EUR-Lex - 31978D0732 - EN

UKF and NSM have a sufficiently broad range of products (NSM has recently extended its range (see point 10)). In the Netherlands they account for 46 and 34 % of production respectively, and have a market share of 50 and 17 % respectively. In the Community as a whole UKF has a 10 % market share (including that of its UK plant) and NSM a 6 74 % share. Other domestic and foreign manufacturers, including smaller firms and others, like Esso Chemie, which have a narrower range of products, are capable of marketing their products throughout the Community without assistance, either via their own marketing network or via the normal trade outlets and cooperatives.

1. The cooperation by joint sales between UKF and NSM affects their entire production and distribution policy. The prices that can be charged vary considerably from one market to another ; a lower return in non-member countries can generally be balanced by a higher one in the Community (barring a few exceptions of limited duration). Prices subject to government approval within the Community are not fixed prices ; they may accordingly be undercut. Improved use of production capacity and imports from other member or non-member countries can be used to boost supplies ; there are no technical barriers to trade or excessive transport costs to hinder imports, especially when they come by sea or inland waterway. When the situation arises that supply constantly exceeds demand and local manufacturers' prices are appreciably undercut, then these local manufacturers lose sales and revenue.

1. This being so, UKF's and NSM's objective is to match their supplies as closely as possible to demand. The basic reason behind the cooperation between UKF and NSM is therefore to establish and exchange sales estimates (correct to the nearest kilogram), broken down by type of fertilizer, use, destination and delivery date. CSV's shareholders act on the sales estimates relayed to them by CSV and make arrangements for the appropriate quantities to be produced and placed at CSV's disposal according to the agreed schedule. The two shareholders' total production consists of these quantities, plus the quantities they market independently without CSV's intervention as a sales agent.

The detailed information thus exchanged with regard to UKF's and NSM's production and sales plans is further supplemented by an exchange of production and sales figures and details of stocks. All these figures are constantly updated to give an accurate picture of actual or expected developments on the market, regularly discussed and then corrected again.

1. The quantities placed at CSV's disposal are irrevocable or may be declared so, either by CSV itself or, where non-member countries are concerned, by Nitrex. There is, however, no sales guarantee given to the shareholders. If one of them produces more than it can sell, either independently or via CSV, it must stock up the surplus or cut down its production. If CSV's domestic sales do not come up to expectations the excess quantity is automatically earmarked for export to non-member countries. If they still fail to find a market, the quota arrangement of Article 6 of the manufacturers' agreement comes into effect. The fact that Article 6 has never been applied even during a period of substantial surplus in production capacity suggests that a purpose of the coordination system is to prevent such a situation.

1. In effect, this means that when the manufacturers draw up their first production and sales forecasts for the coming agricultural year they are free to decide at their own discretion on the quantities they will sell independently and the quantities they will offer CSV. These plans are, however, coordinated at or before the time they are exchanged and harmonized with those of CSV. Any corrections in the course of a farm year are equally carefully harmonized. It is not easy for an individual manufacturer - if only for technical reasons, above all when he is working at full capacity as during the 1973/74 crisis - to decide unilaterally to increase production in order to push up his own export figures in the short term.

In addition, the production and sales accounts refer to total production, including sales made independently by UKF and NSM. The quantities produced by both firms and made available to CSV and those remaining unsold are lumped together in the accounts under the heading "end of year stocks" (eindvoorraden) and made available to CSV in the following year. However, these quantities are not considered as made available to CSV by the producers in proportion to the unsold stock held by each of them, nor in terms of the quantities made available to CSV or sold through its agency during the previous year, but in proportion to their total sales including their individual sales for that year. This puts at a disadvantage a producer who proportionally has made the largest individual sales, particularly to other Member States. Since the amount held in stock may not correspond to the amount supposed to have been made available to CSV, the situation is clarified by completion of "switch agreements", i.e. delivery agreements between the producers or by including the amounts in question in agreements of this type.

1. The proceeds from sales in the Netherlands and in non-member countries (46 % of total sales) are distributed as evenly as storage, transport and packing costs. This pooling of proceeds also covers products - such as intermediate products and urea for industrial uses (5 % of total sales) - marketed without recourse to CSV's services as sales agency.

If UKF and NSM calculate to the last kilogram and cent in these matters, and if the total production and sales of both manufacturers are taken into account in their joint planning to the extent described, then they must inevitably refrain from competing with one another on markets not included in their pooling arrangements in order to safeguard the joint sales policy they pursue through CSV. When deciding on their sales policy for markets not covered by CSV they must take their CSV sales policy into account just as much as they take their quantities and pricing policies for their individual exports into account when they decide on their CSV sales policy.

1. It can be seen from the results of their cooperation - particularly in 1973/74 - that UKF's and NSM's sales policy in other Community markets was specifically discussed during their meetings, leading to decisions of a clearly practical nature. CSV caused its shareholders to provide it with precise figures for their sales in the EEC and persuaded them to reduce their sales, to sell at a higher price, to refrain from entering into further similar agreements without first consulting it and the other manufacturer, or to supply the EEC markets with products of a poorer quality. The records of these meetings show CSV's requests as taking the form of "instructions", "pressure" or "recommendations".

The parties have asserted that 1973/74 was not a typical year, characterized as it was by the shortage induced by the crisis, the danger of supplies draining off to non-member countries (where, for a limited period, they fetched higher prices) and the attendant risk of a shortfall in supply on the domestic market. They maintain that the words "instructions", "pressure" and "recommendations" are not to be taken literally ; the manufacturers were still free to determine their own sales policy, even in these difficult years.

1. The events of 1973/74 demonstrate that decisions concerning the quantity or prices of products sold in one Member State can have repercussions not only in that Member State but in others too. Despite the parties' assertions it seems quite predictable that, faced with an unstable market, they should use their information exchange scheme to improve the coordination of their sales policies on other EEC markets. There is, on the other hand, no need for UKF and NSM specifically to coordinate their individual export deals when market conditions are normal. It is sufficient to have a coordination system which will allow them to concert the general orientation of their sales policy.

1. The cooperation between UKF and NSM makes the two firms interdependent, gives them influence over each other and leads them to coordinate their sales policy even on markets which they do not supply jointly through CSV.

As the Court of Justice of the European Communities held in its judgment of 16 December 1975, ground of judgement 174 (1), the "requirement of independence ... does ... strictly preclude any direct or indirect contact ... the object or effect whereof is either to influence the conduct on the market of an actual or potential competitor or to disclose to such a competitor the course of conduct which they themselves have decided to adopt or contemplate adopting on the market".

1. The joint sale by CSV of straight nitrogenous fertilizers manufactured by UKF and NSM, combined with an information agreement that is inextricably bound to it, thus has the effect of depriving the manufacturers of much of their freedom to determine independently how much to produce and for which markets. Even if the manufacturers did not invariably follow in practice the lines laid down in CSV, this does not alter the fact that UKF and NSM substituted for the inherent risks of competition a form of practical cooperation which created conditions of competition that differed from the normal conditions of the market.

C. Capacity to affect trade between Member States

1. The cooperation between UKF and NSM effected through CSV is capable of affecting trade between Member States. This is clear from an overall assessment of the various aspects of this cooperation, all of which are inextricably interdependent : joint domestic sales, joint sales to non-member countries (except the USA) and the coordination by UKF and NSM of their entire business policy as regards straight nitrogenous fertilizers, including production, storage and sales.

1. There is no need to decide whether cooperation has an appreciable affect on competition in the common market and on trade between Member States if it consists simply and solely of making specified quantities of products available to a distribution agency for sales in non-member countries.

In the case at issue, however, the agreements cover more than just sales in non-member countries : that aspect is an integral part of a more extensive form of cooperation involving joint domestic sales and coordination and effectively covering UKF's and NSM's entire straight nitrogenous fertilizer business.

1. The sales policy of the parties cannot be considered on the basis of each market individually. They needed to coordinate their joint domestic sales and joint sales in non-member countries (with the exception of the USA) for the reason that since their proceeds from sales on the domestic market were - except over one specific period - and still are substantially higher than those from sales in non-member countries, UKF and NSM cannot possibly be indifferent about how much of the quantities they make available to CSV is sold domestically and how much is sold in non-member countries. The parties solved this problem by dividing up their domestic sales into fixed quotas ; the remainder of the quantities made available to CSV by UKF and NSM were automatically earmarked for export to non-member countries. These non-Community sales have brought in lower proceeds, and consequently do not need to be regulated by a permanent quota system : provision is simply made for such sales to be effected in the event of surplus production, i.e. if one or both of the parties produces, and makes available to CSV, more than CSV can manage to market.

1. The events of 1973/74 show (see point 69) that the sales policy determined within CSV can influence the decisions taken by UKF or NSM with regard to sales on non-CSV markets in the Community. The amounts CSV or one of its shareholders supplies to the Dutch or any other Community market may affect the prices on that market and the other party's income and also have repercussions on other markets. An increase in supply to these markets which are an obvious area for expansion because they fetch higher prices than exports to non-member countries, and in the case of Germany higher even than in the Netherlands, is extremely likely to result in exports to other Member States by those purchasing from CSV and its members.

Cooperation is consequently not confined to just one Member State and non-member countries, it affects the whole production and sales policy followed by UKF and NSM, including trade between Member States. The nature and the accuracy of the year-end production and sales accounts, which include figures for quantities exported to other Member States, along with the prior exchange and discussion of all important production and sales factors, demonstrate that UKF and NSM were not free to determine independently their production (1)[1975] ECR 1663, 1942 (Suiker Unie v. Commission of the European Communities (40/73)).

policy or their policy on exports to other Member States.

1. The parties fail in their submission that inter-State trade is subject to technical barriers and cannot therefore be appreciably influenced by private arrangements. If nitrogenous fertilizers with a higher or lower nitrogen content are used in a given Member State, there is nothing to prevent manufacturers in other Member States from including such fertilizers in their production programmes and exporting them.

1. The parties also fail in their argument that inter-State trade has increased and has not therefore been affected.

The volume of UKF's and NSM's export business within the common market has admittedly increased and has even led those companies to establish production and sales facilities in several countries. But, as the Court of Justice emphasized in its judgment of 13 July 1966 (1), the fact that an agreement encourages an increase, even a large one, in the volume of trade between Member States is not sufficient to exclude the possiblity that the agreement may affect such trade by constituting a threat, either direct or indirect, actual or potential, to freedom of trade between Member States in a manner which might harm the attainment of the objectives of a single market between States.

1. The cooperation between UKF and NSM does not merely jeopardize their freedom to determine independently their sales policy on non-CSV markets, but also has a restrictive effect on imports.

The concentration of supplies from two manufacturers of this size and importance on a Community market constitutes an economic unit which discourages foreign manufacturers from pursuing a more active export policy, effectively preventing them altogether from doing so. This danger increases in proportion to the power and solidarity of manufacturers in the country of destination.

Between them, UKF and NSM have something in the region of a 16 % share in Community production ; their most important competitors - BASF, Ruhrstickstoff AG, Gesa, ICI, Montedison and the Carbochimique Group - each have a substantially smaller share of between 7 and 8 %. The two firms have well-sited factories with large production capacities, not all of which is used. With a 67 % share of Dutch production, UKF and NSM hold a very strong position on their home market. The concentration of supplies by UKF and NSM and the annual agreements with CSV fixing quantities for the greater part of their purchases effectively reduce the alternatives open to Dutch purchasers when they wish to place subsequent orders in the course of the year.

The Netherlands imports less of the relevant products than the other Member States, and such imports as there are have had no appreciable influence on the high prices prevailing there. These high prices have been successfully maintained for years, in spite of lower prices in other Member States and considerably lower prices in non-member countries. The cooperation in question resulted in the continuous coordination of market policies and is a force to be reckoned with for foreign manufacturers proposing to import into the Netherlands larger quantities at appreciably lower prices.

1. The cooperation between UKF and NSM through CSV thus has appreciable effects on the structure of competition in the common market and is capable of affecting trade between Member States. This finding, which is based on close and lengthy observation of the market and of the operation of the CSV cooperation arrangements, differs from the conclusions reached by the Commission in its comparable Decisions concerning Cobelaz/Kokerie, Cobelaz/Synthèse, CFA and Seifa, where the Commission made it clear that its sympathetic attitude was strictly a result of the circumstances then pertaining. There is therefore no inconsistency in the finding that inter-State trade is affected in the present case.

D. CSV's proposals

1. The proposal by CSV and its shareholders to go as far as possible in terminating the exchange of information between the two shareholders, and the fact that they have accordingly discontinued the various planning and management committees in which they currently meet together with CSV, are not enough to take the altered arrangements out of the scope of Article 85 (1).

1. Regardless of the amount of information exchanged between the two shareholders, as long as CSV continues handling joint sales of its shareholders' products, it will have to formulate and carry out its sales programmes according to its shareholders' stocks and supply potential, and will have to adjust both these variables as closely as possible to demand from buyers.

The present arrangements, whereby information is exchanged between the manufacturers and CSV at the beginning of the agricultural year and then periodically during the course of the year for the purpose of drawing (1)[1966] ECR 299, 341 (Grundig/Consten (56/64)).

up CSV's sales forecasts, the individual production and sales forecasts for each manufacturer and consequently the volume of goods and the types of fertilizer to be made available for sale by CSV, cannot be terminated if the two manufacturers continue to use a joint agency for selling their products.

1. If a system of separate consultations between CSV and each of its two members were to be set up it would not differ fundamentally from the present arrangements, since, apart from the fact that CSV is a body consisting entirely of representatives of the two manufacturers on which each manufacturer has the right of supervision and veto, it would still be obliged to take account of the manufacturers' individual production and sales forecasts and the quantities placed at its disposal by each shareholder when making its own sales forecasts at the beginning of the year and when conferring thereafter with each manufacturer (every three months, under the proposed system) on the quantities which, judging from current trends, it would require the manufacturer either to place at its disposal or to take back and attempt to sell on its own account. In either case the manufacturer's ability to export to other EEC countries would be directly affected.

1. CSV would then have to act as a kind of umpire and allocate orders and deliveries - a function currently performed by the various committees.

This umpire function would entail a degree of close cooperation, in the form of an agreement or a concerted practice, exercised within CSV or elsewhere, between the two shareholders, which would in any event be all the more necessary as the parties would wish to continue with the system of annual contracts, the quota system would offically be dismantled and the parties would wish to prepare their own production and delivery plans for several years ahead (meerjarenplannen). These long-term plans would in turn entail a more or less overt return to a system similar to the present quota system, the surpluses and the shortfalls being made up at the end of the year by "switch agreements". This would be similar to the present accounts system, for the purposes of which CSV and its shareholders must take account of all the latters' production, including quantities produced for independent sales.

1. It is difficult to see how else CSV, including as it does the two manufacturers' representatives, could fix independently the proportion of the quantities they make available to it that should be set aside for domestic orders (thereby fetching considerably higher prices than exports) and the proportion that should go to export markets.

1. It would, moreover, seem quite impossible for the two shareholders genuinely to hand over to CSV the task of deciding on their sales forecasts and actual sales on the markets allocated to it (a) because of the proportion of their total represented by these sales (50 % for UKF, 35 % for NSM), (b) because these sales concern not just isolated products but the bulk of their production, and (c) above all because they include all their sales on the home market, so that UKF and NSM cannot leave them to the discretion of a third party. Even if they hand over the right to decide on their respective sales on these markets, the fact remains that if CSV satisfies this or that order by supplying products from one manufacturer and not the other this will inevitably affect the opportunities of each of the two to export to markets where they do business independently, particularly in the other EEC Member States.

1. Lastly, CSV's plans for altering the system of distribution for UKF and NSM products in the Netherlands have no impact on the essence of the restriction of competition found in this decision, i.e. the fact that the products of these two undertakings are marketed in the Netherlands as a single option. The proposed alterations are therefore insufficient to prevent the restriction from being caught by Article 85 (1).

III. APPLICABILITY OF ARTICLE 85 (3)

Under Article 85 (3), the provisions of Article 85 (1) may be declared inapplicable to any agreement or concerted practice between undertakings which contributes to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, and which does not: (a) impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives;

(b) afford those undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.

A. Specialization between UKF and NSM

1. The notifying companies fail in their submission that production is improved by a specialization arrangement between UKF and NSM which enables the two companies in combination to supply a full range of straight nitrogenous fertilizers. For one thing, the agreements have had no effect on the range of products offered by UKF which, before the agreements were made, was identical to CSV's current range. For another, NSM's range, which was very narrow for several years, being confined to calcium ammonium nitrate, urea and urea solutions (ammonium sulphate production was stopped in 1968), has since been extended by the addition of 33 75 % N ammonium nitrate for the French and British markets and of DAS (dolomite ammonium saltpeter), a product competitive with magnesammon.

Accordingly, subject to a few minor differences, the product ranges offered by the two CSV shareholders broadly coincide. There is no evidence therefore to suggest that either UKF or NSM has abandoned production of this or that product in favour of the other.

Moreover, since the exchanges of products between them relate to products manufactured by both, there is no evidence of any specialization in their respective manufacturing activities.

1. In any event such a specialization arrangement would not make it necessary to exchange information and operate a joint selling scheme ; the example of Esso Chemie, which markets an even narrower range of straight nitrogenous fertilizers in the Netherlands (KAS, urea, nitric acid) and a range of compound fertilizers that is comparable to UKF's, goes to show that it is quite possible for a firm to survive on this market with only a limited product range.

B. Reduction in cost prices

1. The firms also fail in their submission that the specialization and exchanges between manufacturers made it possible to reduce cost prices, notably by reason of economies of scale, for UKF and NSM are still producing separately two virtually identical ranges and exchanging products manufactured by both.

In any event Dutch retailers and users do not benefit from the alleged improvement, since the prices charged on the Dutch market are still the second highest in the Community, exceeded only by German prices.

1. The statement by CSV and its shareholders that Dutch manufacturers are not always willing or able to follow prices charged by their competitors is difficult to accept, for this competition is on the home market, where they have a preponderant position (roughly two thirds of sales) in relation to the other firms, which are smaller and act separately with higher raw material costs (particularly for natural gas) and higher carriage costs.

C. Improved opportunities for planning by manufacturers

1. An improvement in the opportunities for production and distribution planning by the manufacturers does not automatically improve production and distribution themselves, especially where the manufacturers' freedom of action is reduced. Such an improvement must not be assessed only in subjective terms, taking account only of the manufacturers' wishes and not of any unfavourable effects on competition which may result.

UKF and NSM continuously plan and adjust their production solely because they are selling their products jointly and coordinating their business policies.

1. The perfection of market knowledge that the information agreement gives the manufacturers is of benefit to them and to them alone, for buyers are less favourably placed than they would be in the absence of the agreements as the number of firms actually competing on the market is reduced.

D. Improvement in distribution

1. Nor is it possible to accept the submission that the agreements improve the distribution of the relevant goods in the Netherlands by providing for continuity of deliveries, smooth distribution in terms of both time and space and the assurance that demand can be met at a time of slack production.

1. These benefits, like the further benefits in terms of storage and carriage that the firms plead, do not flow from CSV's existence but from the manner in which wholesalers and cooperatives organize their supplies and the distribution of their products.

1. The contracts that CSV enters into with wholesalers and cooperatives in the Netherlands at the beginning of each year - subject to revision or modification throughout the year - could easily be entered into by the manufacturers themselves, for they have sales departments to market their straight nitrogenous fertilizers in the EEC and the USA and intermediate products on the home market.

Moreover the products are stored initially by the manufacturer and later by the wholesalers and cooperatives, but never by CSV itself. The only role that CSV actually seems to play is to organize means of transport from the manufacturer's plant to the storage depots at cooperatives and wholesalers, subsequent carriage from these depots to the ultimate consumer being handled by the cooperatives and wholesalers themselves.

1. Furthermore, the very grouping of orders which, according to CSV, is the reason why continuity of supplies to consumers can be guaranteed, is in fact carried out by wholesalers, cooperatives, and more rarely, retailers. Indeed the role of the wholesalers, cooperatives and retailers is to seek supplies of the volumes they need on the best possible terms from all manufacturers of straight nitrogenous fertilizers, whether or not they are members of CSV, and whether or not they are established in the Netherlands or elsewhere in the EEC, and to handle the physical arrangements for delivery.

The manufacturers' argument that the joint sale of their products through CSV is necessary to the smooth, continuous supply of Dutch agriculture accordingly fails.

1. As regards their deliveries to the Dutch market during the 1973/74 crisis, it has already been seen that CSV did not hesitate to impose quantitative restrictions on its Dutch buyers when it was still exporting outside the EEC, where it could charge more profitable prices.

1. UKF and NSM fail in their submission that joint sales are necessary to the smooth disposal of their output. This is in fact achieved because CSV grants staggered rebates varying according to whether the time for use is near at hand or still well away, so as to induce cooperatives and wholesalers to buy the products when they are cheapest and then store them. Such a system of rebates could easily be operated in independent sales organizations.

E. The importance of cooperatives and wholesalers on the Dutch market

1. The notifying companies fail in their argument that, because there are groupings of wholesalers and cooperatives on the Dutch market, they must have a single sales agency acting for them because, apart from the fact that neither Esso Chemie nor foreign manufacturers feel the need for a single agency to handle their Dutch sales, they are large enough to be safe from any attempt by wholesalers and cooperatives to act against them where, for reasons which the companies have not specified and of which it is difficult to conceive, the latter might seek to persuade them to sell their products jointly, at the same price and on the same terms.

They consequently fail in their argument that if they were to take over CSV's activities themselves this would push up prices for, as has already been seen, they already have their own sales departments, which market more than 54 % of their output.

Moreover CSV, as has already been stated, plays virtually no role in the storage and delivery of the relevant products, and is not involved in financing deliveries either, this being left to the cooperatives and wholesalers.

F. The need to equalize carriage costs

1. Furthermore, the equalization of carriage costs by CSV can scarcely be regarded as sufficient reason for standardizing the choice of products on the Dutch market.

As Esso Chemie has demonstrated, any firm can do this simply by introducing a delivered price system ; it is not sufficient reason to justify the joint sale by UKF and NSM of their products, nor the coordination of business policy and production set up by the two companies. It appears that, without prejudice to the compatibility with Articles 85 and 86 of delivered price systems, the joint application of such a system by a number of firms is in fact merely a logical consequence of the joint sale of their products.

G. Economies in staffing and management

1. The notifying companies fail again in their argument that by working through CSV they have been able to achieve economies in staffing and management, for any benefit that may have resulted from cooperation between their respective sales departments - and this cooperation extends only to straight nitrogenous fertilizers and in any case does not cover sales in other Community countries - cannot be regarded as constituting an appreciable improvement in distribution.

Not only is there no evidence to suggest that CSV, which has a staff more than 100 strong, has lower operating costs than would be incurred by UKF and NSM if their sales departments - which are already handling the sale of straight nitrogenous fertilizers - were to take over this work also, even if they had to be given additional staff to do so. In addition, and above all, users do not receive a fair share of the benefit from the alleged economies, as was seen earlier when the prices charged on the Dutch market were considered.

1. The effects claimed for the agreements by the notifying companies would therefore not seem capable of being regarded as an improvement in distribution, while their benefits are apparently felt by the manufacturers alone, who shield themselves from any competition while at the same time leaving their retailers to handle storage, their customers' delivery and credit.

H. Advantages for the consumer

1. Dutch consumers are not allowed a fair share of the benefit of this system, which has nothing but disadvantages for them, in terms of both quantities and prices, because of the inelasticity and uniformity of supply on the Dutch market.

Contrary to what the notifying companies allege, these effects on Dutch consumers are not to be attributed to the existence of imposed prices (which in reality are merely maximum prices which in no way impede competition between the various manufacturers), nor to the existence of an oligopoly, but to the enormous influence on business in this market of the pooled sale of UKF and NSM output and of the consequent alignment of prices by Esso Chemie and importing companies on those of CSV.

I. Indispensability of the restrictions

1. Furthermore, even if the first two tests of Article 85 (3) were regarded as being satisfied, exemption could not be given to the notified agreements, as the numerous restrictions which flow from them are by no means proved to be indispensable to the attainment of the benefits of the agreement.

1. In particular, Esso Chemie, with only a little more than a quarter of aggregate Dutch sales, can continue to sell in the Netherlands and for export without pooling its sales and without being placed at a competitive disadvantage. And UKF and NSM stopped using CSV's services for exports to other Community countries and the United States without, as they themselves admit, any adverse effect on their market penetration.

Indeed, the two companies state that their exports to those countries are developing quite favourably, with good prospects for future expansion.

1. Consequently, it cannot reasonably be held, in view of their respective sizes - UKF is the largest, and NSM one of the largest manufacturers of nitrogenous fertilizers in the EEC - that it is essential for them to set up an information system concerning their production and to entrust their Dutch and non-Community export sales to a joint selling agency.

1. Since none of the first three tests of Article 85 (3) is satisfied, there is no need to consider the fourth.

1. CSV's proposals for internal reorganization are not capable of altering this assessment of the applicability of Article 85 (3) to the cooperation between UKF and NSM since they- would make no substantial changes to the aim of that cooperation, the way it is operated or its effects on the consumer.

IV. APPLICABILITY OF ARTICLE 3 OF REGULATION No 17

1. The cooperation between UKF and NSM based on the agreements of 11 April 1963, as amended on 23 June 1969 and 2 January 1974, constitutes an infringement of Article 85 (1) by conferring on CSV, of which UKF and NSM are the shareholders, a joint sales agency for marketing the two companies' straight nitrogenous fertilizers in the Netherlands and by their exchange and joint discussion of detailed information concerning production, storage and sales forecasts and figures for each product and destination, including deliveries to other Member States.

1. The parties have recently decided to discontinue the various planning and management committees operating within CSV, but their disappearance affects merely the administrative machinery behind the cooperation, which itself remains intact. The parties have announced that the agreements that have hitherto governed the cooperation arrangements will, by the beginning of the next fertilizer year, be replaced by bilateral agreements between UKF and CSV and between NSM and CSV taking into account solely market conditions but, as the Commission has explained in points 81 to 87, there is no apparent reason to believe that the new arrangements will achieve anything more radical than a relaxation of the existing sales system. The parties themselves remain convinced that their present cooperation is compatible with Article 85. The parties should therefore be apprised of the limits which Article 85 imposes on their cooperation and should be required, in accordance with Article 3 of Regulation No 17, to bring their infrigement to an end,

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