CJEC, president, December 14, 1999, No C-364/99 P(R)

THE PRESIDENT OF THE COURT

1. By application lodged at the Registry of the Court of Justice on 1 October 1999, DSR-Senator Lines GmbH brought an appeal pursuant to Article 225 EC and the second paragraph of Article 50 of the EC Statute of the Court of Justice against the order of the President of the Court of First Instance of 21 July 1999 in Case T-191-98 R DSR-Senator Lines v Commission [1999] ECR II-2531 (hereinafter 'the order under appeal) rejecting its application for suspension of the operation of Commission Decision 1999-243-EC of 16 September 1998 relating to a proceeding pursuant to Articles 85 and 86 of the EC Treaty (Case No IV/35.134 - Trans-Atlantic Conference Agreement) (OJ 1999 L 95, p. 1) in so far as, in Articles 8 and 10, it imposes a fine of EUR 13 750 000 on the appellant.

2. As well as seeking to have that order set aside, the appellant requests:

- suspension of the operation of Decision 1999-243 with effect from 14 February 1999 in so far as, in Articles 8 and 10, it imposes a fine of EUR 13 750 000 on the appellant, no attendant obligation to be placed on the appellant to provide a bank guarantee;

- in the alternative, suspension of the operation of the above Decision subject to the conditions proposed by the appellant to the Commission by letter of 1 June 1999;

- in the further alternative, referral of the case back to the Court of First Instance for a fresh decision; and

- that costs be reserved.

3. By documents lodged at the Court Registry on 25 and 26 October 1999, the Federal Republic of Germany and the Commission submitted their written observations to the Court.

Facts and procedure

4. The factual background to the dispute was described in the order under appeal as follows:

'1. The applicant was one of 15 shipping companies party to the Trans-Atlantic Agreement (the TAA), a conference agreement relating to liner shipping across the Atlantic, between northern Europe and the United States of America.

2. On 19 October 1994 the Commission adopted Decision 94-980-EC relating to a proceeding pursuant to Article 85 of the EC Treaty (IV/34.446 - Trans-Atlantic Agreement) (OJ 1994 L 376, p. 1), in which, first, it found thatcertain provisions of the TAA, in particular those relating to certain inland transport services in Community territory, infringed Article 85(1) of the EC Treaty (now Article 81(1) EC) and, second, it refused to apply to those provisions Article 85(3) of the Treaty and Article 5 of Regulation (EEC) No 1017-68 of the Council of 19 July 1968 applying rules of competition to transport by rail, road and inland waterway (OJ, English Special Edition 1968 (I), p. 302). Decision 94-980 prohibited the undertakings to which it was addressed from engaging, inter alia, in price-fixing practices which had the same or a similar object or effect as the provisions contained in the TAA.

3. Following numerous discussions with the Commission, the parties to the TAA notified to the Commission on 5 July 1994 a new agreement intended to replace the TAA, called the Trans-Atlantic Conference Agreement (the TACA), which entered into force on 24 October 1994. Because of a succession of amendments, five new versions of the TACA were notified to the Commission after 5 July 1994.

4. On 16 September 1998 the Commission adopted Decision 1999-243 ...

5. According to Articles 1, 2 and 3 of [Decision 1999-243], the parties to the TACA infringed Article 85(1) of the Treaty, Article 53(1) of the Agreement establishing the European Economic Area (EEA) and Article 2 of Regulation No 1017-68 by entering into an agreement under which they engaged in various anti-competitive activities.

6. Articles 5 and 6 of [Decision 1999-243] state that the applicant and the other parties to the TACA have infringed Article 86 of the Treaty (now Article 82 EC) and Article 54 of the EEA Agreement by altering the competitive structure of the market so as to reinforce their collective dominant position and by placing restrictions on the availability and contents of service contracts.

7. Article 8 of [Decision 1999-243] imposes a fine of EUR 13 750 000 on the applicant in respect of the infringements found in Articles 5 and 6. Article 10 provides that the fines laid down in Article 8 are to be paid within three months of the date of notification of the Decision.

8. By letter of 25 September 1998 the Commission notified the applicant of [Decision 1999-243]. In that letter it stated that, if the applicant brought an action before the Court of First Instance, it would not take any steps to recover the fine while the case was pending before the Court, provided that interest accrued on the amount due from the date on which the period for payment expired and that a bank guarantee acceptable to the Commission and covering both the principal sum and interest was provided no later than that date.

9. By letter of 16 December 1998, the applicant asked for a dispensation from the obligation to provide a bank guarantee. The Commission rejected that requestby letter of 10 February 1999, taking the view, in particular, that it had to be possible to raise the required guarantee from among the company's partners, bankers or shareholders. In addition, the Commission indicated that it was prepared to accept:

(a) a bank guarantee limited in time for a one-year period (automatically extended or subject to payment if revoked) while using the attached bank guarantee model;

(b) a payment scheme allowing the company to pay in instalments provided that late payment interest [was] calculated and that the outstanding balance of the debt [was] covered by a standard bank guarantee.

5. By application lodged at the Registry of the Court of First Instance on 7 December 1998, the appellant sought annulment of Decision 1999-243.

6. By separate document lodged at the Registry of the Court of First Instance on 1 March 1999, the appellant lodged an application pursuant to Article 242 EC for suspension of the operation of Decision 1999-243 pending delivery of the judgment in the main proceedings in so far as, in Articles 8 and 10, it requires the appellant to pay a fine of EUR 13 750 000, no attendant obligation to be placed on the appellant to provide the bank guarantee demanded by the Commission in its letter of 25 September 1998 as a condition for not immediately enforcing recovery of that fine.

The order under appeal

7. In the order under appeal it was found that the object of the application was in fact solely to obtain dispensation from the obligation to provide a bank guarantee as a condition for the fine imposed by Decision 1999-243 not being recovered immediately. It was then considered whether the appellant had proved that it was impossible for it to provide the guarantee demanded without jeopardising its existence and that the condition relating to urgency was therefore satisfied.

8. Initially, the President of the Court of First Instance acknowledged that the appellant had established with sufficient certainty that it was unable, by itself, to obtain the bank guarantee required by the Commission (paragraphs 61 to 63).

9. However, the view was taken that, when assessing the appellant's ability to provide the bank guarantee, account had also to be taken of the group of undertakings to which it belonged, directly or indirectly, bearing in mind both the public interest attaching to implementation of Commission decisions and the potential advantages which might accrue for a company's shareholders from its anti-competitive conduct (paragraph 64).

10. It was concluded that the appellant had not adduced evidence capable of proving that Hanjin - an undertaking which holds an 80% stake in the appellant, its subsidiary, and which was also an addressee of Decision 1999-243 - was not in a position to assist it for the purpose of providing the guarantee required by the Commission (paragraphs 65 to 69).

11. In particular, the fact that the appellant's shareholders, including Hanjin, had clearly stated that they did not intend to support the appellant did not prove that they were prevented from so doing. On the contrary, evidence produced by the Commission, which the appellant made no serious attempt to dispute, indicated that Hanjin's performance in 1998 had been healthy, as was its financial forecast for 1999.

12. On the ground that the condition relating to urgency had not therefore been satisfied, the application for interim relief was dismissed and the other pleas and arguments put forward by the appellant in support thereof were not considered.

Arguments of the parties

13. By way of a preliminary point, the appellant states that, following the order under appeal, it submitted to its shareholders a third request for assistance in providing the bank guarantee demanded by the Commission, but this was rejected by a shareholders' resolution of 28 September 1999.

First plea in law

14. The first plea in law raised by the appellant is that, in relying on the fact that the appellant had failed to show that one of its three shareholders was 'prevented from offering it assistance, the President of the Court of First Instance misinterpreted the condition relating to urgency and wrongly concluded that a risk of serious and irreparable damage had not been established. In reality, satisfaction of the condition required by the President of the Court of First Instance lies outside the appellant's control.

15. According to the appellant, the relevant question is not whether its shareholders are in a position to provide assistance but rather whether it, the appellant, has done everything that might reasonably be expected of it to procure such assistance.

16. It is not disputed that the appellant has no means whatsoever, legal or even moral, to extract any form of assistance from its shareholders. Theirs is a commercial decision to be taken by each shareholder as it sees fit.

17. Moreover, the reasoning of the President of the Court of First Instance rests on the presumption that only one of the shareholders - Hanjin - is in a position to assist,whereas such assistance is unlikely in the absence of similar contributions from the other shareholders.

18. Furthermore, the appellant contests as wholly unsubstantiated the statement in paragraph 69 of the order under appeal that 'Hanjin is prima facie in a sufficiently healthy position for the conclusion to be drawn that it would be able to provide the applicant with decisive assistance. It is clear from paragraph 41 that, on the contrary, the appellant had produced evidence to the Court establishing Hanjin's financial difficulties. On that point, the appellant also refers to a report dated 16 September 1999 appended to its appeal. This report, prepared by Professor Tae-Woo Lee of Korea Maritime University, brings to light Hanjin's financial difficulties.

19. The appellant adds that the five orders referred to in paragraph 64 of the order under appeal have no bearing here since, by contrast with the present case, they did not concern situations in which the applicants had clearly showed that they had requested assistance from their shareholders and that those requests had been expressly rejected. Moreover, those cases concerned mostly wholly-owned subsidiaries and there were no doubts as to the financial capacity of the main shareholder. Either the orders in question provide no information as to the facts characterising those cases or the cases to which they relate have features distinguishing them from the appellant's situation.

20. According to the appellant, it is in practice impossible to prove that its shareholders are 'prevented from assisting it; as a result, the appellant is deprived of access to interim relief. Such a criterion also entails discrimination between undertakings which belong to groups or which have one or more major shareholders, as compared with independent undertakings.

21. The appellant adds that the position adopted in the order under appeal is erroneously justified by 'the potential advantages which might accrue for a company's shareholder from its anti-competitive conduct (paragraph 64). That approach, which amounts to holding the group responsible for the infringement, is particularly unfair in the present case, since Decision 1999-243 imposed a separate fine on Hanjin in the amount of EUR 20 630 000.

22. By setting a condition impossible to satisfy, the reasoning adopted in the order under appeal infringes a number of fundamental rights: the right to benefit from a presumption of innocence; the right to a judicial remedy; rights of defence; and the right to a fair hearing. Fines imposed under Community competition law have a criminal law character and as such must be amenable to full judicial review. On that point, the appellant refers to a number of Member States where the law provides for the automatic suspension of decisions imposing penalties, inter alia in the field of competition law, in order to prevent any irreversible consequences for a person on whom such a penalty has been imposed but whose case has not yet been formally heard by an independent court or tribunal.

23. The appellant maintains also that, by virtue of the criteria applied, the order under appeal exceeds the scope of the action in the main proceedings since it makes the grant of suspension conditional upon access to financial resources extraneous to the main dispute, the shareholders not being liable for payment of the fine imposed on the appellant.

24. Lastly, the reasoning adopted in the order under appeal is contrary to the essential principle that undertakings are free to choose the legal form under which they intend to conduct their business.

25. The Commission, on the other hand, maintains that the reasoning adopted in the order under appeal is consistent with the established case-law of both the Court of Justice and the Court of First Instance. Moreover, the fact that the appellant did not challenge that case-law in the proceedings before the President of the Court of First Instance casts doubt on the admissibility of this plea at the appellate stage.

26. The Commission also challenges the attempts made by the appellant to distinguish its own case from those relating to the orders of the Court of Justice and the Court of First Instance cited in the order under appeal. In particular, there is no basis for the argument that the mere fact that shareholders expressly refuse to assist the undertaking concerned precludes the judge hearing an application for interim relief from taking the possibility of such assistance into account. Clearly, if there were any truth in that argument, shareholders would refuse assistance as a matter of course.

27. According to the Commission, the appellant's argument amounts to requiring the Commission - hence the taxpayer - to extend unsecured credit to the company, leaving the owner free to reap any future benefit from its activities. However, until such time as the fine has been annulled or reduced by the Court of Justice or the Court of First Instance, it is the owner, if it so wishes, that should take the necessary measures to ensure that the subsidiary can continue to operate.

28. The Commission contends that, in a case such as this, if the alleged serious and irreparable damage were to materialise, it would flow, not from the decision whose suspension is sought, but wholly from the attitude of the owner, which is in a position to prevent damage if it so wishes. Interim relief may be justified only if the owner itself is in financial difficulty.

29. If the owner chooses to withdraw its support from the undertaking, that is its own choice prompted by doubts as to the viability of the undertaking concerned. Accordingly, should the undertaking enter into liquidation, the fine and the obligation to provide a bank guarantee cannot be regarded as the real cause. The impossibility pleaded by the appellant therefore results from the choice of the owner.

30. In referring to the owner's support of the appellant, the order under appeal in no way exceeds the scope of the main action; nor does it call in question the appellant's freedom to organise its business activities as it wishes. The reference to the group'sfinancial situation does not imply any liability on the part of the owner as regards the fine; it is solely of assistance in determining whether the provision of a bank guarantee was in reality an objective impossibility.

31. Nor is there any breach of the principle of equal treatment, since the line of reasoning adopted in the order under appeal specifically takes into account the real situation of each undertaking concerned.

32. Lastly, the Commission points out that the appellant declined to lead evidence before the President of the Court of First Instance concerning Hanjin's financial situation, with the sole exception of a press article produced at the hearing in response to evidence provided by the Commission. The arguments submitted on this point in these appeal proceedings are therefore inadmissible and, in any event, unfounded.

Second plea in law

33. According to the appellant, the balancing of the interests involved in an application for interim relief and the assessment of urgency are not separate exercises but must be carried out in conjunction. In so far as the President of the Court of First Instance did not address the balancing of interests, the order under appeal is vitiated by an error in law and rests on insufficient grounds.

34. The balancing of the interests concerned is particularly important in the present case. Given the appellant's difficult financial situation, the Commission would not be able to secure payment of the fine, casting doubt on the reasoning in paragraph 64 of the order under appeal which refers to the public interest in seeing 'the Community's financial interests safeguarded. Furthermore, a decision to grant suspension would not negatively affect the interests of any other concerned parties, in the absence of any risk to public health or other similar general interests, whereas a refusal would mean that all the appellant's efforts had been in vain and would have particularly serious consequences for its employees. On that point, the appellant refers to Article 127(2) EC, which states that '[t]he objective of a high level of employment shall be taken into consideration in the formulation and implementation of Community policies and activities. Bankruptcy would also affect existing liner services, shipowning companies and the worldwide container market.

35. In response, the Commission states that the President of the Court of First Instance was not required to balance the interests concerned because he had concluded that it was not impossible for the appellant to provide the requisite bank guarantee.

Third plea in law

36. According to the appellant, the President of the Court of First Instance erred in failing to consider alternative measures which could answer the Commission's needs while respecting the rights of the appellant.

37. On this point the appellant refers to the proposal which it had made to the Commission by letter of 1 June 1999 and which the President did not examine in the context of balancing the interests.

38. In response, the Commission maintains that there was no need to address this point in the order under appeal since the conclusion had already been reached that it was not impossible for the appellant to provide the bank guarantee required.

Fourth plea in law

39. By the fourth plea in law, it is alleged that the order under appeal is vitiated by insufficient reasoning in so far as it fails to address the appellant's arguments that it was legally impossible for it to compel its shareholders to provide assistance.

40. According to the Commission, since the appellant's arguments on shareholder liability were wholly irrelevant to the question whether the ability of Hanjin to assist should be taken into account, the President of the Court of First Instance was entitled not to discuss them except for the brief reference made in the last sentence of paragraph 64 of the order under appeal.

Observations of the Federal Republic of Germany

41. In its written observations, the Federal Republic of Germany merely refers to the statement which it lodged with the Court of First Instance in connection with its intervention in support of the appellant, and which is also appended to those observations.

42. Since the parties' written observations contain all the information necessary in order to decide the appeal, there is no need to hear oral argument.

Findings

43. The first point to note is that, under Article 225 EC and Article 51 of the EC Statute of the Court of Justice, appeals are to be limited to points of law and must lie on the grounds of lack of competence of the Court of First Instance, a breach of procedure before it which adversely affects the interests of the appellant or an infringement of Community law by the Court of First Instance.

44. The Court of First Instance has exclusive jurisdiction to establish the facts, save where a substantive inaccuracy in its findings is apparent from the documents submitted to it, and to appraise those facts.

45. Furthermore, the Court of Justice does not in principle have jurisdiction to examine evidence which the Court of First Instance has accepted in support of its findings or assessments of the facts. Where the general principles of law and rules of procedure governing the burden of proof and the taking of evidence have been observed, it is for the Court of First Instance alone to assess the weight to be attributed to the evidence produced (Case C-159-98 P(R) Netherlands Antilles v Council [1998] ECR I-4147, paragraph 68).

46. Those points must be borne in mind when considering the pleas in support of the appeal.

First plea in law

47. By its first plea, the appellant contests the fact that, in order to assess the urgency of its application, the President of the Court of First Instance sought to determine whether the appellant's majority shareholder was prevented from assisting it in providing a bank guarantee, when it had expressly refused to do so.

48. In order to determine the merits of the pleas in law put forward here which bear on the appraisal of urgency in the order under appeal, it should be recalled that the President of the Court of First Instance examined the question in the very special context of an application for dispensation from an obligation to provide a bank guarantee as a condition for non-enforcement by the Commission of its right to immediate payment of a fine. As noted in paragraph 31 of the order under appeal, an application of that nature can be granted only in exceptional circumstances (orders in Case 107-82 R AEG v Commission [1982] ECR 1549, paragraph 6; Case 86-82 R Hasselblad v Commission [1982] ECR 1555, paragraph 3; Case 234-82 R Ferriere di Roè Volciano v Commission [1983] ECR 725, paragraphs 5 and 6; and Case 213-86 R Montedipe v Commission [1986] ECR 2623, paragraph 22). In the context of applications for interim relief, express provision is made in the Rules of Procedure of both the Court of Justice and the Court of First Instance for requiring security to be lodged, which is a general and reasonable policy pursued by the Commission (see Case 263-82 R Klöckner-Werke v Commission [1982] ECR 3995, paragraph 5).

49. Moreover, it is settled law that in assessing the ability of undertakings to furnish a bank guarantee, regard may be had to the group of undertakings to which it belongs (order in Hasselblad v Commission, cited above, paragraph 4) and, in particular, to the resources available to that group as a whole (order in Case C-12-95 P Transacciones Marítimas and Others v Commission [1995] ECR I-467, paragraph 12).

50. That approach is based on the idea that the objective interests of the undertaking concerned are not autonomous in relation to those of the natural or legal persons with a controlling interest in it and that, consequently, the serious and irreparable nature of the damage alleged must be assessed at the level of the group comprising those persons. In particular, given that the interests at stake overlap, the undertaking's interest in its own survival must not be viewed in isolation from the interest of those controlling it in prolonging its life indefinitely.

51. For the same reasons, in order to assess, in a comparable situation, the damage to an association of undertakings, the financial situation of its members must be taken into account where the objective interests of the association are not autonomous in relation to those of the undertakings belonging to it (see Case C-268-96 P(R) SCK and FNK v Commission [1996] ECR I-4971, paragraphs 35 to 38).

52. Contrary to the assertions made by the appellant, those reasons - in the light of which it is proper to take into account the group when determining the level of the damage suffered by the company seeking interim relief and whether that damage is irreparable - also mean that it is proper to examine whether or not the appellant's majority shareholder was prevented from providing it with assistance.

53. Given that the interest in the survival of the undertaking concerned must be measured in the context of the persons controlling that undertaking, it seems altogether normal that the objective financial situation of the group should serve as the point of reference in assessing whether a risk of serious and irreparable damage is imminent.

54. As the Commission rightly points out, a simple unilateral refusal of assistance by the principal shareholder cannot be enough to preclude the financial situation of the group as a whole from being taken into account. The extent of the damage alleged cannot flow from the unilateral intent of the majority shareholder of the undertaking seeking suspension.

55. Nor is the appellant justified in maintaining that the line of reasoning adopted by the President of the Court of First Instance amounts to discrimination against undertakings which belong to a group or which have one or more major shareholders. The assessment of the serious and irreparable nature of the damage alleged must be carried out with regard to the particular features of each individual case and not along general lines, on the basis of abstract categories. Undertakings belonging to a group or having one or more major shareholders are in a special situation and that must therefore be taken into account.

56. The financial situation of Hanjin, on the other hand, is a question of fact and as such cannot be re-examined at the appellate stage.

57. The approach adopted in the order under appeal does not lay down a condition which is impossible to meet; rather, it is based simply on the objective financial situation of the group to which the applicant belongs. The President of the Court of First Instancewas fully entitled to take that factor into account in order to assess the serious and irreparable nature of the damage, since it was not shown that Hanjin, whose interests overlapped in the present case with those of the appellant, was unable to assist the latter in providing the bank guarantee.

58. Since the appellant relies on a premiss - that it had been faced with a condition impossible to meet - which has proved to be false, it follows that the arguments alleging infringement of the fundamental rights referred to in paragraph 22 above are also unfounded.

59. Nor can the applicant maintain that the order under appeal exceeds the scope of the main action or encroaches on the freedom of undertakings to organise their activities, since the reference to the group's financial situation does not entail any financial liability on its part with respect to payment of the fine but simply indicates the appellant's objective situation.

60. The first plea in law must therefore be rejected.

61. With regard to the second plea, it is enough to point out that, contrary to the appellant's assertions, since the President of the Court of First Instance considered that the existence or imminence of serious and irreparable damage had not been established, he was no longer obliged to balance the various interests at stake.

62. Given the cumulative nature of the conditions for granting suspension of the operation of a measure, an application for suspension must be dismissed if any one of them is absent (order in SCK and FNK v Commission, cited above, paragraph 30).

63. The second plea in law must therefore be rejected.

64. The third plea must also be rejected. As the Commission rightly pointed out, the President of the Court of First Instance was not obliged to consider the alternative measures proposed by the appellant since the latter had failed to establish that it was impossible for it to provide the bank guarantee required by the Commission.

65. The fourth and final plea - alleging that insufficient reasons were given in the order under appeal in relation to the appellant's argument that it was legally impossible for it to compel its shareholders to provide assistance - is also unfounded. That line of argument has no bearing whatsoever on the dismissal of the application for suspension, since the President of the Court of First Instance was fully entitled to confine his examination to the question whether it had been established that Hanjin was prevented from providing the applicant with financial assistance.

66. In the light of all the above considerations, the appeal must be dismissed.

Costs

67. Under Article 69(2) of the Rules of Procedure, which applies to the appeal procedure by virtue of Article 118, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party's pleadings. Pursuant to Article 69(4), Member States which intervene in the proceedings are to bear their own costs. Since the Commission has asked for the appellant to be ordered to pay the costs and the latter has been unsuccessful, it must be ordered to pay the costs.

On those grounds,

THE PRESIDENT OF THE COURT

hereby orders:

1. The appeal is dismissed.

2. DSR-Senator Lines GmbH shall pay the costs.

3. The Federal Republic of Germany shall bear its own costs.