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The recognition of wholesalers and retailers of tobacco products by the Fédération Belgo-Luxembourgeoise des Industries du Tabac (“FEDETAB”, a federation set up in 1946 to which almost all Belgian and Luxembourg tobacco manufacturers belong), the division of traders into various categories and the allocation of various profit margins to the traders;

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The maintenance of resale prices set by the manufacturers for wholesalers and retailers as determined by certain agreements made between FEDETAB and the Fédération Nationale du Commerce de Gros en Produits Manufacturés de Tabac (hereinafter referred to as “FNCG”);

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The restrictions imposed by FEDETAB on the approval of certain categories of wholesalers;

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The ban on resales by wholesalers to other wholesalers and certain retailers;

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The application to wholesalers and retailers of standard terms of payment; and

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The obligation on retailers to stock a minimum number of brands.

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The division of the Belgian wholesalers and retailers into categories and the allocation to the latter of different maximum profit margins;

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The application to wholesalers and retailers of standard terms of payment; and

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The granting to wholesalers and retailers of end-of-year rebates.

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The Association des Détaillants en Tabac Asbl (hereinafter referred to as “ATAB”), an association founded in 1966 and now comprising 360 retailers;

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The Association Nationale des Grossistes en Produits Manufacturés du Tabac (hereinafter referred to as “AGROTAB”), an association created in 1976 to replace the Association Nationale des Grossistes Itinérants en Produits Manufacturés du Tabac (hereinafter referred to as “ANGIPMT”), which was dissolved in 1976 and which in turn together with the Nationale Vereniging van Familiale Tabakgroothandelsondernemingen (hereinafter referred to as “NVFG”) replaced in 1974 the Fédération Nationale du Commerce de Gros en Produits Manufacturés du Tabac (hereinafter referred to as “FNCG”), which had been founded in 1957; and

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The Fédération Nationale des Négociants en Journaux, Publications, Librairie et Articles Connexes (hereinafter referred to as “FNJ”).

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The aforementioned undertakings GB-Inno-BM, Mestdagh and Huyghebaert, who had made complaints to the Commission; and

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The Federation Belge du Commerce Alimentaire (hereinafter referred to as “FBCA”).

(a)

In so far as in three actions (Cases 209, 210 and 218/78) there is mention of the fact that the Commission did not grant the request of the applicants made in August 1978, that is after the contested decision was adopted, to inspect the administrative documents, the statements of claim in Cases 209 and 218 themselves show that that obligation is not to be regarded as a ground for voidance but as a ground for discovery (Case 218/78) or (as in Case 209/78) as grounds for reserving the right to supplement the statement of claim if necessary. The same was made clear in Case 210/78, albeit only in the reply, that that was not intended to be the ground' for declaring the contested decision void.

It is not necessary to say anything further on the correctness of that view. In fact it relates to the conduct of the Commission after the conclusion of the administrative proceedings leading to the contested decision and thus conduct which could have had no influence on the nature of the decision. Therefore it is not necessary now to consider the quite extensively discussed question whether the Commission's reaction to the said requests — in the proceedings there was talk of oral and written procedure — was sufficient and proper. Our inquiry can be confined to other aspects of that ground of complaint.

(b)

As regards the requests made by the applicants during the administrative proceedings, the Commission explained that the presumptuous demand had never been made to it to make all the administrative documents available to the applicants. No such request, as the Commission rightly pointed out, is to be discerned in certain phraseology used on pages 18 and 19 of the minutes of the second hearing in September 1976.

On the other hand the Commission has convincingly shown that it sufficiently met the request to inspect certain documents. When at the first hearing objection was made, which can be regarded as the relevant request, that the applicants were not acquainted with the complaints of Mestdagh and Huy-ghebaert, those complaints were immediately made available to the applicants. Also the letter from the Association Nationale des Grossistes Itinérants en Produits Manufacturés du Tabac of 2 March 1976 (not, as wrongly stated, 13 February 1976) asked for mainly in a letter from FEDETAB of 21 May 1976 (cited at page 27 of the rejoinder) was in fact forwarded to FEDETAB. As regards the reference in the letter from FEDETAB of 21 May 1976 to the forwarding of all other documents, the context should not be overlooked in which that request was made. It related in fact to documents to which the Commission might refer at the hearing. It was said without denial that none were sent because the Commission did not refer to any documents at the hearing. Moreover it is relevant in this respect that apparently before the contested decision was adopted the applicants did not react clearly to the, in their view, insufficient discovery of documents.

(c)

Further the applicants claim that because those concerned could not know the exact composition of the administrative documents, the Commission, without regard to whether applications had been made, should be required to disclose all documents containing facts taken into account by it — since it should rely only on facts on which those concerned had been able to comment — and that it is open to objection that the opinion of the Advisory Committee on Restrictive Practices and Dominant Positions was not disclosed to the applicants. As to this the following observations in my opinion should be made:

The applicants referred to the judgment in Case 85/76 Hoffmann-La Roche & Co AG v Commission [1979] ECR 461, at p. 512 [paragraph 11], which states that in order to respect the principle of the right to be heard the undertakings concerned must have been afforded the opportunity during the administrative procedure to make known their views on the truth and relevance of the facts and circumstances alleged and on the documents used by the Commission to support its allegation that there has been an infringement of Article 86 of the Treaty. That judgment can hardly be regarded as laying down any new principles as suggested by the applicants. The Court's statement cited means in my view that inspection of documents is to be afforded for the purpose of comment on particular facts only in so far as it is indispensable (where for example the evidential value of a document is challenged) for reasonable comment on the facts contained in the document. That however can hardly be said of the documents referred to in paragraphs (101), (102), (127) and (130) of the contested decision to which much reference was made at the hearing. Here it is a question of information from producers on the application of the credit terms and trade margins, of the allegation that the criteria for grading various categories of traders were criticized not only by the complainants but also by the most important association of wholesalers and the alleged impossibility for traders to choose brands of cigarettes, which they wished to sell and to limit the number of brands in accordance with demand. In that respect I refer only to the observation of the Commission that the answers of the producers on the application of the recommendation had no decisive significance on the decision and the fact that in the Commission's decision the principle of agreement and not the manner of determining the criteria for grading is stressed. Likewise it is difficult to understand why it is only-after they have inspected the documents used by the Commission that the applicants can comment on the trend in cigarette sales in Belgium, the peculiarity of the Belgian revenue system and its effects, the number of retailers in other Member States and the comparison of the services which the various traders afford in distribution, in so far as it really is a question, which cannot be said of all those matters, of views upon which the decision depends.

(d)

The administrative proceedings cannot therefore be criticized on the grounds that the applicants were refused inspection of documents which was necessary for proper comment on the objections raised against them and which, had it been allowed, could have substantially influenced the course and outcome of the proceedings.

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On 9 June 1976 by the Association des Grossistes Itinérants en Produits Manufacturés du Tabac, an association founded after the dissolution of the FNCG and in turn superseded in 1977 by AGROTAB;

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On 1 July 1976 by ATAB; and

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On 17 September 1976 by the Association des Grossistes “Groupe Tabac”, a de facto association composed of the most important wholesalers who were formerly members of ANGIPMT and are now members of AGROTAB.

(a)

First as regards the requests made by the associations themselves, Article 19 (2) of Regulation No 17 provides:

“If the Commission or the competent authorities of the Member States consider it necessary, they may also hear other natural or legal persons. Applications to be heard on the part of such persons shall, where they show a sufficient interest, be granted.”

Further, Article 5 of Regulation No 99/63 of the Commission states:

“If natural or legal persons showing a sufficient interest apply to be heard pursuant to Article 19 (2) of Regulation No 17, the Commission shall afford them the opportunity of making known their views in writing within such time-limit as it shall fix.”

Article 7 of the same regulation provides:

Finally, Article 9 (3) of Regulation No 99/63 states as regards the hearings which the Commission has to arrange:

“Hearings shall not be public. Persons shall be heard separately or in the presence of other persons summoned to attend...”

It follows from these provisions that the Commission has a discretion with regard to the hearing. There is a right to a hearing only if sufficient interest is shown and even then it is basically only a written procedure. Oral hearings are to be arranged only where sufficient interest is shown or where the Commission proposes to impose a fine or periodic penalty payment on those concerned. It is moreover clear, and Article 9 of Regulation No 99/63 must be so understood, that contentious proceedings are not the rule. I cannot moreover see any doubt as to the compatibility of Regulation No 99/63 with Regulation No 17 of the Council as mentioned by the applicants at the hearing with regard to the requirement of contentious proceedings. Nevertheless it may be inferred from the judgment in Case 8/71 Deutscher Komponistenverband eVv Commission [1971] ECR 705 that as regards applications by third parties to be heard it is sufficient if the opportunity is given to submit written comments under Article 5 of Regulation No 99/63.

In the present administrative proceedings, according to the unchallenged statement of the Commission, written comments were submitted by ATAB on 21 October 1974 and 10 September 1976 and by the “Groupe Tabac” on 17 September 1976 and they related to the complaints by GB-Inno-BM and the objections of May 1976. Further, written comments were sent in on 5 March 1975, 7 October 1975 and 2 March 1976 by ANGIPMT, which was a member of the “Groupe Tabac”. Apart from that there were official talks between officials of the Commission and representatives of ATAB on 13 November 1974 and 18 March 1976, of ANGIPMT on 23 September 1974 and 26 February 1976 and of NVFG on 29 October 1974. Furthermore mention should be made of written comments by the Europäischer Tabakwaren-Groíshandelsverband (hereinafter referred to as “ETV”) on 21 February 1975 and 7 October 1975 and by the Confédération Européenne des Détaillants en Tabac (hereinafter referred to as “CEDT”) on 11 December 1974 and 4 November 1976 and further of talks said to have been held with the representatives of CEDT on 13 November 1974 and of ETV on 18 February 1975.

From this there can scarcely be said to be disregard of the right of these associations to be heard and for the special interest of the trade to be asserted and moreover as regards the refusal by the Commission to allow representatives of those associations to take part at the oral hearing, it must be borne in mind that ATAB did not by any means represent all specialized retailers but only some hundred of them. It is also significant that apparently no association according to the concluding answer by the Commission and the subsequent letters from the Commission such as those of October 1976 has maintained the allegation that it was not heard. Moreover according to the relevant case-law it seems quite right to hold that there was not sufficient interest for an additional oral hearing because the traders had not associated themselves with the recommendation and that is why the objections in that respect had not been served on them. Let me cite again the judgment in Joined Cases 56 and 58/64 Consten GmbH and Grundig-Verkaufs-GmbH v Commission [1966] ECR 299 where it is expressly indicated [at p. 346] that undertakings which are not parties to an agreement have no right to be heard in proceedings brought by the Commission with regard thereto.

(b)

On the other hand as far as concerns in this connexion the application by FEDETAB for the hearing of certain associations, Article 3 (3) of Regulation No 99/63 is decidedly in point; it states:

“They” (that is to say, the undertakings and associations of undertakings upon whom as those concerned objections have been served) “may attach any relevant documents in proof of the facts set out. They may also propose that the Commission hear persons who may corroborate those facts.”

Article 7 (2) of that regulation must also be borne in mind as allowing the Commission likewise in other cases to afford any other person the opportunity of expressing his view orally.

Since Article 7 (2), where there is a discretion, can obviously be left out of account, an obligation to accede to applications to be heard can at most be based on Article 3 (3) and presumably then only in cases in which particular persons are cited to corroborate particular facts.

When all relevant circumstances are considered, then it is apparent that that is not the case here according to the letter from FEDETAB of 30 June 1976 (cf. Annex 3 of the Commission's pleading on the observations by AGROTAB). In that letter it is explained in response to a query by the Commission that FEDETAB had no objection to representatives of the Association Nationale des Grossistes Itinérants taking part at the hearing. Then following on it simply stated: “La FEDETAB souhaite cependant pour que la Commission soit complètement éclairée de convoquer également les associations suivantes” (namely NVFG and the “Groupe Tabac”). That certainly did not adequately show that there was interest in hearing the said associations, nor was it moreover so shown at the hearing itself, not only because there was no reference to Article 3 of Regulation No 99/63 but also because the facts which were to be corroborated were not stated. Further in support of the view that the failure to afford the hearing requested is not to be regarded as a curtailment of the rights of defence, it is significant that not only FEDETAB itself described NVFG as an unimportant association, which nowhere makes its presence felt, but that after the rejection of the application there was obviously no special reaction either from FEDETAB or from the said associations.

(c)

The administrative proceedings can therefore certainly not be regarded as irregular on the grounds that they disregarded the provisions in Regulations Nos 17 and 99/63 on the hearing of third parties.

(a)

As regards this group of objections the Commission to my mind rightly pointed out that the nature of its administrative proceedings was not such as the applicants assumed it to be. Not every complaint of conduct allegedly distorting competition which for administrative purposes receives a separate file number necessarily introduces independent proceedings even if it relates to matters which as a result of a similar complaint are already the subject of proceedings in relation to competition. In such circumstances it is not a question of starting new proceedings but of extending the proceedings which are already pending to the additional complaints as was done in the present case by the decision of the Commission of 10 May 1976. It was therefore not necessary to have any formal decision joining the proceedings for which reasons would have had to have been given and sent to those concerned for comment. It needed only to be sufficiently clear that the additional complaint would be considered by the Commission in relation to the proceedings already pending and those concerned be given opportunity to comment on the additional complaints.

In the present case it is however clear and not open to dispute that the complaints by Mestdagh and Huy-ghebaert associated with the complaints by GB-Inno-BM dealt at least in part with the same subject-matter — they likewise related to the so-called earlier measures in relation to the distribution of tobacco products in Belgium and their restrictive effects upon competition — and that essentially the same reasons were given for them. Even if then the complaint of unjustified preference of certain traders is the main ground of contention, Mestdagh and Huyghebaert in fact attack the whole system of the collective fixing of trading conditions by members of FEDETAB as unlawful. Further it is significant that not only was FEDETAB's advocate made aware of the position as early as September 1975 as the advocate for Mestdagh and Huyghebaert pointed out at the hearing in 1975 but that also in a letter from the Commission to FEDETAB of 20 October 1975, intended to be brought to the knowledge of the members of FEDETAB, mention was made of the joining of the three complaints and of the fact that Mestdagh ought to be brought into the hearing.

Further, there is still various other evidence that the close connexion between those complaints was quite clear to the applicants. Thus FEDETAB's advocate declared at the hearing in 1975 that it was desirable not to bring fresh proceedings in relation to the complaints by Mestdagh and Huyghebaert but to deal with the matter as a whole. In addition the answers by FEDETAB, Jubilé and Vander Elst to the compaints by Mestdagh and Huyghebaert and the second lot of comments by FEDETAB on those complaints clearly referred to the proceedings commenced as a result of the complaints by GB-Inno-BM. Further in the letters from the advocate for the two applicants to the Commission of 9 June 1976 stress was laid upon the close connexion of the complaints by Mestdagh and Huyghebaert with the problems dealt with in the FEDETAB recommendation and it was emphasized that this would be taken into account in the answer to the second objections. Finally it must not be forgotten that other applicants too stated that the complaints by Mestdagh and Huyghebaert would be taken into account in the comments on the second objections and thereby recognized the connexion which to that extent existed with the FEDETAB recommendation.

I therefore do not see how it is possible to criticize as a procedural irregularity the fact that the Commission did not declare in a formal decision with reasons stated and after specific comment by the applicants in relation thereto that the Mestdagh and Huyghebaert proceedings were to be joined with the GB-Inno-BM proceedings.

(b)

If moreover consideration is given to the question whether as a result of what the Commission did the rights of defence of those concerned were disregarded and therefore it is to be regarded as inadmissible to have dealt with the Mestdagh and Huyghebaert proceedings in the contested decision, then in my opinion the answer cannot be as mooted by the applicants.

First it is necessary to bear in mind that according to the case-law (Joined Cases40/73 and related cases Coöperatieve vereniging, “Suiker Unie” UA and Others v Commission [1975] ECR 1663, at p. 1930) it is quite possible to deal with several infringements in a single decision concerning competition; it is necessary only for care to be taken that in the decision no objections are considered upon which those concerned have not been able to comment.

It therefore seems to me irrelevant that no particular objections taken from the complaints by Mestdagh and Huyghebaert were forwarded to the applicants. What is decisive is that those complaints were served on all applicants (even on the applicant in Case 209/78 as it admits in its reply) and that they commented on them in letters dated 17 December 1975, 22 December 1975, 5 January 1976, 7 January 1976, 20 January 1976 and 21 January 1976. It is significant too that there were further answers by Mestdagh and Huyghebaert thereto relating moreover also to the recommendation and that they in turn provoked reactions from the applicants in letters dated 27 July 1976, 28 July 1976, 29 July 1976 and 30 July 1976. In addition the objections from the year 1976 on which the applicants were able to comment dealt with the problem of the alleged discriminatory treatment of traders which was raised particularly by Mestdagh and Huyghebaert.

As regards however the question of the oral hearing of the complaints by Mestdagh and Huyghebaert, it may be pointed out that it could have taken place as early as 20 October 1975, as the Commission intended, if the applicants had not objected to the participation therein of Huyghebaert's representative, who could have explained his complaints, which had not yet been served upon the applicants. Moreover there was a second hearing on 22 September 1976 in relation to the FEDETAB recommendation. Since it was preceded by comments from Mestdagh and Huyghebaert dealing also with the recommendation, it may well be assumed that the applicants had sufficient opportunity to deal with the views of Mestdagh and Huyghebaert.

(c)

The complaints by Mestdagh and Huyghebaert were not dealt with in the administrative proceedings in a manner to limit the applicants' right of defence as set out in Regulations Nos 17 and 99/63, which would have given cause to declare void the Commission's decision in so far as it concluded the proceedings introduced by the complaints from Mestdagh and Huyghebaert.

(a)

The question first arises whether the content of the said annexes has in fact to be treated as secret.

It is certainly not decisive that some of the annexes were expressly marked “confidential” and some not. Even from Article 20 (3) of Regulation No 17, which states:

“The provisions of paragraphs (1) and (2) shall not prevent publication of general information or surveys which do not contain information relating to particular undertakings or associations of undertakings.” it does not necessarily follow that everything else must be treated as secret and may not be revealed. Futher in this connexion, and this is directed against the Commission, it is not possible to rely on the Belgian Arrêté Royal [Royal Decree] of 8 October 1976 according to which undertakings are obliged to publish their turnover. Apart from the fact that that provision has existed only since 1976 and can thus not cover matters in 1975, it is clear that it does not necessarily make particulars of the kind relevant here available to the public. In the same way I cannot accept the Commission's observation that the figures were supplied by FEDETAB and thus could not be regarded as secret among the manufacturers, since all the manufacturers had access to the FEDETAB material either through their representatives on the administrative board or through the check they had on terms of payment and end-of-year rebates as provided in the sales system. Even if something is known or easily accessible to manufacturers, this does not mean that there is no interest in keeping it secret from purchasers from the manufacturers.

If however the content of the annexes in question is considered, then without its being necessary to have recourse to Article 214 of the EEC Treaty, it is not possible to avoid the impression that it was a question of matters which ought not to have been brought in full detail to the knowledge of customers of the manufacturers. In my opinion the applicants' view may be accepted that the Commission was in principle bound not to make the annexes in question available to other circles.

(b)

On that basis it is further necessary to consider whether the Commission's desire to establish the facts as comprehensively as possible can justify so proceeding. In that respect the Commission relies on Article 20 (2) of Regulation No 17 which states:“Without prejudice to the provisions of Articles 19 and 21, the Commission and the competent authorities of the Member States, their officials and other servants shall not disclose information acquired by them as a result of the application of this regulation and of the kind covered by the obligation of professional secrecy.”

Article 21 is irrelevant and the fact that the above-quoted provision is without prejudice to Article 19 can only mean that the Commission when hearing other persons, which it may consider necessary to do pursuant to Article 19 (2), may escape the obligation to respect secrets.

In my opinion we do not need now conclusively to determine how it is necessary to proceed in detail in balancing the interest in keeping secrets against the interest in completely establishing the facts as the Commission indeed is required to do under Regulation No 17; inter alia the matter is discussed in the judgment of 13 February 1979 in the aforementioned Case 85/76 Hoffmann-La Roche v Commission 1979 ECR 461, at p. 512 [paragraph 13], where it is stated that the obligation under Article 20 (2) must be reconciled with the right to be heard. It has not been convincingly shown that the complainant GB-Inno-BM could usefully have commented on the applicants' answers to the objections put by the Commission only if the applicants had been provided with a full copy of the aforementioned statement by FEDETAB together with all its annexes. In so far as the provision of such copies seemed proper at all, which may be doubted in regard to the sale trends of 160 brands of cigarettes in Belgium, it would certainly have sufficed to proceed so as not to reveal all the details such as the individual terms of payment and in particular the identity of the undertakings concerned. It can therefore be taken that in the present case the Commission cannot justify the disregard of its obligation to respect secrets by referring to its endeavour with the assistance of the complainant to establish the facts as thoroughly as possible.

(c)

That certainly does not mean, as the applicants think, that it necessarily follows that the Commission's decision must be declared void. It depends rather, and authority for this is the judgment of 14 February 1978 in Case 27/76 United Brands Company and United Brands Continental BV v Commission 1978 ECR 207, at pp. 305 and 306 [paragraphs 284 to 288], whether the infringement of which the Commission is guilty decisively influences the course of the proceedings and whether it may be assumed that had there been no irregularity there would have been a different outcome. That however cannot be imagined in view of the nature of the facts known and the comments thereon by the complainant. On the other hand in my view the applicants are wrong in referring to the judgment in the aforementioned Case 85/76 Hoffmann-La Roche v Commission 1979 ECR 461, at pp. 512 and 513 [paragraph 14], where it is said that the Commission cannot use facts, circumstances or documents which it cannot in its view disclose to the undertakings concerned. In that respect it must simply be said that the documents in question in the present case were rightly required from FEDETAB and that the Commission considered itself entitled to forward them to the complainant, as was certainly correct as regards the basic contents.

Thus the disregard of the obligation to respect business secrets, which was rightly criticized, has ultimately no significance for the present proceedings. Whether it can possibly lead to liability on the part of the Community, for which as is known, other conditions must be satisfied, need not be further considered here.

1.

Of interest here in the first place is the observation made by the applicant Heintz van Landewyck that it had signed only the letter of 23 December 1971 laying down the maximum credit terms and no other agreement or measure. In consequence only that letter could be attributed to it; further as regards itself there could not be said to be agreements on competition or concerted practices for in relation to the other measures dealt with in the decision it had merely fitted in with the conduct of other manufacturers because it was compelled so to do by market forces. Here it is proper to mention the general argument put forward by FEDETAB that its members were responsible only for measures and decisions to which they had expressly agreed. Moreover it is necessary to deal in this connexion with the allegation by AGROTAB in the application to intervene that the letter of 23 December 1971 just mentioned was not signed by the applicant Weitab whilst three other companies who had signed it had not been joined by the Commission in the proceedings.

2.

A number of other objections to be dealt with in connexion with the earlier measures relate then to the questions whether in fact an agreement may be assumed, whether the letter from FEDETAB of 21 December 1970 (Politique de distribution cigarettes — tabac à partir du 1. 1. 1971) contained mandatory rules and how that is to be reconciled with the fact that certain agreements are said not to have been applied. Moreover some letters mentioned in the decision are said to have been sent by the Association of Wholesalers, FNCG, that is to say, the manufacturers cannot be held responsible for them.

3.

A further group of objections which needs special mention relates in substance to the part of the decision concerned with the earlier measures and has as subject-matter the judgment therein on the prohibition of rebates, the laying-down of standard terms of payment, the requirement of a minimum range and the prohibition on certain wholesalers being supplied by other wholesalers.

1.

In this respect certain applicants have complained that the decision characterizes the recommendation as an agreement between undertakings who have approved it and said that they would adhere to it. Properly interpreted however, agreements within the meaning of Article 85 (1) of the EEC Treaty are but contracts under national law. The present case is not concerned with such arrangements for there is no binding effect and nothing is provided to ensure that it is adhered to. As authority they cite inter alia the judgment in Case 48/69 Imperial Chemical Industries Limited v Commission [1972] ECR 619 at p. 655 [paragraph 64], where it is stated:

“Article 85 draws a distinction between the concept of ‘concerted practices’ and that of ‘agreements between undertakings’ or of ‘decisions by associations of undertakings’; the object is to bring within the prohibition of that article a form of co-ordination between undertakings which, without having reached the stage where an agreement properly so-called has been concluded, knowingly substitutes practical co-operation between them for the risks of competition.”

I nevertheless have the impression that that judgment in particular shows that the issue with which we are concerned here is basically an unimportant argument of classification. That may be said because the proceedings have shown that in any event a concerted practice within the meaning of Article 85 (1) may be assumed, that is to say, a “co-ordination which becomes apparent from the behaviour of the participants”. It is quite beyond dispute that the directives on distribution were not only worked out in common but that they were and are applied. In that respect I refer to the admission by FEDETAB which nevertheless speaks of flexible application. Reference may also be made to the statements of almost all the applicants at the hearing to the effect that they observed the margins laid down in the recommendation.

Further the view may be taken that the concept “agreement” within the meaning of Article 85 (1) is wider than that of contract in civil law. Of relevance in this respect is the judgment on the so-called gentlemen's agreements in Case 44/69 Buckler & Co v Commission [1970] ECR 733, at p. 754. They were in fact treated as agreements because in the view of the Court it suffices for such purposes if various undertakings mutually declare themselves willing to abide by the gentlemen's agreement and the joint intention of several undertakings with regard to their conduct in the common market is faithfully expressed. That can easily be applied to the present case in which as already stated, representatives of the applicants co-operated in drafting the recommendation on distribution. If then they yet expressly declare their agreement and express their intention of implementing the recommendation then that can be regarded as a mutual agreement within the meaning of the said judgment and thus as an agreement within the meaning of Article 85 (1).

2.

It is further objected that the recommendation was treated in the contested decision as a decision by an association of undertakings within the meaning of Article 85 (1). In that respect the intervener AGROTAB pointed out that FEDETAB was a non-profit-making association and as such did not engage in business.

Here too I agree with the Commission's view that that factor is unimportant. First it is significant that FEDETAB has legal personality, that is it can sue and be sued in its own name. Secondly there is the fact already mentioned that decisions of FEDETAB, as appears from Articles 8 and 9 of its statutes, are binding on the members. However, it should be made clear that on any other interpretation Article 85 could appear to have lacunae: in order to escape application of Article 85 undertakings, instead of mutually agreeing could arrange an appropriate decision by an association having largely similar effect. Thus it was expressly stressed in the case-law (Case 71/74 Nederlandse Vereniging voor Fruit en Groentenimporthandel and Nederlandse Bond van Grossiers in Zuidvruchten en ander Geïmporteerd Fruit v Commission [1975] ECR 563, at p. 583 [paragraph 30]) that Article 85 (1) applies to associations in so far as their own activities or those of the undertakings belonging to them are calculated to produce the results to which it refers.

The FEDETAB decision as such, the effects of which were intended to be increased by the fact that certain manufacturers expressly stated that they agreed to it, is thus quite relevant to the rules on competition, that is to say, it can as such, as was the view of the Commission, be caught by Article 85.

3.

On the other hand it cannot be objected that the recommendation is not binding and that paragraph 61 of the contested decision wrongly speaks of the recommendation giving rise to a genuine mandatory rule of conduct for all firms in the industry.

In this connexion the Commission rightly reminded us that according to the case-law (Case 8/72 Vereniging van Cementhandelaren v Commission [1972] ECR 977, at p. 990 [paragraph 21]) the fixing of a target price affects competition because it enables all the participants to predict with a reasonable degree of certainty what the pricing policy pursued by their competitors will be. It moreover cited Case 73/74 (Groupement des fabricants de papiers peints de Belgique and Others v Commission [1975] ECR 1491) as authority for the rule that the same applied to clauses containing other terms if principal elements in the price are laid down as target figures, which in the present case is so as regards the allowances granted by the manufacturers to their purchasers. Moreover, it should not be forgotten that a number of manufacturers agreed to the recommendation and that manner of agreement gave rise at least to a certain obligation.

When paragraph 61 of the decision speaks of a mandatory rule for third parties it obviously does not mean a legal obligation upon other firms in the industry but only economic compulsion. This may scarcely be doubted when it is borne in mind that the seven firms who approved the recommendation control some 80 % of the cigarette sales in Belgium and thus have considerable influence upon what happens in the market.

4.

Finally in this connexion it is necessary to deal with the objection that the Commission wrongly saw in the recommendation a simple continuation of the distribution system which previously applied. It is said that there were in fact quite clear differences in the effects. The recommendation does not expressly and particularly classify dealers or place any restriction on the class recognized as wholesalers. There are no prohibitions on selling to others in the same class and no collective measures to enforce the terms of payment. Further it confines itself to laying down maximum margins and leaves the manufacturers every freedom as regards other allowances. It is also significant that it applies only between the manufacturer and his immediate buyer; no terms of resale are placed on dealers and therefore it is incorrect to speak of restrictions on competition down the line. Since the Commission did not take account of those matters it must be held that the decision wrongly judged the recommendation on the false facts.

As regards this objection it must first be said that it does not appear valid in so far as it argues that the recommendation applies only between manufacturers and their immediate customers. In my view the Commission has convincingly shown on pages 80 to 90 of its rejoinder that that is not so and that it is intended to apply as between wholesalers and retailers. In support of that it may be pointed out, and this is not meant to be exhaustive, that the notification of the recommendation speaks of maximum rates for intermediary allowances. It is significant that margins are laid down for retailers who in number (several tens of thousands) represent the largest class of customers and at the same time it is stressed that almost all would receive supplies direct from wholesalers.

Reference may also be made to the answer by FEDETAB of 29 July 1976 to the observations of Mestdagh and Huy-ghebaert; in that answer it is said that when food shops are supplied by wholesalers the normal rate of 7.25% for non-specialized retailers will be allowed.

On the other hand it must be admitted that the recommendation does not have such powerful effects between wholesalers and retailers as the earlier system in which there were strict agreements between manufacturers and wholesalers. That also explains why wholesalers do not apparently always keep to the recommendation. In any event it may not be doubted, and the representative of the Fédération Nationale des Négociants en Journaux, Publications, Librairie et Articles Connexes explained this, that wholesalers compete when fixing their sale prices.

I have, however, the impression that the Commission recognized that the recommendation differed in that and other ways from the earlier measures. It must in fact be observed that the decision describes separately on the one hand the earlier measures with all their details and on the other hand the content of the recommendation. In the same way the legal position is considered separately. If in this respect there is reference on one or other issue to the assessment of the earlier measures that is hardly ground for objection. In this respect it is significant that the applicants when giving notice of the recommendation, which was worked out after objections were made to the earlier measures, declared that the recommendation was intended to replace the earlier measures. It is also probably beyond dispute that the subject-matter of the measures is largely of the same kind and that, because the essential elements were retained and the applicants applied on the whole both the earlier measures and the recommendation, the measures had similar effects on the market and on competition.

Pertinent criticism of the decision in relation to the FEDETAB recommendation can therefore scarcely be based upon the ground that the recommendation was inappropriately assessed in its relationship to the earlier measures.

1.

Of importance here in the first place is the applicants' allegation that it is necessary to have regard to the fact that the aim of the measures which are objected to is the maintenance of the traditional marketing with a fine network giving a chance also to the small and little-known brands which contribute to increasing competition. For this specialized wholesalers are indispensable and if their services were not specially rewarded by the maintenance of a certain price-level they would not be able to stand up to competition from other wholesalers whose turnover is tending to increase. As authority for such an aim Case 26/76 {Metro SB-Großmärkte GmbH & Co KGv Commission [1977] ECR 1875 at p. 1897 et seq.) is cited. According to that decision price competition has no absolute priority. In particular separation of the functions on the one hand of the wholesale trade and on the other of the retail trade accords with the right of competition if it is done on the basis of objective criteria. Further the judgment stresses not only that a selective distribution system may be compatible with Article 85 (1) but also that the desire to maintain a certain price level for the specialist trade and the continued existence of that channel of distribution does not necessarily infringe Article 85 (1). The Commission did not properly take that into account in considering the distribution system applying in Belgium to manufactured tobacco.

In my opinion those observations call in the first place for the comment that the Commission has nothing against the classification of dealers into various categories if it is done according to objective criteria applied equally to all nor does it object to different margins being laid down for them. It is therefore not true that it insists on competition on equal terms between specialized wholesalers and other wholesalers which must lead to the disappearance of the specialized wholesaler trade, that is to say, of a traditional channel of distribution, upon which the smaller manufacturers are particularly dependent. The decision is primarily concerned with the fact that the most important manufacturers pursue this policy as cartels and exclude competition in this respect among themselves. It is therefore clear to me that in the present case and particularly as regards the last-mentioned point of view the judgment in the aforesaid Case 26/76 (Metro) does not support the applicants' argument. Although it must be admitted that it contains observations on the compatibility of a selective distribution system with Article 85 (1), it is however of significance that it was concerned with a selective distribution system relating to highly developed consumer goods and to the selection of certain dealers according to their qualifications. To that extent it may rightly be asked whether it may freely be applied to the distribution of manufactured tobacco where those kinds of special features are lacking and moreover there is no selection on the basis of qualifications. Further it is significant that the said Case 26/76 was concerned with an individual distribution system of one manufacturer. There were no horizontal arrangements but on the contrary competition with other forms of distribution by other manufacturers remained. Contrary to the present case the freedom of the dealers to negotiate was untouched, that is to say, there was no uniformity of price-fixing within the selective distribution network but competition remained in that sector. Further it should not be overlooked that the Commission decision in question in that judgment was largely based on Article 85 (3) of the EEC Treaty which allows certain restrictions on competition if they appear necessary in the interests of achieving certain aims considered worthy of protection. The Commission was expressly required in the judgment to ensure that the “structural rigidity is not re-enforced, as might happen if there were an increase in the number of selective distribution networks for marketing the same product”. That obviously refers to making the terms of competition between the various manufacturers uniform as is doubtless so in the present case.

In view of the special nature of the present case it thus certainly does not seem possible to cite the Metro judgment as authority for the view that the Commission wrongly held that competition was affected within the meaning of Article 85 (1).

2.

The further question then arises whether the Commission in assessing the distribution system for manufactured tobacco in Belgium in fact sufficiently and correctly took account of all the essential circumstances and accordingly rightly found a perceptible restriction on competition within the meaning of Article 85 (1).

In that respect the applicants, as is well known, referred to the special circumstances of competition characterizing the market for manufactured tobacco. For them the determining feature is the levying of a high proportional tax based on the retail sale price fixed by the manufacturer or importer and that means that competition by undercutting prices is limited by a minimum tax. Further the rules applicable in Belgium concerning price review did not necessarily allow price increases and as regards manufactured tobacco the fixed price rule of Article 58 of the Belgian Law of 3 July 1969 applied there. That rule has already played a part in Case 13/77 GB-Inno-BM v Vereniging van de Kleinhandelaars in Tabak [1977] ECR 2115. Moreover it must be borne in mind that according to Belgian law it is not possible to acquire various tax labels for one brand of cigarettes and that health provisions also influence competition. In the applicants' view the Commission did not or did not properly take that into account. In its assessment of the perceptibility of the restriction on competition it took no account in particular of the fact that the scope for competition was already substantially restricted by the said rules — some were even of the opinion that competition was practically excluded — and that distortion of competition caused by the government which prevented workable competition must be countered by measures governing the market on the part of the firms concerned.

—

First the Commission sees in the classification of dealers into categories and the determination of certain profit margins for them a restriction on competition between manufacturers in relation to the profit margins granted by them. Further it also considers that there is a restriction on the scope of competition for wholesalers. This is because, since the criteria for classification did not take account of the other services and efforts on the part of individual dealers, there was accordingly no competition as regards the services rendered for manufacturers and because the wholesalers did not compete with one another in fixing their resale prices.

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The Commission regards the adherence to the sale prices for wholesalers laid down by the manufacturers and to the resale prices for retail traders so laid down as a further restriction on price competition which would have been possible for one and the same brand.

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The Commission further regards the restriction placed on the number of wholesalers eligible for approval as constituting a barrier to market entry for those who were not approved.

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The Commission regards the fact that approved wholesalers were prohibited from supplying other wholesalers and certain retailers as preventing intermediaries from making certain sales and improving their position on the market; further their customers were prevented from obtaining larger quantities on more favourable terms.

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The Commission points out that the fixing of maximum credit terms for wholesalers has effects on the profit margins of manufacturers and dealers.

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Finally the Commission criticizes the requirement that retailers should stock a minimum range of brands inasmuch as this prevented them from pushing a particular brand and forced them to tie up their working capital in stocks of various slow-moving brands.

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As regards the classification of dealers into categories and the fixing of profit-margins the Commission also speaks of manufacturers and dealers being subject to restraints on competition. In so far as the number of brands sold is significant for classification, that is to say, a certain requirement to sell a range of brands, this is said, just as in the case of the earlier measures, to constitute restriction on competition for those dealers.

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The Commission takes the view that the end-of-year rebates system effectively stifled all competition in this field between manufacturers. It moreover stresses that because the rebate is based on the total turnover with all manufacturers there is no incentive for intermediaries to make greater competitive efforts with a view to obtaining improved benefits from manufacturers or to take their custom exclusively to one manufacturer quite apart from the fact that such a system imposes a financial burden on any manufacturer wishing to enter the market and thus makes market entry more difficult.

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Finally it is observed that the uniform determination of terms of payment has the effect of preventing competition in this area just as did the corresponding measures of the earlier system.

(b)

Since in the applicants' view — and the Commission did not basically challenge this — any judgment in relation to the restrictions on competition depends on certain governmental rules and practices influencing the market — the manufacturers in this respect speak of compulsion to which traders are subject — it seems useful first of all to set them forth in detail and on the basis of the factors which came to light in the proceedings to attempt an assessment of their effects.

(c)

If after all that we turn to the question whether the assessment vis-à-vis the rules on competition which the Commission made of the Belgian distribution system for manufactured tobacco is valid or contestable, then various considerations have to be taken into account.

(aa)

First the applicants have claimed that the decision contained certain errors and have attempted to show that the Commission in part assumed certain incorrect facts and circumstances which had an influence on its assessment.

In paragraph 1 of the preamble to the decision it was said that cigarette sales were increasing steadily where in fact they increased only from 1967 to 1973 and since then sales declined, as could be shown statistically. In paragraph 11 of the preamble to the decision it was said that in Belgium ad valorem excise duty was charged on manufactured tobacco in place of value added tax, whereas in fact value added tax was levied in addition to excise duty. Further it was said in paragraph 88 that the tobacco industry was not alone in being heavily taxed. As was made clear in the court proceedings, that was an obvious reference to the taxation of mineral oils, alcohol and alcoholic drinks, but it was not borne in mind that those goods were subject only, to a specific tax, which did not have a multiplier effect. Not least in importance, and this relates to the statements in paragraph 81 of the decision, wholesalers had the possibility of competing with one another in the services they rendered to the manufacturers because the wholesalers could react to benefits in a form other than the uniform trade-margins.

As regards these allegations it must certainly be said that in judging the conditions of the market and of competition it is naturally of importance whether there is an expanding market, as the Commission thinks is generally the case for the consumption of cigarettes, or whether total sales are declining and thus the maintenance and development of shares in the market are more difficult. Further in judging the situation as to competition, and this relates to the issue lastly referred to by the applicants, the question is whether apart from the trade-margins there are other benefits afforded by the manufacturers where there is competition they do not relate to the restriction on competition. It was emphasized to us that that was the case and reference was made to frequency and speed of deliveries, special premiums in introducing new lines, support with displays and advertising, the giving of free samples and legal advice and help in temporary difficulties. Therefore there is quite lively competition, and in this respect I refer once again to what the association of newsagents said, between wholesalers as such who belong to the same category, namely in fixing sale prices, the granting of credits, the frequency of deliveries, the range of products, advice inter alia on bookkeeping or taking back unsold goods. This is revealed by the fact, and certain observations in the statement on the first objections support this, that among wholesalers there are considerable changes in the trend in turnover.

Moreover the fact cannot be disregarded that the findings in the decision relating to the taxation of manufactured tobacco were rightly criticized by the applicants. That applies first to paragraph 88 of the decision. If, as appears, the Commission considers the taxation of alcohol and crude oil as comparable with the taxation of manufactured tobacco, then it has obviously not seen the essential distinction between specific taxes and proportional taxes — the latter apply only to manufactured tobacco — and has thus disregarded the multiplier effect, which in fact considerably distorts the conditions of competition. The same applies to paragraph 11 of the decision from which it is evident that the Commission has obviously not considered that value added tax is levied in addition to excise duty and that because the value added tax is a proportional tax, the multiplier effect is increased.

In my opinion those matters are certainly of importance in judging the decision even if on their own they scarcely suffice seriously to upset the decision.

(bb)

The applicants also claim that the Commission in considering the case did not have regard to the special features of the Belgian tobacco market which must have led, to the conclusion that competition in the field of the margins was practically precluded as a result of the said rules or that the scope for competition was at least so narrowed that the measures objected to could not be regarded as an appreciable restriction on competition. They claim that the Commission in assessing the compatibility of the measures with the rules on competition proceeded on the basis of a wrong point of view for the following statement in paragraph 88 of the decision:

“If national legislation has the effect of restricting competition, the added effects of private arrangements restricting competition can only be the more significant”

is not compatible with established case-law. Moreover they claim that in paragraph 83 of the decision in which there is mention of the Belgian system of fixed prices the Commission is wrong in citing the judgment in Case 13/77 as authority for the statement that Article 85 (1) applies even if a restriction on competition is encouraged by national legislation.

In my opinion the following may be said in that respect:

(cc)

It is in fact no longer necessary to discuss detailed criticism made by the applicants in the assessment of particular factors in the system. If however this is done, contrary to the Commission's view that the system must be regarded as a whole, because it cannot necessarily be assumed that parts of the system would not be kept if other parts were found to be contrary to the rules on competition, then the following observations are called for:

3.

The applicants' objections to the assessment of the Belgian distribution system for tobacco goods from the point of view of fulfilling the conditions of Article 85 (1) apply in substance both to the earlier measures and to the recommendation in so far as the applications are not expressly confined to the part of the decision relating to the recommendation. Nevertheless certain additional observations are now required on the question whether the previous asssessment in fact suffices not only for the voidance of Article 2 but also of Article 1 of the decision, first because the distribution system created by the recommendation differs to some extent from that which previously obtained and secondly because Belgian law, which had to be discussed at length, has been subject to certain amendments.

I call attention only to the fact that the earlier measures provided not only for the classification of traders into various categories with different profit margins, the fixing of maximum credit terms for wholesalers and the keeping of a certain minimum range of cigarettes, but they were also concerned, and this was no longer the case under the recommendation, with the adherence by wholesalers and certain retailers to resale prices determined by the manufacturers, a restriction on the admission of the wholesalers to certain categories and the prohibition on supplies to wholesalers and certain retailers by approved wholesalers. Since the contested decision, in so far as it concerns the earlier measures, relates to a period from 1962, it must further not be overlooked that the Belgian rules on fixed prices (Article 58 of the Value-Added Tax Code) entered into force on 1 January 1971 and that the Community rules (Directive No 72/464) which allowed a higher proportional tax applied only as from 1973, whereas there were provisions for price review obviously already before the Ministerial Order of 22 December 1971, that is to say, since October 1959.