COMMISSION DECISION Of 20/X/2005 relating to a proceeding under Article 81(1) of the EC Treaty (Case COMP/C.38.281/B.2) – Raw Tobacco Italy 1 Table of contents 1. FACTS.......................................................................................................................................................... 5 1.1. Subject of the case and procedure ....................................................................................................... 5 1.2. The parties ........................................................................................................................................... 8 1.2.1. Undertakings engaged in the first processing of raw tobacco ......................................................... 8 1.2.1.1. Deltafina and its parent Universal Corporation ................................................................... 10 1.2.1.2. Dimon and its parent Dimon Incorporated .......................................................................... 10 1.2.1.3. Transcatab and its parent Standard Commercial Corporation ............................................. 11 1.2.1.4. Romana Tabacchi ................................................................................................................ 11 1.2.1.5. APTI .................................................................................................................................... 12 1.2.2. The producers of raw tobacco – UNITAB .................................................................................... 13 1.3. The Community and national regulatory frameworks for the raw tobacco sector............................. 14 1.3.1. Common organisation of the market in raw tobacco..................................................................... 14 1.3.2. Interprofessional agreements in the context of the Italian rules governing agricultural products. 18 1.3.2.1. Law 88/88 and interprofessional agreements....................................................................... 18 1.3.2.2. Sectoral measures: the administrative acts (“circolari”) ...................................................... 21 1.4. The industry of raw tobacco in Italy .................................................................................................. 22 1.4.1. The production and varieties of raw tobacco................................................................................. 22 1.4.2. Production cycle in Italy ............................................................................................................... 24 1.4.3. The importance of intermediaries in the Italian market................................................................ 25 1.4.4. Tobacco prices in Italy .................................................................................................................. 26 1.4.5. Cross-border trade......................................................................................................................... 26 1.5. Facts objected to................................................................................................................................ 27 1.5.1. The processors’ cartel.................................................................................................................... 27 1.5.2. The years 1993-1994..................................................................................................................... 28 1.5.3. The year 1995................................................................................................................................ 29 1.5.3.1. Preliminary contacts and discussions................................................................................... 29 1.5.3.2. As to the allocation of third packers and sharing out of quantities ...................................... 29 1.5.3.3. As to prices and the buying conditions to third packers ...................................................... 31 1.5.4. The year 1996................................................................................................................................ 31 1.5.4.1. On-going contacts between processors in preparation of the campaign .............................. 31 1.5.4.2. Maximum prices for Burley................................................................................................. 32 1.5.4.3. Surplus production............................................................................................................... 32 1.5.4.4. Implementation and monitoring........................................................................................... 33 1.5.4.5. Co-ordination at purchasing managers level in respect of prices and quantities for Bright in Umbria and Lazio. .................................................................................................................................. 33 1.5.5. 1997............................................................................................................................................... 34 1.5.5.1. New Deltafina proposal for an agreement on common conduct.......................................... 34 1.5.5.2. The actual agreement covering maximum prices to suppliers, suppliers allocation, joint purchases and surplus production ........................................................................................................... 35 1.5.5.3. Further agreements and contacts in respect of Bright and information exchange on Burley36 1.5.6. 1998............................................................................................................................................... 37 1.5.6.1. Processors’ scepticism in respect of their maintaining a common conduct......................... 37 1.5.6.2. The Villa Grazioli agreement on prices for Burley, Bright and DAC ................................. 37 1.5.6.3. Agreement on surplus production........................................................................................ 41 1.5.6.4. Follow-up to the Villa Grazioli and the surplus production agreements ............................. 41 1.5.6.5. Co-ordination of bids for ATI tender................................................................................... 44 1.5.6.6. Joint-negotiation with suppliers........................................................................................... 44 1.5.7. 1999............................................................................................................................................... 46 1.5.7.1. On-going discussion and co-ordination ............................................................................... 46 1.5.7.2. January agreement on surplus production of 1998 Burley crop........................................... 46 1.5.7.3. February agreement on pricing and purchasing conduct ..................................................... 46 1.5.7.4. February Interprofessional Agreements on surplus production of 1998 Burley crop........ 47 1.5.7.5. The Framework Interprofessional Agreement ..................................................................... 47 1.5.7.6. Interprofessional Agreement for the 1999 crop of Burley................................................... 48 2 1.5.7.7. Interprofessional Agreement for the 1999 crop of Bright.................................................... 50 1.5.7.8. Interprofessional Agreement for the 1999 crop of Havannah.............................................. 51 1.5.7.9. Interprofessional Agreement for the 1999 crop of Kentucky .............................................. 52 1.5.7.10. COGENTAB ....................................................................................................................... 53 1.5.7.11. Processors’ October agreement on prices for Burley and Bright, allocation of third packers and boycott of third packers not belonging to COGENTAB.................................................................. 54 1.5.7.12. Follow-up to the October agreement on Burley and Bright and further discussion............. 57 1.5.8. The year 2000................................................................................................................................ 58 1.5.8.1. On-going discussions and co-ordination.............................................................................. 58 1.5.8.2. Interprofessional Agreement for the 2000 crop of Burley................................................... 59 1.5.9. The year 2001............................................................................................................................... 60 1.5.9.1. On-going discussions and co-ordination.............................................................................. 60 1.5.9.2. Interprofessional Agreements for the 2001 crop of Burley ................................................. 61 1.5.10. 2002.......................................................................................................................................... 63 2. LEGAL ASSESSMENT............................................................................................................................ 64 2.1. Infringements of Article 81(1) of the Treaty....................................................................................... 64 2.1.1. Undertakings and associations of undertakings............................................................................. 64 2.1.2. Agreements between undertakings, decisions by associations of undertakings and concerted practices 64 2.1.3. Summary of the