Case T-395/94 Atlantic Container Line AB and Others v Commission of the European Communities (Competition Liner conferences Regulation (EEC) No 4056/86 Scope Block exemption Regulation (EEC) No 1017/68 Individual exemption) Judgment of the Court of First Instance (Third Chamber), 28 February 2002 II - 885 Summary of the Judgment 1. Competition Maritime transport Agreements, decisions and concerted practices Agreement between shipping lines on the scheduled transport between Northern Europe and the United States and the inland carriage of containers Relevant market Restrictions of competition within the common market Certain member lines established outside the Community No effect (EC Treaty, Art. 85 (now Art. 81 EC)) II - 875
SUMMARY CASE T-395/94 2. Competition Agreements, decisions and concerted practices Effect on trade between Member States Criteria (EC Treaty, Art. 85(1) (now Art. 81(1) EC)) 3. Competition Maritime transport Agreements, decisions and concerted practices Effect on trade between Member States Agreement between shipping lines relating to the conditions for the sale of maritime and inland transport services Effect on trade in port and auxiliary services linked to the carriage of goods (EC Treaty, Art. 85(1) (now Art. 81(1) EC)) 4. Competition Maritime transport Regulation No 4056/86 Block exemption Scope (Council Regulation No 4056/86, Art. 3) 5. Competition Maritime transport Regulation No 4056/86 Block exemption Strict interpretation Exemption for liner conference agreements Scope (EC Treaty, Art. 85(1) and (3) (now Art. 81(1) and (3) EC); Council Regulation No 4056/86, Art. 3) 6. Community law Definitions Interpretation Definition taken from an international convention Interpretation with regard to that convention 7. Competition Maritime transport Liner conferences Definition Block exemption of liner conference agreements Conditions Setting uniform freight rates for all conference members Tariff rates varying between members Whether unlawful (Council Regulation No 4056/86, Art. 3) 8. Competition Maritime transport Regulation No 4056/86 Block exemption of liner conference agreements Justification Stabilising effect of uniform freight rates for all conference members Independent action on the part of one conference member Whether lawful (Council Regulation No 4056/86, Art. 3) II - 876
ATLANTIC CONTAINER LINU AND OTHERS v COMMISSION 9. Actions for annulment Commission decision refusing to grant individual exemption Complex economic appraisal judicial review Limits (EC Treaty, Art. 85(3) (now Art. 81(3) EC), and Art. 173 (now, after amendment. Art. 230 EC)) 10.Competition Maritime transport Agreements, decisions and concerted practices Prohibition Exemption Conditions Discretion of the Commission (EC Treaty, Art. 85(3) (now Art. 81(3) EC); Council Regulation No 4056/86) 11. Competition Agreements, decisions and concerted practices Prohibition Exemption Conditions Cumulative nature (EC Treaty, Art. 85(3) (now Art. 81(3) EC)) 12.Competition Maritime transport Agreements, decisions and concerted practices Prohibition Exemption Relevant market Delimitation Criteria Agreement between shipping lines relating to the scheduled transport of containers between Northern Europe and the United States 13.Competition Agreements, decisions and concerted practices Prohibition Exemption Conditions Possibility of eliminating competition in respect of a substantial part of the relevant services Must be assessed as a whole (EC Treaty, Art. 85(3) (now Art. 81(3) EC)) 14. Competition Maritime transport Agreements, decisions and concerted practices Prohibition Exemption Conditions Possibility of eliminating competition in respect of a substantial part of the relevant services Assessment criteria Agreement between shipping lines fixing maritime transport rates (EC Treaty, Art. 85(3) (now Art. 81(3) EC); Council Regulation No 4056/86, Art. 11) 15. Procedure Intervention Plea in law not raised by the applicant Whether inadmissible (EC Statute of the Court of justice, Art. 37, fourth para.; Rules of Procedure of the Court of First Instance, Art. 116(3)) II - 877
SUMMARY CASE T-395/94 16. Competition Administrative procedure Decision finding that there has been an infringement Order compelling the undertakings concerned to inform their customers that they may renegotiate or rescind the contracts Decision departing from the Commission's usual practice Failure to state that fact in the statement of objections Infringement of the obligation to state reasons (EC Treaty, Art. 85(1) (now Art. 81(1) EC); Council Regulations No 1017/68, Art. 11, and No 4056/86, Art. 11) 1. In the case of an agreement between shipping lines on the scheduled transport of containers across the Atlantic between Northern Europe and the United States and on the inland carriage of the containers, the relevant markets directly affected are those in transport services and not that in the export of goods to the United States. The restrictions of competition occur within the common market because it is there that the members of the agreement, including several shipping companies established in the Community, are in competition to sell their services to clients, namely shippers, established in the Community. The fact that certain members of the agreement are not established in the Community does not cast doubt on that conclusion. between Member States, it must be possible to foresee with a sufficient degree of probability and on the basis of objective factors of law or fact that it may have an influence, direct or indirect, actual or potential, on the pattern of trade between Member States, such as might prejudice the realisation of the aim of a single market between States. In particular, it is not necessary that the conduct in question should in fact have substantially affected trade between Member States. It is sufficient to establish that the conduct is capable of having such an effect. (see paras 79, 90) (see para. 72) 2. For an agreement between undertakings to be capable of affecting trade 3. An agreement between shipping companies, including a number established in the Community, which related to the conditions for the sale of maritime and inland transport services to shippers established in various Member States of the Community is capable of affecting trade between Member States for the purposes of Article 85(1) of the Treaty (now Article 81(1) EC). II - 878
ATLANTIC CONTAINER LINE AND OTHERS v COMMISSION Furthermore, such an agreement is capable of modifying the pattern of trade in goods transiting through the ports served by the shipping companies which are members of an agreement. As a result, that agreement must be regarded as having affected trade between Member States, over and above the trade consisting of only maritime transport services, since port and auxiliary services linked to the carriage of goods were also affected. The existence of a liner conference within the meaning of Regulation No 4056/86 depends on the charging of 'uniform or common freight rates' by its members. (sec paras 140, 143) Finally, although more indirectly, the relevant agreement has, or at the very least is capable of having, an effect on the trade in goods between Member States, in so far as the transport prices fixed by the agreement represent a proportion of the end selling price of the goods transported. (see paras 80-82) 4. An agreement can qualify for the exemption provided for in Article 3 of Regulation No 4056/86 laying clown detailed rules for the application of Articles 85 and 86 of the Treaty to maritime transport only if it is a liner conference agreement. 5. Having regard to the general principle of the prohibition of agreements restricting competition in Article 85(1) of the Treaty (now Article 81(1) EC), provisions derogating therefrom in an exempting regulation must, by their nature, be strictly interpreted. This conclusion applies, a fortiori, to the provisions of Regulation No 4056/86 relating to maritime transport by virtue of its unlimited duration and the exceptional nature of the restrictions on competition authorised (horizontal agreement having as its object the fixing of prices). It follows that the block exemption provided for by Article 3 of Regulation No 4056/86 cannot be interpreted broadly and progressively so as to cover all the agreements which shipping companies deem it useful, or even necessary, to adopt in order to adapt to market conditions. The exemption can relate only to the types of agreement which the Council, when Regulation II - 879
SUMMARY CASE T-395/94 No 4056/86 was adopted, regarded, in the light of experience, as satisfying the conditions of Article 85(3) of the Treaty. Apart from the power enjoyed by the Council, if the need arose, to amend Regulation No 4056/86, the undertakings concerned also always have the option to apply for an individual exemption to offset any disadvantages of the limitations inherent in the block exemption. (see para. 146) which presents itself as such on the market vis-à-vis both users and competitors. The conference puts itself forward as an entity on the market since it fixes uniform freight rates for all its members, in the sense that the same price will be charged for the carriage of the same cargo from point A to point B, regardless of which shipowning member of the conference is responsible for carriage. 6. The definition of 'liner conference' in Article 1(3)(b) of Regulation No 4056/86 was taken word for word from the United Nations Convention on a Code of Conduct for Liner Conferences. That code thus constitutes an important point of reference for the interpretation of the concept of liner conference referred to in Regulation No 4056/86. By contrast, an agreement between carriers providing for a scheme of tariffs which vary according to the members cannot be regarded as a liner conference under Regulation No 4056/86. (see paras 157, 167) (see para. 147) 7. By its very nature and in the light of its objectives, a liner conference, as defined by the Council for the purposes of qualification for block exemption under Regulation No 4056/86, can be characterised as a collective entity 8. Liner conferences qualify for a block exemption because of their stabilising effect. That stability is best ensured if all the members of the conference adopt uniform freight rates rather than if there are several rates according to the members concerned. A uniform level of freight rates within the conference also allows users, account of II - 880
ATLANTIC CONTAINER LINE AND OTHERS v COMMISSION whose interests is also a requirement for the exemption, to be assured of being able to obtain the transport service at the same price, whichever conference member it approaches. That interest of the shippers in having access to a reference rate in respect of a particular commodity is appreciably reduced if the members of the conference do not charge one rate, but two or more, in respect of the same product. Furthermore, the possibility of fixing different levels of prices makes it possible to attract into the group shipping lines which, without that flexibility, would remain independent and this situation is likely to lead to the elimination of external competition; by contrast, the obligation to fix uniform freight rates for all conference members is not such as to encourage all operators to join the conference, which guarantees the existence of external competition. (see paras 158-159, 162) That interpretation of the concept of liner conference is not inconsistent with the possibility for a conference member to take independent action. That action is fundamentally different from the system of differentiated prices. The taking of independent action, which enables a conference member, subject to notice, to offer, for a specific product, a lower freight rate than that in the conference tariff, does not create another level of prices which may be generally charged, since that action concerns only a single ad hoc transaction. The stabilising effect of the existence of uniform or common freight rates for all conference members therefore continues in the event of independent action, whereas it is undermined where the conference tariff, which lists all the freight rates applicable, is replaced by a system of rates which vary according to the members. 9. In the context of an action for annulment pursuant to Article 173 of the Treaty (now, after amendment, Article 230 EC), the review undertaken by the Court of the complex economic appraisals made by the Commission when it exercises the discretion conferred on it by Article 85(3) of the Treaty (now Article 81(3) EC), with regard to each of the four conditions laid down in that provision, is necessarily limited to verifying whether the rules on procedure and on the giving of reasons have been complied with, whether the facts have been accurately stated and whether there has been any manifest error of assessment or a misuse of powers. (see para. 257) II - 881
SUMMARY CASE T-395/94 10. Although stability in the maritime transport sector, to the extent that it contributes to assuring shippers of reliable services, may be an advantage for the purposes of the first condition of Article 85(3) of the Treaty (now Article 81(3) EC), the Commission cannot be obliged to grant individual exemption to every agreement between shipping lines which, in the opinion of the parties, may contribute to such stability. Within the limits imposed by Regulation No 4056/86, the Commission retains its discretion in applying Article 85(3) of the Treaty. (see para. 262) 11. The four conditions for granting an exemption under Article 85(3) of the Treaty (now Article 81(3) EC) are cumulative and therefore non-fulfilment of only one of those conditions will render it necessary to refuse the exemption. Article 81(3) EC), the market to be taken into consideration comprises the totality of the products which, with respect to their characteristics, are particularly suitable for satisfying constant needs and are only to a limited extent interchangeable with other products. In the case of an agreement between shipping lines for the scheduled transport of containers across the Atlantic between Northern Europe and the United States the relevant market is that for containerised liner shipping. The fact that other modes of transport, whether maritime or air, may engage in marginal competition on the market in containerised liner shipping services in respect of a limited number of products, does not mean that, for that reason, they can be regarded as forming part of the same market. (see paras 272-273) (see para. 264) 12. In assessing an agreement with a view to granting an exemption under Article 85(3) of the Treaty (now 13. The possibility of eliminating competition in respect of a substantial part of the services in question within the meaning of Article 85(3) of the Treaty (now Article 81(3) EC), must be assessed as a whole, taking into account in particular the specific characteristics of the relevant market, the restrictions of competition brought II - 882
ATLANTIC: CONTAINER LINE AND OTHERS v COMMISSION about by the agreement, the market shares of the parties to that agreement and the extent and intensity of external competition, both actual and potential. In the context of this comprehensive approach, those different elements are closely interlinked or may balance each other out. Thus, the greater the restrictions of internal competition between the parties, the more necessary it is for external competition to be keen and substantial if the agreement is to qualify for exemption. Similarly, the larger the market shares of the parties to the agreement, the stronger the potential competition must be. (see para. 300) 14. In order to determine whether an agreement affords its signatory parties the possibility, in respect of a substantial part of the products in question, of eliminating competition within the meaning of Article 85(3)(b) of the Treaty (now Article 81(3)(b) EC), the Commission cannot, in principle, rely merely on the fact that the agreement in question eliminates competition between those parties and that they account for a substantial part of the relevant market. First, the prohibition on eliminating competition is a narrower concept than that of the existence or acquisition of a dominant position, so that an agreement could be regarded as not eliminating competition within the meaning of Article 85(3)(b) of the Treaty, and therefore qualify for exemption, even if it established a dominant position for the benefit of its members. Second, potential competition must be taken into consideration before concluding that an agreement eliminates competition for the purposes of Article 85(3) of the Treaty. Taking into account and analysing external competition, both actual and potential, is all the more necessary where it is a question of examining whether an agreement between shipping companies fixing maritime transport rates qualifies for individual exemption under Article 12 of Regulation No 4056/86. (see paras 330-331 ) 15. Interveners must, under Article 116(3) of the Rules of Procedure of the Court of First Instance, accept the case as they find it at the time of their intervention and their submissions in an application to intervene are, under the fourth paragraph of Article 37 of the Statute of the Court of Justice, limited to II - 883
SUMMARY CASE T-395/94 supporting the submissions of one of the main parties, an intervener is not entitled to raise a plea in law that was not raised by the applicant. (see para. 382) 16. In a decision finding that the provisions of an agreement between shipping lines fixing the rates and conditions of maritime transport infringe the Treaty's competition rules, an order compelling the undertakings concerned to inform customers with whom they have concluded service contracts and other contractual relations in the context of that agreement 'that such customers are entitled, if they so wish, to renegotiate the terms of those contracts or to terminate them forthwith', which was not obviously necessary and does not correspond to an established line of Commission decisions, requires that institution expressly to set out its reasoning. Even if that order may be regarded as necessary for re-establishing compliance with the law and as coming within the limits of the Commission's power to order the undertakings concerned, in accordance with Article 11 of Regulations No 1017/68 and No 4056/86, 'to bring such infringement to an end', the statement of objections should in any event have set out, even briefly, but in sufficiently clear terms, the measures which the Commission intended to take in order to bring an end to the infringements and should have given the applicants all the information necessary in order to enable them properly to defend themselves before the Commission adopted a final decision on that point. That conclusion is all the more necessary where the individual service contracts account for a substantial part of the turnover of the undertakings concerned and the obligation to renegotiate with customers could thus have significant consequences for those undertakings, and could even amount to a penalty more serious than a fine. (see paras 411, 415, 418) II - 884