CJEC, November 26, 1975, No 73-74

THE COURT OF JUSTICE OF THE EUROPEAN COMMUNITIES,

1. By application lodged at the Court registry on 30 September 1974, the Groupement des papiers peints de Belgique and its members sought the annulment of the Decision of 23 July 1974 (OJ 1974, L 237, p. 3), in which the Commission declared a series of agreements and decisions of the groupement to be incompatible with Article 85 (1) of the EEC treaty, refused the application for a declaration of non-applicability, ordered the members of the groupement to bring the infringements to an end immediately and imposed fines on the members of the groupement for their collective decision to suspend supplies to Mr Pex.

Subject-matter of the action

2. During the oral proceedings the members of the groupement announced that they no longer contested 'the decision of the Commission as from the date on which it was delivered and as regards the future in so far as it prohibited the agreements imposing the obligation to charge the prices fixed and to display them' and the agreements ' prohibiting the display of lower prices or of reductions made by reference to the fixed or recommended prices '.

3. The groupement stated that it continued to contest the legality of the decision as regards the past, not for the purpose of seeking its annulment in toto but in order to demonstrate that the suspension of deliveries to Mr Pex did not come within the prohibition in Article 85 (1) and that, in consequence, the decision of the Commission imposing the fines for such suspension should be annulled.

4. Alternatively, the members of the groupement contend that the fines were so excessive that the Court, which has unlimited jurisdiction in the matter, should reduce them.

5. The applicants relied on submissions referring to infringement of the provisions of the treaty and the inadequacy of the statement of reasons for the decision.

The substance of the Case

Adverse effect on competition within the common market

6. The applicants maintain that the decision was wrong in declaring, under item II c. 3, that they fixed re-sale prices for wallpaper dealers.

7. They do not deny, however, that retailers who have obtained their supplies direct from the groupement or through dealers, are bound to display the lists of prices fixed jointly by the members of the groupement and must not make any public announcement of rebates on these prices.

8. The applicants maintain that all that is involved is prohibition on announcing rebates, retailers being free to grant rebates in particular cases, even on a regular basis, provided that they do not announce them publicly.

9. Article 85 (1) of the treaty expressly identifies agreements which 'directly or indirectly fix purchase or selling prices or any other trading conditions' as incompatible with the common market.

10. If a system of fixed selling prices is clearly in conflict with that provision, a price-list system under which the announcement of rebates on these prices is prohibited is equally so.

11. Consequently, it matters little whether the decision was wrong in holding that the members of the groupement had operated a system of fixed re-sale prices.

12. Furthermore, there is no dispute that the agreement between the members of the groupement, which embraces four out of five Belgian wallpaper manufacturers, prevents any competition on the selling prices in Belgium for wallpapers which they sell under the joint trade-mark ' decorgroup '.

13. Apart from the direct or indirect fixing of prices, the agreement which was the subject of the contested decision also comprises a series of restrictive clauses relating to other trading conditions listed under item II a. 2 (a) to (u) of the contested decision.

14. Although some clauses of the reglement d'ordre interieur had ceased to be applied before the contested decision was taken, it is not disputed that the essence of the agreement covering all aspects of the sale and marketing of the groupement's wallpapers remained in force until the decision prohibited them.

15. The applicants maintain that the decision not to supply Mr Pex was taken individually by each manufacturer approached by him because Mr Pex had broken his contracts.

16. The right reserved to the groupement to decide to suspend supplis to a buyer who does not comply with the general conditions of sale was expressly included in the circulars addressed to customers by the members of the groupement.

17. In the circular of 29 October 1971, sent by the groupement to all its customers, it is stated that :

'In the present circumstances it appears to us essential to draw your attention to the "general conditions of sale", in particular, to strict compliance with the following three paragraphs :

Simply by placing an order, the customer undertakes to comply with all the obligations which arise from the general conditions of sale and accepts the consequences of any infringements ...'.

18. It is clear from these words and from the timing of its publication that this circular was intended to reassure retailers that the groupement was seeing that the general conditions of sale were applied and that appropriate steps would be taken against any competitor practicing undercutting especially as the conditions of which the customers were reminded were the very ones which Mr Pex had infringed.

19. It must, accordingly, be recognized that the Commission was in possession of sufficient evidence that the decision to suspend deliveries to Mr Pex was taken jointly by the members of the groupement.

20. Consequently, the fact that Mr Pex did not try to place an order with one of the members of the groupement and that another member of the groupement continued deliveries for a certain time does not suffice to invalidate the Commission's finding that there was a collective decision to refuse to supply Mr Pex.

21. In consequence, the control of the market exercised by the groupement characterized by its pricing and rebates policy, and supported by penalties in order to ensure strict compliance with the general conditions of sale, was intended to and did restrict or distort competition in Belgium and, consequently, within the common market.

Effect on trade between Member States

22. The applicants maintain, first, that the agreements and decisions of the groupement were not liable to affect trade between Member States.

23. They maintain, secondly, that even if, in fact, the agreements and the decisions were liable to affect trade between Member States, the contested decision did not specify how this trade could be affected.

24. Thirdly, the members of the groupement state that they believed in all good faith that the agreements and decisions did not affect trade between Member States, and that there is, accordingly, no justification for fines for a decision which merely enforced the agreements.

25. The fact that a price-fixing agreement of the type in question only covers the marketing of products in a single Member State does not rule out the possibility that trade between Member States may be affected.

26. In fact, a restrictive agreement extending over the whole of the territory of a Member State is by its very nature liable to have the effect of reinforcing the compartmentalization of markets on a national basis, thereby holding up the economic interpenetration which the treaty is designed to bring about and protecting domestic production.

27. In this connexion it is important to identify the means available to the parties to a restrictive agreement to ensure that customers remain loyal, the relative importance of the agreement on the market concerned and the economic context in which it exists.

28. The decision of the groupement concerning the bareme de la prime de co-operation, the level of which depends on the amount of all purchases from all members during a given year could have the effect of concentrating orders with members of the groupement with the result that the customer who has already covered part of his requirements from members of the groupement is encouraged to buy his entire requirements from those members, in order to obtain the highest possible rebate.

29. The decision does not explain how the fact that 10 per cent of Belgian imports, representing 5 per cent of the total Belgian market, sold by the groupement subject to its prices and conditions is, in the absence of exclusive arrangements between the members of the groupement and foreign manufacturers, liable to affect trade between Member States.

30. 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.

31. Although a decision which fits into a well-established line of decisions may be reasoned in a summary manner, for example by a reference to those decisions, if it goes appreciably further than the previous decisions, the Commission must give an account of its reasoning.

32. With regard to the finding in the decision of the territorial protection arising from the restrictive practice and the closing off of the national market, the decision does not clearly set forth the grounds on which the Commission found them to exist, the mere reference to an earlier case constituting insufficient explanation.

33. Without excluding the possibility that a restrictive pricing practice such as that in dispute may in fact affect trade between Member States, the fact remains that, when the defendant adopted a decision which went appreciably further than its earlier decisions, it ought to have supplied a more detailed statement of the grounds on which it was based.

34. In this respect, the obligation on the Commission, under Article 190 of the EEC treaty, to give reasons for its decisions is not satisfied by the straightforward assertions appearing under heading e of the contested decision entitled 'the effect on trade between Member States'.

35. In consequence, Article 4 of Decision No 74-431-EEC of the Commission must, in accordance with the applicants' claim, be annulled.

36. Under Article 69 (2) of the rules of procedure the unsuccessful party shall be ordered to pay the costs.

37. In this Case the defendant has failed in its submissions.

38. The defendant must, therefore, in accordance with the applicant's claim, be ordered to pay the costs.

THE COURT

Hereby :

1. Annuls Article 4 of Decision no 74-431-EEC of the Commission;

2. Orders the Commission of the European communities to pay the costs.