97/624/EC: Commission Decision of 14 May 1997 relating to a proceeding pursuant to Article 86 of the EC Treaty (IV/34.621, 35.059/F-3 - Irish Sugar plc) (Only the English text is authentic)

• Articles: 6

Article 1

Irish Sugar plc infringed Article 86 of the EC Treaty by having recourse, as part of a sustained and comprehensive policy of protecting its position on the sugar market in Ireland, to methods different from those which condition normal competition in products or services based on traders' performance, the effect thereof being that the maintenance of the degree of competition still existing in the market or the growth of that competition has been hindered. To this effect, Irish Sugar plc (and/or Sugar Distributors Limited in the period before February 1990) engaged in the following abusive conduct on the granulated sugar market for retail and industrial sale in Ireland:

1. in the period 1986 to 1988, granting a special rebate to certain retailers established in the border area with Northern Ireland ('border rebate`) and granting selectively low prices to customers of an importer of French sugar;

2. agreeing in 1988 with one wholesaler and one retailer to swap competing retail sugar products, i.e. Eurolux 1 kilogram packet sugar of Compagnie française de sucrerie, for its own product;

3. in 1988, practising with the potential customer of a competitor a fidelity rebate, that is, a rebate that was conditional on the customer's purchasing all or a large proportion of its retail sugar requirements from Irish Sugar plc;

4. in the period since (at least) 1985, practising a system of 'sugar export rebates`, that is rebates granted on sugar exported in processed form to other Member States, which discriminate against customers of industrial sugar supplying the domestic Irish market;

5. in the period since 1993, practising price discrimination against competing sugar packers which sourced or source their industrial sugar from Irish Sugar plc;

6. in the period since 1993, practising a policy which adversely affects the competitive position of other Irish sugar packers in the retail sugar market, in particular by:

(i) granting, at certain periods in 1994, rebates to wholesale groups in Ireland which were dependent on increases in their purchases of retail sugar from Irish Sugar plc, and had the effect of tying them to Irish Sugar plc to the detriment of competing sugar packers;

(ii) granting, in December 1994 and February 1995, selective rebates to certain customers of competing sugar packers which were dependent on those customers increasing their purchases of retail sugar from Irish Sugar plc over a period of 12 months and were thus intended to restrict competition from the competing sugar packers.

Article 2

For the infringements referred to in Article 1, a fine of ECU 8 800 000 is hereby imposed on Irish Sugar plc.

The fine shall be paid, in ecus, within three months of the date of notification of this Decision, into bank account No 310-0933000-43 of the Commission of the European Communities, Banque Bruxelles Lambert, Agence européenne, rond point Schuman 5, B-1040 Brussels. After the expiry of that period, interest shall be automatically payable at the rate charged by the European Monetary Institute for transactions in ecu on the first working day of the month in which this Decision is adopted, plus 3,5 percentage points, namely 7,5 %.

Article 3

Irish Sugar plc shall immediately bring to an end the infringements referred to in points 4, 5 and 6 of Article 1 in so far as it has not already done so.

Irish Sugar plc shall refrain from repeating any act or conduct described in points 4, 5 and 6 of Article 1, and from adopting any measure having equivalent effect.

In particular, Irish Sugar plc shall refrain from applying dissimilar conditions to equivalent transactions with its industrial sugar customers, such as sugar export rebates and other rebates that, because they bear no relation to the quantity of sugar supplied and the costs of the transaction, discriminate against competing sugar packers. Irish Sugar plc shall inform its industrial sugar customers accordingly, in writing, within three months of the date of notification of this Decision.

Irish Sugar plc shall also refrain from a policy of pricing of retail sugar that adversely affects the competitive position of other sugar packers, including selective pricing to customers of competing packers and the granting of target rebates to retail sugar customers. Irish Sugar plc shall inform those of its customers that are currently receiving rebates or that have been offered rebates that are dependent on achieving particular volumes or increases in volumes of purchases from Irish Sugar plc that such rebates no longer apply, in writing, within three months of the date of notification of this Decision.

Article 4

Irish Sugar plc shall, for a period of three years from the date of notification of this Decision, furnish to the Commission within three months following the end of each calendar year, a list of the prices offered in the preceding year, including all rebates and discounts, to its industrial sugar and retail sugar customers, together with details of the volumes of sugar purchased by each customer in that year.

Article 5

A periodic penalty payment of ECU 1 000 shall be imposed on Irish Sugar plc in respect of each day of delay in carrying out the requirements set out in Articles 3 and 4, following the expiry of the three-month time limit specified for their implementation.

Article 6

This Decision is addressed to Irish Sugar plc, Athy Road, Carlow, Ireland.

This Decision shall be enforceable pursuant to Article 192 of the EC Treaty.

Done at Brussels, 14 May 1997.

For the Commission

Karel VAN MIERT

Member of the Commission

FOOTNOTES

(1) OJ 13, 21. 2. 1962, p. 204/62.

(2) OJ 127, 20. 8. 1963, p. 2268/63.

(3) Council Regulation (EEC) No 793/72, OJ L 94, 21. 4. 1972, p. 1 and Commission Regulation (EEC) No 2103/77, OJ L 246, 27. 9. 1977, p. 12.

(4) For fuller details of the three different types of sugar see paragraphs 2.62 to 2.73 of the UK Monopolies and Mergers Commission ('MMC`) report on the existing and proposed mergers between Tate & Lyle plc or Ferruzzi Finanziaria SpA and S & W Berisford (HMSO Cmd 89 of February 1987) and paragraphs 4.30 to 4.32 of the MMC report 'Tate & Lyle plc and British Sugar plc` (HMSO Cmd 1435 of February 1991).

(5) Council Regulation (EEC) No 1785/81 and subsequent legislation based thereon. OJ L 177, 1. 7. 1981, p. 4.

(6) Council Regulation (EC) No 1101/95, OJ L 110, 17. 5. 1995, p. 1.

(7) See footnote 4.

(8) On the basis of purchases of sugar in its natural state (whether for direct consumption or processing by industry), as in Table 1, Irish consumption per head 1994/5 was 0,044 tonnes compared to an EU 12 average of 0,035 tonnes. If imports and exports of transformed sugar are taken into account, Irish total domestic consumption per head 1994/5 was 0,039 tonnes compared to an EU 12 average of 0,034 tonnes. (Source: 1994/5 provisional marketing-year statistics).

(9) Source: Facts about Ireland, Irish Government publication 1995.

(10) [. . .] In the published version of the Decision, some information has hereinafter been omitted, pursuant to the provisions of Article 21 (2) of Regulation No 17 concerning non-disclosure of business secrets.

(11) The cost of transport from France for sugar in bags rose from around £ Irl 30 and £ Irl 45 per tonne between 1985 and 1994. Transport costs for importing sugar in bulk would have been on average £ Irl 40 to 50 per tonne higher over this period. Up to 1990, the average difference between the effective support price in France and the market price in Ireland was around £ Irl 50, thus making it commercially viable to import bagged sugar, but not bulk sugar.

(12) As a result of industrial users moving to silos, the bagged market has been shrinking from 30 000 tonnes at the beginning of the 1980s to less than 7 000 tonnes today.

(13) For example, see the reference to the recognized branding advantage of Siucra products in paragraph 57.

(14) Source: Greencore group corporate plan 1993/94 to 1997/98 of June 1994. In Annex 4 to the Statement of Objections of 25 March 1996.

(15) Source: Greencore group corporate plan of June 1994. In Annex 4 to the Statement of Objections of 25 March 1996.

(16) Irish Sugar response of 1 September 1993 to the initial Statement of Objections at 12.

(17) As recorded in the minutes of the SDL board meeting of 1 July 1982. In Annex 3 to the Statement of Objections of 25 March 1996.

(18) Messrs Gray, Comerford, Garavan, Hogan, Keleghan, Lyons and Tully.

(19) See, for example, the minutes of the McKinneys management committee meetings of 29 April 1986, 15 January 1987, 16 March 1987 and 14 December 1987.

(20) In its response to the Statement of Objections dated 12 July 1996, at 3.3.4.

(21) [. . .].

(22) See Recital 71.

(23) In Annex 4 to the Statement of Objections of 25 March 1996.

(24) In English in the original text.

(25) In English in the original text.

(26) In English in the original text.

(27) ASI also supplied Shamrock Foods Limited with golden granulated, a speciality sugar.

(28) In English in the original text.

(29) In English in the original text.

(30) In English in the original text.

(31) In English in the original text.

(32) In English in the original text.

(33) In English in the original text.

(34) In English in the original text.

(35) In English in the original text.

(36) In English in the original text.

(37) In English in the original text.

(38) In English in the original text.

(39) In English in the original text.

(40) In English in the original text.

(41) In English in the original text.

(42) The document is undated, but most likely it should be situated in or around October 1986.

(43) In English in the original text.

(44) In English in the original text.

(45) In English in the original text.

(46) In English in the original text.

(47) In English in the original text.

(48) In English in the original text.

(49) In English in the original text.

(50) In English in the original text.

(51) As provided by Irish Sugar, in response to requests for information, and copied at an inspection of the company's premises on 16 January 1995.

(52) As shown by extracts from Irish Sugar and Sugar Distributors management meeting minutes during the 1980s provided by Irish Sugar on 18 May 1995.

(53) In English in the original text.

(54) This is so because the method of payment varies between customers, so that for some, export rebates are only paid in respect of (documented) volumes of sugar actually exported (referred to as 'export sugar` by some customers, [. . .]), and for others export rebates are averaged down and paid for all sugar purchases, whether for 'domestic` or export use. Certainly, export rebates paid in respect of volumes exported can be significantly higher than [. . .] a tonne.

(55) In English in the original text.

(56) In English in the original text.

(57) In its response to the Statement of Objections of 12 July 1996 at 6.2.6.

(58) In its response to the Statement of Objections of 12 July 1996 at 6.3.1.

(59) In English in the original text.

(60) In English in the original text.

(61) At the hearing of 26 July 1996 (Mr McCluskey).

(62) In Annex 9 of the Statement of Objections of 25 March 1996.

(63) In English in the original text.

(64) An internal note copied at the investigation on 16 January 1995 shows 1994/1995 Irish Sugar sales to Dunnes of [. . .] tonnes of Siucra 1 kg, [. . .] tonnes of Siucra specials, [. . .] tonnes of St Bernard 1 kg and [. . .] tonnes of St Bernard specials.

(65) Irish Sugar's response to the Statement of Objections of 12 July 1996 at 7.3.4.

(66) At the hearing of 26 July 1996 (Mr Power and Mr McCluskey).

(67) As sent by Irish Sugar to the Commission on 18 May 1995 and in Annex 9 to the Statement of Objections of 25 March 1996.

(68) In Annex 9 to the Statement of Objections of 25 March 1996.

(69) Case 85/76, Hoffmann-La Roche v. Commission [1979] ECR 461, at paragraph 28; see also Case 31/80, L'Oréal v. De Nieuwe AMCK, [1980] ECR 3775, at p. 3775.

(70) Commission Decision 88/518/EEC, OJ L 284, 19. 10. 1988, p. 41.

(71) In its response to the Statement of Objections of 12 July 1996 at 3.2.1 to 3.2.7.

(72) Case 27/76, United Brands v. Commission [1978] ECR 207, at paragraph 11.

(73) Joined Cases 40 to 48, 50, 54 to 56, 111, 113 and 114/73, Suiker Unie and others v. Commission, [1975] ECR 1663, at paragraphs 16, 17 and 24.

(74) See footnote 73, at paragraphs 19 and 20.

(75) From Table 1 above it can be seen that in the period 1986 to 1994 imports have always been lower than 10 % of total national consumption. Between 1989 and 1994 imports represented less than 5 % of national consumption.

(76) In its response to the Statement of Objections of 12 July 1996 at 3.3.6.

(77) See footnote 69, paragraphs 38 and 39.

(78) See Case 322/81, Michelin v. Commission, [1983] ECR 3461, at paragraph 59.

(79) In its response to the Statement of Objections of 12 July 1996 at 3.3.2.

(80) Case IV/M.190 Nestlé/Perrier, Commission Decision 92/553/EEC, OJ L 356, 5. 12. 1992, p. 1.

(81) Commission Decision 94/893/EC, IV/M.430 Procter & Gamble/VP Schickedanz, OJ L 354, 31. 12. 1994, p. 32.

(82) Cases T-68/89, T-77/89, and T-78/89 Società Italiana Vetro SpA v. Commission, [1992] ECR 4-II-1403.

(83) See Hoffmann-La Roche v. Commission, cited in footnote 69, paragraph 91.

(84) See Michelin v. Commission, cited in footnote 78, paragraph 57.

(85) OJ 30, 20. 4. 1962, p. 993/62.

(86) OJ 53, 1. 7. 1962, p. 1571/62.

(87) Cited in footnote 78, at paragraph 82.

(88) Tetra Pak II, Commission Decision 92/163/EEC, OJ L 72, 18. 3. 1992, p. 1, at paragraph 165.

(89) See United Brands v. Commission, cited in footnote 72, at pp. 298-299; Suiker Unie and others v. Commission, cited in footnote 73, at pp. 2000-2005; ECS/AKZO, Commission Decision 85/609/EEC, OJ L 374, 31. 12. 1985, p. 1. Hilti, Commission Decision 88/138/EEC, OJ L 65, 11. 3. 1988, p. 19, at pp. 36-38, subsequently upheld by the Court of First Instance by judgment of 12 December 1991, Case T-30/89, [1991] ECR-II 1439.

(90) Commission Decision 83/462/EEC, OJ L 252, 13. 9. 1983, p. 13.

(91) Irish Sugar response to the Commission's Statement of Objections of 12 July 1996 at 9.3.3 and 9.3.4, citing ECS AKZO Decision.

(92) Commission Decision 89/22/EEC, OJ L 10, 13. 1. 1989, p. 50, at paragraphs 132 and 133.

(93) Based on discounts of [. . .] per parcel and [. . .] per tonne, as referred to in Irish Sugar and SDL internal documents above, and 1985/1986 and 1986/1987 prices for retail sugar, as provided by Irish Sugar, of [. . .] and [. . .] a tonne. It should be noted that in the case of at least one customer [. . .] 'additional expenditure . . . will arise` (paragraph 57 of this Decision).

(94) Michelin v. Commission, cited in footnote 78, at paragraph 57.

(95) Cited in footnote 89, at point 82 (iii).

(96) Statement of Mr Noel McCluskey to the hearing on 26 July 1996.

(97) Irish Sugar response to the Statement of Objections of 12 July 1996 at 5.4.1 (ii).

(98) See footnote 72.

(99) Commission Decision 76/353/EEC, OJ L 95, 9. 4. 1976, p. 1.

(100) Irish Sugar response to the Statement of Objections of 12 July 1996 at 6.4.3 (ii).

(101) United Brands v. Commission, cited in footnote 72 at paragraphs 229, 230.

(102) Commission Decision 88/518/EEC, cited in footnote 70 at paragraph 73.

(103) Judgment of the Court of First Instance in Case T-83/91, [1994] ECR II-755 at paragraph 114.

(104) Cited in footnote 78; opinion of the Advocate-General.

(105) Cited in footnote 78, at paragraph 82.

(106) Cited in footnote 78, at paragraph 57.

(107) Case 56/65, Société technique minière v. Maschinenbau Ulm, [1966] ECR 235, p. 249.

(108) OJ L 319, 29. 11. 1974, p. 1.