Competition Law Compliance Programme

DATE: 19 NOVEMBER 2010

Contents Part 1: Introduction to Eurogypsum ...... 2 Part 2 : Compliance Programme: Importance, Content and Proposals for Action ...... 2 PS: this anti-trust statement is used whenever the calcium sulphate consortium meetsPart 3: Compliance Guidelines Fundamentals ...... 4 Part 3: Compliance Guidelines Fundamentals ...... 5 3.1 Meeting ...... 5 3.2 Information exchanges ...... 5 3.3 DO’s & DON’Ts ...... 7 3.3.1 DO’s ...... 7 3.3.2 DON’Ts ...... 7 Annex 1: Antitrust Compliance Declaration ...... 9 Annex 2: Eurogypsum Compliance Rules ...... 11 Annex 3: Principle of E.U. Competition Law and its implication for Trade Association...... 12 3.1 Art 81, Paragraph 1 of European Community Treaty ...... 12 3.2 Modernisation Regulation 1/2003 ...... 13 3.2.1 Fines ...... 13 3.2.2 Lifting the corporate veil ...... 13 Annex 4: Case Law Examples of Anti-competitive Conduct and Trade Associations’ Interventions before the European Court of Justice ...... 15 4.1 Case law examples ...... 15 4.2 Intervention before the European Court ...... 16

Part 1: Introduction to Eurogypsum

Founded in 1961, EUROGYPSUM is a European federation of national associations of gypsum products manufacturers, based in Brussels and registered in Belgium as an AISBL (International Non Profit Association).

Its role is to promote the interests of the European Gypsum Industry and ensure that there is awareness at a European level of the contribution the Gypsum Industry makes to society in general and to the built environment in particular.

It does this through joint research projects on relevant scientific, technical, economic and legal matters and by initiating information and communication programs.

- Membership :

Eurogypsum has 3 types of members: full, extraordinary and associate.

Full members are national associations of producers of gypsum products.

Extraordinary members are companies operating in a European country where no industry-wide association exists.

Associate members may be individuals –scientists, academics and researchers- who have distinguished themselves through their work in physical chemistry or gypsum application in a given country or they may be companies with gypsum activities outside Europe.

- The European Gypsum Industry :

With a turn over of over 10 billion Euros, the European Gypsum and Anhydrite Industry operates 160 quarries and some 200 factories and generates employment directly to 28.000 people and indirectly to 85.000 people. The European Gypsum Industry is one of the few fully integrated industries within the construction products field. The European Gypsum Industry covers the whole life-cycle of the product. The companies which extract the mineral “Gypsum” also process it and manufacture the value-added products and systems mainly used in construction. Gypsum products are eternally and fully recyclable as they always keep their natural properties after every recycle. Therefore, the gypsum companies strive to recycle the products at the end of their life-cycle (demolition waste). The main players of the Industry operate globally but manufacture and sell locally with high technical and environmental standards and with greatest respect for the local communities. SMEs are very active in building plaster and gypsum ceiling tiles, mainly in Spain

Part 2 : Compliance Programme: Importance, Content and Proposals for Action

Competition laws in any country ensure a free economy by encouraging competition in the market.

Competition laws are complex and their violation is a serious matter. Penalties for violation of these laws are more and more severe in general and could be so for Eurogypsum and its members in case of competition rules violation.

Therefore Eurogypsum should take the necessary measures to ensure that the association and its members comply with competition rules.

A compliance programme provides a formal framework for ensuring that the association as a whole as well as its individual members, employees and directors, complies with competition law. It can also help to identify actual or potential infringements at an early stage, enabling the association to take appropriate remedial action. In the case of cartel activity, early detection is key if we are to benefit fully from our leniency programme.

Such a programme also aims at:

• informing the association and its members about the content of competitions rules and it consequences on the association’s activities; • identifying the boundaries of permissible conduct; • identifying situations where it would be advisable to seek legal advice for optimised compliance with competition rules

When considering whether it is necessary to implement a compliance programme, one should bear in mind that if you do commit an infringement, any financial penalty may be reduced where you can show that you have taken adequate steps to achieve compliance. The larger the business and the greater the risk of infringement, the more likely it is that adequate steps will include the introduction of a compliance programme.

The content of a compliance programme must be tailored to the particular requirements of the association. There is no standard programme that can apply in all cases.

However, there are certain general features that must be included as a minimum in any programme if it is to work effectively.

In general, a compliance programme has four features: • support of senior management; • appropriate policy and procedures; • training, and • regular evaluation.

A compliance programme goes further than a verbal or written commitment to comply with competition law. It must be actively implemented and promoted through the operation of appropriate policies and procedures. An effective policy would contain at least the following elements: • an overarching commitment to comply with competition law; • placing a duty on the association, its members; all employees and directors to conduct their activities dealings within this overarching policy and seeking a written undertaking from them to this effect, and • a commitment to take disciplinary action against employees/directors who intentionally or negligently involve the firm in an infringement of competition law– this is essential if the programme is to be taken seriously.

Eurogypsum proposes the following 6 action packages:

• Package 1 : analysis of the minutes of the Board, STC, ERMC and MCC committee for the years 2009- 2010 and subsequent coaching of the secretary general; • Package 2: a training session of 2 hours for the Board (May Board meeting), and of the Committee members (March committee meetings) on the basis of package 1 Quote for package 1 and 2: 5000 Euro • Package 3:

Legal advice on a cases by case basis in case of doubt Quote: hourly rate: 450 Euro (partner) 330 Euro (legal adviser) • Package 4: Antitrust declaration compliance –to be signed by the Eurogypsum Secretary general, national association secretaries general, Board Members and STC-ERMC and MCC members (see annex 1) • Package 5: Eurogypsum competition compliance rules (see annex 2) • Package 6: Include the following slide on compliance with completion law before a Eurogypsum meeting. Antitrust-statement

As participants in this meeting, we need to be mindful of the constraints of antitrust laws. There shall be no discussions of agreements or concerted actions that may restrain competition. This prohibition includes the exchange of information concerning individual prices, rates, coverages, market practices, claims settlement practices, or any other competitive aspect of an individual company’s operation. Each participant is obligated to speak up immediately for the purpose of preventing any discussion falling outside these bounds.

PS: this anti-trust statement is used whenever the calcium sulphate consortium meets

Part 3: Compliance Guidelines Fundamentals

Promoting the common environmental and social objectives of a sector in an association may lead or be considered to be a cooperation between competitors. Therefore, the association and its members are required to comply strictly with the following rules.

3.1 Meeting

- A written agenda should be drawn up prior to each meeting and circulated in advance of the said meeting; - Member representatives should not attend any meeting unless they have first received an agenda for the said meeting; - Minutes of each meeting should be carefully drawn up following the meeting and distributed to all those in attendance; - The attendance of a lawyer may be advisable for such meetings; - An Association meetings must not be used to discuss future prices, business strategies or comment on specific marketing strategy of members; - Any member should be allowed to attend meetings so as not to exclude a specific group or segment.

3.2 Information exchanges

The Principle :

A professional association must not be used as a forum for the exchange of competitive sensitive information 1 between members. The exchange of such information could indeed constitute a serious infringement of Article 81 of the EC Treaty

Therefore, the following information must never be exchanged :

- Information on prices and discounts, including the extent and timing of any anticipated change in price; - Information on capacity and production costs, including the extent and timing of any anticipated change in capacity; - Information relating to customers, sales and the timing of sales campaigns.

Moreover,

- Exchange of information mechanisms designed to serve as a support for anti- competitive practices are illegal per se. - Exchange of information between competitors (consultations, discussions, …) regarding proposed commercial decisions are illegal, even if the anti-competitive agreement resulting from such discussions has not been formalized, nor even reached. - In particular, any exchange of information regarding future commercial policies is clearly deemed illegal. - Information exchange systems not intended to monitor a cartel or an anti-competitive concerted practice might, notwithstanding, be illegal if they negatively affect competition.

Potential exemption to the principle:

1 Information exchanges comprise the gathering of statistical information, market research, the exchange of opinion or experience, assessment of the overall economic situation in the industry and benchmarking

If exchange of information, the validity of information exchanges must be assessed on the following basis :

● The structure of the relevant market

Data that would not be deemed commercially sensitive on a non-concentrated market for a non homogeneous product may be deemed commercially sensitive on a highly concentrated market for a homogeneous product.

If the relevant market is highly concentrated, the exchange of information will increase transparency and reduce uncertainty on markets where competition is already limited by the structure of the markets. It will then be regarded as illegal behaviour by the Competition authorities.

As a rule, an information exchange system requires that at least 3 players supply data.

● The sensitive nature of the information

Commercially sensitive information is information that is not publicly available and gives some indications of a competitor’s commercial position or strategy, and thus increases transparency of the market.

Aggregate data, which are those that do not enable the identification of the undertakings, are generally deemed non-sensitive and may therefore, be freely exchanged between competitors. The exchange of aggregate data, setting out production or other figures for the whole industry without enabling the extraction of individual data, does not generally raise competitive concern.

Aggregate data become commercially sensitive if they enable the extraction of individual data, for example if the number of actors is small.

Individual data, which allow identification of the companies whose information is included in the data, are commercially sensitive if they reveal competitors’ commercial position and/or strategy. Individual data on prices and pricing policy, costs, sales volumes, market shares, capacities and investments are generally commercially sensitive. But they may be exchanged if they are old enough not to be able to impact the commercial policy of competitors.

By way of example, the following could be the subject of discussion :

▫ Introduction of new regulations pertaining to the relevant industry ; ▫ Involvement in litigation affecting the relevant industry as a whole ; ▫ Work safety, environmental protection etc.., provided that any results of the eventual cooperation are made available to all interested parties on reasonable terms ; ▫ Overall economic trends ; ▫ Technical promotion or advertising of products in the relevant economic sector ; ▫ Organisation of and participation in exhibitions, trade fairs or conferences, etc; ▫ Standards.

3.3 DO’s & DON’Ts

3.3.1 DO’s

Do object if an improper subject is raised.

Do state explicitly that the company does not want to receive any commercially sensitive information within the framework of Associations, and protest in writing in case you receive it.

Do make sure by appropriate awareness measures that informal discussions during or after such meetings do not include anti-competitive subjects.

Do require the trade associations to have a confidential collection system (“Black Box System”): The association must take all the necessary measures to ensure the confidentiality of the system, through using an intermediary responsible for collecting individual commercially sensitive data and to deliver such information to the Association in a form meeting aggregation and history criteria (“Black Box”).

Do require the signature of a confidentiality agreement and just give the information to the independent third party operating the Black Box system.

Do require that Association regularly monitor strict compliance with applicable rules deriving from legislation and jurisprudence.

Do ensure that statistics are available to all members and non members.

Do seek legal advice, if in doubt.

3.3.2 DON’Ts

Don’t exchange neither accept to receive commercially sensitive information within the framework of Trade Associations, except if: As a principle, the information must be regarded as “historical” (at least 12 months old in the European Union, depending on the structure of the market, the nature of the data, and the applicable rules in a relevant country).

Or, the information as aggregated in a way that does not permit recipients to identify individual data such as individual market shares of other players (and the data has been supplied by at least three players).

Don’t discuss, recommend or agree upon costs, purchasing or selling prices, price trends, price changes and their implementation and methods of calculation of discounts, rebates or trade margins.

Don’t discuss, recommend or agree upon the use of any terms and conditions of purchase or sale, whether standard or not.

Don’t discuss, recommend or agree upon the allocation or limitation of territories, customers or selling activities or parts and material sourcing.

Don’t discuss, recommend or agree upon levels of production, inventory levels, production processes and methods, parts and materials, and technological developments or changes.

Don’t discuss, recommend or agree upon controls or limitations on business methods or practices, such as advertising and “fair trading” practices.

Don’t remain at any sessions where others engage in improper discussions, even if you are silent. Tell the others that the discussion is illegal and leave in such a way that others will remember you left, either because it is on record or by making sure that everybody present realizes that you are leaving.

Don’t engage in any vote which has as its purpose the exclusion of any member of the industry without valid reasons.

Don’t discuss, recommend or agree to blacklist or boycott customers, competitors or suppliers.

Annex 1: Antitrust Compliance Declaration To be published on the website

The signing MEMBERS (national and association representatives, Board members, members of the STC, ERMC and MCC, the Eurogypsum Secretariat) states its support for the policy of competition served by all applicable antitrust laws, and its intent to comply strictly with these laws wherever EUROGYPSUM holds its meetings and activities.

Through its meetings and other activities EUROGYPSUM brings together representatives of competitors from the European Gypsum Industry. The subject matter of EUROGYPSUM activities is technical in nature and there is no attempt to restrain competition in any manner.

EUROGYPSUM takes the opportunity, through this “Antitrust Compliance Declaration”, to make clear that its members and attendees unequivocal support the policy of competition served by antitrust and competition laws and their uncompromising intent to comply strictly in all respects with these laws. Any conduct that is contrary to the applicable antitrust and competition laws is contrary to the EUROGYPSUM policy.

The penalties which may be imposed upon EUROGYPSUM, its members and the individuals involved in any violation of the antitrust and competition laws are so severe that good business judgment demands that every effort be made to prevent such violation.

It shall be the responsibility of every member EUROGYPSUM to be guided by the EUROGYPSUM’s policy of strict compliance with the antitrust and competition laws in all EUROGYPSUM activities. Antitrust compliance is the responsibility of every EUROGYPSUM member. Any knowing violation of the “Antitrust Compliance Declaration” by a EUROGYPSUM member will result in that member’s termination from membership and removal from any EUROGYPSUM activity.

The rules of this “Antitrust Compliance Declaration” apply to all members, attendees, working committees and other meetings sponsored by the Association as well as to all meetings attended by the representatives of the Association.

The following rules are applicable to all EUROGYPSUM activities and must be observed in all situations under all circumstances without exception or qualification: • The General Assembly, any Working Committee or activity of EUROGYPSUM shall not be used for the purpose of bringing about or attempting to bring about any understanding or agreement, oral or written, formal or informal, expressed or implied, among competitors with regard to prices, costs, bids, terms or conditions of sale, distribution, volume of production, markets, territories, or customers. • No EUROGYPSUM activity or communication shall include discussion for any purpose or in any manner of pricing methods, production levels or other limitations on either the timing, costs or volume of production or sale, or allocations of markets, territories or customers. • No EUROGYPSUM activity or communication shall include any discussion, which might be construed as an attempt to prevent any business entity from obtaining a supply of goods or otherwise purchasing goods or services freely in the market. • In conducting EUROGYPSUM meetings, the EUROGYPSUM Secretariat shall prepare and follow a formal agenda. The agenda should be specific and avoid topics that may cause antitrust problems such as price, production and selection of customers or suppliers. In addition, any discussion of pricing, discounts, credit terms, refusals to deal or allocation of markets shall be avoided. All participants at the meeting shall adhere strictly to the agenda. • Minutes of the meeting shall be distributed to all members. Approval of the minutes shall be obtained at the next meeting. • Speakers at meetings shall be informed of the necessity to comply with EUROGYPSUM’s antitrust policy in the preparation and presentation of their presentations.

• During informal discussions at the site of a EUROGYPSUM meeting, but beyond control of its Chairperson or the EUROGYPSUM Secretariat, all members and attendees shall observe the same rules that are defined by this “Antitrust Compliance Declaration”. • If antitrust problems arise with a member’s company activities, this member should promptly consult EUROGYPSUM on any matters of concern. • The antitrust laws and government enforcement policies change from time to time based on new court decisions or other events. In addition, nearly every national jurisdiction has its own antitrust laws, which may differ from other antitrust laws. Accordingly, every member should consult their legal counsel whenever antitrust concerns or other competitive problems arise.

Annex 2: Eurogypsum Compliance Rules

• Do avoid any discussion related to prices or pricing policy with a competitor • Do not agree with your competitors on sales volumes or any market share percentage • Do not agree to refrain from competing in a given geographical market, unless a formal/valid non compete agreement exists • Do not agree with your competitors to boycott (refuse to sell/buy) or to treat a given customer or public sources (any legal sources other than a competitor) or internet market intelligence sources • Do not discuss up for bid with your competitors or agree not to bid • Do not fix a minimum resale price to your customer/distributor • Do always keep in mind that in various countries, the conjunction of dominant position (collective or single) and high market prices is often regarded as suspicion or abuse • Do not use a dominant market position (if you have one) to control prices or exclude competitors, such a requiring a customer to purchase products only for you • Do not require from your customer to purchase one (less desirable) product in order to obtain another (more desirable) product • Do not offer discriminatory prices, tariff conditions, payment methods, etc to competing customers of the same class for the same product without objective and fair justification (cost saving, volume of purchase, promotional services, contractual conditions, duration of the commercial contract, meet competitor’s (including importers) price etc….) • Do write carefully and clearly in memoranda , letters and e-mails and assume that everything written may be disclosed publicly in adversarial proceeding • Do remember that competition rules apply in social settings and trade association meetings • Do consult with the Eurogypsum legal adviser regarding any competition law concerns

Annex 3: Principle of E.U. Competition Law and its implication for Trade Association.

3.1 Art 81, Paragraph 1 of European Community Treaty

Article 81, Paragraph 1, treaty establishing the European Community states as follows for associations

“The following shall be deemed to be inconsistent with the Common Market and shall be prohibited, namely: all agreements between firms, all decisions by associations of firms and all concerted practices likely to affect trade between Member States and which have the object or effect of preventing, restraining or distorting competition within the Common Market, and in particular those which :

- directly or indirectly fix buying or selling prices or other trading terms, - limit or control production, marketing, technical development or investments, - affect the sharing of markets or sources of supply, - apply to trade partners unequal conditions in respect of equivalent transactions, thereby placing them at a competitive disadvantage. - Make the conclusions of a contract subject to the acceptance by trade partners of additional goods or services which are not by their nature or by the custom of the trade related to the subject matter of such contracts. ”

Article 81 EC applies when undertakings enter into an agreement with each other and when they act in concert via an association. In this case, compliance of association members with non- binding recommendations of an association is held to be illegal if such recommendations create a substantial effect on competition.

Two basic points should be highlighted :

- if the object or effect of the professional association’s activities is found to unduly affect competition, the activity will be declared illegal, regardless of the good intentions of the members, - no formal agreements between members (or between their own members) are necessary since, under the concept of concerted practices, an agreement may be implied by the actions of the parties.

Acting through a professional association does not provide members with any special protection under competition laws.

Under the EU’s new procedural rules, it will no longer be possible to apply to the European Commission for being exempted from Article 81 EC. Instead, undertakings and professional associations must themselves assess whether their agreements or actions are capable of infringing Article 81 EC.

At the same time, the European Commission and national competition authorities have been granted stronger powers to enforce the EU competition rules.

In particular, the European Commission has the power to request information from undertakings, to conduct unannounced inspections at the premises of undertakings and the homes of their employees and to take statements from undertakings’ employees.

Finally, the consequences of infringing the EU competition rules can be serious, particularly in terms of the imposition of fines on the parties.

3.2 Modernisation Regulation 1/2003

Since Regulation 1/2003: the “Modernisation Regulation” came into force, trade associations and their members must assess themselves the potential competition law implications of their behaviour. The option of applying for and obtaining clearance from a national competition authority within the European Commission is no longer available.

The European Court of justice and the Commission support the enhancement of effective enforcement of EC competition law through the possibility of civil damages. Firstly, it is now obvious that EC law requires damages to be available as a remedy for breaches of EC competition law. Secondly, national legislators have started to implement provisions to facilitate damage actions. For example, the principle of effectiveness under UK competition law precludes the application of English rules which would prevent the possibility of a damage claim.

Furthermore, a finding by the Commission or a national competition authority of an infringement of competition law will be binding on the courts in subsequent civil damages actions. The same applies to judgments on appeal.

3.2.1 Fines

If members of a trade association reach an agreement during a meeting of the association which breaches competition law, the association can be fined for merely providing a “forum” for the infringement.

The Commission can fine an association of undertakings up to 10% of the total turnover generated by the association in the previous financial year for a breach of competition law. This amount can be increased if the infringement is linked to the activities of its members i.e a maximum of 10% of the total worldwide turnover of all the members which are active on the relevant market in question. National competition authorities may impose fines for breaches of European, as well as purely national competition law.

In contrast to the Commission, certain national competition authorities have the power to fine individuals for breaches of competition law. Based on the German principle of liability for failure to provide proper organisational structures, the German Federal Cartel Office regularly fines the management or other executive bodies of an undertaking, or association of undertakings, who have not exercised their duty of supervision properly by failing to prevent infringements by employees. When calculating the fine the German Federal Cartel Office usually takes the yearly income of the employee as a gauge.

In the UK, as in France, individuals may be subject to criminal prosecution under the cartel offence. An individual may face imprisonment if they dishonestly agree to cause or implement arrangements for a “hardcore” cartel activity.

3.2.2 Lifting the corporate veil

Undertakings which are members of trade associations may be held liable for any fines imposed on the trade association.

Art.23 of the Modernisation regulation introduces the concept that members may be liable for fines imposed on an association of undertakings, thereby putting trade associations at greater risk of surprise investigation (“dawn raid”) by the Commission. Considering that the fine imposed on the association may be calculated on the basis of the turnover of its members, it is likely that the association will lack the resources to pay the fine in full. In this case the “Corporate veil” is lifted and the members become liable for the association’s fine as follow :

- In the event of insolvency, the association must demand contributions from its members towards payment of a fine. - Where such contributions fail to be paid within the time-limit (set by the Commission), the Commission may require direct payment from any undertaking whose representatives were members of the decision-making body of the association. - The Commission may, if necessary to ensure full payment, require the balance of the fine to be paid by any member which was active on the market in which the infringement occurred. - The member undertakings have the rights to raise a defence against payment. However, it is necessary to show firstly that the undertaking has not implemented the infringement of the association, and secondly that it was either not aware of the existence of the infringement or actively distanced itself from it before the Commission launched its investigation.

The obligation on an undertaking to actively distance itself may also be applicable to a member who was not present at the meeting where the infringing agreement was reached, but learned of the agreement later on ( through the minutes of the meeting for example).

Annex 4: Case Law Examples of Anti-competitive Conduct and Trade Associations’ Interventions before the European Court of Justice

4.1 Case law examples

“A recommendation of an association, even if it does not have a binding effect on its members, cannot escape article 85 (1) when compliance with the recommendation by the members has a profound influence on competition in the market in question”. IAZ International Belgium S.A v. Commission, ECJ judgment of 8 November 1983

“The GPVA and its members held several meetings every year in which they set the rate of increase of the selling price of vegetable parchment in the Benelux and Danish markets. While some GPVA member manufacturers did not supply any parchment in the Benelux and Danish markets, the mere fact that they took part in the discussions in which the price levels for those markets were fixed, and that they regularly received the price lists for those markets, constitutes a violation of article 85 . In effect, such behaviour implies the acceptance of a restriction of possibilities for competition on the part of the firms concerned” “ Where the system of reciprocal exchange of information among members of an association includes the communication to competitors of information on production, research, development, consumption and terms of sale, such a system is sufficiently characterized as a concerted practice prohibited by article 85 ”. Vegetable Parchment, Commission Decision of 23 December 1977

“The Court considers that [...] the information [exchanged] , which relates in particular to sales made in the territory of each of the dealerships in the distribution network, is in the nature of business secret. The Court also observes that […] having regard to its frequency and systematic nature the exchange of information in question […] reduces, or even removes, the degree of uncertainty regarding the operation of the market , which would have existed in the absence of such an exchange of information”. John Deere v Commission, CFI judgment of 27 October 1994

Heavy fines can be imposed in case of violation of articles 81 & 82. In the Cartonboard case, fines totalling €131 million were imposed by the Commission on members of the “Product Group Paperboard” because the association had been established by the members for the sole purpose of disguising the price fixing and market regulation of their clandestine cartel. Some of the fines imposed by the Commission were reduced by the European Court of Justice on appeal. Cartonboard, Commission Decision of 13 July 1994 and ECJ judgment of 16 November 2000

In the Vitamins case, The European Commission imposed fines totalling € 855 million on eight vitamins producers for their participation in a series of market-sharing and price-fixing cartels . As a result of a parallel investigation by the US antitrust authorities, the eight vitamins producers settled criminal litigation brought before the US courts for US $900 million . The eight cartel members now face a barrage of civil claims brought by vitamins purchasers before courts in the US, EU member states and elsewhere, which could expose them to substantial damages award. Vitamins, Commission Decision of 21 November 2001

On 16 December 2006, the French competition council has imposed a 575.4 million fine to 11 trading undertakings in the steel sector together with the trade association active in this sector for a price fixing and clients and market allocation cartel from 1999 to 2004 . The agreement was carried out at the initiative of three main French steel traders and organised in the framework of the trade association. The trade association was condemned to a fine of €124.000 . Conseil de la concurrence- France (Fédération française de distribution des métaux).

4.2 Intervention before the European Court

Any participation in proceedings before the European Courts implies acceptance of the judicial nature of the process. And the Courts have made very clear that they welcome the participation of trade associations and similar representative organisations.

Trade associations are allowed to intervene in order to address questions of principle affecting the sector concerned, and this is the principal basis on which such associations appear before the European Courts.

The trade association may also act in place of one or more of its members who would themselves have had standing to bring proceedings but prefer not to do so in their own name.

Private parties may challenge decisions by EU Institutions addressed to them, and legislation or decisions that “directly and individually” concern them. This implies that issues relating to all areas in which the EU is active – in the sense that it adopts legally binding rules- may fall to be decided by the Court of First Instance. Trade associations can play an important role in influencing the outcome of these cases and their broader implications.

When actions are brought by private parties for the annulment of EU measures “any other person establishing an interest in the result of the case” is entitled to intervene. The general rule is that the intervener must establish a direct interest in the actual form of order sought by one of the parties to the main action, and not merely in the legal arguments. Thus the Court distinguishes between prospective interveners establishing a direct interest in the ruling on the specific act whose annulment is sought (admissible) and those who have only an indirect interest in the outcome of the case by reason of similarities between their own situation and that of one of the parties (inadmissible).

For example, a company that complained to the European Commission about the conduct of a rival would be allowed to intervene in an action challenging the Commission’s decision to prohibit that conduct. But another company whose activities are similar to the prohibited conduct would not be allowed to intervene.

But what is not possible for individual companies is often entirely open to trade associations. The Court’s practice is to allow interventions by representative associations whose object is to protect their members, in cases raising questions of principle liable to affect those members. The Court has explained that this approach is intended to facilitate assessment of the context of such cases whilst avoiding multiple individual interventions that would compromise the effectiveness and proper course of the procedure.

This policy has evolved over the years in a series of generally unpublished Court orders dealing with applications to intervene.

Four cumulative requirements have been developed. Associations will ordinarily be admitted to intervene in a case if the following criteria are met :

- the association represents an appreciable number of undertakings active in the sector concerned. - The objects of the association include protecting its members’ interests. - The case may raise questions of principle affecting the functioning of the sector concerned. - The interests of the members may therefore be affected to an appreciable extent by the forthcoming judgment.

The best placed association to intervene will often be the European level association for the sector concerned by the case. Associations that are able to present a picture of the overall European context to the Court may be able to make particularly valuable contribution. Of course, European associations are often made up of the national associations whose members are the producers, distributors or retailers concerned by the case.

The Court of First Instance most certainly does not disqualify European associations because their immediate “members” are national trade associations and not the actual undertakings directly concerned.

Intervention in other actions

Damages actions : Damage actions can require the Courts to rule on the legality of EU measures, in exactly the same way as direct actions for the annulment of those measures. In turn, this may raise issues of general principle affecting the interests defended by trade associations. In these circumstances, it is quite possible that the Court of First Instance would be prepared to adopt the flexible approach above in the context of direct challenges to legislation and decisions.

Preliminary references from national Courts : National courts frequently refer questions of EU law to the Court of Justice under Article 234 EC. However, there is no provision for the Court of Justice to admit interveners in these proceedings.

Thus a trade association that wishes to participate must seek to intervene before the national court. If the national court is willing to accept the intervention-under its own rules-then the Court of justice will allow the intervener to submit written and oral observations in exactly the same way as all the other parties to the national proceedings.

Infringement actions against member states : Private parties are not permitted to intervene in actions brought by the European Commission against Member States for infringing EU law. A trade association with an interest in a case brought under Article 226 EC would therefore have to approach the Commission or the Member State concerned, offering input for their submissions to the Court of Justice.

The above comments are intended as guidelines.

Every individual must use his own judgment and a reasonable amount of common sense in order to comply with competition laws, and avoid any violation of those laws.

If ever, there is doubt in your mind regarding the legality of an activity or discussion, or if you think you might be violating competitions laws, discuss the matter with you company’s Legal Advisor before proceeding.