OPINION OF ADVOCATE GENERAL DARMON delivered on 7 July 1992

130 Pages·2009·7.17 MB·English

AHLSTRÖM OSAKEYHTIÖ AND OTHERS v COMMISSION
OPINION OF ADVOCATE GENERAL
DARMON
delivered on 7 July 1992 *
Summary
The market for wood pulp I -1449
The product I - 1449
The producers I - 1450
The customers I - 1452
Announced prices and transaction prices I - 1452
Trends on the pulp market I - 1453
Procedure and decision I - 1455
I — Procedural submissions I - 1459
A — The decision embodies complaints which are not referred to in the State
ment of Objections I - 1460
(1) The Statement of Objections did not refer to concertation on transac
tion prices I -
1460
(2) Duration of concertation I -1454
(a) Duration of the infringement until the date of the Statement of
Objections I -1454
(b) Duration of the infringement established for certain producers .. I - 1466
(3) Identity of the producers involved in the concerted practice I - 1468
(4) St Anne's participation in Fides I - 1469
B — The evidence on which the decision is based I- 1470
* Original language: French.
I - 1445
OPINION OF MR DARMON — CASES C-89/85, C-104/85, C-114/85, C-116/85, C-117/85 AND C-125/85 TO C-129/85
(1) Transaction prices I -1470
(2) The documents relating to Fides I -1479
C — The refusal to organize a joint administrative hearing I -1479
D — The failure to consult the Advisory Committee on Restrictive Practices
and Monopolies I -1481
Conclusion I-1481
II — 'General' concertation on announced prices I -1482
A — The concept of concerted practices I - 1482
B — Evidence of a concerted practice on announced prices for wood pulp — I - 1493
(1) Parallel conduct of the producers I - 1495
1.1. Parallelism of announced prices I - 1495
1.2. The system of price announcements I -1502
1.2.1. The system of price announcements created artificial trans
parency on the pulp market and constituted a system for
exchanging information between producers I-1504
(a) The role of customers in the dissemination of infor
mation on announced prices I -1506
a.1 Integrated producers I -1507
a.2 The role of important customers I -1507
a.3 Common customers I -1507
a.4 Horizontal communication between purchasers I - 1507
(b) Common agents I -1509
(c) The trade press I -1510
I-1446
AHLSTRÖM OSAKEYHTIÖ AND OTHERS v COMMISSION
1.2.2. The system of quarterly announcements I -1511
(a) The quarterly announcements mechanism is said not to
be necessitated by objective market conditions I-1511
a.1 Quarterly basis of price announcements I-1512
a.2 The use of the US dollar by non-United States pro
ducers I -1512
(b) Simultaneous price announcements I-1514
1.3. Parallelism of announced prices: evidence of concertation on the
pulp market? I -1520
1.3.1. The Commission's analysis I -1520
1.3.2. The expert's report ordered by the Court I -1525
(a) The expert's report is said to oversimplify the Commis
sion's reasoning I -1525
(b) The economic model used by the experts I -1526
(c) The alleged failure to examine the level of prices 1-1531
(d) The period from 1975 to 1977 I-1533
(e) The different aspects of price uniformity I -1536
e.1 Uniform prices for the same grade of pulp I -1536
e.2 Uniform prices for different qualities of pulp I -1537
e.3 Uniform prices for different customers buying differ
ing quantities I -1537
e.4 Uniform prices in US dollars for customers in differ
ent countries I -1539
(f) Concertation or market conditions? I-1540
I - 1447
OPINION OF MR DARMON — CASES C-89/85, C-104/85, C-114/85, C-116/85, C-117/85 AND C-125/85 TO C-129/85
f.1 Undertakings that were not involved in the pro
cedure I-1541
f.2 Changes in market shares I-1543
(g) The pulp market before 1975 and after 1981 I-1544
g.1 The market before 1975 I -1544
g.2 The market after 1981 I -1545
Conclusion I -1546
1.4. The statement of reasons in the decision I -1547
(2) Direct and indirect exchange of information I -1551
III — Concertation within KEA I -1558
IV — Concertation within Fides I -1560
V — The clauses prohibiting export and resale I -1562
VI — Effect on trade between Member States I -1565
VII — The alleagation of discrimination I -1566
VIII — The undertaking I-1568
IX —The fines I-1569
(1) Discrimination I -1570
(2) The amount of the fines I -1570
X —Costs I-1571
I - 1448
AHLSTRÖM OSAKEYHTIÖ AND OTHERS v COMMISSION
Mr President, 3. Before I proceed to examine a case which
Members of the Court, has itself helped to stimulate demand for
wood pulp in the Community as a result of
the sheer volume of documents produced, it
is necessary to recall the characteristics of the
1. Last but not least ... For several reasons,
market for wood pulp, followed by the main
that is the expression which most readily
features of the procedure and of the con
comes to mind when delivering my Opinion
tested decision.
in this, the 'wood pulp' case. First of all,
because it is the last competition case
brought by undertakings to be decided by
the Court at first and last instance: the crite
The market for wood pulp
rion adopted for the allocation of cases
pending before the Court of Justice at the
time of the establishment of the Court of
First Instance meant, in view of the stage of
the proceedings reached at the time, that this The product
case would be heard by the Court of Justice.
Secondly, because this Opinion and the
Court's judgment will constitute the last
stage of a long drawn-out procedure whose 4. The contested decision is concerned with
salient features were, in particular, a hearing bleached sulphate pulp used in paper manu
in January 1988, an initial judgment of the facturing and offered on the open market
full Court on 27 September 1988 rejecting ('market pulp'). There are other processes for
the submission relating to the extra the production of pulp (chemical or mechan
territorial scope of Community competition ical) but sulphate pulp is best in quality. It is
law, the hearing in 1990 of the first 'accoun obtained by the chemical processing of cellu
tancy' experts followed, in November 1991, lose in a two-stage process. To begin with,
by the hearing at which every aspect raised the first stage leads to the production of
in the applications was considered and in unbleached (brown) sulphate pulp which is
which the 'economics' experts were heard. used in the manufacture of packaging mate
However, neither this case nor this last stage rial (bags, boxes etc). Next, in order to be
are by any means of little account. The quite used in the manufacture of finer papers,
vast dimensions of this case, in terms of both (newsprint, writing paper) requiring, in par
the complexity and the sheer volume of the ticular, a high degree of brightness, the pulp
arguments put forward, as well as the num is bleached chemically. That process has the
ber of applicants, make it anything but ordi advantage of consuming less energy and
nary. causing less pollution than other processes.
In addition, practically all types of wood can
be used in the manufacture of bleached sul
phate pulp. Consumption of such pulp has
2. Inevitably, I have had to resign myself, in grown in recent years and, according to the
order to take account of manifold objective decision, accounted for approximately one-
constraints and of the concern to keep this third of the market in 1980.
Opinion within reasonable limits, to neglect
ing certain aspects of those arguments where
the reasons for the solution which I shall
propose to the Court would seem not to be 5. There are several types of bleached sul
affected thereby. phate pulp whose classification depends on
I - 1449
OPINION OF MR DARMON — CASES C-89/85, C-104/85, C-114/85, C-116/85, C-117/85 AND C-125/85 TO C-129/85
the type of tree from which it comes. The 30 countries. A major part of the pulp is
main distinction is between softwood pulp used by the producers (or their subsidiaries).
and hardwood pulp. The two categories have The pulp which they sell on the market is
different properties: softwood pulp has known as 'market' pulp, it should be
longer and more resistant fibres. Hardwood recalled, and it is this which forms the
pulp, which has shorter fibres, is used for the subject-matter of the contested decision.
manufacture of soft paper, which is not so According to the decision, total output of
strong. Softwood pulp is considered to be of bleached market pulp amounted to approxi
better quality than hardwood pulp. Within mately 18 million tonnes in 1981. Canada
each category, moreover, there is a difference was the leading producer (with more than
according to whether the pulp was produced 6 million tonnes), followed by the United
in northern or southern latitudes. Generally States (with more than 4 million tonnes),
speaking, hardwood and softwood from Sweden (with 2.5 million tonnes) and Fin
northern latitudes are considered better in land (with 1.6 million tonnes).
quality than those from southern latitudes.
Since 1978 there have been four price levels
for those products, the highest prices being
paid for- northern softwood and the lowest
for southern hardwood.
9. According to the decision, there are more
than 50 firms which sell market pulp in the
Community. For their part, some of the
applicants emphasize that pulp is sold in the
6. In view of the properties of the different
Community by 115 firms and that it comes
categories of pulp, paper manufacturers gen
from 18 countries.
erally use a mixture of types in order to
obtain paper of the specific grade required.
7. Within any pulp category, pulp is very 10. As far as total turnover is concerned, the
largely interchangeable. In contrast, there is United States and Canadian producers are
less interchangeability between the different larger than the Swedish and Finnish produc
categories in the short term. A switch in cat ers, who are the traditional suppliers of the
egory is likely to be very costly for the paper European market to which they sell two-
manufacturer; it is a relatively long process thirds of their output. The market was pen
requiring trials and possibly even conversion etrated by Canadian and United States pro
of equipment. ducers in the 1950s. Exports from the United
States grew substantially in the 1970s. The
Community market does not have the same
importance for the North American produc
ers as it has for the Swedish and Finnish pro
The producers
ducers. The main outlet for Canadian and
United States producers is the United States
domestic market. From their point of view,
therefore, the Community market is used
8. Bleached sulphate pulp is produced by primarily to offset cyclical fluctuations on
some 800 producers scattered in over the United States market.
I - 1450
AHLSTRÖM OSAKEYHTIÖ AND OTHERS v COMMISSION
11. The tendency towards vertical integra 15. The Finnish producers are members of
tion is particularly marked in the pulp indus Finncell, 4 an association founded in
try: many pulp producers also manufacture 1918 whose object is to sell in its own name
paper or hold sizeable shares in paper mills. 1 the wood pulp manufactured by its mem
bers. Finncell fixes the export prices and
divides orders amongst its members.
12. The cost structure 2 varies according to
the areas in which production is located.
Generally speaking, wood costs are substan 16. During the period covered by the
tially higher in Finland and Sweden than in decision, all the United States applicants, 5
the United States and Canada. However, with the exception of Bowater, were mem
transport costs are said to be higher for pulp bers of the Pulp, Paper and Paperboard
from the latter countries than they are for Export Association, commonly known as
pulp from Scandinavia. Furthermore, the the 'KEA', corresponding to the initials of its
Commission and some of the applicants con former name (Kraft Export Association). It
sider that fixed costs are high whereas the was established under the Webb Pomerené
second group of experts, relying on the fig Act, a United States statute which permits
ures set out in the decision, 3 have instead the formation of associations for the promo
concluded that the percentage of those costs tion of exports without infringing United
is relatively small in relation to variable States anti-trust legislation. The Act autho
costs. rizes producers, in particular, to exchange
information on the marketing of their prod
ucts abroad and to agree on export prices.
13. The construction of a new pulp mill
requires very large capital investments and a
long period for its completion. Pulp mills are
17. As a rule, a single producer supplies
installed in the vicinity of forestry resources.
some 50 customers in the Community. Finn-
cell is said to have the largest number of cus
tomers (290).
14. The decision emphasizes that between
1975 and 1981 the capacity utilization ratio
and level of stocks differed widely not only
18. The producers market the pulp in the
betwen different countries but also between
Community through their subsidiaries, sales
the producers of one country.
offices, branches or agents. Some agents rep
resent several producers.
1 — See Table 5 annexed to the decision.
2 — With regard to costs, the figures in Table 1 were challenged
at the hearing, in particular on the ground that they were 4 — Enso-Gutzeit withdrew from Finncell on 31 December
never communicated to the producers and were not set out 1979 and Ahlström did so on 31 May 1986.
in the Statement of Objections; it is true that this table was 5 — International Pulp Sales withdrew from KEA in 1979; Ches
not referred to in the Statement of Objections which, how
apeake, ITT Rayonier and Mead are said to have withdrawn
ever, contained other figures (Annex III) relating to produc
at the time when the Statement of Objections was notified
tion costs.
and Crown Zellerbach in 1982, that is to say after the period
3 — Table 1 annexed to the decision. covered by the decision.
I-1451
OPINION OF MR DARMON — CASES C-89/85, C-104/85, C-114/85, C-116/85, C-117/85 AND C-125/85 TO C-129/85
The customers which is not to exceed the price announced
in the period prior to the commencement of
the quarter. It is common ground that the
customer does not necessarily purchase the
19. In the first place, it should be noted that entire quantity reserved for him.
the price of the pulp accounts for approxi
mately 50% to 70% of the cost of paper.
According to the decision, the Community
market is the most important market for
bleached sulphate pulp and in 1981 it
22. The pulp sold on the spot market
accounted for one-third of global sales. In
accounts for a negligible proportion of con
the same year Community pulp production
sumption.
amounted to approximately 700 000 tonnes,
whilst total sales in the Community
amounted to some 6 million tonnes. The
main purchasers were Germany (approxi
mately 2 million tonnes), France (approxi
23. In order to obtain the desired mixture
mately 1.3 million tonnes) and the United
and to ensure availability of supplies, pur
Kingdom (approximately 1.1 million tonnes).
chasers place their orders with several pro
ducers, who may be located in different
areas. Furthermore, purchasers of pulp
20. Bleached sulphate pulp is bought by linked to a producer are led to purchase cer
more than 800 paper manufacturers operat tain types of pulp from other suppliers.
ing in the Community. According to the fig
ures given by some of the applicants, 6 which
have not been contradicted by the Commis
sion, in the mid 1970's just 17 purchasers
Announced prices and transaction prices
accounted for 50% of pulp purchases and
41 of them accounted for 80%. Purchasers of
pulp are often linked with pulp producers
whose headquarters are located outside the
Community.
24. According to a well-established practice,
a few weeks or, at times, a few days before
the beginning of a quarter the producers
21. The majority of pulp sales are made on communicate the prices which they wish to
the basis of long-term supply contracts obtain for the types of pulp marketed by
which are concluded for periods ranging them. Those prices, which include the cost of
from three to five years and frequently con transportation to European ports, are gener
tain an automatic renewal clause (known as ally fixed in different ways according to
'evergreen renewal provisions'). Those con whether they are for deliveries to ports in
tracts generally provide that the seller is to North-West Europe (zone 1) or to Mediter
reserve a particular tonnage of pulp for the ranean ports (zone 2). Those announcements
purchaser on a quarterly basis at a price are made to the producers' customers, poten
tial customers, agents and sales offices. For
the entire period covered by the decision
after 1976, those prices have been quoted in
6 — See the common part of the applications in Cases 125 to United States dollars by all the producers
129/85, at p. 25.
I - 1452
AHLSTRÖM OSAKEYHTIÖ AND OTHERS v COMMISSION
concerned. The prices are published forth Trends on the pulp market
with in the specialist press.
26. The pulp market is largely dependent on
demand for paper and board, which in turn
25. Announced prices are to be distin
is influenced by changes in the general econ
guished from transaction prices, that is to say
omic situation.
the prices actually invoiced to customers.
Transaction prices may be identical to
announced prices or may differ (where 27. The table set out below 7 shows chang
rebates, payment concessions or other dis ing patterns of consumption and importation
counts are granted). of bleached sulphate pulp in the Community.
TABLE 2
Consumption and importation of bleached sulphate pulp in the EEC
(1 000 tonnes')
IMPORTATION
con
Year
sumption Total From % of From the % of From % of From % of
EEC Canada Total USA Total Sweden Total Finland Total
1974 4 571, 7 4 767, 5 1 394, 0 29, 24 644, 0 13, 51 1 718, 6 36, 05 466, 8 9, 79
1975 3 850,8 3 371,6 971,6 28,82 587,0 17,41 1180,1 35,00 282,7 8,38
1976 4 408, 8 4 708, 0 1 359, 2 28, 87 718, 8 15, 27 1 568, 7 33, 32 393, 0 8, 35
1977 4 439, 1 4 636, 8 1 395, 8 30, 10 696, 2 15, 01 1 406, 3 30, 33 437, 4 9, 43
1978 6 136, 0 5 546, 7 1 664, 7 30, 01 781, 9 14, 10 1 523, 5 27, 47 669, 9 12, 08
1979 6 540, 8 5 929, 3 1 565, 9 26, 41 934, 9 15, 77 1 571, 2 26, 50 836, 3 14, 10
1980 6 774, 0 6 178, 8 1 721, 3 27, 86 1 090, 3 17, 65 1 340, 3 21, 69 838, 8 13, 57
1981 6 598,5 6 140,9 1568,6 25,54 1085,0 17,67 1371,0 22,33 804,8 13,11
1982 6 406,5 5 872,9 1427,8 24,31 1127,6 19,20 1143,5 19,47 700,3 11,92
Source: Cepac 'Annual statistics'.
7 — Table No 2 annexed to the decision; it should be noted that
according to the Finnish applicants the figures in that table
include internal deliveries within groups, even though those
deliveries do not concern merchant pulp; specifically as
regards 1981 and 1982, Finland's import share was 10.11%
and 8.74% respectively.
I - 1453
OPINION OF MR DARMON — CASES C-89/85, C-104/85, C-114/85, C-116/85, C-117/85 AND C-125/85 TO C-129/85
28. The very strong demand for paper pulp a decline that became more pronounced in
in 1973 — when there were shortages — the following quarter and the first two quar
began to fall at the end of 1974 and slumped ters of 1978. That was when announced
in 1975. During that year the capacity utili prices fell to their lowest level during the
zation ratios of the United States, Swedish period covered by the decision. In the third
and Finnish producers declined significantly. quarter of 1978 announced prices recovered
The same was true in the case of those Cana slightly, and rose steadily in the fourth quar
dian producers whose production was ter. Subsequently, in each of the following
affected by strikes. Still in 1975, the Swedish quarters until the second quarter of 1980,
Government introduced a stock incentive announced prices continued to increase.
scheme as a result of which Swedish produc They then remained stable until a further
ers' stocks grew to colossal proportions. In increase in the third and fourth quarters of
1976 demand for pulp in the Community 1981, which, according to the Commission,
recovered to almost the 1974 level. was not 'accepted' in all the Member States.
31. It should be pointed out at this juncture
that the Commission considers that during
29. During 1977 consumption stagnated the period in question the producers almost
(+0.7%) and there was a very slight decline simultaneously announced similar prices for
in imports (-1.5%). In 1978 consumption similar periods and invoiced identical trans
and imports began to rise appreciably, a action prices, a finding which, in its view, can
trend which continued throughout 1979 and be explained only by the existence of a con
peaked in 1980. In 1981 there was a slight fall certed practice. However, the Commission
in demand which continued into 1982. states that in 1977 and 1978 transaction
prices differed significantly from announced
prices, since according to the decision, weak
demand led to greater competitive pressure
which made it impossible for the undertak
ings to charge unrealistic concerted prices.
30. According to the decision, the trend
with regard to announced prices on the
Community market may be summarized as
follows: 1975 8 and 1976 were characterized
32. It should be noted that in April 1978 the
by complete stability until the third quarter
Commission initiated an anti-dumping pro
of 1977 9 which witnessed the beginnings of
cedure concerning imports of pulp originat
ing in Canada, the United States, Finland
and Sweden, 10 which was terminated at the
8 — 1975 is the first year of the period covered by the contested end of the same year. 11
decision in connection with the 'general' concertation on
prices referred to in Article 1(1) and (2) of the decision;
according to the decision, prices had increased by 40%
between the first quarter of 1974 and the first quarter of
1975; it should be noted that the decision also referred to
changes in prices in 1982, although the period covered by it 10 — See the Notice of the initiation of the procedure in
ends in 1981. OJ C 89 of 12 April 1978, p. 2.
9 — I am referring to the data in paragraph 15 of the decision; 11 — See the Notice of termination in OJ C 303 of 19 December
Table 6 annexed to the decision shows a reduction in Finn- 1978, p. 10, which states as follows: 'Having regard to the
cell's prices in the first two quarters of 1977, a point to development of the situation, it is not considered necessary
which I shall return in due course. at present to introduce defensive measures'.
I - 1454