Court of Justice 18-12-1997 ECLI:EU:C:1997:633

The decision contested before the Court of First Instance

Following that judgment, the Commission resumed the investigation. On completion of the investigation, it notified the five complainant undertakings by letter of 13 October 1994 of a new decision rejecting their complaints. The Commission confirmed, in particular, that the French authorities had introduced in 1977 a State import scheme for vehicles from third countries. The French Ministry for Industry had thus authorised five importers to act as exclusive representatives of five manufacturers of Japanese vehicles.^(*) Each of them was as such notified each year by the Ministry of the maximum number of vehicles of its make authorised for importation. The overall total was limited in the case of metropolitan France to 3% of the market and in the case of the département of Martinique to 15%. The official importers notified the dealers in Martinique annually of the number of sales allowed and sent the documents necessary for registering the vehicles.

On the whole, according to the decision, the importers who were the subject of the complaints, in particular those in Martinique, had no freedom of action in implementing the import scheme set up by the French authorities, the arrangements for which were also made exclusively by the State. Accordingly, those importers could not be found to be in breach of Article 85 of the Treaty. Nor could that view be affected, the Commission argued, by the examination of documents from Martinique, in particular the minutes of a meeting held at the Prefecture of Martinique on 19 October 1987 and the draft agreement annexed thereto. In their proper context, those documents could not affect the view that the import scheme for Japanese vehicles of the makes in question was dictated exclusively by the public authorities, with no independent role on the part of the importers.

The objection of inadmissibility

As regards the claim for annulment, the Commission raises an objection of inadmissibility alleging that the appeal does not identify precisely which parts of the judgment arc alleged to be unlawful or the grounds and legal arguments on which that allegation is based. In particular, according to the Commission, the grounds relied upon by Somaco amount to general criticisms grouped together under the generic heading ‘inadequate and contradictory grounds — errors in law’, and therefore do not meet the requirements of Article 51 of the Statute and Article 112(1)(c) of the Rules of Procedure of the Court of Justice. Furthermore, still according to the Commission, the action simply reiterates the criticisms of the Commission decision which were raised in the action at first instance.

Under the system set up by the Treaty and by Article 168a in particular, a review by the Court of Justice of the judgments of the Court of First Instance must not lead to a rehearing of the dispute. Instead, the task of the Court of Justice is to rule on specified criticisms which the appellant makes in relation to certain aspects of the judgment at first instance. Moreover, those criticisms must concern only the findings of the Court of First Instance on points of law, to the exclusion of any assessment of the facts.

The system, as summarised in those terms, has found expression in the rule laid down in Article 168a of the Treaty and reproduced in Article 51 of the Statute and Article 112(1)(c) of the Rules of Procedure of the Court of Justice, under which an appeal is to be limited to points of law (Article 168a of the Treaty and Article 51 of the Statute) which must be contained in the appeal (Article 112(1)(c) of the Rules of Procedure).

The Court of Justice has interpreted those rules sufficiently strictly to prevent appellants from using the appeal procedure to obtain a review of complaints already heard by the Court of First Instance.

However, in all the judgments in which the Court of Justice has emphasised that the appeal must clearly specify the alleged flaws in the judgment which it is requested to set aside and the legal arguments which specifically support the request,^(*) it has concluded that an appeal is inadmissible only where it simply repeats or reproduces verbatim pleas in law and arguments already submitted to the Court of First Instance.

On the other hand, it is a different matter if the appellant, while not displaying exemplary clarity, lodges an appeal which does take issue with certain aspects of the judgment at first instance. In such a case, and these proceedings seem to me to fall into that category, the Court of Justice is entitled to identify the grounds of appeal and the arguments supporting them, even if they are not specifically pleaded by the appellant.^(*)

The appeal by Somaco, save for its general and irrelevant reiteration of the observations already submitted at first instance, does allow two distinct grounds of appeal to be identified sufficiently clearly. The first is directed at the alleged contradiction in the grounds of the judgment, complaining that while the Court of First Instance found that no irresistible pressure was exerted on the official importers in metropolitan France, at the same time it held that the reasons for the decision were correct in identifying pressure on dealers in Martinique who were dependent on the same importers. The second alleges the distortion of evidence by the Court of First Instance in finding that there was irresistible pressure on dealers in Martinique.

For the rest, if the purpose of setting out the grounds of appeal clearly and correctly is also to allow the proper conduct of proceedings inter partes, it must be concluded that, in this case, that aim has been achieved, since the Commission's defence in fact seeks to demonstrate that there is no contradiction in the reasons stated by the Court of First Instance nor any distortion in the assessment of the evidence.^(*)

The Commission also pleads that the appeal is inadmissible in so far as it alleges an error of fact, which is not subject to review by the Court of Justice.

In that connection, suffice it to note that since the contradiction in the grounds and their inadequacy amount to a breach of the obligation of the Court of First Instance to state the reasons on which its judgments are based, imposed by the general principle applied in Article 190 of the Treaty, there is an error of law which can be relied upon as such in an appeal to the Court of Justice.^(*)

The ground alleging distortion of evidence constitutes the only exception to the rule that the assessment of evidence by the Court of First Instance is not subject to review. According to the consistent case-law of the Court of Justice, the assessment by the Court of First Instance of the evidence before it and its relevance is not a question of law subject to review by the Court of Justice. However, the Court of Justice has reserved a two-fold right of review as regards the assessment of evidence. First, from a purely procedural point of view, it has jurisdiction to verify whether the evidence examined by the Court of First Instance has been properly obtained and whether the general principles of law and the rules of procedure in relation to the burden of proof and the taking of evidence have been observed.^(*) Secondly, in more substantial terms, the Court of Justice has reserved the right to assess whether there has been any ‘distortion of evidence’.^(*) In a situation of that kind, where ‘the substantive inaccuracy of its findings is attributable to the documents submitted to it’,^(*) there is thus a limit on the otherwise exclusive jurisdiction of the Court of First Instance to establish the facts.

It follows from the foregoing that the ground alleging distortion of evidence is also admissible as a point of law.

Dismissal of the claim for annulment of the decision

In the first ground of appeal, Somaco alleges that the Court of First Instance made contradictory findings. In particular, the appellant argues, the Court could not hold that there was an agreement contrary to Article 85 between official importers relating to the territory of metropolitan France while at the same time concluding that irresistible pressure was exerted by the State on dealers in Martinique who are dependent on those importers, thereby ruling out any independent agreement between those dealers.

To assess the merits of this ground of appeal we must look at the reasoning of the Court. Faced with a Commission decision rejecting the complaints of the appellant, and taking the view that the conduct of the undertakings complained of was in practice essentially dictated by the policy of the French authorities, the Court first verified, as regards the situation in metropolitan France, the existence of statutory provisions imposing on the importers of Japanese vehicles the conduct described in the complaints.

It is common ground that Articles 85 and 86 do not apply in the case of anti-competitive conduct engaged in by undertakings on their own initiative, if such conduct is imposed by national legislation or if the latter creates a legal framework which itself eliminates any possibility of competition among the undertakings.^(*) However, the Court ruled out the existence of national legislation in that respect, pointing to the statement by the French authorities, which is not contradicted by other evidence, that ‘the machinery introduced by France for controlling imports of Japanese vehicles was the subject of a purely oral procedure’.^(*)

The Court therefore considered that the decision by the Commission to reject the complaints alleging infringement of Article 85 could be justified only if it was proven that there had been ‘irresistible pressure’ by the national authorities with a view to imposing anti-competitive conduct on the undertakings.^(*) Analysis of the evidence on which the Commission based its decision did not reveal the existence of such ‘irresistible pressure’ and therefore, as it could not be ruled out that the undertakings concerned had acted independently, the decision rejecting the complaints, made precisely on the basis that such independent action could be ruled out, was annulled in that respect.

In other words, the invalidity of the decision did not necessarily imply the existence of an agreement prohibited by Article 85 (which the Court did not in fact establish), it being sufficient for those purposes to point to the erroneous assessment of the facts by the Commission. The latter had in practice taken the view, on the basis of wholly insubstantial evidence collected during its enquiries (the statements by the French authorities alone), that not even the fundamental requirement for the application of Article 85, that is to say, freedom of action on the part of the undertakings with respect to the public authorities, had been satisfied.

As it is not the case that the Court established the existence of a prohibited agreement between the official importers in metropolitan France, the alleged contradiction in the judgment regarding the finding of ‘irresistible pressure’ on the dealers in Martinique who are dependent on those importers for imports of Japanese cars into the island is resolved.

Accordingly, the first ground of appeal against the judgment of the Court of First Instance cannot be upheld.

In the second ground of appeal, Somaco claims that in its judgment the Court distorted the evidence put before it by the appellant, in particular the two documents mentioned above: the minutes of the meeting of 19 October 1987 between dealers in Martinique in Mazda, Nissan, Toyota, Honda and Mitsubishi cars, a representative of the Ministry for Industry and a representative of the administration of the overseas territories; and the draft agreement signed that day by those dealers in the presence of the Prefect of Martinique.

Somaco alleges that those two documents contain phrases and expressions which point unequivocally to the existence of an agreement between dealers without any requirements being imposed by the public authorities. In the case of the minutes, the reference is to the fact that a decision adopted by the dealers is recorded therein (‘the dealers present decided’), providing for self-limitation of imports to 15% of the total market to be administered through a form of self-monitoring which is not further defined (‘to agree to a voluntary limitation ... to 15% of the total market and to abide imperatively by that voluntary limitation, if need be by monitoring it themselves’). Moreover, as a further relevant consideration, Somaco points out that the dealers declared that they wished to consider any disputes among themselves as a personal matter (‘The participants treat disputes between them as a matter for them personally’).

As regards the draft agreement, which sets out the distribution of the market share between the various makes and the method for absorbing the sales by Toyota in excess of its quota, Somaco highlights its contractual basis, borne out by the terminology used and the inclusion of a kind of cancellation clause intended to come into operation in the event of breach of an obligation under the agreement by any of the parties to it.

Somaco took the view that the Court could not but consider those documents relevant, as evidence of the existence of an unlawful agreement within the meaning of Article 85, without their undergoing some ‘distortion’. I therefore turn to an analysis of the line of argument followed by the Court in relation to the evidence put before it, bearing in mind that the draft agreement was held by the Court in the previous Asia Motor judgment to constitute ‘firm evidence of the probable existence of a consensus as between the dealers’.^(*)

Having established that, in the case of Martinique as well, there were no legal provisions requiring dealers to adopt the conduct complained of, the Court considered it necessary to ascertain whether the public authorities exerted ‘irresistible pressure’ on the dealers concerned to adopt that conduct.

In the course of that investigation, the Court assessed evidence other than that submitted to it by the parties, in particular by the Commission, during the proceedings in the previous Asia Motor case.

In particular, the Court cites the letter of 19 August 1982, from the Secretary of State to the Minister responsible for the Overseas Departments and Territories to the President of the Antilles-Guyana Group of Importers of Foreign Vehicles, stating that, in order to halt the sharp rise in imports of Japanese cars into the overseas departments and territories, the public authorities had devised, from 1980, a system to reduce the level of penetration of those cars in those territories. Again according to that letter, the system, which was similar but not identical to that operating in metropolitan France, should have allowed the level of penetration to be reduced to 15%.^(*)

The Court also considered correspondence between the Prefect of Martinique and the dealers in the region which confirms the existence of a limit on imports of Japanese cars set by the French central administration,^(*) and of a system by which the administration passed on the quotas to the Prefecture of Martinique which, in its turn, notified them to the dealers. It was then the central administration which issued the documentation necessary to register the cars sold.

Another document considered by the Court is the letter of 3 September 1986 to the Prefect of Martinique from the Nissan dealer, in which the latter — having pointed out that a quota for imports of Japanese vehicles had been ‘set up’ for several years and that, consequently, the importer into France received instructions every year from the administration authorising him to issue only a given number of certificates of conformity — complained of his meagre quota which was reduced further every year. According to the Court, if the quotas of each dealer depended on an agreement between them, that complaint would be directed not at the public authority, but rather at the dealer's competitors with a view to renegotiation of the agreement. Still according to the Court, therefore, the limitation of imports to 15% of the market is unlikely to be the result of an independent decision by dealers: in the wake of that agreement, they have seen the market reduced by about 50%, according to data provided by the Commission and not disputed by Somaco.

In the light of the probative material referred to above, the Court took the view that it had to reconsider the significance it had attached, in the previous Asia Motor judgment, to the documents produced by Somaco. In particular, the minutes of the inter-ministerial meeting and the draft agreement of 19 October 1987 appeared to it to support the case, put by the Commission, for ‘codification’ of the unwritten import policy unilaterally imposed by the French public authorities since 1982, resulting from the need to solve a problem raised, in the practical management of that policy, by the Toyota dealer and to prevent such a problem from arising again in future.^(*)

The Court also examined other documents produced by Somaco, and found that some of them concerned the situation in metropolitan France but not that in Martinique. That is so in the case of the letter of 1 July 1987 from the Ministry for Industry concerning, in particular, the position of one of the complainants, Mr Cesbron, relating solely to the import scheme on metropolitan territory. As regards other documents, such as the letter of January 1981 to the President of the French Republic from the Antilles-Guyana Group of Importers of Foreign Vehicles, the minutes of the meeting of 1 October 1987 at the Prefecture of Martinique and the telex of 22 September 1987 from the Prefect of Martinique, the Court observed that these simply concerned either the fears of the importers regarding the establishment of a quota which had not yet been fixed (letter of January 1981), or else the search for a solution to the problem caused by the conduct of the Toyota dealer. In any event, in the view of the Court, none of that evidence points conclusively to the existence between the dealers of an agreement within the meaning of Article 85.

In view of the assessment made by the Court of First Instance, and criticised by Somaco, it is necessary to ascertain whether the Court ‘distorted’ the evidence in that process. The case-law of the Court of Justice, which considers that defect to be subject to review, has never made clear, not even by way of example, what sort of error of assessment would constitute such a defect in practice.^(*)

Since the defect in question constitutes an exception to the sole jurisdiction of the Court of First Instance to assess the facts, I believe it must be interpreted narrowly in order to prevent the division of powers prescribed by the Treaty in the Community legal system from being compromised.^(*) It follows that the concept of ‘distortion of evidence’ should only cover circumstances in which the error of reasoning made by the Court of First Instance in assessing the evidence is so serious and manifest as to prevail, at least as regards the documentary evidence, over the substantive inaccuracy of the findings of fact made on the basis of the documents contained in the file submitted before the Court.^(*)

In the case which is the subject of this appeal, the Court examined the documents produced by Somaco, the prima facie evidential value of which it acknowledged,^(*) placing them in a wider context, in which the aforesaid documents produced by the Commission, which were, moreover, not challenged by the appellant, also came into their own. On the basis of this other evidence, which could plausibly support the view that import quotas were fixed by the administration with no active part played by the dealers, the Court felt able to posit a scenario which offered a rational explanation for the minutes and draft agreement of 19 October 1987 as well.

Such an overall view may or may not be endorsed in this connection; however, there does not appear to have been any ‘distortion’ of the evidence on this point, with the result that this criticism of the judgment given at first instance must be rejected.

In the reply, the appellant makes a further criticism regarding the assessment of evidence by the Court. In particular, Somaco argues that the Court made its analysis on the basis of the evidence produced by the Commission in support of its argument for the existence of irresistible pressure, and only then went on to consider the documents produced by the appellant. The effect of proceeding in this way was to reverse the presumption raised by Article 85, which assumes that corporate behaviour is independent and not dictated by other considerations.

Apart from the fact that this argument is inadmissible as it was only put forward in the reply, it is obviously wholly without foundation as well.

First, the fact that the Court, in its judgment, analyses evidence produced by the parties in a particular order rather than in any other cannot constitute a defect in the judgment. Secondly, Article 85 does not lay down any rules of inquiry, such as presumptions or other ways of streamlining the evidence, confining itself to setting out a fundamental rule. It follows that in an application for the annulment of a Commission decision, it is for the applicant to supply the evidence in support of his own application, while the defendant institution bears the burden of proving the facts cited in support of its own defence with a view to demonstrating the validity of the measure it adopted. This, moreover, constitutes a fundamental principle of procedure, which underlies, with subtle differences, all the legal systems of the Member States.^(*) The Court duly applied that principle in this case.

This ground of appeal must, therefore, be rejected as well.

Dismissal of the claim for damages

Somaco applied to the Court of First Instance for compensation for damage suffered as a result of the conduct of the Commission. The Court dismissed the claim on the ground that it was inadmissible. The Court referred to consistent case-law according to which ‘an application seeking compensation for damage caused by a Community institution must state the evidence from which the conduct alleged against the institution can be identified, the reasons for which the applicant considers there is a causal link between the conduct, the damage it claims to have suffered, and the nature and extent of that damage’.^(*)

In particular, faced with a mere list of figures purportedly representing the damage suffered and the statement that the damage imputed to the Commission could be quantified by calculating the usual interest rate applied to such figures for the period between the decision not to pursue the case and the delivery of the judgment, the Court was right to consider that the wrongful conduct alleged against the Commission or the nature of the damage reportedly sustained had not been identified.^(*)

It is common ground that it is for the party seeking to establish the Community's liability to adduce conclusive proof as to the existence or extent of the damage he alleges and to establish the causal link between that damage and the conduct complained of on the part of the institutions.^(*)

None of those factors was supported by documentation or other evidence. Nor can the responsibility of the State for infringement of Community law as set out in the case-law of the Court of Justice be invoked to justify the failure to discharge the burden of proof, as Somaco attempts to do. Whilst it is true that the protection of individuals in the face of unlawful conduct by the Community institutions should be on an equal footing with the level of protection accorded to citizens in terms of compensation for unlawful acts by the State in breach of a provision of Community law,^(*) this cannot in any event reverse the burden of proof. Suffice it to note that the conditions for liability on the part of the State for breach of Community law must also be satisfied by an individual seeking compensation in proceedings before the national court.

Accordingly, this ground of appeal must also be rejected.