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JUDGMENT OF 13. 1. 2004 CASE T-67/01

JUDGMENT OF THE COURT OF FIRST INSTANCE (First Chamber)13 January 2004 *

In Case T-67/01,

JCB Service, established in Rocester, Staffordshire (United Kingdom ), representedby R. Fowler, QC, R. Anderson, barrister, L. Carstensen, solicitor, and initiallyby M. Israel, and, subsequently, by S. Smith, solicitors, with an address for servicein Luxembourg,

applicant,

v

Commission of the European Communities, represented by A. Whelan andS. Rating, acting as Agents, with an address for service in Luxembourg,

defendant,

APPLICATION, as a principal claim, for annulment of Commission Decision2002/190/EC of 21 December 2000 relating to a proceeding under Article 81 ofthe EC Treaty (Case COMP.F.1/35.918 JCB) (OJ 2002 L 69, p . 1), and, in thealternative, for partial an nulm ent of that decision and corresponding reduction ofthe fine imposed on JCB Service,* Language of the case: English.I I -56


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JCB SERVICE v COMMISSIONTHE COURT OF FIRST INSTANCEOF THE EUROPEAN COMMUNITIES (First Chamber),

composed of: B. Vesterdorf, President, J. Azizi and H. Legal, Judges,Registrar: J. Plingers, Administrator,

having regard to the written procedure and further to the hearing on 22 January2003,

gives the following

Judgment

Legal background

1 Article 81 of the EC Treaty provides:

' 1 . The following shall be prohibited as incompatible with the common market:all agreements between undertakings, decisions by associations of undertakingsand concerted practices which may affect trade between Member States andwhich have as their object or effect the prevention, restriction or distortion ofcompetition within the common market, and in particular those which:

(a) directly or indirectly fix purchase or selling prices or any other tradingconditions;II - 57


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(b) limit or con trol produ ction , markets, technical developm ent, or investment;

(c) share markets or sources of supply;

(d) apply dissimilar conditions to equivalent transactions with other tradingparties, thereby placing them at a competitive disadvantage;

(e) make the conclusion of con tracts subject to acceptance by the other parties ofsupplementary obligations w hich, by their nature or according to comm ercialusage, have no connection with the subject of such contracts.

2. Any agreements or decisions prohibited pursuant to this Article shall beautomatically void.

3. The provisions of paragraph 1 may, however, be declared inapplicable in thecase of:

any agreement or category of agreements between undertakings;

any decision or category of decisions by associations of undertakings;I I -58


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JCB SERVICE v CO MMISSION any concerted practice or category of concerted practices, whichcontributes to improving the production or distribution of goods or topromoting technical or economic progress, while allowing consumers afair share of the resulting benefit, and which does not:

(a) impose on the unde rtakings concerned restrictions w hich are no tindispensable to the attainment of these objectives;

(b) afford such undertakings the possibility of eliminating competition inrespect of a substantial part of the products in question.'

2 Article 15 , relating to fines, of Regulation N o 17 of the Council of 6 February1962, First Regulation implementing Articles [81] and [82] of the Treaty (OJ,English Special Edition 1959-1962, p. 87) provides:

'...

2. The Commission may by decision impose on undertakings or associations ofundertakings fines of from 1 000 to 1 000 000 units of accou nt, or a sum inexcess thereof but not exceeding 10 % of the turnover in the preceding businessII - 59


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year of each of the undertakings participating in the infringement where, eitherintentionally or negligently:

(a) they infringe Article [81](1) or Article [82] of the Tre aty , or

(b) they com mit a breach of any obligation imposed pu rsuant to Article 8(1).

In fixing the amount of the fine, regard shall be had both to the gravity and to theduration of the infringement.

5. The fines provided for in para grap h 2(a) shall not be imposed in respect of actstaking place:

(a) after notification to the Comm ission and before its decision in app licatio n ofArticle [81](3) of the Treaty, provided they fall within the limits of theactivity described in the notification ...'II-60


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JCB SERVICE v COMM ISSION

Facts and administrative procedure

3 JCB Service is a com pany inco rpora ted under English law and set up in 1956 byJoseph Cyril Bamford with its registered office in Rocester, Staffordshire (UnitedKingdom). JCB Service is held by Transmissions and Engineering ServicesNetherlands BV and owns and controls directly or indirectly the companies of theJCB Group ( 'JCB'), which comprises 28 companies, including inter aliaJCBamford Excavators, JCB Sales, JCB SA, JCB Germany and JCB Spain. JCBmanufactures and markets construction site machinery, earthmoving andconstruction equipment and agricultural machinery as well as the spare partsfor those various products.

4 JCB had a turnover of EUR 1 400 million in 2000 for construction equipmentand ranked fifth among manufacturers worldwide; it exports more than 70 % ofits production through a network of more than 400 distributors and agents.Caterpillar is its highest-ranking competitor, with a turnover of EUR 12 629million. JCB estimates its market share for construction and earthmovingequipmen t at 8.5 % in Europe and 4.4 % w orldwide . In 1995 and 199 6, JCB hada m arket share of 13 to 14 % in volume (8.9 % in value) of all constru ction andearthmoving machines sold in the Community (36.8 % in volume and 23.7 % invalue in the United Kingdom). Backhoe loaders are the group's leading product,in which JCB had a m arke t share of more tha n 2 3 % in value wo rldw ide andnearly 60 % in the United Kingdom in 1995.

5 JCB's distribution network is structured on a national basis with one subsidiaryper country (in Germany, Belgium, Spain, France, Holland and Italy) or oneexclusive importer.

6 Two companies in the JCB Group notified the Commission in 1973, usingform A/B drawn up pursuant to Regulation No 17, of eight standard distributionII - 61


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agreements for JCB products, to be concluded with the distributors or maindealers linked to the group, five of which concerned countries in the commonmarket, namely the United Kingdom (including the Channel Isles) and Ireland(notified by JCB Sales) and Germany, Benelux, Denmark and Italy (notified byJCBamford Excavators). The agreements were registered by the Commission'sdepartments on 30 June 1973.

7 The Com mission (Directorate-General (DG) for Competition) informed JCBSales, by letter of 27 October 1975, that the agreements notified entailed severalrestrictions in breach of the provisions of Article 85 of the EC Treaty (nowArticle 81 EC). It required their amendment and put various questions to thecompany. The Commission focused on the five agreements concerning thecommon market, stating that the other three did not seem likely to affect tradebetween the Member States.

8 Revised standard agreements concerning JCB Sales and applicable in the UnitedKingdom and Ireland (the Distributor Agreement-Export, the UK DistributorAgreement and the UK Main Dealer Agreement) were sent to the Commission on18 December 1975.

9 By letter of 13 January 1976, the Commission acknowledged receipt of those newversions, informed JCB Sales that certain problems previously raised had beenresolved while others remained and sought clarification of several provisions.

10 JCB Sales answered those points by letter of 11 March 1976 and provideddetailed information regarding the remaining problems alleged to exist by theCommission in its letter of 13 January 1976.I I -62


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JCB SERVICE v COMMISSION11 Subsequently, there were no developments on the JCB notification file until 19 80.

12 On 6 March 1980, JCB Sales sent the Commission the standard UK DistributorAgreement replacing the agreement notified in 1975, which had expired, and,according to the applicant, containing only minor changes. On its expiry, JCBSales sent the Commission the agreement which replaced the 1980 agreement byletter of 29 December 1995. The Commission did not reply to the letters sent byJCB in 1980 and 1995.

1 3 A judgment of the Tribunal de Comm erce de Paris (Com mercial Co urt, Paris) of11 December 1995 partially dismissed the action for unfair competition broughton 28 November 1990 by JCB's subsidiary in France, JCB SA, as exclusiveimporter of JCB products in France, against Central Parts SA, which obtainedJCB spare parts from the United Kingdom in order to resell them in France. JCBSA had accused Central Parts of using the JCB sign and the description'distributeur agre' (authorised distributor) unlawfully.

1 4 On 15 February 1996, Central Parts lodged a complaint with the Commissionabout the commercial practices of 'JCB Grande Bretagne' in relation to thedistribution of its products.

15 On 5 November 1996 the Commission undertook an inspection at the premisesof JCB SA, and of two of its distributors in the United Kingdom, Gunn JCB Ltdand Watling JCB Ltd.II - 63


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16 On 24 March 1998, the Commission sent a first statement of objections toJCBamford Excavators overlooking the relevance of the notification sent in 1973(see paragraph 6 above). JCB pointed out that omission on 6 July 1998 in itswritten observations in response to the statement of objections and again at itshearing by the Commission's departments on 16 October 1998.

17 In the meantime, on 8 April 1998, the Cour d'appel de Paris (Court of Appeal,Paris) delivered a judgment overturning the judgment of the Tribunal decommerce de Paris of 11 December 199 5, holding that Central Parts had engagedin unfair competition with JCB SA.

18 A second statement of objections taking account of the 1973 notification was sentto JCB Service (JCBamford Excavators) on 30 July 1999, to which JCBamfordExcav ators replied on 13 December 199 9. JCBamford Excav ators was heardagain on 16 January 2 000 .

19 In the course of the administrative procedure, JCB had access to its file, at itsrequest, three times, on 24 April 1998, 22 October 1999 and 16 May 2000, withthe exception of documents deemed by the Commission to be non-accessible, aclassification confirmed by the Hearing Officer acting in the internal procedurefor processing requests for access to files laid d ow n by the C omm ission N otice onthe internal rules of procedure for processing requests for access to the file incases pursuant to Articles [81] and [82] of the EC Treaty, Articles 65 and 66 ofthe ECSC Treaty and C ouncil Regulation (EEC) N o 40 64/89 (OJ 1997 C 2 3,p. 3).II-64


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JOB SERVICE v COMMISSION

20 O n 21 De cem ber 20 00 the Co mm ission ado pted Decis ion 2002/190/EC of21 December 2000 rela t ing to a proceeding under Art ic le 81 of the EC Treaty(Case COMP.F.1/35.918 JCB) (OJ 200 2 L 69 , p . 1 , ' the contes ted d ecis ion ') ,Article 1 of wh ich re ads as follows:

'JCB Service and its subsidiaries have infringed Article 81 of the Treaty byenter ing into agreements or concer ted pract ices wi th author ised dis t r ibutors , theobject of wh ich is to restr ict com peti t io n w ithin the co m m on m ark et in ord er topar t i t ion nat ional markets and provide absolute protect ion in exclusive terr i tor iesouts ide which author ised dis t r ibutors are prevented f rom making act ive sales andwhich include the following:

(a) restr ict ions on passive sales by authorised distr ibutors in the UnitedKingdom, I re land, France and I ta ly , which include sales to unauthor iseddis t r ibutors , end-users or author ised dis t r ibutors located outs ide exclusiveterr i tor ies and, in par t icular , in other Member States ;

(b) restr ict ions on sources of supply regarding purchases of contract goods byauthorised distr ibutors located in France and Italy, which prevent cross-suppl ies between dis t r ibutors ;

(c) f ixing of disc ou nts or resale prices app licable by auth oris ed d istr ib uto rs in theUni ted Kingdom and France;

(d) im pos it ion of service su pp ort fees on sales to oth er M em be r States effected byauthor ised dis t r ibutors outs ide exclusive terr i tor ies in the Uni ted Kingdom onII - 65


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the initiative of and according to fixed scales set forth by JCBamfordExcavators Ltd or other subsidiaries of JCB Service, thereby makingdistributors' remuneration dependent on the geographic destination of sales;

(e) w ithd raw al of allowances depend ing on whether sales in the United Kingdomare made within or outside exclusive territories or whether authoriseddistributors, in the territory of who m contractual produ cts are used, reach anagreement with authorised selling distributors, thereby making distributors'remuneration dependent on the geographic destination of sales.'

21 Article 2 of the contested decision rejects the app lication for exemp tion subm ittedby JCBamford Excavators on 30 June 1973. Article 3 orders JCB Service and itssubsidiaries to bring to an end the infringements established and Article 4imposes a fine of EUR 39 614 000 on JCB Service in respect of thoseinfringements.

Pre-litigation procedure and forms of order sought

2 2 By application lodged at the Registry of the Court of First Instance on 22 March20 01 JCB Service brought the present action u nder Article 230 E C for annulm entof the contested decision.

2 3 By a separate document, lodged the same day, the applicant brought anapplication under Articles 242 EC and 243 EC for suspension of operation ofArticles 1(d), 2 and 3(a) to (f) of the contested decision, and, in the alternative, forsuch further or other relief as the Court considered just and appropriate. ThoseII-66


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JOB SERVICE v C O M M I S S I O N

proceedings , regis tered as Case T-67/01 R, were concluded by an order forrem ova l from the register of 10 M ay 2 0 0 1 , once the ap plic an t had declared i tselfsatisfied, a t the hear ing of 8 M ay 2 0 0 1 , wi th the expla nat io ns given by theCommission regarding the interpretat ion of the operat ive par t of the contes teddecis ion.

24 By an oth er do cu m ent , a lso lodged on 22 Ma rch 2 0 0 1 , JCB Service asked theCourt to order measures of organisat ion of procedure and/or measures of inquiryunder Articles 64 and 65 of the Rules of Procedure of the Court of First Instance,to the effect that the Commission provide i t wi th the documents i t had numbered1 to 19 to which i t d id not have access dur ing the adminis t ra t ive procedure.

25 The appl icant c la ims that the Court should:

as i ts princip al claim , ann ul the con tested decision;

in the al terna tive , ann ul the con tested decision in pa rt and re duce the fineimposed accord ingly ;

ord er the C om m ission to provid e it w ith copies of do cu m en ts on the filedeclared not communicable , any document in exis tence recording te lephoneor other contact , and al l other documents or informat ion not disclosed to theappl ican t ;II - 67


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JUDGMENT OF 13 . 1. 2004 CASE T-67/01

order the Commission to pay the costs.

26 The Commiss ion con tends tha t the Cour t shou ld :

dismiss the action in its entirety; and

order the applicant to pay the costs.

27 By a measure of organ i sa t ion of procedure not i f ied on 18 N o v e m b e r 2 0 0 2 , theC o u r t of First Instance asked the Commiss ion to produce conf ident ia l andnon-conf ident ia l vers ions of t he document s on the file not disclosed to JCB dur ingthe adminis t ra t ive procedure and n u m b e r e d 14 to 19 in the appl icant ' s l is t , toindica te the method used to de te rmine the a m o u n t of the f ine, providing data toenable a c o m p a r i s o n to be made with s imilar cases, and to reply to the c o m p l a i n ttha t there is a con t rad ic t ion in the opera t ive par t of the decision.

2 8 On 4 December 2002, the Commission sent the Court of First Instancenon-confidential versions of the documents requested and answered the questionsput.

2 9 The parties presented oral argument and replied to the questions put to themorally by the Court at the hearing on 22 January 2003.II-68


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JCB SERVICE v CO MMISSION30 On the day of the hearing the Commission produced to the Court the confidentialversions of documents Nos 14 to 19 to allow the court to assess whetherconfidentiality had been opposed justifiably. Further, it was decided at thehearing that the Commission should disclose to the Court and to JCB's counsel

docum ents N os 1 to 1 3. The C omm ission made the disclosure requested and theapplicant's counsel submitted written observations on all the documents on13 February 2003.

Law

31 The application contains pleas relating to the procedure by which JCB Servicealleges that the Commission, throughout the procedure under Article 81 EC,breached essential procedural requirements and disregarded the fundamentalrights of the defence. It also contains pleas concerning the merits of the contesteddecision.

1. The procedure

The first plea: the Commission 's failure to act w ithin a reasonable period

Arguments of the parties

3 2 JCB submits that the Commission failed to fulfil its obligation to act within areasonable time which derives both from a general principle of Community lawenshrined in the case-law and from Article 6(1) of the European Convention folII - 69


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the Protection of Human Rights and Fundamental Freedoms (ECHR), signed inRom e on 4 Novem ber 1950 (Joined Cases T-213/95 and T-18/96 SCK and FN K vCommission [1997] ECR II-1739, paragraphs 56 and 57).

33 First , JCB not i f ied the agre em ents con cernin g i ts dis t r ibu t ion arran gem en ts on30 June 1973 and the Commiss ion c losed tha t procedure 27 years la ter inreject ing, in Art icle 2 of the contested decision, the request for exemption underArt icle 81(3) EC made in 1973. Second, the procedure ini t iated fol lowing thecomplaint by Central Parts on 15 February 1996 lasted nearly f ive years .

3 4 The Commission disputes the applicability of Article 6(1) of the ECHR toadministrative proced ures in com petition law since that convention is not p art ofCommunity law as such (Case T-112/98 Mannesmannrhren-Werke v Commission [2001] ECR II-729, paragraph 59).

3 5 M oreover, the C omm ission contends tha t it did not breach its duty to act within areasonable time. First, JCB, without ever seeking a formal decision from theCommission, implemented a system of contracts different from that notified in1973 and did not notify all the agreements, given that the letters sent in 1980 and1975 did not constitute notifications within the meaning of Regulation No 17.Secondly, the infringement procedure was not excessively long, given thecomplexity of the file, the checks it required and the fact that changes made atthe same time to Community law on dealership agreements caused certain pointsin the first statement of objections to be reconsidered. Moreover, of the 33months of the infringement procedure, JCB was responsible for a delay of morethan seven months.II-70


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JCB SERVICE v COM MISSION

Findings of th e Co u r t

36 T h e need t o ac t within a reasonable time in conducting administra t ive proceedings relating t o competition policy is a general principle of Co m m u n i t y l a wwhose observance is ensured by the Community judicature (Case C-282/95 PGurin automobiles v Commission [1997] E C R I -1503 , pa rag raphs 36 a n d 3 7 ;Joined Cases C-238/99 P, C-244/99 P , C-245 /99 P , C-247/99 P , C-250 /99 P toC-252/99 P a n d C-254/99 P LVM v Commission [2002] ECR I-8375, paragraphs167 t o 1 7 1 , a n d SCK and FNK , cited above, paragraphs 5 5 a n d 56) , a n d which isincorpora ted , as an element of the right t o good adminis t ra t ion , in Article 41(1)of the Charter of fundamental rights of the European Union proclaimed in Niceon 7 December 2000 (OJ 2000 C 364, p. 1). Accordingly, while i t is n o t necessaryto rule on the applicability as such of Article 6(1) of the ECHR t o administra t iveproceedings before t h e Commission relat ing t o competi t ion policy, it must beconsidered whether, in the present case, the Commission has breached the generalprinciple of Co m m u n i t y l a w that decisions must be adopted within a reasonabletime in th e procedure leading t o t he adop t ion of the contested decision.

3 7 In considering this plea, a distinction must be made between t h e t w o sets ofadministra t ive proceedings a t issue, namely, first, consideration of the agreementsnotified in 1973, which w a s concluded by the rejection, in Article 2 of thecontested decision, of the applicat ion for exemption, and, second, investigation ofthe complaint made in 1996 , t h e conclusions of which ar e se t o u t in th e otherart ic les of the opera t ive par t of the contested decision relat ing t o t h einfringement.

3 8 A s regards the proceedings which followed notification in 1973 , according t o t hedocumen ts on the file, t h e Commission filed t h e notified agreements i n 19 92without taking a decision an d i t w as only JCB's reply to the first statement ofobjections which led th e defendant t o reconsider those agreements in th e courseof the investigation of the complaint . It is abundantly clear that the fact that thoseproceedings lasted 2 7 years breaches th e obligat ion of the adminis t ra t ion t oadop t a position a n d close proceedings, once opened, within a reasonable t ime.I I -71


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However, regrettable as such a breach is, it cannot have affected either thelawfulness of the rejection of the application for exemption or the proper conductof the proceedings to establish that there was an infringement.

3 9 As regards the rejection of an application for exemption, which is a separatedecision from that finding that there was an infringement, it is settled case-lawthat the mere fact of not having been adopted within a reasonable time cannotrender unlawful a decision taken by the Commission following notification of anagreement (see, to that effect, Case T-26/99 Trabisco v Commission [2001]ECR II-633, paragraph 52, and Case T-62/99 Sodima v Commission [2001]ECR II-655, paragraph 94).

4 0 Infringement of the principle that the Commission must act within a reasonabletime, if established, would justify the annulment of a decision taken followingadministrative proceedings in competition matters only in so far as it alsoconstituted an infringement of the rights of defence of the undertakingsconcerned. Where it has not been established that the undue delay has adverselyaffected the ability of the undertakings concerned to defend themselves effectively, failure to comply with the principle that the Commission must act within areasonable time cannot affect the validity of the administrative procedure (seeJoined Cases T-305/94 to T-307/94, T-313/94 to T-316/94, T-318/94, T-325/94,T-328/94, T-329/94 and T-335/94 LVM v Commission [1999] ECR II-931,paragraph 122, not overturned on that point by the judgment on appeal of15 October 2002 in LVM v Commission, cited above, paragraphs 176 and 177).

41 As regards the decision finding an infringement, suffice it to note that care istaken in that decision not to base findings on matters which were notified and toestablish that the practices of which JCB is accused are different from thosestipulated by the notified agreements. Consequently, the fact that the agreementswere notified long ago cannot affect the lawfulness of the infringementproceedings relating to matters other than those notified.II-72


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JCB SERVICE v COMMISSION42 Moreover, JCB Service does not argue that the length of t ime which elapsedresulted in any part icular procedural irregulari ty and confines i tself to submitt ingthat the Commission 's conduct reveals poor management of the f i le . No inferenceof relevance to the consideration of the claims for annulment can therefore be

drawn from the length of t ime which has elapsed since the notif ications made in1 9 7 3 .

43 As regards the investigation of the complaint referred to the Commission on15 February 1 9 9 6 , the total durat ion of the procedure, 4 years , 10 months and6 days, does not appear excessive given the complexity of the case, which involvesseveral Member States and covers f ive heads of infringement, and the need todraw up a second s ta tement of object ions , referred to in paragraphs 16 and 18above .

44 Even if that length of time were held excessive, that finding would be such as toentail the annulment of the relevant art icles of the contested decision only if i twere established that it gave rise to an infringement of the rights of defence (seethe judgment of 20 Apri l 1999 in LVM v Commission, c i ted above , paragraph122, not over turned on that point by the judgment of 15 October 2002 in LVM vCommission).

45 However , i t must be noted that the appl icant does not argue that theCommission's al leged fai lure to act within a reasonable t ime in investigatingthe complaint gave rise, in the present case, to an infringement of the r ights ofdefence. As was confirmed at the hearing, JCB Service confines i tself to arguingthat the length of the procedure reveals the Commission 's par t ia l i ty andmismanagement of the f i le and thereby demonstrates the unlawfulness of thecontes ted decis ion. Against that background, and wi thout i t being necessary torule on the al leged excessive length of the investigation of the complaint , i t mustbe held that the plea as i t is argued cannot entail the total or part ial annulment ofthe operative part of the contested decision.II - 73


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4 6 It follows from the foregoing observations that the plea, which is not such as toaffect the lawfulness of the contested decision, either with regard to theapplication for exemption or with regard to the infringement, must be rejected asinoperative.

The second plea: breach of the principle of the presumption of innocence


4 7 JCB Service submits that the Commission did not allow it a fair hearing and didnot observe the principle of the presumption of innocence which applies to theprocedures relating to infringements of the competition rules that may result inthe imposition of fines on undertakings (Case C-199/92 P Hls v Commission[1999] ECR I-4287, paragraphs 149 and 150). The Commission thus failed toobserve its duty of impartiality, in considering the facts with partiality, failing totake account of evidence in its favour and presuming its guilt, in breach of theprinciple of the benefit of the doubt (Case T-62/98 Volkswagen v Commission[2000] ECR II-2707, paragraph 269, and the Opinion of Judge Vesterdorf actingas Advocate General in Case T-1/89 Rhne-Poulenc v Commission [1991]ECR II-867, II-869, II-954 and II-956).

4 8 JCB alleges tha t the C omm ission had adopted a negative attitude tow ards it fromthe start, without having ascertained whether the distribution agreements hadbeen notified, and then, once it had the complete file before it, had adhered to itsoriginal position, presuming the guilt of the undertaking. T he applicant takes theview, citing examples in support of that view, that the Commission did notconsider, or destroyed, evidence in its favour and misinterpreted the documentsand the facts of the case.II-74


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JCB SERVICE v COMMISSION

49 The Com mission contends tha t the procedure was cond ucted fairly as JCBam fordExcavators was given two hearings and had prior access to the file. TheCommission adds that it adopted a second statement of objections because theapplicant's written and oral observations led it to examine the 1973 notificationthoroughly and reconsider its assessment. The Commission therefore disputesthat it acted partially.

Findings of the Court

50 The plea is in two p arts. The first concerns observance of the right to be heard,which is governed , as regards the ap plication of Articles 81 EC and 82 EC, by theprovisions of Article 19(1) of Regulation No 17 and by those of RegulationNo 99/63/EEC of the Commission of 25 July 1963 on the hearings provided forin Article 19(1) and (2) of Council Regulation No 17 (OJ, English Special Edition,1963-1964 p. 47). Those provisions require that undertakings concerned by aproceeding for the establishment of infringements are afforded the opportunity,in the course of the administrative procedure, of effectively making known theirviews on all the objections dealt with in the decision (Case 85/76 Hoffmann-LaRoche v Commission [1979] ECR 461, paragraph 9, and SCK and FNK vCommission, cited above, paragraph 65). In the second, the applicant relies onthe principle of the presumption of innocence which is part of the Communitylegal order and applies to the procedures relating to infringements of thecompetition rules applicable to undertakings that may result in the imposition offines or periodic penalty payments (Case Hls v Commission, cited above,paragraphs 149 and 150, and Case C-235/92 P Montecatini v Commission[1999] ECR I-4539, paragraphs 175 and 176).

51 As regards respect for the rights of the defence, as pointed out in paragraphs 16and 18 above, JCBamford Excavators was given an opportunity to submit itsobservations and was heard by the Commission following each of the statementsof objections.I I -75


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52 The prep ara tion of a second statem ent of objections was made necessary by theobservations made in response to the first statement of objections, which pointedout, in particular, that agreements had been notified. The Commission wasobliged to reconsider its objections in the light of those agreements sinceArticle 15(5) of Regulation No 17 prohibited it from imposing a fine on JCB inrespect of notified clauses. Far from infringing the right to be heard, reconsideration of the infringement in the light of such new evidence and the adoptionof the second statement of objections were intended to correct the originaldeficiencies in the proced ure and the errors of assessment liable to arise as a result(see C ase 51/6 9 Bayer v Commission [1972] ECR 7 45, paragra ph 11). From thatpoint of view, the procedure followed did not show signs of any irregularity orfailure to have regard to the rights of the defence.

5 3 As regards the principle of the presumption of innocence, the mere fact that theCommission adopted two successive statements of objections cannot suffice toestablish that that principle was breached. Moreover, a general presumption ofthe guilt of the undertaking concerned can be attributed to the Commission onlyif the findings of fact it made in the decision were no t sup ported by the evidence itfurnished.

5 4 As an exam ple of the Com mission's alleged partia lity, JCB Service men tions, first,a memorandum of 16 May 1995 from the Sales Development Director, sent tothe managers of the companies in the group, which states that the prohibition ofparallel imports is contrary to the decisions of the Commission and the case-lawof the Court of Justice. It alleges that the Commission used that document asevidence that JCB was aware of Community law, which constitutes anaggravating factor. However JCB cannot claim that it was unaware of therequirements of Community competition law, as, moreover, attested by itsnotification of its agreements as soon as the United Kingdom of Great Britain andNorthern Ireland joined the European Community. JCB's concern over thecompatibility of its agreements and practices with Community law, whichemerges from the memorandum mentioned above, is an objective finding of fact,II-76


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JCB SERVICE v CO MM ISSI ON

which is, moreover, not disputed by the applicant. The fact that the Commissionhas taken account of the document in question and the conduct which it recordsdoes not therefore reveal partiality on its part.

55 JCB subm its, second, that the Comm ission misinterpreted the letter of 13 April1995 from Berkeley JCB to JCB Sales mentioned in recital 89 of the contesteddecision. That correspondence records the fact that that distributor might beapproached 'by both end users and agents'. Even if the Commission hadmisinterpreted that part of the sentence in stating in recital 143 of the contesteddecision that Overseas end-users and their duly appointed agents' were referredto, that possible inaccuracy did not in itself demonstrate partiality but, at worst,betrayed a poor understanding of the document.

56 Th ird, JCB takes the view th at, in any event, the Comm ission assumed its guilt. Itcomplains, for instance, that it did not take account of the judgment of the Courd'appel de Paris of 8 April 1998, which was in its favour. That judgment, whichheld that Central Parts used the JCB sign without authorisation and deleted theserial numbers from JCB machines, concluded that Central Parts had engaged inacts of unfair competition against JCB. The Commission also misinterpreted the'Rouvire dispute', named after a customer of Central Parts, an unauthoriseddealer who bought a JCB machine from Central Parts and subsequently repairedit badly. The fact that the author of a complaint in a procedure applyingRegulation No 17 might have engaged in misconduct for which it was sentencedby a court is irrelevant to the infringements actually alleged against JCB whichare, moreover, separate.

57 JCB Service submits, fourth, that the transcript of the interview held on6 November 1996 on the premises of the authorised distributor, Wading JCB,II - 77


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between officials of the 'Competition DG' and the distributor's representativesmade by staff of that directorate constituted exculpatory evidence which theCommission was wrong not to take into account.

58 According to the transcript of that interview, which was placed on the court fileduring these proceedings, as indicated in paragraphs 27, 28 and 30 above, theinformation given to the Commission by Watling JCB during that interviewconcerns, inter alia, the way in which restrictions imposed on out-of territorysales were implemented, relations between the applicant and the JCB DealerAssociation, service support fees and the drawing up of retail price lists. In thepicture of relations between the JCB group and one of its distributors whichemerges from that interview, no element can be clearly pinpointed as evidence asto whether or not the practices of the distribution network constituteinfringements. It seems, therefore, that it cannot be argued that the Commissionexcluded the document from its examination of the elements of the infringementin order to suppress exculpatory evidence. M oreover, the Com mission states th atit excluded that document because it had doubts about the lawfulness of thecircumstances in which it was obtained, which seems a plausible explanationhere.

59 Accordingly, in the light of the circumstances described above and the content ofthe transcript in question, the Commission's decision to exclude that documentfrom the file is no t sufficient to prove the allegation of partiality made against theCommission in dealing with the case.

60 In conclusion, there is nothing in the conduct of the administrative procedure toindicate that the Commission interpreted the documents and the facts in atendentious or biased manner or exhibited partiality in its conduct towards JCB.The plea of breach of the principle of the presumption of innocence inconsideration of the evidence must therefore be rejected.I I -78


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61 It follows from the foregoing that the right to be heard and the principle of thepresumption of innocence were not breached.

The third plea: breach of the right of access to the file


62 JCB Service alleges that the Commission disregarded its right to have access to thedocuments placed on the file which, it argues, were relevant to its defence andwere not internal Commission documents which the Commission could declarenon-accessible (documents 1 to 19 mentioned in paragrap h 24 above).

63 The Commission contends that JCB had access to all the documents on the filewhich were not confidential. As regards the documents numbered 6 to 10, theCommission points out that it did not use them as evidence of the infringementand that they therefore could not have been of any use to the undertaking'sdefence.


64 Access to the file is one of the procedural guarantees intended to safeguard therights of the defence. Infringement of the right of access to the Commission's fileduring the procedure prior to adoption of the decision can, in principle, cause thedecision to be annulled if the rights of defence of the undertaking concerned haveII-79


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been infringed. In such a case, the infringement com mitted is no t remedied by themere fact that access was made possible during the court proceedings relating toan action in which annulment of the contested decision is sought. Where accesshas been granted at that stage, the undertaking concerned does not have to showthat, if it had had access to the non-disclosed documents, the Commissiondecision would have been different in content, but only that it would have beenable to use those documents for its defence (judgment of 15 October 2002 inLVM v Commission, paragraphs 316 to 318).

65 In accordance wi th those pr inciples , i t must be cons idered whether theCommission's refusal to al low JCB access to the documents at issue, which wereonly disclosed in the course of the court proceedings, prevented the appl icantfrom taking cognisance of documents which were l iable to be of use to i t in i tsdefence and thereby infringed the rights of the defence.

66 T h e d o c u m e n t n u m b e r e d 1 b y t h e a p p l i c a n t is a l ist o f J C B ' s a u t h o r i s e dd i s t r i b u t o r s f o r B en e lu x , b a sed o n a n off ic ia l pub l ica t ion b y J C B , w h i c h C e n t r a lPar t s d isc losed t o t h e C o m m i s s i o n i n t h e c o u r s e o f t h e i n v e s t i g a t i o n of i tscomplaint. The information contained in that document, in the form of a simplelist of addresses, was clearly familiar to JCB and the applicant does not evenallege that its rights were infringed as a result of the failure to disclose thatdocument to it.

6 7 The documents numbered 2, 11, 12, 13, 14, 15, 16 and 17 are requests forinformation sent to Central Parts, Gunn JCB and Watling JCB by theCommission in the exercise of its powers of investigation under Article 14 ofRegulation No 17. As mere requests for information they contain nothing usefulto JCB's defence. The refusal to disclose them thu s did not prejudice the rights ofthe defence.II-80


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JCB SERVICE v COMMISSION68 The documents numbered 3, 18 and 19 are replies to the requests for informationmentioned in paragraph 67 above, the first under Article 14 and the two othersunder Article 11 of Regulation No 17 . They could compromise the Commission'ssources of information. In those circumstances the Commission was entitled to

invoke confidentiality and refuse to allow JCB access to those documents on thefile during the administrative procedure.

6 9 Finally, the documents numbered 6, 7, 8, 9 and 10 concern the interview betweenofficials of the 'Competition' DG and representatives of Wading JCB which tookplace on the premises of Wading JCB on 6 November 1996 (see paragraphs 57and 58 above). Although it includes witness statements concerning the operationin practice of JCB's distribution network from the point of view of the dealers,that interview cannot be considered to have had the potential to be useful to thedefence of the undertaking in question.

7 0 First, the matters brought to light by those interviewed are all referred to in otherdocuments on the file on which the undertaking was given an opportunity to putits view, whether on out-of-territory sales, relations between the applicant andthe JCB Dealer Association, service support fees or the drawing up of retail pricelists. As held in paragraph 58 above, the transcript of the interview containsnothing which can be clearly pinpointed as evidence as to whether or not thepractices of the distribution network constitute infringements. The contesteddecision is, moreover, based on those documents and not on the content of theinterview, which is precisely what JCB, in this plea, accuses the Commission ofnot taking into account.

71 Second, the circumstances of the case make it legitimate to assume that JCB wasaw are, through its distributor, W atling JCB, of the content of the interview beforethe adoption of the contested decision. In particular, the facts set out inparagraph 4.59 of the application imply that JCB received a copy of thedocum ent through W atling JCB before the decision w as adop ted. M oreover, JCBI I -81


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Service itself accepts that it was informed by Watling JCB of the inspectionconducted by the Commission at its premises and the interview recorded on thesecond day of that inspection. It does not specify when it received thatinformation but, whilst it complains that the Commission did not allow it accessto the document, it does not allege that it was unaware of its content during theprocedure.

72 It follows from the foregoing that the plea of breach of the right of access to thefile and the resulting breach of the rights of the defence must be rejected.

73 M ore ov er , there is no need to adjudicate on the claims for pro du ct io n of cer taindocuments on the f i le to which JCB was refused access during the administ rat iveprocedure, given that those documents were disclosed in ful l to the appl icant inthe course of proceedings before the Court of Firs t Instance.

2 . The merits of the contested decision

The plea of failure to establish the infringem ent

7 4 The Commission identified five counts of infringement of the provisions ofArticle 81 EC, set out in paragraph 20 above.II-82


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JCB SERVICE v CO MMISSION

Preliminary observations of the parties on notification

75 JCB Service submits that, having notified its agreements as long ago as 1973,amended them in the light of the Commission's observations and submittedrevised agreements in 1975, and then amendments to them in 1980 and 1995, itwas entitled to assume, in the absence of any communication from theadministration until the lodging of the complaint by Central Parts in 1996, thatits agreements, as amended and, in its view, properly notified, were consistentwith Community law and tacitly approved by the Commission.

7 6 The Commission states that only the distribution agreements properly notifiedusing form A/B on 30 June 1973, relating to all the then Member States of theCommunity, apart from the French Republic, and the agreements sent on18 December 1975 amending some of the previous ones, can be considered tohave been properly notified. However, the contracts sent in 1980 and 1995, nothaving been notified using the requisite form A/B, were not, in the defendant'sview, validly notified. It points out that Community law and, in particular,Regulation No 17, do not allow the interp retation relied on by JCB Service basedon tacit approval or presumption of lawfulness.


7 7 The question thus raised by the parties is whethe r, regardless of the subm ission in1975 of agreements amended following the Commission's observations, whichthe Commission accepts fall within the terms of notification, as indicated inparagraph 76 above, the documents subsequently sent in 1980 and 1995 may beconsidered to have been properly notified in the light of the requirements ofRegulation No 17 and of Regulation No 27 of the Commission of 3 May 1962,First Regulation implementing Council Regulation No 17 (OJ, English SpecialEdition, 195 9-19 62, p. 132), as amended by Regulation (EEC) No 1133/68 of theCommission of 26 July 1968 (OJ, English Special Edition, 1968, (II) p. 400), andreplaced by Commission Regulation (EC) No 3385/94 of 21 December 1994 onII - 83


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the form, content and other details of applications and notifications provided forin Council R egulation N o 17 (OJ 1994 L 377 , p. 28), which entered into force on1 March 1995.

78 T h e d o c u m e n t s s e n t b y J C B i n 1 9 8 0 a n d 1 9 9 5 r e l a t e t o t h e a g r e e m e n t w i t h t h eU n i t e d K i n g d o m d i s t r i b u t o r s a n d t h e q u e s t i o n o f the i r lawfu lness is l ikely t o b er e l e v a n t t o t h e e x a m i n a t i o n o f t h e f i r s t e lement of t h e i n f r i n g e m e n t r e g a r d i n g t h er e s t r i c t i o n s i m p o s e d o n pass ive sa les b y U n i t e d K i n g d o m d e a l e r s ( see p a r a g r a p h s 8 6 t o 8 9 b e l o w ) .

7 9 According to settled case-law, the objects of notification are achieved solely bynotification of contracts in identical terms concluded by one and the sameundertaking (Case 1/70 Rochas [1970] ECR 515, paragraph 5). The use of thatform is therefore mandatory and is an essential prior condition for the validity ofthe notification (Joined Cases 209/78 to 215/78 and 218/78 Van Landewyck vCommission [1980] ECR 3125, paragraphs 61 and 62), and a fresh notificationmust be made in the event of any reinforcement or extension of the restrictionsand, a fortiori, any introduction of new restrictions (Case C-39/96 Free RecordShop [1997] ECR I-2303, paragraph 15). An undertaking cannot maintain thatexclusivity clauses in a notified agreement have expired if it has not notified, inthe form required by Regulation No 17, the amendments alleged to have beenmade (Joined Cases 43/82 and 63/82 VBVB and VBBB v Commission [1984]ECR 19, paragraph 8). It is only in the specific case of renewal of a request forexemption that the Court has held that a mere request for renewal withamendments is sufficient (Case 75/84 Metro v Commission [1986] ECR 3021,paragraphs 29 to 31).

so Furtherm ore, as the Comm ission is right to observe, on the specific subject of thesystem of notification provided for by Regulation No 17, Community competition law makes no provision for tacit approval of agreements notified in thatway.II-84


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81 In the present case , the 1980 agreement contains new clauses concerning, interalia, intel lectual property r ights and the procedure to be followed to terminatecontractual re la t ionships . I t has some addi t ions concerning the obl igat ions of thedistr ibutor. Clause 4, which l imits the freedom of distr ibutors with regard towholesale sales, has been amended in the new agreement. In the 1995 version,Clause 4 was rewrit ten as regards the exceptions to the restr ict ions imposed ondis t r ibutors . Fur ther obl igat ions for dis t r ibutors were a lso int roduced.

82 Given the sub stantial am en dm en ts thus mad e to i ts agre em ents and the newclauses inserted in them, JCB should have notif ied them using the form providedfor that pu rpo se wh en i t sent them in 1980 and 19 95 , in ord er to enab le theCommission to carry out the review incumbent upon i t effectively. Accordingly,only the agreements notif ied in 1973 and amended in 1975 in response to theCommission 's observat ions must be regarded as proper ly not i f ied.

The first element of the infringement, relating to restrictions on passive sales bydistributors in the U nited Kingdom, Ireland, France and Italy, to unauthoriseddistributors, end-users or distributors located outside exclusive territories and, inparticular, in other Mem ber States

Arguments of the par t ies

83 JCB Service considers that the Commission has not adduced evidence for i ts claimthat restr ict ions on passive sales had been imposed on authorised distr ibutors inthe Uni ted Kingdom, I re land, France and I ta ly , prohibi t ing them from export ingeven to end-users and authorised distr ibutors outside their exclusive terri tory,and, in part icular , to the other Member States and that the only expressprohibi t ion in those agreements concerns sales to unauthor ised dis t r ibutors . TheI I - 85


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applicant stresses that most of the documents on which the Commission reliesrelate to the implementation of Clause 4 of the notified agreements. JCB Servicema intains further, tha t its policy on 'grey exp orts' was directed at parallel trade rsoutside its network and that the documents mentioned in the contested decisionin that regard are not relevant to the establishment of the infringementcomplained of.

84 The Commission contends that JCB effectively imposed restrictions on thepassive out-of-territory sales allocated to each authorised agent, by interfering inthe export sales of its distributors in the United Kingdom, by obliging its Italiandistributors to sell only within the allocated territory, by making supplies by itsIrish distributors outside the allocated territory subject to its approval and byparticipating, through its French subsidiary, in the negotiation of service supportfees in France. The Commission adds that Clause 4 of the notified agreementswas implemented in a different and more restrictive way than w as provided for bythe wording of the notified clause. The defendant also takes the view that JCBactively discouraged all sales abroad whether by its authorised agents or byunauthorised agents in the case of parallel exports.


8 5 The element of the infringement described by Article 1(a) of the contesteddecision concerns a restriction imposed on passive sales by autho rised distributo rsin the United Kingdom, Ireland, France and Italy, prohibiting or deterring themfrom selling not only to unauthorised distributors, but also to authoriseddistributors out-of-territory or to end-users. A restriction of that nature, whichhas as its object and effect the limiting and sharing of markets, is prohibited byArticle 81(l)(b) and (c) EC (see Case 86/82 Hasselblad v Commission [1984]ECR 883, paragraph 46).II-86


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JCB SERVICE v COMMISSION The United Kingdom

86 The notified agreements concerning distributors and main dealers in the UnitedKingdom (registered under numbers IV 28696 and IV 28697 respectively)contain, in the version amended in 1975 in response to the Commission'sobservations, a Clause 4 which provides, as regards distributors, '[t]he distributorhereby agrees not to sell JCB prod ucts wholesale for resale except to an appro vedsub-dealer or in the case of B prod ucts to a main dea ler', and as regards maindealers, '[t]he main dealer hereby agrees not to sell JCB products wholesale forresale except to an approved sub-dealer'. Those clauses, which lay down aprohibition on selling to unauthorised agents, did not contain a generalprohibition on selling to final dealers or to authorised agents outside the territoryallocated. The Commission contends that the clause in question has beeninterpreted as entailing a general prohibition on out-of-territory sales.

87 JCB Service submits that the documents on which the Commission based itsconclusion in recitals 143 and 144 of the contested decision that the restrictionswere established do not support that conclusion.

88 In that connection, in a letter sent on 26 October 1992 by Watling JCB to thesecretary of the Queen's Award Office applying for a Queen's Award for ExportAchievements, it expressly states that its distribution agreement prohibits it fromselling new machines or parts for export. According to a letter of 13 April 1995from Berkeley JCB to JCB Sales, that authorised distributor considers itself boundby a clause prohibiting it from selling outside its territory and undertakes toconsult JCB in the event of doubtful requests from both end users and agents. In aletter of 21 November 1995, TC Harrison JCB, another authorised distributor,explains to Central Parts that it is not allowed to export. A letter of 30 November1992 from Gunn JCB to JCB Sales, in which that authorised distributor defendsits sale of a new machine in France, confirms that JCB Sales ensures territorialexclusivity is respected by its agents. Those documents all show that thedistributors believed that their contract with JCB bound them to restrictiveII - 87


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commercial practices and acted accordingly; going beyond the prohibition onselling to unauthorised agents contained in Clause 4, they behaved as though theywere subject to a more general prohibition on selling outside their territory, inparticular for export.

89 I t fol lows from the foregoing that , in the United Kingdom, restr ict ive pract icesgoing beyond the provis ions of the not i f ied agreements were implemented. Theelement of the infr ingement relat ing to passive sales by authorised dist r ibutorsand end users outside their terr i tory is therefore establ ished.

Ire land

9 0 The standard distribution-export agreements notified in 1973 and 1975concerning, inter alia, Ireland and naming Blackwood Hodge as the contractorfor that country (registered as number IV 28695), contained no clause prohibitingwholesale sales to unauthorised agents like those considered in the case of theUnited Kingdom in paragraph 86 above. However, the agreement concluded in1992 by JCB Sales with Earthmover Commercial Industrial (ECI) JCB, itsdistributor for Ireland, contains a Clause 4, concerning wholesale sales,comparable to the Clause 4 in the 1975 versions of the United Kingdomdistributor and main dealer agreements. The clause in the 1992 agreementprovides that '[t]he distributor hereby agrees not to sell JCB products wholesalefor resale except to an approved sub-dealer'. As the agreement was not notified,Clause 4, which concerns both passive and active sales, can therefore serve asevidence of the infringement.II-88


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JCB SERVICE v COMMISSION91 As regards the implementation of the agreement in respect of passive sales, JCBService casts doubt on the probative force of the documents mentioned in recital122 of the contested decision on which the Commission rel ies to establish theinfr ingement .

92 According to a fax of 31 Janua r y 1995 from JCB Sales to JCB SA and two otherfaxes of 31 Janua ry and 30 March 1995 from ECI JCB to JCB Sales , concerningat tem pts by Central Par ts to obtain sp are par ts from ECI JCB 's depot in C ork , theIrish distr ibutor evaded Central Parts ' requests by claiming i t had enough to doon i ts own market , and at the same t ime asked JCB Sales whether i t should meetrequests for supplies from France. Given that the contractual provisions areidentical to those for the United Kingdom but not notif ied, those facts, inconjunction with the general strategy of l imiting out-of-territory sales in the restof JCB's distr ibution network, are sufficient to establish this element of theinfringem ent, tha t is to say, restr ict ions im posed on passive out-of-te rri tory sales.

93 Th e fact that the I rish Co m pet i t ion A uthor i ty gran ted ECI JCB a block e xem ptionby decision of 5 November 1993 for i ts exclusive distr ibution agreement withJCB Sales, without raising any objection to Clause 4, is irrelevant to the exerciseby the Commission of the powers conferred on i t by Community law in the areaof compet i t ion. Moreover , the decis ion of the I r ish Compet i t ion Author i ty , takenunde r the Co m pet i t ion Act 1 99 1, gran ts the exem ption subject to Art icle 81(1)EC and C om m ission Re gulat ion (EEC) N o 1 983 /83 of 22 Jun e 1983 on theapplication of Article [81](3) of the Treaty to categories of exclusive distr ibutionagreements (OJ 1983 L 173, p. 1) . I t is set t led case-law that any similari ty theremay be between the legislat ion of a Member State in the f ield of competi t ion andthe rules laid down in Articles 81 EC and 82 EC certainly cannot serve to restr ictthe Commission's freedom of action in applying those Articles so as to compel i tto adopt the same assessment as the author i t ies responsible for implement ing thenational legislat ion (Case 298/83 CICCE v Commission [1985] ECR 1105 ,pa r ag r aph 27 ) .

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JUDGMENT OF 13. 1. 2004 CASE T-67/019 4 In any event, the decision of the Irish Competition Authority is based on Clause 4as it appea rs in the 1992 agreement referred to in par agra ph 90 above, concludedbetween JCB Sales and ECI JCB, which was not notified to the Commission.

9 5 It follows from the foregoing that the element of the infringement relating toIreland is also established as regards passive sales.

France

96 The s tandard dealership cont rac t be tween JCB SA and JCB Service and eachdeale r , dat ing from 1 9 9 1 , includ es, in Art icle 2, a recipro cal exclusivi ty clausewhich prohibi t s the dealer f rom, inter alia, se l l ing , d i s t r ibut ing or promot ingdi rec t ly or indi rec t ly JCB products and par t s outs ide the ter r i tory a l located. Thatagreement , which was not not i f ied and can, therefore , be taken in to account asevidence of the infr ingement , prohibi ts act ive sales and also expressly lays down aprohibi t ion on pass ive sa les outs ide the ter r i tory a l located.

9 7 JCB Service none the less submits that the documents on which the Commissionrelies, in recitals 111, 113 and 134 of its decision, do not prove the existence ofthe restrictions complained of.

9 8 In that regard, it appears th at a fax of 21 June 1988 from JCB SA to an authoriseddealer advises that dealer that sales outside the territory allocated are not eligiblefor assistance or discou nts an d w ill have an 8 % penalty applied for servicesupport. In a letter of 10 January 1995 to one of its dealers, Philippe MPT, JCBSA, referring to incidents involving that agent and client companies concerning'out-of-sector sales or proposals', reminds the dealer of its contractualII-90


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JCB SERVICE v COMMISSIONobligations. In a letter of 31 January 1996 to JCB SA, a dealer in Toulouse,Pinault quipement, complains of competition from JCB le de France (asubsidiary of JCB SA) on its territory and from parallel networks of Central Partsand Renault agricole. It calls on JCB SA to intervene forcefully to ensure thatrequests for parts in the Aquitaine region are passed on to it. Those documentsconfirm to a great extent the restrictive practices and partitioning of marketsprovided for by the standard dealership agreement.

99 JCB Service cites the decision of the French competition council, given on 20 July2001, which, it alleges, establishes that there was no restriction on passive sales.That decision is, however, irrelevant to the present dispute. It appears that itconcerns an agreement, denounced by JCB dealers in France, between the JCBGroup and Renault agricole on the distribution of agricultural equipment. Suchequipm ent is expressly excluded by Article 1 of the standard dealershipagreement at issue here and is, moreover, covered by a separate distributionnetwork.

100 It follows from the foregoing that the element of the infringement relating torestrictions on passive sales is established in respect of France.

Italy

101 The standard 1993 distribution contract between JCB SpA, JCB's Italiansubsidiary, and each distributor provides that distributors are to undertake tosell JCB products only on the allocated territory (Clause 4). That provision of theagreement, which was not notified and may therefore be taken into account inestablishing the infringement, prohibits all sales outside the allocated territory.That restrictive clause, therefore entails a prohibition on export sales and is thusintended to partition the market.I I - 91


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1 0 2 Furthermore, two communications from JCB Sales to JCB SpA, dated 24 March1994 and 14 February 1996 respectively, referred to in recitals 108 and 124 ofthe contested decision, reveal that Sofim, a distributor in Italy, was subject tocriticism for selling JCB machines in Slovenia where Terra is the local agent, inthe first case, and aggressively promoting JCB products in Southern Austria atlower prices than those of local agents, in the second. JCB Service maintains thatClause 4 concerned active sales only and that passive out-of-territory sales werecommon. The applicant describes how, for a period from 1990 to 1999, JCBmachines were sold on the respective territories of two authorised distributors,Somi (territory of Rome) and Vames (territory of Turin) by authoriseddistributors for other territories (Rimac and Stella, on the one hand, and Paneroand Meta, on the other). It appears that an average of 25 % of the sales made onthe territories of Somi and Vames were mad e by distributors authorised for otherterritories.

1 0 3 JCB Service thus proves that sales between the territories of the distributors inItaly took place and the practice was thus n ot as strict as the agreement required.However, the criticism which Sofim's conduct attracted shows the inflexibility ofJCB's distribution system as regards export sales and confirms that the objectivewas the partitioning of national markets. In any event, however the agreementswere implemented in practice, Article 81(1) EC prohibits the existence, indistribution contracts, of clauses having the object or effect of restricting sales.They constitute a restriction on competition which may be subject to a penaltyunder Article 81(1) EC if they are capable of affecting trade between MemberStates (Case C-306/96 Javico [1998] ECR I-1983, paragraphs 14 and 15). Thefact that a clause in an agreement between undertakings, the object of which is torestrict competition, has not been implemented by the contracting parties is notsufficient to remove it from the ambit of the proh ibitio n laid dow n in Article 81(1)EC (Case Hasselblad v Commission, cited above, parag raph 46 , and Joined CasesC-89/85, C-104/85, C-114/85, C-116/85, C-117/85 and C-125/85 to C-129/85Ahlstrm Osakeyhti and Others v Commission [1993] ECR I-1307, paragraph 175, and Case T-77/92 Parker Pen v Commission [1994] ECR II-549,paragraph 55).II-92


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JCB SERVICE v COMMISSION104 It follows from the forego ing th at the elem ent of the infringem ent relating topassive sales is established in respect of Italy.

Paral le l exp or ts on the wh ole of the geog raphic marke t concerned

105 JCB Service submits that the documents referred to in reci tals 93, 118 and 119 ofthe contested decision, relat ing to paral lel exports intended for t raders notbelonging to i ts dis tr ibut ion network, do not serve to establ ish the infr ingementcomplained of .

106 In that regard, in a letter of 2 June 1992, which JCB Sales sent to Watling J C B ,JCB sets out i ts posi t ion, which is unchanged as regards paral lel exports and is toact ive ly d iscourage the sa le of any new machine abroad, whether through aUni ted Kingdom dis t r ibutor or an external equipment h i re company. Two faxes ,of 11 and 15 M ay 1 9 9 5 , also se t out the complain ts of the German subs id iary ,JCB Germany, to JCB Sales on the subject of sales made by Berkeley JCB, aUni ted Kingdom dis t r ibutor , and by an equipment h i re company to a localcom pe t i to r .

107 The documents analysed above show that JCB has a pol icy of par t i t ioning theterr i tories of i ts dis tr ibutors and nat ional markets which leads i t to prohibi tgeneral ly any out-of-territory sale, part icularly abroad, whether i t is a case ofparal lel exp orts outside i ts dis tr ib ut ion n etw ork o r no t . Such co nd uc t reinforcesthe restr ict ions imposed on passive sales .

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1 0 8 It follows from all the foregoing that the Commission was right to take the viewthat JCB, by its agreements and practices, has contrived to preserve itsdistributors' exclusivity in the territory allocated to them, partitioned marketsand deterred or prohib ited expo rts. The ap plicant's argum ents relating to the firstelement of the infringement must therefore be dismissed.

The second element of the infringement, relating to restrictions on sources ofsupply imposed on distributors located in France and Italy, which preventcross-supplies between distributors


1 0 9 JCB Service submits that the allegation that the agreements gave rise torestrictions on the sources of supply of authorised distributors in France and inItaly, obliging them to obtain supplies solely from the national JCB subsidiaryand prohibiting cross-supplies between authorised distributors, is based on amisinterpretation of those agreements by the Commission, the purpose of theclauses at issue being merely to ensure that distributors market only JCBproducts. The applicant also complains that the Commission did not investigatewhether the contested clauses had actually been implemented.

1 1 0The Commission contends that the restrictions imposed on French and Italiandistributors derive from the terms of the contracts at issue, without there beingany need to ascertain whether they were actually implemented. It adds that JCBnever repo rted those restrictions, which have the effect of reinforcing those w hichwere notified.II - 94


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JCB SERVICE v CO MMISSION


111 The sharing of sources of supply is prohibited by Article 81(1)(c) EC. The elementof the infringement set out in Article 1(b) of the contested decision relates torestrictions alleged to have been imposed on distributors in France and in Italyregarding their sources of supply for contract goods, preventing cross-suppliesbetween those distributors.

112In F rance, Article 2 of the stan dard dealership agreem ent requires, as an essentialcondition of the contract, that supplies of JCB products and parts be obtainedexclusively from the French subsidiary, JCB SA, and from JCB Service. In Italy,the standard distribution contract prohibits distributors from selling or frombeing involved, directly or indirectly, in the sale of products other than JCBproducts (Article 4) and requires them to obtain supplies of spare parts and othersubsidiary products used for the repair of JCB products exclusively from JCB SpA(Article 6), unless they have prior written agreement from JCB, in the casescovered by those two articles.

113The clauses of those agreements, which were not notified and can serve asevidence of this element of the infringement, have a restrictive purpose.

1 1 4 JCB Service disputes that the documents to which the Commission refers inrecital 110 of the contested decision have any probative value.

1 1 5In relation to those documents, it must be observed that, as regards France, aletter dated 21 June 1996, sent by JCB SA to Sem-Cedima, one of its dealers,announces that the dealership contract is to be terminated by the Frenchsubsidiary with two dealers, Sem Cedima and K. Malecot, because of theirII - 95


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purchasing policy, under which they bought new machines and spare parts notfrom the companies of the JCB group in France, but from English companies, apractice of which JCB disapproves. Another letter, of 10 February 1999, from anauthorised dealer in France, whose identity is concealed, responding to a requestfor information from the 'Competition' DG, describes a prohibition on purchasing JCB spare parts and equipment from elsewhere than the JCB SA sources ofsupply and pressure exerted on the JCB distribution network and on thatcompany in that regard. The dealer is critical of that conduct, which is providedfor by Article 2 of the contract, denounces the parallel distribution networks foragricultural industrial and public works equipment, and explains that theprincipal advan tage in obtaining supplies in the United K ingdom is the differencein prices. Those documents confirm that the agreements were implemented andthat there were restrictions in France on the sources of supply of JCB authorisedagents.

116As regards Italy, in concluding that this element of the infringement wasestablished, the Commission relied on no evidence other than the provisions ofthe contract. JCB Service submits that the Commission cannot impose a penaltyon it for clauses which were not rigorously interpreted and implemented, withoutinvestigating and proving whether they were actually implemented.

117 As stated in paragraph 103 above, the fact that the clauses restricting competitionwere not rigorously interpreted and applied is irrelevant to the establishment orotherwise of the alleged infringement. The absence of any analysis of the effectsof the agreement in the contested decision does not, therefore, in itself constitutea defect in that decision (Joined Cases 56/64 and 58/64 Consten and Grundig vCommission [1966] ECR 299; see also judgment of 6 April 1995 in CaseT-143/89 Ferriere Nord v Commission [1995] ECR II-917, paragraphs 30 and31 , upheld by the judgm ent of the C ourt of Justice of 17 July 1997 in CaseC-219/95 P Ferriere Nord v Commission [1997] ECR I-4411, paragraphs 13, 14and 15), given that the anti-competitive object or effect of an agreement must beI I - 96


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JCB SERVICE v COMMISSIONtaken into account as a l ternat ive , not cumulat ive , requirements (Case 56/65Socit technique minire [1966] ECR 235; see a lso, judgment of 6 Apri l 1995 inFerriere Nord v Commission, c i ted above , paragraphs 30 and 31) .

11 8I t fol lows from the foregoing that the Commission was right to take the view thatthe element of the infringement relat ing to restr ict ions on sources of supply asregards purchases of contract goods by dealers operating in France and in I talywas es tabl ished. The arguments of the appl icant on that point must therefore bedismissed.

The third elemen t of the infringemen t, relating to the fixing of discounts or resaleprices applicable by authorised distributors in the United K ingdom and France

Arguments of the par t ies

119JCB Service denies that it fixed discounts or resale prices applicable by itsauthor ised dis t r ibutors in the Uni ted Kingdom and in France. The appl icantsubmits that the Commission has adduced no evidence of reprehensible pract icesin that regard. I t submits that the documents on which the Commission based i t sassessment merely reflect its attempts to increase its own sale prices to itsdis t r ibutors , a t tes t to normal preoccupat ions and ordinary commercial re la t ionswithin a dis t r ibut ion network or re la te to the es tabl ishment of a new dis t r ibut ionnetwork for agr icul tural products .II - 97


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120 The Com mission alleges that JCB was involved in the fixing of discounts andresale prices for its distributors in the United Kingdom and in France and that itsinvolvement entailed a degree of coercion. The Commission takes the view thatthe documents on which it based its assessment, concerning relations betweenJCB and the JCB Dealer Association, show that JCB, by its instructions and itsprice reviews, which were passed on within the Dealer Association, necessarilyinfluenced the price policy of its distributors in the United Kingdom. Thedefendant alleges, moreover, that JCB also fixed prices in France through JCB SA,the price restrictions being in addition to the territorial restrictions. Finally, itcontends that, in the contractual relations defining the vertical distributionagreements in this sector, there is evidence that there was an anti-competitivestrategy.


121Agreements or concerted practices which directly or indirectly fix purchase orselling prices or any other trading conditions are prohibited by Article 81(1)(a)EC.

122 The agreements, notified in respect of the United Kingdom in 1973 and 1975 andnot notified in respect of France, contain provisions to the effect that JCBdetermines the 'ex-works' invoice price for dealers and retailers of its products byapplying a discount to the recomm ended retail price. The applicant has adm itted,in its reply to the second statement of objections, that it drew up lists of retailprices for dealers and lists of recommended retail prices.II-98


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123 As regards the United Kingdom, according to the notified agreements, relating todistributors and main dealers, the prices paid by those agents for the spare partswere the same as JCB's recommended retail selling price, reduced by a discountwhich varied according to the product. Following the 1973 notification, theCommission, in its letter of 27 October 1975, had criticised those clauses,pointing out, in particular, that they might be used to fix selling prices.

1 2 4 The distributor agreement, sent in 1980, is identical to the previous ones. Theagreement sent in 1995, which replaced it, changes the method of calculation, theprices paid, corresponding, in the case of machines, to the 'ex-works price list'and for spare parts to the stock order price, but retains the reference torecommended retail prices and entitles JCB to modify unilaterally its discountsand its prices.

1 2 5 Similarly, as regards France, the 1992 standard dealership contract between JCBService and JCB SA, on the one hand, and the dealer, on the other, provides thatthe prices invoiced to the dealer are, in the case of machines, the prices fixed byapplying a discount to the 'recommended maximum prices' and, in the case ofspare parts, the prices appearing in the 'JCB distributor catalogue'.

1 2 6 Those contractual provisions show that JCB Sales, by drawing up lists ofrecommended retail selling prices for its products and determining invoice pricesinternal to its network according to those expected retail prices, exercised aninfluence over the fixing of retail prices. However, there is a difference betweenthe establishment of recommended prices and the fixing of retail prices. It is,moreover, for the supplier to determine the 'ex-works' price at which it willinvoice its products. The contractual documents as such are not thereforesufficient, in the present case, to establish that retail prices were fixed directly orindirectly.II - 99


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JUDGMENT OF 13 . 1. 2004 CASE T-67/01

127 The C o m m i s s i o n b a s e d its c o n c l u s i o n t h a t the p r o h i b i t e d c o n d u c t wases tabl i shed, in the case of the Uni t ed Kingdom, on document s concern ingre la t ions between JCB and its Dealer Associat ion and, in France , on ci rcumstances involving JCB SA, accord ing to recitals 128 to 133 and 168 to 171 of thecontes ted decis ion.

128 As r e g a r d s the U n i t e d K i n g d o m , the d o c u m e n t s d i s c u s s e d b e t w e e n the p a r t i e s( re fe r red to in rec i ta l s 1 3 1 and 1 3 2 of t h e co n te s t ed d ec i s io n ) sh o w th a t JC B w a sc o n c e r n e d a b o u t the level of r e t a i l p r i c e s wh ich it fe l t were to o low and t h a ts tu d ie s and d i s c u s s i o n s w e r e c o n d u c t e d on t h a t su b jec t w i th in the J C B D e a l e rA s s o c i a t i o n at the r e q u e s t of the a p p l i c a n t . T he c o r r e s p o n d e n c e f r o m thes e c r e t a r y of the B r i t i sh Dea le r Asso c ia t io n of 11 and 20 J a n u a r y 1 9 9 3 can bei n t e r p r e t e d , a c c o r d i n g to the a p p l i c a n t , as a t t e m p t s to i n c rea se its own sel l ingp r i c e to its d i s t r i b u t o r s . T he l e t t e r of 16 J u l y 1 9 9 1 f ro m J C B Service to thes e c r e t a r y of t h e as so c ia t io n a l so r ev ea l s t h a t t h e a p p l i c a n t i n t e n d e d to i n c rea se t h eav e rag e g ro s s d ea le r ma rg in for sp a re p a r t s by 2 %. It c a n be in fe r red f rom thosed o c u m e n t s t h a t the m e m b e r s of the d i s t r i b u t i o n n e t w o r k c o n f e r r e d w i t h onea n o t h e r a n d w e r e e n c o u r a g e d to do s o , or ev en th a t JC B d i r ec t ed a n d i n f lu en cedt h e c o n d u c t of m e m b e r s of t h e a s s o c i a t i o n . H o w e v e r , t h e y do n o t s h o w t h a t t h e ywere su b jec t to a s t r i c t b o d y of ru l e s on re ta i l p r ices . T he C o m m i s s i o n ' sc o n c l u s i o n t h a t t h o s e d o c u m e n t s s h o w t h a t h o r i z o n t a l p r i c e a g r e e m e n t s c o v e r i n gt h e w h o l e of t h e U n i t e d K i n g d o m had b een accep ted by all d ea le r s is t h e r e f o r eu n w a r r a n t e d in the l igh t of t h e f ac tu a l ev id en ce ad d u ced in s u p p o r t of it.

1 2 9 As regards France, several faxes (mentioned in recital 133 of the contesteddecision) were admitted by the Commission in evidence of JCB's anti-competitiveconduct. Faxes sent to JCB SA by dealers, dated 18 July 1994 and 23 October1995, reveal the existence of commercial negotiations between the nationaldistributor and dealers who asked JCB SA to supply them at a lower price becauseof rates agreed with customers. The facts described appear rather to reflect theusual commercial dialogue between a wholesaler and a retailer, but do notsupport the conclusion that there was a strict practice of fixing retail prices.Another fax of 10 June 1996 from JCB SA to JCB Sales reveals coordination onII - 100


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prices for spare parts but that single piece of info rm atio n is no t sufficient tosupport the conclusion that there was systematic f ixing of the retai l pricesim pose d by JC B Sales in tha t area. Tho se do cu m en ts show in any event that itwas not rare for dealers to sell below the suggested price and ask the supplier toinvoice them at a lower price to take account of that and so as not to reduce theant ic ipated prof i t margin by too much. On the other hand, those documents donot in any way show that JCB Sales was obliged to grant that request .

1 3 0In shor t , according to the documents on the f i le , JCB's act ions amounted to thefixing of i ts own prices 'ex-works ' , detai ls of which were negotiable, and thedrawing up of suggested scales for retail prices. The influence of JCB on retail saleprices was therefore significant , but essential ly that of a manufacturer who drawsup suggested lists of retail sale prices and fixes invoicing prices internal to itsnetwork according to the retai l sale prices desired. Moreover, the retai l sale pricescales, al though strongly indicative, were none the less not binding. There isnothing to indicate that JCB's efforts to influence dealers and discourage themfrom agreeing to sale prices considered to be too low involved coercion.

1 3 1According to the case-law, which al lows just if ication of distr ibution systems,some l imitat ion in price competi t ion is inherent in any selective distr ibutionsystem (Case 107/82 AEG v Commission [1983] ECR 31 51 , pa r ag raph 4 2 ) .Dealers cannot lawful ly have under takings wi th regard to pr ices imposed on them(AEG v Commission, ci ted above, paragraph 43) , but the Court has held, asregards relat ions between franchiser and franchisee, that , so long as there is noconcer ted pract ice for the appl icat ion of guide pr ices , the communicat ion of suchprices is not restr ict ive of competi t ion (Case 161/84 Pronnptia [1986 ] ECR 353 ,par agr aph 25 ) , and n or is an ade qu ate prof it m argin for dealers (Metro vCommission, ci ted above, paragraph 45) . On the other hand, an increase in theII - 101


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rigidity of the price structure (Case Metro v Commission, paragraph 44) liable toimpede effective competition on prices (Case T-88/92 Leclerc v Commission[1996] ECR II-1961, paragraph 171) must be condemned.

1 3 2 That case-law can be applied, by analogy, to the present case, in so far as itconcerns a distribution system which is hybrid but very similar to a selectivedistribution system (see paragraphs 165 to 167 below).

1 3 3 Accordingly, in the absence of unequivocal evidence establishing the fixing of or astrict set of rules regarding re tail prices and discou nts, the app lican t's submissionson this point must be allowed and it must be held that the third element of theinfringement is not sufficiently established in law.

The fourth element of the infringement, relating to the imposition of servicesupport fees on sales to other Member States by distributors in the UnitedKingdom according to fixed scales set by JCB


1 3 4 JCB Service submits that the service support fees on out-of-territory sales byauthorised UK distributors are based on a reasonable estimate of actual cost andhave no deterrent effect on exports. Contrary to the Commission's analysis theyare neither uniform nor set according to a fixed scale and imposed by JCB. Theapplicant makes clear that its participation in the negotiation of the fees, providedfor by the notified agreements, benefited small distributors and that theCommission had made no objection to it. The arrangement set up did not entailany breach of Article 81 EC.II - 102


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135 The Commission contends that the system of service support fees , se t in advanceand on a f lat-rate basis, is r igid and restr icts the autonomy of distr ibutors, thatthe part icipation of JCB in the f ixing of those fees from the outset and before anydisagreement can have been es tabl ished, prevents any negot ia t ion betweendis t r ibutors . The defendant adds that , in conjunct ion wi th other terms, thisarrangement disadvantages export sales f inancial ly , having a deterrent effect ont h e m .


136A clause enti t led 'service su pp ort fee: sales outs ide the region or terri to ry' w asinserted in the amended agreements notif ied in 1975 , regis tered under numbers IV28 69 6 and IV 28 69 7 , concern ing Uni ted Kingdom di s t r ibu tors and Uni tedKingdom main dealers respect ively. That c lause s t ipulated that the dis t r ibutor ormain dealer undertook, in the event of a sale outside the al located terri tory, topay to the distr ibutor responsible for that terri tory a service support fee theamount of which was to be agreed between the two dis t r ibutors and in defaul t ofagreement JCB was to determine the amount having regard to a l l the c i rcumstances of the case, the cost of the service carried out and a reasonable profi te lement (Clause 5 of agreements N o IV 28 69 6 and N o IV 28 69 7) .

137T ha t arran ge m en t is no t open to cri ticism in the light of co m peti t i on law and theCommission does not quest ion the pr inciple of i t . However , i t contends that theamended clause was not appl ied in accordance wi th i t s terms and that JCB wasalways involved in the negotiat ion of the fee, imposing a predetermined flat ratein excess of real costs and, therefore, having a deterrent effect on exports.

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13 8 The application of an arrangement liable to affect trade between Member States,particularly by directly or indirectly fixing purchase or selling prices or othertrading conditions, or limiting or controlling production or markets, particularlyfor export, is prohibited by Article 81 EC. If the practices described by theCommission were proven, the element of the infringement at issue here would beestablished.

13 9 JCB Service submits that the documents on which the Commission based itsassessment of the infringement, referred to in recitals 123 to 127 of the contesteddecision, are not convincing.

140In the case of France, a fax from JCB SA, of 21 June 1988, indicated that salesoutside a sector would not receive multiple deal trading support and would havean 8 % p enalty imposed for provision of service sup port. Three d ocuments, a faxof 9 February 1995 from JCB Sales to Watling JCB, a fax of 29 May 1996 fromJCB SA to Gunn JCB, produced by the applicant as an annex to its reply, and aletter of 5 June 1996 from JCB SA to a dealer in the Hrault, make reference to asum of FRF 10 000, which was the amount of the service support fee for abackhoe loader. As regards Spain, according to a fax of 22 July 1994 from JCBSpain to JCB Sales, the service supp ort fee is to be negotiated at a round 5 % of thedealer's purchase price and JCB will decide in the absence of agreement. Asregards Germany, a fax of 15 May 1995 from JCB Sales to JCB Germanyindicates tha t the service supp ort fee is norm ally 4 % of the price paid by the localclient, that it is to be paid to the United Kingdom distributor and that JCB willdecide in the absence of agreement. As regards Ireland, a fax of 29 February 1996records the sale of seven machines in the South of Ireland for which the servicesupport fee is GBP 850 in all cases but one, where it is GBP 1 700.II - 104


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141 A ccord ing to tho se do cu m ent s the service supp ort fees applied we re at apre-determined f lat rate or were determined on the basis of a guide price and JCBw as to intervene in the absence of agreem ent betw een i ts age nts . Since the notifiedagreements made provision for JCB to intervene in cases of disagreement betweenthe distr ibutors concerned, the prior f ixing of a guide pr

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