of the administrative body

71 The applicant maintains that there has been an infringement of a general principle requiring continuity in the composition of an administrative body before which proceedings are brought which May result in a fine.

72 There is no general principle of this nature and consequently this complaint is unfounded.

VII - Submission of the infringement of an essential procedural requirement through failure to provide a statement of reasons

73 With regard to the infringement of an essential procedural requirement the applicant puts forward a series of complaints with regard to the reasoning of the contested decision.

74 It complains first of all that the decision omitted to refer to important parts of its reply to the notice of complaints, which dealt in particular with the characteristics of the market in pharmaceutical products and the pointlessness of territorial protection.

75 Those omissions hamper any review of the Commission's powers to intervene under Article 85 of the treaty on the ground of a potential obstacle to trade between Member States.

76 Under Article 190 of the treaty the Commission is required to state the reasons on which its decisions are based, enumerating the facts forming the legal basis of the measure and the considerations which led it to adopt the decision.

77 Nevertheless the Commission is not required to discuss all the issues of fact and of law which May have been touched on by every interested person in the course of the administrative procedure.

78 With regard more particularly to decisions imposing a fine, the statement of reasons is to be considered sufficient if it indicates clearly and coherently the considerations of fact and of law on the basis of which the fine has been imposed on the parties concerned, in such a way as to acquaint both the latter and the Court with the essential factors of the Commission's reasoning.

79 It is clear from the decision that the Commission considered that the position of the market in pharmaceutical products was not decisive in finding an infringement of the rules of the treaty on competition.

80 Consequently the Commission has not infringed an essential procedural requirement by omitting from the reasons for its decision factors which it rightly or wrongly considered irrelevant to the proceedings.

81 With regard to territorial protection the decision sets forth clearly and coherently the reasons of fact and of law for which the Commission alleged that the applicant together with other undertakings had shared out the markets within the Community.

82 The abovementioned complaints are thus unfounded.

83 The applicant then maintains that a number of the recitals in the preamble to the decision are contradictory.

84 Nevertheless, since the applicant has merely noted these recitals without giving details in support of its statement, this submission cannot be relied upon.

85 The applicant further complains that the contested decision contains statements without the reasons for them being stated or adequately stated.

86 With regard to the passages which have been criticized in the statement of reasons relating to the harm caused to consumers by the agreement, those considerations are not basic to the Commission's reasoning.

87 With regard to the allegation of the inadequacy of the statement of reasons relating to the statements contained in the second and third subparagraphs of paragraph 24 of the decision, this complaint relates to the factual evidence forming the basis for the decision and consequently to the substance of the proceedings.

88 In this connexion the information contained in the Commission's decision is sufficient to allow for its reasoning to be understood and for the Court to review the decision.

89 Consequently these complaints are unfounded.

90 The applicant complains in addition that the defendant has infringed Article 4 of Regulation No 99 because certain provisions in the contested decision - in particular relating to the legal scope of the gentlemen's agreement, of the export agreement and of the quantitative compensation for quantities - do not appear in the notice of complaints or do so in another form.

91 The decision is not necessarily required to be a replica of the notice of complaints.

92 In fact the Commission must take into account the factors emerging from the administrative procedure in order either to abandon such complaints as have been shown to be unfounded or to supplement and redraft its arguments both in fact and in law in support of the complaints which it maintains.

93 This latter factor does not contradict the rights of the defence protected by the abovementioned Article 4.

94 This provision is observed if the decision does not allege that the persons concerned have committed infringements other than those referred to in the notice of complaints and only takes into consideration facts on which the persons concerned have had the opportunity of making known their views.

95 No complaint of this nature arises from a comparison between the notice of complaints addressed to the applicant on 30 July 1968 and the provisions of the contested decision.

96 Consequently this complaint is unfounded.

97 The applicant finally complains that the Commission violated a general principle of law to the effect that persons concerned must be made aware of their rights of action and of the time- limits fixed for this purpose.

98 Since the applicant lodged its application within the prescribed period, this submission is irrelevant.

VIII - The complaint relating to the publicity given to the decision

99 The applicant complains that the Commission violated the principles on which Article 21 of Regulation No 17 is based by communicating the contested decision to the press and publishing it in its entirety in the Official Journal of the communities although it does not appear amongst the decisions publication of which is prescribed by that Article.

100 The defendant is thus alleged to have influenced public opinion to the detriment of the applicant's reputation and its stock market position.

101 Article 21 of Regulation No 17 which provides for the publication of certain decisions does not include those adopted under Article 15 of the said Regulation.

102 Although the Commission was not obliged to publish the contested decision, there is nothing in the letter or the spirit of the abovementioned Article 21 to prevent it from publishing it since this did not amount to divulging the undertakings' business secrets.

103 The Commission's communication to the press altered neither the meaning nor the content of the decision.

104 The publicity thus given to the decision May even contribute to ensuring the observance of the rules of the treaty on competition.

105 The present complaint is thus unfounded.

D - Substance

I - The status and duration of the gentlemen's agreement

106 The applicant complains that the Commission considered that the export agreement relating to trade with third countries and the gentlemen's agreement governing the conduct of its members in the common market constituted an indivisible entity as far as Article 85 was concerned.

107 The applicant States that the gentlemen's agreement, unlike the export agreement, did not constitute an agreement within the meaning of Article 85 (1) and in any event it definitively ceased to exist from the end of October 1962.

108 The conduct of the parties to the export agreement does not in the applicant's view indicate that they continued the restrictions on competition which were originally provided for in the gentlemen's agreement.

109 The opposite conclusions reached by the contested decision are therefore alleged to be vitiated because they are based on incorrect findings.

110 The gentlemen's agreement, which the applicant admits existed until the end of October 1962, had as its object the restriction of competition within the common market.

111 The parties to the export agreement mutually declared themselves willing to abide by the gentlemen's agreement and concede that they did so until the end of October 1962.

112 This document thus amounted to the faithful expression of the joint intention of the parties to the agreement with regard to their conduct in the common market.

113 Furthermore it contained a provision to the effect that infringement of the gentlemen's agreement would ipso facto constitute an infringement of the export agreement.

114 In those circumstances account must be taken of this connexion in assessing the effects of the gentlemen's agreement with regard to the categories of acts prohibited by Article 85 (1).

115 The defendant bases its view that the gentlemen's agreement was continued until February 1965 on documents and declarations emanating from the parties to the agreement the tenor of which is indistinct and indeed contradictory so that it is impossible to conclude whether those undertakings intended to terminate the gentlemen's agreement at their meeting on 29 October 1962.

116 The conduct of the undertakings in the common market after 29 October 1962 must therefore be considered in relation to the following four points: sharing out of domestic markets, fixing of common prices, determination of sales quotas and prohibition against manufacturing synthetic quinidine.

II - Protection of the producers' domestic markets

117 The gentlemen's agreement guaranteed protection of each domestic market for the producers in the various Member States.

118 After October 1962 when significant supplies were delivered on one of those markets by producers who were not nationals, as for example in the case of sales of quinine and quinidine in France, there was a substantial alignment of prices conforming to French domestic prices which were higher than the export prices to third countries.

119 It does not appear that there were alterations in the inignificant volume of trade between the other Member States referred to by the clause relating to domestic protection in spite of considerable differences in the prices prevailing in each of those States.

120 The divergences between the domestic legislation of those States cannot by itself explain those differences in price or the substantial absence of trade.

121 Obstacles which might arise in the trade in quinine and quinidine from differences between national legislation governing pharmaceutical products under trademark cannot relevantly be invoked to explain those facts.

122 The correspondence exchanged in October and November 1963 between the parties to the export agreement with regard to the protection of domestic markets merely confirmed the intention of those undertakings to allow this state of affairs to remain unchanged.

123 This intention was subsequently confirmed by Nedchem during the meeting of the undertakings concerned in Brussels on 14 March 1964.

124 From those circumstances it is clear that with regard to the restriction on competition arising from the protection of the producers' domestic markets the producers continued after the meeting on 29 October 1962 to abide by the gentlemen's agreement of 1960 and confirmed their common intention to do so.

125 The applicant maintains that owing in particular to the shortage of raw materials the sharing out of domestic markets, as emerges from the exchange of letters of October and November 1963, had no effect on competition in the common market.

126 Despite the scarcity of raw materials and an increase in the demand for the products in question, as the contested decision finds, a serious threat of shortage nevertheless emerged only in 1964 as a result of the interruption of Nedchem's supplies from the american general service administration.

127 On the other hand such a situation cannot render lawful an agreement the object of which is to restrict competition in the common market and which affects trade between the Member States.

128 The sharing out of domestic markets has as its object the restriction of competition and trade within the common market.

129 The fact that, if there were a threatened shortage of raw materials, such an agreement might in practice have had less influence on competition and on international trade than in a normal period in no way alters the fact that the parties did not terminate their activities.

130 Furthermore the applicant has furnished no conclusive evidence capable of proving that it had ceased to act in accordance with the agreement before the date of expiry of the export agreement.

131 Consequently, the submissions concerning that part of the decision relating to the continuation of the agreement on the protection of the producers' domestic markets until the beginning of February 1965 are unfounded.

III - The joint fixing of sales prices

132 With regard to the joint fixing of sales prices for the markets which were not shared out, that is to say, the Belgo-Luxembourg economic Union and Italy, the gentlemen's agreement provided for the application to such sales of the current prices for exports to third countries fixed by mutual agreement, in accordance with the export agreement.

133 The joint fixing of sales prices by the producers of virtually all the quinine and quinidine distributed within the common market is capable of affecting trade between Member States and seriously restricts competition within the common market.

134 If, as the defendant maintains, the parties to the export agreement continued until February 1965 to apply their current export prices to supplies to the abovementioned Member States, it would follow that they continued to abide by that part of the gentlemen's agreement relating to the joint fixing of sales prices.

135 With regard to the period from November 1962 to April 1964, the figures supplied by the defendant show a substantial and constant identity between the current prices fixed for export within the framework of the agreement and the prices maintained by the undertakings concerned, including the applicant, for their sales in unprotected domestic markets in the Community.

136 Where such prices deviate from the scale of export prices they do so in terms of rebates or increases corresponding generally to those agreed on under the gentlemen's agreement.

137 The applicant had supplied no evidence capable of proving that this argument is unfounded.

138 Moreover the increase in prices of 15 per cent, which was jointly decided upon on 12 March 1964 under the export agreement which led Nedchem to withdraw its opposition, was uniformly applied - although that undertaking would have preferred to continue to fix lower prices - with regard to supplies to Italy, Belgium and Luxembourg also.

139 These circumstances show that with regard to sales prices the parties to the export agreement continued after October 1962 to act in the common market as if the gentlemen's agreement of 1960 were still in force.

140 The action taken by the parties to the agreement with regard to prices from May 1964 was only discussed in depth as a result of the questions put by the Court to the defendant during the oral procedure.

141 It is clear from the oral procedure, taking into account the information supplied by the parties, that during 1964 and in particular from May onwards, a party to the agreement applied prices which in an increasing number of cases deviated from the current export prices, and that the defendant has been unable to give a explanation as to how this might be reconciled with the continuation in force of the agreement in question.

142 The failure to communicate to the undertakings concerned the results of the investigations carried out in Italy and Belgium, which excluded any possibility of clarification and discussion at the stage of the administrative procedure, May have contributed to leaving unexplained facts which ought to have been clarified.

143 In these circumstances proof has not been sufficiently established in law that the applicant by mutual agreement with the other producers maintained uniform prices for its sales in the Belgo-Luxembourg Economic Union and Italy after May 1964.

144 Consequently the period from May 1964 to February 1965 must be omitted from the infringement.

IV - The sales quotas

145 With regard to the fixing of sales quotas for the common market, which was linked to a system of compensation and which constituted a supplementary guarantee of the sharing out of domestic markets, the applicant maintains that the necessary condition for the functioning of such a system, namely the reciprocal notification of all sales including those effected within the Community, was no longer fulfiled subsequent to October 1962.

146 It is not clear that the communications of the undertakings concerned relating to sales, which the defendant has produced in support of its opposing statement, also relate to supplies within the common market.

147 On the contrary, such documents in general refer expressly to "export sales", an expression habitually employed by the members of the cartel to indicate sales to third countries.

148 Furthermore, it is clear from an exchange of letters in January 1964 between two members of the cartel that even such export sales figures were no longer communicated regularly.

149 The defendant itself admits in the statement of reasons for the contested decision that during 1963 and 1964 the compensation arrangements which were intended to ensure that the quotas were observed were not applied because of the scarcity of raw materials and because of the increase in demand, so that the members of the cartel had no further interest in effecting compensatory deliveries between themselves.

150 At the hearing the defendant produced a Table of the amounts of quinine disposed of by Nedchem, Boehringer and Buchler from 1962 to 1964 with the object of proving that those quantities, viewed as a percentage of the total of the quotas, did not deviate perceptibly for that period from the quota assigned to each of the undertakings within the framework of the agreement and thus that the quota arrangement continued to operate after 1962.

151 Nevertheless, this Table, which moreover does not include sales of quinidine, shows that, even taking as a basis an average recorded over the previous two years, there are considerable deviations in the case of each of the three undertakings in relation to its own quota.

152 Furthermore, the Commission has supplied comprehensive figures covering all the sales of quinine by the undertakings concerned and it is thus impossible to discern from them the course of conduct of those undertakings in the common market.

153 Since there is insufficient proof that the system of quotas for sales within the common market was continued after October 1962, it must be concluded that the applicant's complaints with regard to this part of the contested decision are well founded.

V - Restrictions on the manufacture of synthetic quinidine

154 The gentlemen's agreement prohibited the group of French undertakings from manufacturing synthetic quinidine.

155 Owing to the stringency of the restrictions imposed on undertakings from one member state for the benefit of undertakings in other Member States and taking into account the importance of such undertakings on the market in question, these prohibitions clearly have as their object the restriction of competition within the common market and are capable of affecting trade between Member States.

156 The fact relied upon that, when the gentlemen's agreement was concluded, the French undertakings were not in a position to manufacture synthetic quinidine does not render lawful such a restriction which entirely precluded them from taking up this activity.

157 That the French undertakings should accede to this restriction of their freedom of action is explicable in terms of their interest - owing to the particularly high prices which they maintained for their products in France - in preserving the territorial protection which they enjoyed on their domestic market.

158 Taking into account the connexion thus existing between those two restrictions on competition, it May reasonably be concluded that the prohibition on production lasted as long as the territorial protection.

159 Although it is true that in March 1964 Boehringer granted a licence to manufacture quinidine to the remaining British member of the cartel, on whom the gentlemen's agreement imposed prohibitions similar to those imposed on the French undertakings, this has no effect on the finding which has already been made with regard to the relationship between the French undertakings and the German and Netherlands members of the cartel.

160 Although it is possible that, owing to the scarcity of raw materials which has established by the contested decision (No 29, last paragraph), in its ultimate period protection of the domestic markets did not have important effects on competition and trade between Member States, this cartel nevertheless lasted until February 1965.

161 In the absence of any indication to the contrary and having regard to the abovementioned connexions between the two aspects of the cartel, it must be considered that the agreement restricting the French undertakings' freedom to manufacture was of the same duration.

162 Consequently the applicant's complaints in this respect are unfounded.

VI - General appraisal of the agreement within the common market

163 It is clear from the foregoing that the applicant participated with other producers of wuinine and quinidine in an agreement prohibited by Article 85 of the EEC treaty.

164 This agreement continued in most of its forms even after the meeting on 29 October 1962.

165 Serious doubts as to the continuation of the agreement after 1962 exist only with regard to the application of sales quotas.

166 Nevertheless, the fact that the undertakings did not continue to apply the system of quotas does not seem perceptibly to have improved the conditions of competition, since they continued jointly to fix prices, to apply uniformly to their deliveries in the common market joint price increases arranged in March and October 1964 and decided within the framework of the export agreement and finally to maintain protection of their respective domestic markets and the prohibition on the French undertakings' production of synthetic quinidine.

167 However, the application of uniform prices for deliveries to Italy, Belgium and Luxembourg has only been proved to exist up to April 1964.

168 Finally, even if it must be conceded that the export agreement could have operated independently of the agreement relating to the common market, it must be found that in fact the members of the cartel attributed great importance to the joint application of both agreements.

169 Although from October 1963 the export agreement was declared to be "in abeyance", it is clear from the declarations made by the undertakings concerned at their subsequent meetings together with their subsequent conduct as a whole that they continued to have an interest in upholding that agreement, in particular with regard to its possible employment within the common market.

VII - Complaints relating to the fine

170 The applicant complains that the Commission imposed on it a fine for an infringement which had come to an end.

171 It claims that the fines provided for in Article 15 (2) of Regulation No 17 are in the nature of periodic penalty payments and not penalties of a criminal law nature.

172 The penalties provided for in Article 15 of Regulation No 17 are not in the nature of periodic penalty payments.

173 Their object is to suppress illegal activities and to prevent any reference.

174 This object could not be adequately attained if the imposition of a penalty were to be restricted to current infringements alone.

175 The Commission's power to impose penalties is in no way affected by the fact that the conduct constituting the infringement has ceased and that it can no longer have detrimental effects.

176 For the purpose of fixing the amount of the fine, the gravity of the infringement is to be appraised by taking into account in particular the nature of the restrictions on competition, the number and size of the undertakings concerned, the respective proportions of the market controlled by them within the Community and the situation of the market when the infringement was committed.

177 The applicant raises an objection of illegality against the abovementioned Article 15 on the ground that the system of fines provided for by this provision differs in essentials from the system provided for by the Commission's draft on which the European Parliament was consulted.

178 Considered as a whole the substance of the draft Regulation on which the Parliament was consulted has not been altered.

179 Consequently the objection of illegality is unfounded.

180 The applicant requests the Court to cancel or at least considerably to reduce the fine because the infringement alleged against it is of a "purely formal" nature.

181 Furthermore, it maintains that there is no proper relationship between the fine imposed and the infringement committed taking into account in particular the fact that within the cartel the applicant always maintained that prices should be kept at a low level.

182 It is clear from the considerations previously set out in connexion with the complaints relating to the findings of fact contained in the decision in dispute that the infringement was not of a purely formal nature.

183 In the third subparagraph of paragraph 40 of the contested decision it is expressly stated that the applicant repeatedly expressed itself in favour of relatively low prices.

184 The Commission has consequently taken this factor into account in assessing the fine.

185 The consideration given to the extenuating circumstances operating in favour of the applicant means that the fine imposed on it is proportionally smaller, in relation to those imposed on the other members of the cartel, than its quota within the cartel.

186 The relatively large amount of the fine imposed on the applicant is nevertheless justified owing in particular to the fact that this undertaking controls the major part of the market in the products in question and in consideration of the leading part which it played in drawing up and implementing the agreements together with the grave and intentional character of the infringements committed by it.

187 The findings of the contested decision relating to the infringements alleged against the applicant are thus well founded in their essentials.

188 Since excluding the fixing of sales quotas for the period from November 1962 to February 1965 and of the sales prices for the period from May 1964 to February 1965 does not appreciably diminish the gravity of the restrictions on competition arising from the agreement, it justifies only a slight reduction in the fine.

189 It is appropriate to reduce the fine of 200,000 units of account.

190 Under the first subparagraph of Article 69 (2) of the rules of procedure of the Court of Justice, the unsuccessful party shall be ordered to pay the costs if they have been asked for in the successful party's Pleading.

191 Since the applicant has failed in the essential part of its conclusions, it must be ordered to pay the costs.

THE COURT,

hereby:

1. Dismisses the application for annulment;

2. Annuls so much of Article 1 of the decision of the Commission of the European Communities of 16 July 1969 (OJ L 192, p. 5 et seq.) as records that the applicant applied the clauses of the gentlemen's agreement of 9 April 1960 on the system of quotas and compensation during the period from November 1962 to February 1965, and the fixing of prices and rebates for the export of quinine and quinidine during the period from May 1964 to February 1965;

3. Reduces the fine imposed on the applicant by the abovementioned decision to 200 000 units of account;

4. Orders the applicant to pay the costs of the proceedings.