CJEC, September 23, 1986, No 5-85

THE COURT OF JUSTICE OF THE EUROPEAN COMMUNITIES,

1. By an application lodged at the Court registry on 14 January 1985, AKZO Chemie BV and AKZO (hereinafter together referred to as ' AKZO '), whose registered offices are at Amersfoort (Netherlands) and Walton-on-Thames (United Kingdom) respectively, brought an action under the second Paragraph of Article 173 of the EEC treaty for a declaration that the decision of 6 November 1984 in which the Commission ordered the applicants, pursuant to Article 14 (3) of Regulation No 17, to submit to investigations is void.

2. Reference is made to the report for the hearing for the facts of the case and the submissions and arguments of the parties, which are mentioned or discussed hereinafter only so far as is necessary for the reasoning of the Court.

3. AKZO Chemie BV and AKZO are part of the AKZO group which is the principal supplier in the Community of Benzoyl Peroxide, a chemical product used both in the making of plastics and as a bleach for flour.

4. Benzoyl Peroxide is also manufactured by a small company, engineering and chemical supplies Ltd (hereinafter referred to as ' ECS '), whose registered office is at Stonehouse (United Kingdom). Until 1979, ECS's only customers were British flour mills. From that time, ECS began to sell to plastics manufacturers and to compete with AKZO on that larger market.

5. On 15 June 1982, ECS made a complaint to the Commission alleging an infringement of Article 86 of the EEC treaty. It claimed that in order to oblige it to withdraw from the plastics market, AKZO had threatened to force it from the flour additives market by a policy of selective selling at abnormally low prices and actually carried out that threat. Following that complaint, Commission officials, in December 1982, carried out investigations on the premises of AKZO Chemie BV and of AKZO.

6. On 8 June 1983, the Commission decided to open against AKZO the procedure laid down in Article 3 of Regulation No 17. In July 1983, it adopted interim measures imposing certain obligations on AKZO in regard to its pricing policy in the flour additives sector (decision No 83-8-462 of 23 July 1983, Official Journal, L 252, p. 13).

7. In a Statement of Objections dated 3 September 1984, the Commission complained that AKZO had infringed Article 86 of the treaty by threatening to sell Benzoyl Peroxide for use as a bleach for the treatment of flour to ECS ' s customers at abnormally low and discriminatory prices and actually carried out that threat.

8. On 22 October 1984, AKZO transmitted to the Commission the first part of its reply to the Statement of Objections. It contended in particular that it had in no way abused a dominant position.

9. On 26 October 1984, a Commission official telephoned a member of AKZO's legal department to inform him that investigations under Article 14 (2) of Regulation No 17 would be carried out in regard to the plastics sector on 7 and 8 November on the premises of AKZO Chemie BV and on 12 and 13 November on the premises of AKZO, AKZO did not immediately react to that information.

10. During the afternoon of 6 November 1984, AKZO informed the Commission by telephone that it was not willing to submit to the scheduled investigations. In the course of that conversation, it stated that it would set out the grounds for its refusal in a letter which would reach the Commission that very day and that is in fact what occurred.

11. Some hours after that conversation, the member of the Commission responsible for competition matters adopted the decision which is the subject of these proceedings. The first Paragraph of Article 1 of that decision requires AKZO Chemie BV and AKZO to submit to an investigation into a suspected abuse of a dominant position in Benzoyl Peroxide in the common market or a substantial part thereof involving the making of threats against ECS and the implementation of a policy of abusive pricing designed to damage ECS.

12 The investigations were in fact carried out on 7 and 8 November in the Netherlands and 12 and 13 November in the United Kingdom.

13. In their application initiating the proceedings before the Court, the applicants advance four submissions against the contested decision. In their reply, they put forward three new submissions. It must first be verified whether the latter three submissions fulfil the conditions laid down in Article 42 (2) of the rules of procedure of the Court according to which no fresh issue may be raised in the course of proceedings unless it is based on matters of law or of fact which come to light in the course of the written procedure.

Admissibility of the submissions put forward in the reply 14 in the first submission, the applicants point out that the certified copy of the contested decision presented to them on the day on which the investigations were carried out was not signed. They deduce from that that the same must also have been true of the original and that, therefore, there is an irregularity in the decision. In the second submission, the applicants claim that the investigations were carried out at a time when they were preparing their reply to the Statement of Objections concerning the flour additives sector and that those investigations hindered the normal exercise of their right to a fair hearing. Finally, in their third submission, the applicants consider that the Commission misused its powers to the extent that the contested decision requiring them to submit to an investigation in the plastics sector was adopted solely for the purpose of punishing them for contesting the Statement of Objections in regard to the flour sector. They refer in that connection to threats which they allege were made by the Commission official in charge of the case in the course of a telephone conversation on 1 October 1984. They explain that they raised that submission in their reply because it was only during the written procedure that they became aware that the Commission approved of the conduct of its official.

15. From the very terms in which the first two submissions are presented it can be seen that they are based on facts which were known to the applicants before the action was brought. The certified copy of the contested decision was presented to them on the very day on which the investigations were carried out. The inconveniences which, according to the applicants, were caused by the time chosen by the Commission for carrying out its investigations were in any event clear before the action was brought. Since they were put forward for the first time in the reply, although they are not based on matters of law or fact which came to light in the course of the written procedure, both submissions must be declared inadmissible.

16. With regard to the third submission, it must first be pointed out that the Commission official in charge of the case spoke to AKZO's managers in his capacity as agent of the Commission. If there were any threats, they were uttered by the responsible official in the performance of his duties. Furthermore, the applicants should have been made aware by the adoption of the contested decision that the alleged threats had been carried out. All this shows that at the time when the action was brought the applicants should have known that the unlawful purposes allegedly pursued by the contested decision could be imputed to the Commission itself.

17. The three submissions raised by the applicants in the reply must therefore be declared inadmissible.

Substance of the Case

18. In their first submission, the applicants claim that the contested decision does not contain an adequate statement of the reasons on which it is based. They point out that they sent the Commission a letter justifying their refusal to submit voluntarily to the investigations which the Commission wished to carry out. The applicants consider that the Commission ought therefore to have stated in its decision the reasons for which it rejected their arguments.

19. The Commission considers that it was under no obligation to refute those arguments in its decision.

20. It must be pointed out that Article 14 (3) of Regulation No 17, which sets out the matters which must be specified in a decision adopted thereunder, does not require the Commission to reply to arguments put forward by the undertakings concerned. The purpose of that provision is to enable the Commission to carry out investigations without the consent of the undertakings and without prior warning. In those circumstances, the fact that the Commission, in this case, informed the undertakings that investigations under Article 14 (2) of Regulation No 17 were to be carried out cannot have the effect of imposing on it a more extensive obligation to state the reasons for its decision than that to which it would have been subject if it had forthwith carried out an investigation under Article 14 (3) of the same Regulation. It must therefore be concluded that in this respect the decision at issue contains an adequate statement of the reasons on which it is based.

21. In their second submission, the applicants claim that the decision is unlawful inasmuch as it was adopted without the competent national authorities being consulted, as required by Article 14 (4) of Regulation No 17. 22 the Commission points out that it has produced to the Court a memorandum which shows that the competent Netherlands authority was consulted on 6 November 1984. Moreover, a letter from the office of fair trading dated 20 December 1984, which has also been produced to the Court, proves that the competent British authority was also properly consulted. It is true that that consultation took place by telephone and that no minute of it was drawn up, but the Commission contends that there is no obligation to draw up such a minute.

23. The documents supplied by the Commission do in fact show that the competent Netherlands and British authorities were consulted before the decision was adopted.

24. It is of little importance that the consultation was carried out informally and, as in the case of the British authorities, by telephone and without a minute of it being drawn up. Since the purpose of Article 14 (2) of Regulation No 17 is to enable the Commission to carry out investigations without prior warning on the premises of undertakings suspected of infringements of Articles 85 and 86 of the treaty, the Commission must be able to adopt its decision without being made subject to conditions of a formal nature which would have the effect of delaying such adoption.

25. In their third submission, the applicants complain that the decision is incompatible with the fundamental principles laid down in Article 8 of the European Convention for the Protection of Human Rights and Fundamental Freedoms inasmuch as it was adopted without complying with the procedure laid down in Article 14 (3) of Regulation No 17 not with standing the fact that only compliance with that procedure makes it possible to ensure that the decision is adopted in accordance with those fundamental principles.

26. The Commission contends that all of the guarantees required by Article 14 (3) of Regulation No 17 were provided in this case and all the matters which that Article required to be specified were in fact specified.

27. The applicants themselves admit that if the conditions laid down in Article 14 (3) of Regulation No 17 are fulfilled, a decision ordering an undertaking to submit to an investigation is not contrary to the fundamental principles laid down in Article 8 of the European Convention for the Protection of Human Rights and Fundamental Freedoms. As can be seen from the examination of the first two submissions, that is so in this case. The third submission must therefore also be rejected.

28. In their fourth submission, the applicants first challenge the delegation of authority under which the contested decision was adopted inasmuch as it is not in accordance with the principle of collegiate responsibility laid down in Article 17 of the treaty of 8 April 1965 establishing a single Council and a single Commission of the European Communities (hereinafter referred to as ' the merger treaty '). Such a system does not provide parties to proceedings with the same guarantees. Thus, the failure to publish the decision delegating authority to certain members of the Commission makes it impossible to review the legality of that delegation. Furthermore, the decision is, according to the applicants, the result of a misuse of the authority delegated inasmuch as the delicate circumstances surrounding the investigations should have led the member of the Commission responsible for competition matters to have the decision adopted by the full Commission.

29. For its part, the Commission emphasizes first that the system of delegation of authority which it has established guarantees respect for the principle of collegiate responsibility because machinery is provided which ensures that important decisions are adopted by the full Commission. Moreover, it points out that a decision ordering an undertaking to submit to investigation is a straightforward measure of management and there was therefore no need in this case to refer it to the full Commission.

30. With regard to the first part of the fourth submission concerning the compatibility of the system of delegations of authority with the principle of collegiate responsibility, it must first be pointed out that that principle is to be traced to Article 17 of the merger treaty according to which ' the Commission shall act by a majority of the number of members provided for in Article 10. A meeting of the Commission shall be valid only if the number of members laid down in its rules of procedure is present '. The principle of collegiate responsibility thus laid down is founded on the equal participation of the members of the Commission in the adoption of decisions and it follows from that principle, in particular, that decisions should be the subject of a collective deliberation and that all the members of the college of commissioners bear collective responsibility on the political level for all decisions adopted.

31. It is also necessary to describe, particularly from the point of view of the system of delegations of authority, the measures adopted by the Commission in order to prevent the rule requiring collective deliberation from having a paralysing effect on the full Commission.

32. In the first place, on 23 July 1975, the Commission introduced into its provisional rules of procedure a new Article 27 according to which ' subject to the principle of collegiate responsibility being respected in full the Commission may empower its members to take, in its name and subject to its control, clearly defined measures of management or administration ' (Official Journal, l 199, p. 43).

33. In the second place, on the same date, the Commission adopted an internal decision laying down the principles and conditions on which delegations of authority would be granted. According to the information supplied by the Commission in reply to a question put to it by the Court, that decision established certain procedural guarantees in order to ensure that the decisions adopted pursuant to a delegation of authority complied with the principle of collegiate responsibility. Thus, decisions delegating authority must be adopted at meetings of the Commission and such delegations may only be made to designated persons for designated categories of everyday measures of management or administration. Furthermore, the person to whom authority has been delegated may adopt a decision only if all the departments concerned are in agreement and only if he is satisfied that the decision does not need, for whatever reason, to be considered by the full Commission. Finally, all decisions adopted under a delegation of authority are transmitted on the day following their adoption to all the members of the Commission and to all departments.

34. In the third place, in the particular sphere of competition law, the member of the Commission responsible for competition matters was granted, by decision of 5 November 1980, the power to adopt in the name of the Commission certain procedural measures provided for in Regulation No 17. He may decide alone to initiate the procedure, on his own, to seek information from undertakings and to order an undertaking to submit to an investigation under Article 14 (3) of Regulation No 17.

35 With regard to the compatibility of that system with the principle of collegiate responsibility, it should be pointed out that in its judgment of 17 January 1984 (joined Cases 43 and 63-82, VBVB and VBBB V Commission, (1984) ECR 19), the most recent decision on that point, the Court decided that the Commission could, within certain limits and subject to certain conditions, authorize its members to adopt certain decisions in its name without the principle of collegiate responsibility which governed its functioning being impaired by such authorization. Two considerations underlie that settled case-law.

36. On the one hand, such a system of delegation of authority does not have the effect of divesting the Commission of powers by conferring on the member to whom authority is delegated powers to act his own right. decisions adopted under a delegation of authority are adopted in the name of the Commission, which is fully responsible for them, and may be the subject of an application for annulment under the same conditions as if they had been considered by the full Commission. Moreover, the Commission has set up machinery making it possible to reserve for the full Commission certain measures which could be adopted under a delegation of authority. Finally, it has retained the right to reconsider the decisions granting delegations of authority.

37. On the other hand, limited to specific categories of measures of management or administration, and thus excluding by definition decisions of principle, such a system of delegations of authority appears necessary, having regard to the considerable increase in the number of decisions which the Commission is required to adopt, to enable it to perform its duties. The need to ensure that the decision-making body is able to function corresponds to a principle inherent in all institutional systems and which is set out in particular in Article 16 of the merger treaty, according to which ' the Commission shall adopt its rules of procedure so as to ensure that both it and its departments operate... '.

38. Contrary to what the applicants maintain, a decision ordering an undertaking to submit to an investigation is a form of preparatory inquiry and as such, must be regarded as a straightforward measure of management. That is true even if the undertakings are opposed to the investigation. The power conferred on the Commission by Article 14 (3) of Regulation No 17 is exercised precisely and above all when the Commission expects that the undertakings will not submit voluntarily to an investigation.

39. With regard to the argument based on the failure to publish the decision granting the delegation of authority, it is true that the principle of legal certainty and the need for administrative decisions to be transparent require that the Commission should publish decisions granting delegations of authority as if they were rules of procedure, such as those contained in the decision of 23 July 1975, which lays down the general framework in which such decisions are adopted. However, the failure to publish the decision delegating authority to the member of the Commission responsible for competition matters did not deprive the applicants of the opportunity of contesting that decision or the decision adopted under the delegation of authority on the ground that they were defective.

40. In those circumstances, it must be held that the decision of 5 November 1980 authorizing the member of the Commission responsible for competition matters to adopt in the name of the Commission and subject to its control a decision under Article 14 (3) of Regulation No 17 ordering undertakings to submit to investigations does not breach the principle of collegiate responsibility laid down in Article 17 of the merger treaty.

41. With regard to the second part of the submission concerning misuse in this case of the authority delegated, it must be pointed out that the failure of the undertakings concerned to agree to the scheduled investigations is not a ground which ought to have led the member of the Commission responsible for competition matters to have the measure considered by the full Commission. As has already been remarked, decisions ordering investigations under Article 14 (3) of Regulation No 17 are, by definition, adopted in cases in which the Commission expects that the undertakings will not submit voluntarily, for whatever reasons, to investigation.

42. The member of the Commission responsible for competition matters was therefore entitled to adopt the contested decision in the name of the Commission.

43. In the light of the foregoing considerations, it must be concluded that the submissions relied on by the applicants in their application are unfounded and that the action must therefore be dismissed.

Costs

44. Under Article 69 (2) of the rules of procedure the unsuccessful party is to be ordered to pay the costs. Since the applicants have failed in their submissions, they must be ordered to pay the costs.

THE COURT (fifth chamber)

Hereby:

(1) Dismisses the application;

(2) Orders the applicants to pay the costs.