CJEC, October 25, 1983, No 107-82

THE COURT OF JUSTICE OF THE EUROPEAN COMMUNITIES

1. By application lodged at the Court registry on 24 March 1982 Allgemeine Elektricitats-Gesellschaft AEG-Telefunken Ag (hereinafter referred to as "AEG"), Frankfurt am Main, brought an action under the second Paragraph of Article 173 of the EEC treaty for a declaration that Commission decision No 82-267-EEC of 6 January 1982 relating to a proceeding under Article 85 of the EEC treaty (IV/28.748 -AEG-Telefunken) was void.

2. The applicant, a limited liability company incorporated under German law, is engaged, inter alia, in developing, manufacturing and marketing consumer electronic products (television sets, radios, tape-recorders, record-players and audio-visual equipment). Since 1970 those products have been manufactured and marketed by Telefunken Fernseh-und rundfunk-gmbh (hereinafter referred to as "TFR"), a subsidiary of AEG, which since 1 June 1979 has been an independent division of AEG. The marketing of Telefunken products is carried out in Germany by AEG sales offices or branches and in the other Member States of the Communiy by AEG subsidiaries responsible in each of the countries for marketing activities, that is, as far as this case is concerned, AEG-Telefunken France (hereinafter referred to as "ATF") in France and AEG-Telefunken Belge (hereinafter referred to as "ATBG") in Belgium.

3. For the marketing in the common market of a number of Telefunken products coming under a so-called "five-point" programme, which covers the above-mentioned consumer electronic products, AEG notified the Commission on 6 November 1973 of a system of selective distribution for Telefunken brand products (Vertriebsbindung fur Telefunken-Markenwaren) based on standard agreements (eg-Verpflichtungsscheine) concluded with qualified re-sellers at various stages of marketing. At the request of the Commission AEG subsequently made certain amendments to the system. By letter of 17 May 1976 the director general for competition informed AEG that he saw no objection to the use of the version of the standard selective distribution agreement notified on 16 March 1976 from the point of view of Article 85 (1) of the EEC treaty.

4. As time passed the Commission, which had received numerous complaints with regard to AEG from traders in the consumer electronics sector, gained the impression that the actual application of the selective distribution system by AEG and its subsidiaries did not correspond to the scheme notified to it. Consequently on 26 and 27 June 1979 it carried out inspections on the premises of TFR, ATBG and ATF and, taking the view that the documents of which it took cognizance on that occasion were such as to confirm its suspicions, by decision of 29 May 1980 it initiated a procedure under Article 9 (3) of Regulation No 17 against AEG.

Following that procedure, on 6 January 1982 the Commission adopted the disputed decision in which it found that AEG had improperly applied its selective distribution system by discriminating against certain distributors and by influencing directly or indirectly dealers'resale prices and that that had been done with a view to excluding in principle certain forms of distribution and Maintaining prices at a given level. The decision states that AEG has infringed Article 85 (1) of the EEC treaty by the way in which it has applied its selective distribution agreement, requires it to terminate without delay the infringements found and imposes on it a fine of one million European currency units or dm 2 445 780.

6. In the submissions which it puts forward in support of its application the applicant claims that :

I. The procedure leading up to the adoption of the contested decision was irregular inasmuch as, in AEG's view :

A. The facts were insufficiently investigated ;

B. Documents were selected and used in accordance with arbitrary criteria ;

C. The actual market conditions were misinterpreted ;

D. The results of previous inquiries were not mentioned ;

E. The rights of the defence were infringed ;

II. The conditions laid down for the application of Article 85 (1) of the EEC treaty were lacking by reason of factors such as :

A. The unilateral nature of the acts for which AEG and its subsidiaries are criticized ;

B. The lawful nature of acts directed towards guaranteeing the Maintenance of a minimum profit margin in the context of a selective distribution system ;

C. The atypical nature of the conduct to which the objections relate ;

D. The fact that the conduct to which the objections relate cannot be ascribed to AEG ;

E. The absence of obstacles to intra-Communiy trade ;

III. The objections on which the contested decision is based are unfounded since in particular ;

There was no distribution policy contrary to the system and there were no individual cases in which that policy was applied ;

There was no policy of influencing selling prices in a way incompatible with the selective distribution system and there were no individual cases in which that policy was applied.

7. A dispute has also arisen between the parties as to the default interest which, in the Commission's view, AEG should pay if, in the final outcome of the proceedings, it reMains subject to pay a fine. The Commission had declared itself disposed to suspend the provisional enforcement of the decision on condition that the applicant undertook to pay such interest in the event of the Court's judgment being unfavourable to it and AEG agreed subject to the reservation that the Court should declare that such interest was in fact payable.

8. By order of 6 May 1982 made on an application lodged by AEG at the same time as the Main action was brought, the president of the Court suspended execution subject to the Maintenance of the security furnished on 17 March 1982 in favour of the Commission. The order moreover emphasized that AEG's reservation was lawful and must be accepted and that the question whether or not interest was due did indeed fall within the jurisdiction of the Court seised of the Main proceedings.

I -The submissions challenging the regularity of the proceedings which led to the adoption of the disputed decision

A -Insufficient investigation of the facts

9. AEG claims that the Commission ignored all the factors capable of explaining the specific details of the application of the selective distribution system at the European Communiy level and that it restricted itself to impounding some 500 documents and to using at the most passages drawn from some 40 of such documents.

10. In that connection it must be observed, as the Commission rightly claims, that the Commission is by no means required to impound or copy for the purposes of an inquiry all the documents relating to a selective distribution system. In fact only those documents relating to the improper application of the system need be considered.

B -Selection and use of documents according to arbitrary criteria

11. According to AEG those of the documents taken by the Commission during the inspections on 26 and 27 June 1979 which might have served to exculpate it were not considered. Equally the Commission discarded certain conclusions which it arrived at during its inquiry and which were favourable to AEG, and used other evidence according to entirely arbitrary criteria.

12. In support of this submission AEG advances the following allegations :

(I) To support its objection with regard to price concertation, in point (28) of the decision, the Commission relied on information supplied, in response to a mere request for information, by Mr Iffli without taking into account the fact that he was habitually opposed to any system of selective distribution.

(II) In the case of the ratio store the Commission ignored the fact that the managers of ratio themselves acknowledged that their shop in Kassel did not satisfy the specialist trade conditions.

(III) The trader Verbinnen never stated that he had been subjected to pressure by ATBG.

(IV) Requests for information about an improper use of the system by ATBG, addressed to Belgian traders, received negative answers. However, neither the questions nor the answers were mentioned in the decision.

(V) The Commission took into consideration only a single one of the many documents produced by AEG -which it moreover used arbitrarily -but none of the evidence which AEG had presented or offered during the procedure.

13. In this connection it should be stressed that the cases in respect of which no objection has been raised do not necessarily prove the correct application of the system in as much as an improper application would have required the intervention of AEG only in comparatively rare cases where AEG felt that there was a risk of parallel imports or of very keen price competition. In these circumstances the Commission was not therefore required to take into consideration the cases in which no infringement was under discussion.

14. On the other hand AEG's allegations must be examined in detail as regards the cases of Iffli, Ratio and Verbinnen, inasmuch as they amount to a claim that the Commission found that an infringement had occurred after it had arbitrarily brushed aside factors which would necessarily have led it to another conclusion.

15. These allegations, viewed in that light, are tantamount to a statement that, when it came to establishing whether certain cases constituted an improper application of the selective distribution system, the Commission misinterpreted the evidence relating to those cases. It is therefore in reality a question of the appraisal of the substance of the individual cases -which will be dealt with separately when matters of substance are considered -and not of the regularity of the procedure followed by the Commission.

C -Incorrect interpretation of actual market conditions

16. AEG claims that the Commission did not take account of the market situation as regards consumer electronic products as a whole and ignored factors such as the fierce competition in the sector, which meant that a distribution policy aimed at limiting the number of approved distributors and Maintaining high selling prices would have been unreasonable.

17. As regards this submission, it should be stated at the outset that to establish the existence of a situation which ought to have made it inadvisable for an undertaking to engage in certain conduct cannot by itself prove that such conduct did not take place, since it May well be conceived that the under taking in question May have relied upon an incorrect appreciation of the actual market situation or, whilst being well aware of the situation, have taken too optimistic a view of the advantages resulting from a price Maintenance policy, thinking that they would outweigh the disadvantages involved in the loss of competitive positions.

18. Thus, as the Commission has pertinently observed, the view May be taken that AEG was not taking excessive risks, even in a situation of very keen competition, by adopting a high price policy, since distributors were in any event anxious to supplement their range by Telefunken brand products and were generally willing to accept a high trade margin.

D -The failure to mention the results of previous inquiries

19. AEG states that the Commission, having received, after the introduction of the selective distribution system in 1973, numerous complaints calling in question the conduct of AEG and its subsidiaries, had initiated proceedings which it had subsequently abandoned. That indicates, it is claimed, that the Commission had not, in the course of its inquiries, established an improper application of the selective distribution system. The failure to mention those precedents, which were incompatible with the disputed decision, proves, it is alleged, that the Commission embarked on the present case with its mind made up.

20. The Commission correctly denies that the fact that the complaints in question were not pursued May be interpreted as a favourable judgment on the application by AEG of the selective distribution system. It should be stated that, even if the Commission takes the view that an isolated case does not represent a correct application of the selective distribution system, it is not required to pursue a large-scale inquiry such as that provided for by Article 9 of RegulationNo17 in the absence of grounds for suspecting that that case indicates a policy on the part of the undertaking. It is therefore natural that the Commission should have decided to initiate a procedure within the meaning of RegulationNo17 only after numerous complaints and reports had convinced it that the selective distribution system was in fact being improperly applied.

E -Infringement of the rights of the defence

21. AEG claims that the rights of the defence were infringed inasmuch as the Commission :

(a) Did not provide it with the complete text of a letter of 12 August 1980 from Mr. Iffli referring to alleged improper conduct on the part of the applicant, which was therefore prevented from making its views on the matter known ;

(b)used in the contested decision documents which had not been mentioned in the Statement of Objections of 2 June 1980, even though they were already in the Commission's possession at that time ;

(c)adopted a decision based, inter alia, on individual cases not mentioned in the Statement of Objections (mammouth, Verbinnen).

22. As regards the letter from Mr Iffli, AEG contends that the fact that it was able to consult it in its entirety only after the decision was adopted shows that obviously the applicant had no opportunity to use it in replying to the Statement of Objections.

23. The Commission claims that Mr Iffli's letter could not at first be communicated to the applicant in its entirety for reasons of confidentiality and the protection of trade secrecy.

24. In this respect it must be observed that such considerations ought to have caused the Commission to abstain from using that document as evidence. AEG is justified in taking the view that it could not allow to be used against it a document part of which had not been communicated to it and that it was not for the defendant to judge whether a document or a part thereof was or was not of use for the defence of the undertaking concerned.

25. It follows that Mr Iffli's letter of 12 august 1980 cannot be regarded as admissible evidence for the purposes of this case.

26. As regards the documents mentioned only in the decision (letter of 29 June 1976 from TFR's munster sales office ; ATF memorandum of 7 July 1977 ; ATF memorandum of 20 October 1978), the Commission contends that these were documents with which the applicant was already familiar as they came from its own offices and that they were used only to confirm objections already raised.

27. In this connection it must be observed that the important point is not the documents as such but the conclusions which the Commission has drawn from them. Since these documents were not mentioned in the Statement of Objections AEG was entitled to take the view that they were of no importance for the purposes of the case. By not informing the applicant that these documents would be used in the decision, the Commission prevented AEG from putting forward at the appropriate time its view of the probative value of such documents. It follows that these documents cannot be regarded as admissible evidence for the purposes of this case.

28. For the same reasons the Mammouth case cannot be considered as it was not mentioned in the Statement of Objections.

29. As regards the Verbinnen case, on the other hand, it must be observed that, whilst it was not mentioned in the Statement of Objections, it was communicated to AEG in sufficient time to allow it to prepare its observations before the contested decision was adopted.

30. In conclusion it must be stated that AEG's submissions to the effect that the procedure which led up to the adoption of the contested decision was irregular have proved to be groundless except that relating to the infringement of the rights of the defence. However, that submission is not of general scope as it is restricted to alleging infringements with regard to certain individual cases and cannot therefore imply that the procedure as a whole was irregular. It thus follows that the exclusion of certain documents used by the Commission in infringement of the rights of the defence is of no significance except to the extent to which the Commission's objections can be proved only by reference to those documents.

II -The submissions disputing the existence of the conditions laid down for the application of Article 85 (1) of the EEC treaty

A -The unilateral nature of the acts attributed to AEG and its subsidiaries

31. AEG contends that the acts complained of in the contested decision, namely the failure to admit certain traders and steps taken to exert an influence on prices, are unilateral acts and do not therefore, as such, fall within Article 85 (1), which relates only to agreements between undertakings, decisions by associations of undertakings and concerted practices.

32. In order properly to appreciate that argument it is appropriate to consider the legal significance of selective distribution systems.

33. It is common ground that agreements constituting a selective system necessarily affect competition in the common market. However, it has always been recognized in the case-law of the Court that there are legitimate requirements, such as the Maintenance of a specialist trade capable of providing specific services as regards high-quality and high-technology products, which May justify a reduction of price competition in favour of competition relating to factors other than price. Systems of selective distribution, in so far as they aim at the attainment of a legitimate goal capable of improving competition in relation to factors other than price, therefore constitute an element of competition which is in conformity with Article 85 (1).

34. The limitations inherent in a selective distribution system are however acceptable only on condition that their aim is in fact an improvement in competition in the sense above mentioned. Otherwise they would have no justification inasmuch as their sole effect would be to reduce price competition.

35. So as to guarantee that selective distribution systems May be based on that aim alone and cannot be set up and used with a view to the attainment of objectives which are not in conformity with Communiy law, the Court specified in its judgment of 25 October 1977 (metro V Commission, (1977) ECR 1875) that such systems are permissible, provided that re-sellers are chosen on the basis of objective criteria of a qualitative nature relating to the technical qualifications of the reseller and his staff and the suitability of his trading premises and that such conditions are laid down uniformly for all potential resellers and are not applied in a discriminatory fashion.

36. It follows that the operation of a selective distribution system based on criteria other than those mentioned above constitutes an infringement of Article 85 (1). The position is the same where a system which is in principle in conformity with Communiy law is applied in practice in a manner incompatible therewith.

37. Such a practice must be considered unlawful where the manufacturer, with a view to Maintaining a high level of prices or to excluding certain modern channels of distribution, refuses to approve distributors who satisfy the qualitative criteria of the system.

38. Such an attitude on the part of the manufacturer does not constitute, on the part of the undertaking, unilateral conduct which, as AEG claims, would be exempt from the prohibition contained in Article 85 (1) of the treaty. On the contrary, it forms part of the contractual relations between the undertaking and resellers. Indeed, in the case of the admission of a distributor, approval is based on the acceptance, tacit or express, by the contracting parties of the policy pursued by AEG which requires inter alia the exclusion from the network of all distributors who are qualified for admission but are not prepared to adhere to that policy.

39. The view must therefore be taken that even refusals of approval are acts performed in the context of the contractual relations with authorized distributors inasmuch as their purpose is to guarantee observance of the agreements in restraint of competition which form the basis of contracts between manufacturers and approved distributors. Refusals to approve distributors who satisfy the qualitative criteria mentioned above therefore supply proof of an unlawful application of the system if their number is sufficient to preclude the possibility that they are isolated cases not forming part of systematic conduct.

B -the lawful nature of actions intended to guarantee the Maintenance of a minimum profit margin with a selective distribution system

40. AEG claims that the conduct to which objection is made is designed to Maintain a level of prices indispensable for the survival of the specialist trade and that, if selective distribution systems are justified by the need to guarantee the existence of that trade, whose costs are much higher than those of the non-specialist trade, such systems cannot be considered contrary to Communiy law in so far as they are structured or applied in such a way as to guarantee to approved dealers the enjoyment of a minimum margin. In that connection it mentions the fifth Subparagraph of Paragraph 21 of the aforementioned Metro judgment, according to which : " for specialist wholesalers and retailers the desire to Maintain a certain price level, which corresponds to the desire to preserve, in the interests of consumers, the possibility of the continued existence of this channel of distribution in conjunction with new methods of distribution based on a different type of competition policy, forms one of the objectives which May be pursued without necessarily falling under the prohibition contained in Article 85 (1), and, if it does fall thereunder, either wholly or in part, coming within the framework of Article 85 (3)".

41. However, it should be emphasized that, in the Metro case, there was no question of conduct designed to prevent the admission to the distribution network of traders who were not ready to charge certain prices. The applicant Metro was not objecting to the selection criteria chosen for the admission of traders to the company Saba's selective distribution system, for which the Commission had given negative clearance under Article 2 of Regulation no 17, but was only claiming that the system led to a congealing of the price structure at the level of the retail trade and thus to the elimination of price competition.

42. A restriction of price competition must however be regarded as being inherent in any selective distribution system in view of the fact that prices charged by specialist traders necessarily reMain within a much narrower span than that which might be envisaged in the case of competition between specialist and non-specialist traders. That restriction is counterbalanced by competition as regards the quality of the services supplied to customers, which would not normally be possible in the absence of an appropriate profit margin making it possible to support the higher expenses connected with those services. The Maintenance of a certain level of prices is therefore lawful, but only to the extent to which it is strictly justified by the requirements of a system within which competition must continue to perform the functions assigned to it by the treaty. In fact the object of such a system is solely the improvement of competition in so far as it relates to factors other than prices and not the guarantee of a high profit margin for approved re-sellers.

43. AEG was therefore not justified in taking the view that the acceptance of an undertaking to charge prices making possible a sufficiently high profit margin constituted a lawful condition for admission to a selective distribution system. By the very fact that it was authorized not to admit to and not to keep in its distribution network traders who were not, or were no longer, in a position to provide services typical of the specialist trade, it had at its disposal all the means necessary to enable it to ensure the effective application of the system. In such circumstances the existence of a price undertaking constitutes a condition which is manifestly foreign to the requirements of a selective distribution system and thus also affects freedom of competition.

C -The non-systematic nature of the conduct to which the objections relate

44. By this submission AEG denies that it normally and intentionally made an improper use of its selective distribution system. If account is taken of the thousands of distributors who apply to be admitted to the system or who are already active within it, it is easy to understand, according to AEG, that vagaries are inevitable. Even on the supposition that they were intentional, a few infrequent cases of infringement cannot in any case call in question a correct application of the system.

45. Before those arguments are considered, it must first be stated that, as the Commission has pertinently observed, the small number of infringements with which AEG is charged in comParison with the whole of the cases in which the system is applied does not by itself prove the non-systematic nature of the infringements. Indeed, the great majority of distributors are already habitually opposed to a low price policy and normally willingly accept any initiative designed to Maintain a high profit margin, so that a producer who wishes to make an improper application of the system would be forced to refuse admission or to threaten reprisals only in the case of traders operating a very aggressive price policy.

46. It follows that the non-systematic nature of the infringements is not necessarily proved by their relatively restricted number and the possibility that there has been a systematic use of the conditions for admission in a manner incompatible with Communiy law can be ruled out only after it has been established that there was no general policy on the part of AEG or its subsidiaries designed to exclude re-sellers who were too aggressive or to influence prices.

D -The submission that the conduct to which the objections relate cannot be ascribed to AEG

47. AEG states that it is impossible for any infringements which May be established to be ascribed to it as it never played an independent part in the application of the selective distribution system as effected by TFR, ATF or ATBG. Indeed, it is impossible to ascribe a "general distribution policy" to AEG on the basis of documents in a file which were drawn up exclusively by its subsidiaries and in which it played no part. Still less can it be held responsible for individual infringements alleged by the Commission to have been committed by its subsidiaries.

48. The Commission replies that the system introduced by AEG was implemented in the various Member States concerned by its subsidiaries TFR, ATF and ATBG, which are controlled by the applicant, are made responsible by it for the application of the system and are required in this respect to carry out AEG's instructions. It observes that TFR, ATF and ATBG form part of the AEG-Telefunken group and that TFR, for example, is a wholly-owned subsidiary of AEG-Telefunken.

49. As the Court has already emphasized, particularly in its judgment of 14 July 1972 international chemical industries, case 48-69 ((1972) ECR 619) "the fact that a subsidiary has separate legal personality is not sufficient to exclude the possibility of imputing its conduct to the parent company... In particular where the subsidiary, although having separate legal personality, does not decide independently upon its own conduct on the market, but carries out, in all material respects, the instructions given to it by the parent company."

50. As AEG has not disputed that it was in a position to exert a decisive influence on the distribution and pricing policy of its subsidiaries, consideration must still be given to the question whether it actually made use of this power. However, such a check appears superfluous in the case of TFR which, as a wholly-owned subsidiary of AEG, necessarily follows a policy laid down by the same bodies as, under its statutes, determine AEG's policy.

51. AEG's influence on ATF emerges indirectly from an internal memorandum of ATF dated 30 June 1978, where it is stated that a distributor with whom ATF was negotiating with a view to his acceptance was aware of "Telefunken's policy, which succeeds in keeping retail prices stable and thus in Maintaining an appropriate profit margin for retailers". The word "Telefunken" shows that in fact ATF was referring to commercial policy perceived as being the result of an initiative on the part of AEG which alone was in a position to draw up a unitary policy to be followed by its various subsidiaries responsible for distributing Telefunken products.

52. As to ATBG, it May be seen from the documents relating to the case of the Belgian wholesaler Diederichs that ATBG constantly informed TFR about its negotiations with Diederichs (see ATBG's letters of 19 and 24 October 1977). Furthermore, it emerges from those documents that TFR made direct contact with Diederichs to consider the possibility of regularizing his activities, although they did not involve the German market (see TFR's memorandum of 29 September 1977), that it raised within its organization problems raised by Diederichs's application for admission (see TFR's telex message of 11 October 1977) and that it finally stated that : "at present there is no reason to pursue the discussions initiated with Mr Diederichs" (see TFR memorandum of 28 October 1977). These matters show clearly that there was no question of ATBG's having any independent power of decision-making as against AEG and TFR.

53. It must therefore be concluded that the conduct of TFR, ATF and ATBG in restraint of competition are to be ascribed to AEG.

E -The absence of obstacles to intra-Communiy trade

54. By this submission AEG claims that the application of its selective distribution system is not in itself capable of affecting trade between Member States or thus of falling within Article 85 (1) of the treaty. That reMains true, it alleges, even if it were to be established that the system had been improperly applied.

55. The Commission acknowledges that the selective distribution system established by AEG does not in itself contain provisions forming an obstacle to trade between approved distributors in the different Member States and cannot therefore as such affect intra-Communiy trade. It claims however that it is precisely the improper application of the system alleged against AEG which has made it possible to eliminate large-scale traders from the distribution network, in a discriminatory manner, and which has thus prevented considerable trade which those dealers might have effected between Member States.

56. According to AEG the absence of perceptible obstacles, actual or potential, to trade between the Member States, May be seen first from the very modest share of the market belonging to TFR, ATF and ATBG, secondly from the fact that the traders concerned did not carry out trade between Member States or were not in a position to do so and thirdly from the fact that as regards colour television sets all intra-Communiy trade is to a large extent impeded by serious technical difficulties.

57. In this connection it must be observed that whereas the first two arguments relate to all the products comprised in the "five-point" programme, which covers products such as television sets, radios, tape-recorders, record-players and audio-visual material, the third refers only to colour television sets.

58. AEG's argument relating to the modest share of the market belonging to TFR, ATF and ATBG cannot be upheld in view of the fact that each of those companies had, in its own country during the years 1973 to 1980, at least 50% of the consumer electronics market. As the Court has already stated in its judgment of 1 February 1978 (miller, case 19-77, (1978) ECR 131), an undertaking possessing roughly 5% of the market concerned is "an undertaking of sufficient importance for its behaviour to be, in principle, capable of affecting trade".

59. As regards the second argument put forward by AEG, it must be pointed out that the risk of obstacles to potential trade cannot be ruled out on the basis of a mere allegation that the traders did not or were not in a position to carry on trade between Member States. In that connection it is important to stress that several of the undertakings mentioned in the decision (for example, Diederichs in Belgium and the Auchan, Darty, Fnac and Conforama shops in France) actually undertook or were prepared to undertake parallel imports. The ratio chain of stores in the federal republic of Germany on several occasions effected re-imports of Telefunken products from Austria and would no doubt have done so from Member States of the EEC if the re-importation from those states had brought it the same advantages.

60. In any case it must be recalled that, according to the miller judgment to which reference has already been made, the mere fact at a certain time traders applying for admission to a distribution network or who have already been admitted are not engaged in intra-Communiy trade cannot suffice to exclude the possibility that restrictions on their freedom of action May impede intra-Communiy trade, since the situation May change from one year to another in terms of alterations in the conditions or composition of the market both in the common market as a whole and in the individual national markets.

61. As regards colour television sets AEG has claimed that in any event the application of its distribution system could not have affected parallel imports into France, which were not practicable by reason of the difference between the standards used in Germany (pal) and in France (Secam) and of the considerable cost of converting sets.

62. The Commission has contended that, whilst differences of a technical nature were liable to make trade between Member States more difficult, they nevertheless did not have the effect of making such trade impossible between the Federal Republic of Germany and France.

63. In reply to a question put by the Court, AEG stated, in a letter of 28 January 1983, that until September 1981 Secam television standards were compulsory in France and that "there was no practicable possibility therefore of overcoming the obstacles to trade resulting from different standards in France and the Federal Republic". Insurmountable difficulties also existed in relation to imports from the Federal Republic into Belgium, because sets intended for Belgium had to be equipped for the cable television system which is widespread there but on the other hand does not exist in the Federal Republic of Germany.

64. During the oral procedure the Commission pointed out that the fact that Verbinnen sold in Belgium colour television sets bought in Germany is a clear demonstration that there are no insurmountable technical problems in marketing such sets in Belgium. It May also be seen from the file that Diederichs too imported into Belgium television sets originating in the Federal Republic of Germany.

65. As regards imports of colour television sets into France, even though it May be admitted that they were limited because of the difference in broadcasting systems (Secam in France and pal in Germany) it must nevertheless be observed that, as the Commission made clear at the hearing without being contradicted by the applicant, TFR also manufactured during the period under review sets which could operate with both systems, which are in special demand in the frontier regions of Germany and France. That fact is sufficient for the conclusion to be drawn that AEG's policy was capable of affecting also the export of colour television sets from the Federal Republic of Germany to France.

66. It follows from the foregoing considerations that the arguments intended to show that trade between Member States could not have been affected by the disputed conduct cannot be upheld.

III - The submissions to the effect that the Commission's objections raised against AEG are unfounded

67. The Commission complains that AEG, by an improper application of its selective distribution system for Telefunken brand products, refused to admit to its distribution network certain distributors who nevertheless satisfied the conditions for admission and that it fixed directly or indirectly the selling prices to be applied by approved distributors, thus infringing Article 85 (1) of the EEC treaty.

68. According to the Commission, that discrimination and that fixing of selling prices were not isolated mistakes committed by overzealous members of the external staff but infringements deliberately and systematically committed. The existence of a policy designed to apply the selective distribution system in such a way as to attain objects not in conformity with Communiy law emerges clearly, it is alleged, from the documents of the TFR, ATF and ATBG sales directorates.

69. AEG denies both the existence of a general policy designed to make an improper application of the system and the infringements alleged by the Commission in the individual cases mentioned.

70. Although the contested decision relates exclusively to the practical application of the system, it is appropriate to consider first the nature and characteristics of the general distribution policy pursued by AEG.

71. The Commission's objection regarding the distribution policy is based on numerous documents impounded by the Commission's inspectors on the occasion of the inspections on the premises of TFR, ATF and ATBG. It is sufficiently clear from those documents, taken as a whole, that it was AEG's view that the Maintenance of a high profit margin was absolutely essential for the survival of the specialist trade and that undertakings dispensing with a high profit margin must automatically be regarded as incapable of providing the very expensive services associated with the specialist trade.

72. That attitude cannot be regarded as being in keeping with a correct application of the selective distribution system, since the Maintenance of a minimum profit margin for traders cannot in any case be, as such, one of the objects pursued by means of such a system.

73. The Metro judgment referred to above, on which AEG relies to justify its attitude, established in reality a causal link between the Maintenance of a certain price level and the possibility of the survival of the specialist trade in conjunction with an improvement in competition and permits a restriction of price competition only to the extent to which such a restriction appears necessary to ensure competition at the level of the services provided by the specialist trade. However, if such services were provided also by the specialist departments of discount stores or other new forms of distribution which, thanks to their type of organization, would be in a position to provide them at a lesser price, the Maintenance of a minimum profit margin would be deprived of any justification inasmuch as such a margin would no longer serve to guarantee competition affecting factors other than price.

74. Nor is the attitude which is revealed by the documents mentioned in the decision acceptable either in so far as, quite apart from the problem of the Maintenance of a high level of prices, it presupposes that the new forms of distribution are not, by their very nature and type of organization, capable of satisfying the specialist trade conditions.

75. Such a generalized appraisal cannot be accepted, since there is nothing to prevent a discount store from organizing its consumer electronics department in such a way as to satisfy the qualitative specialist trade conditions. A manufacturer who has introduced a selective distribution system cannot therefore absolve himself, on the basis of an a priori evaluation of the characteristics of the various forms of distribution, from the duty of checking in each case whether a candidate for admission satisfies the specialist trade conditions. Moreover it May be seen from the file that AEG was compelled to acknowledge that there was a tendency to create specialist departments even in the discount stores and even to admit that in certain cases the selective distribution conditions were satisfied.

76. It must therefore be concluded that the documents mentioned by the Commission do in fact demonstrate the existence of a distribution policy motivated both by a desire to guarantee a high profit margin for approved resellers and to impede, so far as at all possible, the admission of new forms of trade, which are regarded a priori as being incapable of satisfying the specialist trade conditions. That policy therefore exhibits characteristics which cannot be reconciled with a correct application of the selective distribution system.

77. The improper application of the system by AEG is moreover confirmed by a number of individual cases mentioned by the Commission.

78. The individual cases in which AEG has arbitrarily applied its selective distribution system have been subdivided by the Commission into three categories according to the type of conduct which it alleges gave rise to the infringement :

AEG made admission subject to a price undertaking and excluded automatically all those who were not prepared to give that undertaking.

AEG applied the system on the basis of a territorial criterion and not of a check on the required conditions.

AEG attempted to require its distributors, directly or indirectly, to Maintain certain prices.

A -The cases of improper refusal of admission

1. In the Federal Republic of Germany

(a) Ratio store

79. In point (16) of the decision of 6 January 1982 the Commission stated that : "the refusal to accept ratio was not due to the alleged absence of a specialist department, but to the fact that ratio was a discount store". AEG claims that the refusal to admit ratio was due solely to the fact that that undertaking, particularly its shop in Kassel, at no time satisfied the specialist trade conditions.

80. It May be seen from the correspondence between TFR and ratio that the refusal to supply ratio with Telefunken products included in the "five-point" programme was never explained by reference to the failure to comply with precise conditions of the selective distribution scheme. The letter of refusal of 29 June 1976 contains only a very vague reference to the effect that TFR had taken its decision "after weighing up all the questions involved" in the context of Article 85 (1). That explanation in no way clarifies in what respect ratio failed to fulfil the specialist trade conditions.

81. A letter of 22 December 1976 from ratio, in which it disputed certain oral observations made by TFR employees on the occasion of a visit to the ratio store in Kassel on 20 May 1976 received no reply from TFR which, moreover, never explained whether or to what extent those oral observations had been taken into account as a basis for the refusal.

82. It must therefore be stated that TFR not only never gave any reasons for its refusal to supply, unless an altogether general and indeterminate reference to the competition rules of the treaty May be regarded as a statement of reasons, but did not enter either into any discussion of the remarks recalled and disputed by ratio which might have been regarded by TFR as reasons justifying a refusal to supply.

83. In these circumstances it is impossible to Maintain that the ratio case does not constitute an example of improper application of the selective distribution system. The fact that ratio abstained from bringing an action to obtain supplies of Telefunken products cannot be interpreted as meaning that ratio acknowledged that TFR's refusal was well founded. In fact the bringing of an action May well not have been in ratio's interests because either of the fairly heavy costs which would have been incurred or of the fact that under German law a right to receive supplies can be established only if the undertaking in question proves that it is not in a position to obtain supplies of the product concerned from other manufacturers.

(b) Harder

84. In point (17) of the decision the Commission states that the wholesaler harder, who had been banned from the distribution network, was required as a condition of re-acceptance to undertake not to supply discount stores or similar undertakings with AEG products and not to export those products to other Communiy countries.

85. AEG claims that those conditions are mentioned only in a letter of 15 December 1976 from the Freiburg sales office and are merely the result of an initiative taken by the employee in charge of that office ; they show, furthermore, that it was for TFR head office to take a decision on harder's re-admission. It May be seen, it is claimed, from two letters from TFR's lawyers of 29 august and 7 September 1977 that the suspension of supplies to harder, decided upon by TFR by reason of numerous infringements of the agreement committed by him, could be terminated only when harder had helped to explain the infringements as provided by the standard selective distribution agreement. Supplies were not resumed because harder never complied with those conditions. In those circumstances there is no reason for taking into account the proposal from the Freiburg sales office, which TFR never followed up.

86. It must be agreed that in the light of the documents in the file the failure to re-admit harder appears to have been due solely to Harder's not having complied with the obligations laid down by the standard agreement so as to expunge the consequences of an infringement thereof and that in the absence of any expression of opinion on the part of the competent officers of TFR there is no evidence justifying the supposition that if harder had satisfied the above-mentioned conditions additional undertakings would have been required of him over and above the obligations resulting from the selective distribution system. The case of harder cannot therefore be regarded as adequately proved.

2. In France

(a) Auchan

87. According to the Commission (point (23) of the decision), ATF, AEG's subsidiary for France, was by no means disposed to admit Auchan to its distribution network. Auchan's admission, it is alleged, took place only after Auchan had undertaken to adhere to the prices recommended by ATF and to terminate all press advertisements for Telefunken products.

88. AEG claims that it could not have admitted Auchan before it had undertaken not to infringe competition rules.

89. AEG's assertion is by no means supported by the documents in the file, which, like the ATF memorandum of 21 March 1978, show only that Auchan was "one of the keenest discounters" charging extremely low prices but provide no evidence which would justify a statement that such prices were contrary to national legislation on competition.

90. On the other hand it appears from an ATF memorandum of 20 October 1978 that an agreement between ATF and Auchan was possible on the following conditions, namely that Auchan "would be willing, in exchange for our deliveries, which it claims are urgent as it is no longer prepared to work with grundig, to withdraw all press advertisements featuring our television sets and to adhere to our recommended prices on condition that in the town where the products are sold no shop of any kind charges lower prices, in which case it would have to bring its own into line". Auchan was admitted to the AEG distribution system on 3 November 1978.

91. It May be seen from the foregoing that, to obtain supplies of Telefunken contract goods, Auchan was prepared to impose its own limitations on its freedom to engage in price competition by refraining from charging prices below the lowest prices charged by traders in the town where the products were sold. Such an undertaking is clearly not in conformity with the conditions of the standard agreement.

(b) Iffli

92. In an ATF memorandum of 30 June 1978, referred to in point (26) of the decision, it is actually stated that : "Mr Iffli undertakes to adhere to our prices and gives an assurance that his purpose in choosing Telefunken is not to smash the brand".

93. AEG's explanations, according to which the expression "our prices" refers to ATF selling prices to Iffli and the undertaking "not to smash the brand" amounts to an undertaking not to sell at prices contrary to competition rules, do not ring true. In fact the expression "our prices" used by ATF could not be immediately understood if it referred to anything other than retail selling prices and the expression "smash the brand" would generally imply nothing other than a sale at prices which a manufacturer might regard as prejudicial to the well-established reputation of his products. That point of view, which is asserted by the Commission, moreover finds additional support in the same memorandum of 30 June, in which it is stated that Iffli had asked ATF for its conditions for purchase and that ATF had explained to him its price policy, in particular the criteria to be adopted in order to calculate "the retail selling price including all taxes with a 25% margin".

94. ATF 's concern to avoid price competition May be seen moreover from another passage in the same memorandum in which it is stated that : "we thought it would be better to arrange a fixed price policy agreement for Metz between le Roi de la Télé, Iffli and Darty than to leave Iffli on the sidelines. The latter would in any case manage to obtain Telefunken equipment and we should then no longer be able to ensure compliance with our price policy".

3. In Belgium

(a) Diederichs

95. AEG asserts that the refusal to admit the wholesaler Diederichs (points (36) to (39) of the disputed decision) was based on considerations relating to Diederichs's inability to satisfy the specialist trade conditions.

96. That argument cannot be upheld. In actual fast it is impossible to find in the correspondence between ATBG and Diederichs or in the TFR or ATBG internal documents any mention of the conditions which Diederichs is supposed not to have met, except for a reference to the fact that Diederichs had acted contrary to competition rules in importing Telefunken contract goods from Germany and that, to be admitted as an approved distributor, he would have to undertake to abstain from such conduct in future. However, effecting parallel imports cannot be regarded as an infringement of the rules of competition, whereas an undertaking no longer to effect such imports is manifestly an infringement of Communiy law since it would allow a manufacturer to wall off national markets and thus to circumvent the principle of the free movement of goods.

97. It must thus be concluded that the only reasons for the refusal to admit Diederichs were reasons relating to the Maintenance of a specific distribution structure over the various national markets, as emerges moreover very clearly from the statement in a TFR memorandum of 28 October 1977 that AEG-Brussels was "opposed to the inclusion of Diederichs in the interests of distribution policy".

B -The cases of territorial protection

98. Point (29) of the decision states that ATF allocated to the distributors whom it had recruited a specified sales territory in which it promised them a total absence of competitors in the distribution of Telefunken products. ATF is said to have refused all applications for admission from other dealers within that area.

99. AEG claims that a correct application of the selective distribution system required from ATF only a negative obligation consisting in not refusing to accept into the system applicants who satisfied the specialist trade conditions, but not a positive obligation consisting in canvassing all distributors who satisfied those conditions so as to persuade them to join the AEG-Telefunken selective distribution system. In these circumstances, it claims, it is impossible to speak of an improper application of the system unless it can be shown that applicants satisfying the conditions for admission were rejected for reasons of territorial protection.

100. The question whether any territorial protection existed must be considered both from the point of view of a guarantee against the initiatives of approved re-sellers from other areas and from that of a guarantee against the admission of fresh dealers in a given area.

1. The case of le Roi de la Télé

101. It May be seen from a letter of 9 November 1972 from ATF that ATF felt it could not comply with a request for supplies from Mr Iffli because of its commitments with regard to distribution in the Metz area with le roi de la television. An ATF internal memorandum of 30 June 1978 states : "we are aware of the problem which this application raises as regards metz in view of the exclusive rights which le Roi de la Télé has had up to now. But a decision will have to be taken." That indicates that territorial protection had been granted to le Roi de la Télé even before the introduction of the selective distribution system until 1978 and was abandoned only when ATF, confronted with a fresh application from Iffli, took the view that both financial and legal considerations militated strongly against the rejection of the application.

2. Lama

102. Point (34) of the decision mentions in a letter of 23 October 1978 in which ATF wrote to the wholesaler Lama in Paris that : "in the case of wholesalers it is normal that we should grant them de facto exclusive rights over a given territory, although that is becoming illegal in the light of the scrivener circular".

103. AEG claims that that letter does not prove specific conduct on the part of ATF designed to refuse admission of a trader to its distribution network so as to grant territorial protection to an approved re-seller and that the sentence quoted by the Commission was used simply to stress, with some exaggerations normal in trade reports, ATF's readiness to oblige a trade associate.

104. It must however be observed that a grant of de facto exclusive rights cannot be put into effect except by excluding other distributors active in the same area as the approved re-seller. By acknowledging that the grant of de facto exclusive rights was in keeping with its normal practice and by confirming its undertaking to Maintain that practice with regard to lama, ATF therefore itself provided evidence of improper conduct.

3. Radio du Centre

105. In a letter of 2 March 1978 ATF wrote to Radio du Centre that its commercial objectives in the colour television and radio-electro-acoustics sector for 1978 "oblige us to reconsider our 1977 agreements as far as the allocation of your area of activity for our brand is concerned". If ATF was obliged, in order to arrange a joint operation by Radio du Centre and Sner in the department of Puy-de-Dome, to amend the agreements entered into with Radio du Centre, it is impossible to avoid the conclusion that those agreements guaranteed Radio du Centre territorial protection which prevented ATF from accepting in the same area applications for admission from other traders.

4. Schadroff

106. The wholesaler Schadroff, Bourg St Andeol, complained that a wholesaler from Marseille had made offers in its sales area and ATF wrote to Schadroff on 13 April 1979 to the effect that one of its employees had "asked the Marseille wholesaler to stop making such offers in your sales area" and reminded Schadroff that he enjoyed "de facto exclusive rights... which we have always defended, as we have proved on numerous occasions". That letter shows that ATF took active steps to prevent other approved traders from invading the exclusive sales area granted to Schadroff.

C -The cases of influence brought to bear on prices

1. Direct influence

(a) In the Federal Republic of Germany

(I) Suma

107. The memorandum from the AEG sales office in Munich dated 20 April 1977 in which it is stated that Suma had promised "not to act as a price leader but, at most, to take the lowest price on the market and, if possible, to adopt a position somewhere between average shop prices and the lowest prices" leaves no doubt that Suma was induced to restrict its freedom of competition in the matter of selling prices.

(II) Holder

108. A TFR memorandum of 30 November 1976, mentioned in point (41) of the decision, states that TFR had "explained in detail to holder the distribution and price-fixing policy".

109. AEG has claimed in that connection that that case concerned a conversation relating to the introduction of a quite new item of TFR equipment, the trx 2000, which however was very dear. The need for it to be very carefully launched made it necessary to explain in detail to re-sellers the method of distribution of the equipment and the prices which could best ensure its commercial success.

110. Even on the supposition that, as is probable, TFR did not restrict itself to giving holder information as to the price which, regard being had to the market situation, was best adapted to the launch of the new equipment, but actually intended to fix a selling price for it, nevertheless, in contrast to the Suma case in which the price undertaking covered the whole range of Telefunken contract goods, the infringement of the competition rules would concern here only a single model within a single category of contract goods and in respect of one small retailer, which would mean that this shortcoming was deprived of most of its significance.

(b) In France

(I) Darty

111. An ATF letter of 26 May 1978, mentioned in point (42) of the decision, refers to an "undertaking given by the Darty Company to increase its retail prices".

112. The fact that the undertaking given by Darty consisted in bringing to an end a promotional campaign in the Paris region and in reverting to its original prices in no way means that the steps taken by ATF to achieve that result did not amount to unlawful influence brought to bear on prices. AEG's statement that the word "undertaking" was used in error, whereas what was involved was a unilateral decision on Darty's part, lacks plausibility, the more so as a visit to Darty of one of ATF's managers concerned, as a memorandum of 5 June 1978 expressly shows, "prices charged for colour television sets in Paris".

(II) The Paris distributors

113. The aforementioned memorandum also refers, as regards the Paris region, to the fact that on 2 June 1978 "everybody" seemed willing to increase prices and that only Fnac had not already done so, for which reason ATF's Mr Hondre was to make contact with Fnac.

114. AEG denies that the expression "everybody" can relate to "the retailers in Paris supplied by ATF" as is stated in point (43) of the decision, but the third heading in the memorandum ("prices charged in Paris"), together with the word "everybody", is in conflict with the view that that memorandum concerned only Darty and Fnac.

115. In those circumstances the existence of an agreement on prices between AEG and the retailers in the Paris region May be regarded as proved.

(III) Camif

116. Point (44) of the decision bases the Camif case on the following passage from an ATF memorandum of 5 June 1978 : "in view of the fact that certain retailers, including Darty, regard Camif as a normal customer and thus as a competitor and are therefore inclined to align themselves on Camif price catalogues, we took steps on 2 inst. To ask Mr Dechambre to increase the retail prices of goods in his 1978 winter catalogue". In view of this verbatim quotation AEG's mere assertion that ATF invited Camif to increase its prices so as to take account of an increase in AEG's selling prices which was to take place in September 1978 seems very unconvincing.

(IV) Cart

117. In a letter of 4 November 1977, mentioned in point (46) of the decision, ATF reminds cart of the price agreement between the two undertakings and emphasizes that cart's failure to comply with those commitments can only "cast a shadow over our commercial relations". It adds that : "the reaction of certain of our representatives has inevitably come to our notice, since they feel that cart, instead of encouraging the keeping up of prices, is selling off dirt cheap". ATF finally asks cart if it would be possible to stop the distribution of the cart catalogue containing the disputed prices or if necessary to withdraw it.

118. The request to keep prices up, which was the purpose of the letter of 4 November 1977 can in no way be justified by reference to the need to take account of an increase in selling prices to the wholesale trade which took place only in September 1978. Furthermore the letter of 21 July 1978, informing cart of that increase, is not restricted simply to indicating the retail selling prices which might be charged to take account thereof, but adds : "as agreed between us, we ask you to take account in the publication of your catalogue of the retail selling prices set out above and to regard them as minimum prices".

(v) Fnac, Darty and Grands Magasins

119. An ATF memorandum of 13 October 1978 (point (45) of the decision), entitled "retail prices as from 18. 9. 1978", contains the following passage : "we are arranging with our customers siege," that is to say Darty, "Fnac and grands magasins for all these prices to be applied on 2 November 1978". Even if, as AEG asserts, that passage relates only to the passing on in the retail prices of the increase in the wholesale prices, the fact reMains that ATF exerted pressure on certain of its distributors to pass the increase on as soon as possible and even concluded an agreement with them to that effect.

(VI) Capoferm

120. It May be seen from an ATF internal memorandum of 3 April 1979 that the retail groups Capoferm/Darty had given an undertaking to ATF that a special premium which had been granted to them to pay for old television sets handed in as a means of promoting the sale of new sets would not be used to reduce retail prices.

121. In view of the fact that that premium was already deducted from the price invoiced by ATF, the distributor was in practice undertaking to preserve the same profit margin both in the event of the handing in of an old set and thus of the payment of the premium to the customer and in the event of the set's being sold without the production of an old one. That undertaking to retain a minimum price even where, in the absence of the handing in of an old set, the premium May be regarded as a mere advantage granted to the distributor, amounts to a price agreement which is incompatible with Communiy competition law.

(c) In Belgium

(I) Verbinnen

122. Point (39) of the contested decision refers to the fact that, according to information provided by the Belgian retailer Verbinnen, ATBG had requested him in January or February to increase the price of a Telefunken television set so as to bring it up to the retail price level in that part of Belgium.

123. The information supplied by Verbinnen to the Commission in two letters of 3 and 27 November 1980 does not show that ATBG exerted pressure to require him to keep to certain retail selling prices. Nor does it emerge from the letter of 27 November that ATBG attempted to force Verbinnen to charge the prices fixed by Telefunken. Verbinnen himself uses in his letter the dutch word "voorstellen", which means "suggestions" and it would no doubt be going too far to take the view that a reference in an informal conversation to a price which ATBG regarded as chargeable for a given type of equipment is in itself tantamount to bringing an unlawful influence to bear on prices.

2. Indirect influence

(a) Suma

124. Point (49) of the decision states, with reference to a TFR memorandum of 20 April 1977 that a good conduct bonus of 2% on turnover had been promised to Suma as a reward for the restraint it had shown in the field of price competition.

125. AEG has provided various explanations regarding the nature of that bonus : at the hearing on 19 august 1980 it stated that it was a recompense for making available advertising space in shop windows and shops ; subsequently it claimed that it was in fact only an extra rebate in view of Suma's importance as a customer.

126. Mr Waltenberger, Suma's manager, for his part stated on 2 September 1980 to an officer of the Commission that : "the good conduct bonus of 2% offered by AEG in talks with Suma on 20 April 1977 "(cf. AEG memorandum of that date)" was to be granted on the ground that AEG was in principle to be informed of the Article to which the publicity campaign related before press advertisements appeared. In addition AEG-Telefunken secured agreement that particularly aggressive prices offered by competitors would be communicated to Telefunken and would not be immediately adopted by Suma unless it was clear that they were campaigns by competitors of unlimited duration".

127. A letter of 15 October sent to the Commission by AEG's lawyers, which Mr Waltenberger by a telex message of 29 October 1980 declared to be fully in accordance with the facts, denies that any influence was brought to bear on prices but expressly concedes that the "bonus" was officially presented as a reward for information with which Suma supplied Telefunken on market trends.

128. Even if, interpreting all the statements mentioned above in the way most favourable to AEG, the Court were to take the view that the 2% bonus related simply to an undertaking on the part of Suma to inform TFR of the prices charged by Suma itself and the other distributors, there is no doubt that such an undertaking was such as to allow TFR to keep a check on the prices charged by Suma, which had expressly agreed, as is clear from the memorandum of 20 April 1977 from the AEG sales office in Munich, to adopt a moderate attitude with regard to competition and to facilitate TFR's intervention if other approved distributors operated too aggressive a price policy. Since the obligation linked with the bonus thus had the effect of facilitating TFR's control over prices, it must be concluded that the bonus amounted in fact to a means of exerting an indirect influence on prices.

3. Other individual cases of influence brought to bear on prices

(a) Wilhelm

129. In a letter of 22 july 1976 to the Saarbrucken sales office, TFR asked for information about wilhelm's "very disturbing prices" and asked the reasons for "this fresh price-offensive". However, contrary to the Commission's view, an implied request to take steps against an undertaking charging reduced prices cannot be deduced from that letter, which May very well be interpreted as requesting the addressee to check whether Wilhelm's conduct was correct. In fact that was the sense in which the letter was understood by the Saarbrucken sales office, which replied on 22 July 1976 that Wilhelm's offers formed part of normal price competition.

(b) Schlembach

130. In a memorandum of 9 September 1977, mentioned in point (51) of the decision, the employee in charge of TFR's cologne office reported that on 8 September 1977 he had held a "frank and at times heated discussion" with the retailer Schlembach concerning his newspaper advertising of Telefunken products and that he had made it clear that "a repetition of the advertisements would lead to a considerable worsening of relations". Since AEG has not succeeded in adducing any evidence in support of its allegation that the advertisements in question constituted an infringement of German competition law, it must be stated that the threats of an interruption of trade relations were completely unjustified and were simply designed to exert an improper influence on the prices of the trader in question.

(c) Gruoner, Sudschall and Massa

131. The cases of Gruoner, Sudschall and Massa were wrongly mentioned in the decision since, as May be seen from a report of 31 October 1978 from the Mannheim sales office, those undertakings had marketed, at very low prices stigmatized by TFR as disruptive, imperial model television sets which were not subject to the Telefunken selective distribution system. In such cases there can therefore be no question of an improper application of that system.

(d) Kaufhof (Kassel) and Hertie (Frankfurt)

132. In the report of 31 October 1978 previously referred to, it is stated that offers at very low prices made inter alios by kaufhof (Kassel) and hertie (frankfurt) had disrupted the market and that "considerable efforts were needed before order could be restored".

133. AEG states that that expression refers to the efforts which it had to make to convince the other distributors, who were alarmed by those two retailers'very low prices, that the special offers made by Kaufhof and Hertie were not based on specially advantageous conditions of supply offered to them by TFR.

134. As the Commission has not attempted to clarify that point, the rather vague sentence in the document referred to above cannot be regarded as sufficient evidence to establish the existence of an infringement.

D -Conclusions regarding the individual cases

135. An examination of the individual cases referred to by the Commission makes it possible to reach the following conclusions :

(a) An improper application of the selective distribution system must be regarded as sufficiently proved in law in the following cases : ratio, Auchan, Iffli, Diederichs (admission subject to improper conditions) ; le Roi de la Télé, Lama, Radio du Centre, Schadroff (territorial protection) ; Suma, Darty, Camif, Cart, Fnac (direct influence brought to bear on prices) ; Darty, Fnac, dealers in Paris and Grands Magasins (price agreement) ; Suma (indirect influence brought to bear on prices) ; and Schlembach (attempt to influence prices).

(b) On the other hand the evidence adduced by the Commission is not sufficient to prove an infringement of the competition rules in the cases of Harder, Holder, Wilhelm, Gruoner, Sudschall, Massa, Kaufhof (Kassel), Hertie (Frankfurt) and Verbinnen, whilst the Mammouth case cannot be considered because it was not mentioned in the Statement of Objections and was not communicated to AEG before the decision was adopted.

136. It is clear from the foregoing considerations that AEG's systematic conduct in the improper application of the selective distribution system must be regarded as having been sufficiently proved in law. The fact that the Commission has not succeeded in proving a number of individual cases does not call in question the systematic nature of AEG's improper conduct and does not affect the scope of the infringement as determined by the Commission in its decision of 6 January 1982.

137. The Court feels that it must emphasize the gravity of such an infringement, which consists in applying a selective distribution system, after its approval by the Commission, in a manner contrary to the undertakings entered into by the applicant, upon which the compatibility of the selective distribution system with Article 85 of the treaty depended.

138. In these circumstances there are no grounds for fixing the fine at an amount other than that determined by the Commission. AEG's application for a declaration that the Commission's decision of 6 January 1982 is void must therefore be dismissed in its entirety.

IV -interest

139. The question whether AEG is required to pay interest on the amount of the fine until the date of the actual payment reMains to be considered.

140. During the proceedings AEG claimed that there was no legal basis in Communiy law for any requirement to pay default interest.

141. There can be no doubt that, particularly in a situation typified by very high interest rates, there May be a considerable advantage for an undertaking in delaying the payment of a fine as long as possible. If the view were to be taken that measures designed to offset that advantage were not permissible in Communiy law that would amount to encouraging manifestly unfounded actions with the sole object of delaying payment of the fine. It is impossible to imagine that such an effect was intended when the provisions of the treaty concerning legal remedies against measures adopted by the institutions were drafted.

142. Moreover the same principle is expressed in Article 86 (2) of the rules of procedure of the Court according to which, if the Court adopts an order suspending the operation of a measure or any other interim order, "the enforcement of the order May be made conditional on the lodging by the applicant of security of an amount and nature to be fixed in the light of the circumstances".

143. On the basis of the foregoing considerations it is clear that AEG must pay the Commission default interest on the amount of the fine. As regards the amount to be paid in that connection, as AEG has not disputed either the rate of interest due to the Commission or the date from which the interest is payable, there is no need for the Court to arrive at a decision in that respect.

Costs

144. Under Article 69 (2) of the rules of procedure, the unsuccessful party is to be ordered to pay the costs if they have been asked for in the successful party's pleading. As the applicant has failed in its submissions it must be ordered to pay the costs.

On those grounds

THE COURT

Hereby :

1. Dismisses the application ;

2. Orders AEG-Telefunken Ag to pay to the Commission of the European communities default interest on the fine imposed ;

3. Orders the applicant to pay the costs incurred by the Commission of the European Communities.