During the last two weeks of December 1975, Mr Full visited Mr Schreiber. At the meeting, Mr Full described the terms granted by Melchers for retail business and handed Mr Schreiber Melchers' current price list, that is to say price list No 8/75. Mr Full met Mr Schreiber a second time in January 1976 and on that occasion referred to the new terms applied by Melchers as from February 1976 by virtue of price list No 1/76. The latter list contained inter alia a discount of 3% for wholesalers.

Mr Schreiber kept notes regarding the two meetings with Mr Full. The content of those notes was clarified by Mr Schreiber at the hearing of witnesses on 18 September 1981. The question whether Mr Full gave Mr Schreiber the impression that Melchers had accepted Gruoner as a customer is disputed by the parties (see below, paragraph 20).

On the same day Mr Weber informed Mr Iffli by telephone that the major part of his order for Pioneer equipment had already been sent to Rommelshausen and he sent him a letter listing those of the articles ordered by Mr Iffli which he said Melchers had already dispatched to Gruoner, and also those which would be reserved for Mr Iffli at the importer's warehouse in Hamburg. The articles listed by Mr Weber as having already been dispatched to Rommelshausen or as having been reserved at Hamburg correspond to those ordered by Mr Schreiber on 20 January 1976.

Mr Schreiber stated at the hearing of witnesses of 18 September 1981 that he had informed Mr Weber of the quantities of Pioneer equipment which lie had ordered from Melchers on 20 January 1976. Mr Schreiber had not however informed Mr Weber that some of the goods ordered had already been dispatched by Melchers. According to Mr Schreiber, Mr Weber must have written his letter to Mr Iff li on 20 January 1976 in order not to lose the latter's order.

Mr Weber explained at the hearing of witnesses that the information regarding the delivery of Pioneer equipment which he had passed on to Mr Iffli in his letter of 20 January 1976 came from Mr Schreiber. Thinking that that information was correct, he had even prepared the export invoices and other documents relating to the transaction.

On 19 January 1976 Mr Iffli made an import declaration to the French customs authorities for Pioneer equipment on the basis of pro forma invoices and on 21 and 22 January 1976 he obtained import licences. Pioneer was advised of this by MDF and passed on the information to Melchers.

Telephone conversation with Mr von Bonin, sales manager of Pioneer's agents in Germany, amounts to the following:

Pioneer's European head office in Antwerp already knows that a licence has been issued to import Pioneer equipment. The German representative was instructed not to supply Jung under any circumstances. We can be supplied only if we undertake not to export.

Melchers consequently refuses to make delivery prior to any such undertaking.

In a letter dated 29 January 1976, Mr Weber informed Mr Iffli of the abovementioned telephone conversation which is supposed to have taken place between Mr Schreiber and Mr von Bonin.

The question whether that conversation between Mr von Bonin and Mr Schreiber actually took place is disputed by the parties (see below, paragraph 23).

On 18 February 1976, Mr Schreiber sent Mr Weber the following telex message:

The meeting with the management of Melchers in Bremen concerning the sale of Pioneer equipment has enabled the following matters to be clarified:

On 19 February 1976 Mr Schreiber wrote a memorandum regarding the Rommelshausen meeting in which he stated inter alia: Following talks with C. Melchers & Co.... any obstacles to cooperation between us have now been removed. The connection between the telex message and the meeting and the meaning of the memorandum are disputed by the parties (see below, paragraph 24).

Gruoner placed a further order with Melchers in the following weeks. Gruoner became Melchers' most important single customer.

According to the Commission, Mr Schreiber did not obtain that impression from his discussions with Mr Full, because he sent an order to Melchers on 20 January 1976.

At the hearing of witnesses on 18 September 1981, Mr Schreiber explained that Melchers had not drawn up conditions for wholesalers at the time of his first meeting with Mr Full. The two wholesalers who were being supplied at the time by Melchers, namely Brommelhaupt and Weide, benefited from the most favourable terms applied to the retail trade. As regards the remark bonus für GH (bonus for wholesalers) appearing in his handwritten notes on the first meeting with Mr Full, Mr Schreiber stated: A transitional solution had apparently been worked out for the wholesale trade; the practice was probably the same in the case of Brömmelhaupt. Mr Schreiber was unable to give further details on the meaning of his remark.

Mr Schreiber further explained that the second meeting had taken place between Mr Full and himself before he had forwarded his order to Melchers on 20 January 1976. Mr Schreiber finally explained that he had considered the information received from Mr Full to constitute an offer by Mr Full and that the offer he himself had made to Iffli was based solely on the information received at the first meeting, whilst the order placed with Melchers referred to the new 1976 prices, the existence of which had been notified to him at the second meeting.

Mr Full stated at the hearing of witnesses that he had told Mr Schreiber at their first meeting that Melchers had not drawn up conditions for wholesalers. Nor did such conditions exist at the time of the second meeting between Mr Schreiber and Mr Full, which took place, according to the latter, after the Gruoner order of 20 January 1976 (see below, paragraph 23).

Moreover, the parties are not in agreement about the remark Parallel imports must be prevented. Belgium!, appearing in Mr Schreiber's handwritten notes.

According to the Commission, that remark shows that the question of parallel exports from Germany had already been raised during the discussions between Mr Full and Mr Schreiber.

Melchers points out that the wish to prevent parallel deliveries may have been expressed by Mr Schreiber with a view to preventing parallel imports into Germany from Belgium, which at that time was the principal source of parallel imports on the continent, in particular of equipment coming from Great Britain. According to Melchers, the same preoccupation may underlie the words no reimportation appearing in Mr Mauser's memorandum of 16 December 1975 concerning Mr Iffli's visit to Gruoner on 12 December 1975.

At the bearing of witnesses, Mr Schreiber confirmed the interpretation given by Melchers to the abovementioned phrase contained in his handwritten notes. As regards Mr Mauser's remark, Mr Schreiber stated that he assumed Mr Hauser meant that he had had discussions with Mr Iffli on the question whether goods purchased by the latter would actually be marketed in France or whether they might reappear on the German market.

Mr Schreiber also explained that on 6 February 1976, when Mr Weber sent a telex message to Messrs Schmidt and Hauser of Gruoner, he discussed with Mr Full the question of parallel imports into France of Pioneer products coming from Germany. It was Mr Full who had given him the information which lie noted on Mr Weber's telex message (see above, paragraph 8, and below, paragraph 24).

Mr Full stated at the hearing of witnesses that it was unlikely that he had given that information to Mr Schreiber.

In Melchers'view, it is difficult to believe that Mr Iffli's order was not acceptable whilst Mr Schreiber's reduced order was. Melchers prefers the view that the reasons for which Mr Schreiber reduced Mr Iffli's order are unclear.

In the statement which he made on 18 May 1977 to the Commission's inspectors, Mr Schreiber explained that he had reduced Mr Iffli's order in the belief that its composition would give Melchers the impression that it was intended for re-export to France, which might give rise to difficulties in relations with Melchers. At the hearing of witnesses on 18 September 1981, he adhered to that explanation, whilst at the same time asserting that he had reduced Mr Iffli's order because he was convinced that Melchers did not have the goods ordered by Iffli in stock.

According to the Commission, all the products ordered by Gruoner could have been dispatched by 10 February 1976 at the latest; besides, Melchers could have obtained supplies not only from Pioneer in Antwerp but also from Japan.

The Commission regards the telex message of 23 January 1976 as an acceptance of the order of 20 January. In its opinion it is unlikely that a student on her second day at work would have sent a telex message without having been told to do so. In' any event, it is irrelevant whether or not Melchers was in breach of contract in the commercial sense; what is important is the fact that Melchers regarded Gruoner's telex message of 20 January as a normal order until 23 January but subsequently refused to deliver.

Mr Schreiber explained, at the hearing of witnesses on 18 September 1981, that he understood the telex message of 23 January 1976 as an acceptance of his order since that telex message went so far as to refer to the carrier.

Miss Hammer explained at the hearing of witnesses that she merely intended to acknowledge receipt of the telex message of 23 January 1976. She was unable to recall whether when the telex message from Mr Schreiber was given to her she had been asked to acknowledge receipt or whether she had done so on her own initiative. Miss Hammer further stated that she had not seen Mr Schreiber's order of 20 January 1976 before sending the telex message of 23 January 1976.

The Commission maintains that Mr von Bonin stated during a telephone conversation between him and Mr Schreiber on or about 27 January 1976 that Melchers was refusing to deliver because it had not received an assurance that the equipment ordered would not be exported. The Commission relies in particular on the telex message which Mr Schreiber sent to Mr Weber on 28 January 1976 (see above, paragraph 7). The Commission further recalls that Melchers' lawyer wrote, in his reply to the statement of objections: Instead of contacting Mr Full, Mr Schreiber telephoned Mr von Bonin. Moreover, Melchers' lawyer recognized, at the hearing held at the Commission at Brussels on 21 November 1978, that Mr von Bonin had telephoned Gruoner, probably on 27 January 1976.

According to Melchers, Mr von Bonin spoke to Mr Schreiber for the first time at the meeting of 11 February 1976 at Rommelshausen. All contacts between Melchers and Gruoner before that meeting in fact took place solely through the intermediary of Mr Full.

Mr von Bonin confirmed the foregoing at the hearing of witnesses. After receiving the order, Mr Full was instructed to explain to Gruoner that it was not possible to fulfil such an order at that time.

Mr Schreiber explained on that occasion that he had lied when he told Mr Weber and the Commission inspectors that Mr von Bonin had told him that Melchers refused to deliver because it had not received an assurance that the Pioneer equipment would not be exported. He had invented that explanation after discovering that the prices quoted by him to Mr Iffli were too low and because Mr Iffli threatened to institute legal proceedings against Gruoner. On the other hand, Mr Schreiber maintained that he had called Mr von Bonin, but that the latter had merely explained during the conversation that Melchers had not yet even decided whether they wanted to supply Gruoner.

Mr Full explained in a written statement of 22 February 1980 that Mr von Bonin told him on 20 January 1976 that Gruoner's order: ... cannot be performed by reason of a shortage of stock. Even partial deliveries would lead to insurmountable difficulties for Melchers because the specialized retail trade which we supply would then have to wait. I have been instructed to contact Mr Schreiber and to explain the situation to him, drawing attention to the fact that no business relations yet exist. Mr Full declared that during a visit at the end of January 1976 Mr Schreiber told him that his order was intended for France. Mr Full then declared, regarding the latter visit: I tried to explain to Mr Schreiber that a delivery could not take place before a general policy decision (in principle to supply the wholesale trade) was adopted in Bremen and, secondly, that an order of that size could not be performed at short notice ... My warehouse at Karlsruhe ... was almost empty at that time ... Our warehouse at Bremen still had to deal with considerable delays on orders from our specialized German retailers. I told Mr Schreiber that partial deliveries could not be made either if the question whether or not to supply Gruoner was answered in the affirmative within a short period because of the shortage of goods at our disposal; we had to use them in the first place to supply the German market which interested us. We expected the same attitude on the part of Gruoner in the case of future transactions.

At the hearing of witnesses Mr Full explained the meaning of the latter phrase as follows: I also expected therefore that Gruoner would supply the German market in accordance with our instructions. I did not write that we also expected Gruoner not to export...

For its statement that the Gruoner order was discussed at the meeting in Rommelshausen, the Commission relies in particular on the telex message from Mr Schreiber to Mr Weber of 18 February 1976 in which Mr Schreiber summarizes the meeting with the management of ... Melchers ... and on the first sentence of Mr Schreiber's memorandum of 19 February 1976 regarding that meeting, which reads as follows: Any obstacles to cooperation between us have now been removed. The Commission compares that sentence with Mr Schreiber's handwritten notes regarding the meetings with Mr Full and concludes that the principal question remaining to be settled between Melchers and Gruoner at the time of the Rommelshausen meeting was that of exports, since all other questions had been settled during their meetings. The Commission emphasizes that the execution of Gruoner's order in no way required the establishment of regular commercial relations between Melchers and Gruoner. It cannot therefore accept Melchers' argument that the word obstacles referred to the establishment of regular commercial relations. The Commission also refers to Melchers' reply to the statement of objections in which Melchers admits that Gruoner's order was discussed at the Rommelshausen meeting.

Melchers claims that the Rommelshausen meeting was not organized for the purpose of discussing Gruoner's order but solely in order to negotiate the basic conditions of the business relationship between Gruoner and Melchers, which confirms that Gruoner's order was placed at a time when those conditions had not yet been established.

Melchers relies upon Mr Schreiber's memorandum of 19 February 1976. It is apparent from the first line thereof that the word obstacles referred to the obstacles arising from the fact that there was still no real agreement between the parties on prices, delivery, warranty etc. According to Melchers, Mr Schreiber's telex message of 18 February 1976 whereby he passed on to Mr Weber information apparently received from Melchers concerning re-exports to Germany does not support the Commission's view, since it was sent in response to a letter and to two telex messages from Mr Weber, of 3 and 6 February 1976, and does not refer specifically to the Rommelshausen meeting.

According to Mr Schreiber's explanations at the hearing of witnesses on 18 September 1981 his handwritten notes do not relate to the Rommelshausen metting. Mr Schreiber also said at that hearing that Mr Iffli's order was not discussed at the Rommelshausen meeting. He therefore admitted that the statement made by him on 18 March 1977 to the Commission's inspectors was not correct in so far as he stated with regard to the Rommelshausen meeting that he invited Melchers to Rommelshausen in order to discuss the latter's refusal to sell. Mr Schreiber also admitted that the information on sales by Melchers to undertakings which exported to France, given by him to Mr Weber in a telex message of 18 February 1976, did not originate from the Rommelshausen meeting but from a meeting between him and Mr Full on 6 February 1976, following the telex message from Mr Weber to Messrs Schmidt and Hauser of Gruoner of the same day (see above, paragraphs 8 and 20).

Mr von Bonin also stated at the bearing of witnesses that Mr Iffli's order was not discussed at the Rommelshausen meeting.

In support of that claim, Melchers relies upon the statement made by Mr Schreiber on 5 September 1980 to the effect that: It is true that we did not have the price list of Melchers of Bremen, since at that time Melchers did not contemplate making deliveries to the wholesale trade and we therefore had no business relations with Melchers. We only had the Melchers price list for 1975, given to us by the representative Mr Full, and we knew from conversations with Mr Full what discounts applied to the retail trade. We wrongly assumed that repayment of the VAT would entail a price reduction and would not, for example, have a neutral effect on prices.

Melchers attempted to reconstruct the calculation made by Mr Schreiber.

According to the Commission, it is unlikely that Mr Schreiber made the alleged VAT mistake.

It points out in that respect that the application to loudspeakers of the method of calculation which, according to Melchers, Mr Schreiber followed leads to the finding that he had not made any mistake in the case of loudspeakers. In the Commission's view, it is inconceivable that Mr Schreiber should have made a miscalculation regarding only some products and not all of them. The Commission adds that Mr Iffli would still have been interested in Pioneer equipment at prices 11% higher than those quoted by Gruoner, since they would still have been between 8.5% and 32% lower than those applied by MDF. Likewise, if Melchers had granted the additional discounts of 11 % it would have secured a considerable profit on the transaction since its gross profit margin was between 41% and 74%. The method of calculation allegedly followed by Mr Schreiber was also strange in so far as it involved the deduction first of the discounts and then of value-added tax. The calculation of discounts and profit margins should in fact have been made on the net prices excluding value-added tax, otherwise the figure arrived at would include discounts on the tax itself, which would be absurd. Consequently, if Mr Schreiber really thought that value-added tax was included in the prices shown on Melcher's price list — which is very improbable in view of the fact that that list very clearly states at the bottom of page 2 that value-added tax is not included — he would first have deducted the 11% for value-added tax and only then would he have brought the discounts and profit margin into his calculation.

The deduction which, according to Melchers, was due to Mr Schreiber's alleged mistake is, according to the Commission, due to another discount. It refers in that respect to Mr Schreiber's handwritten notes from which it is apparent that Melchers offered bulk discounts and discounts for sales to wholesalers, which applied to all products, with the specific exception of loudspeakers and headphones.

Mr Schreiber confirmed at the hearing of witnesses on 18 September 1981 that he wrongly deducted 11% in respect of German value-added tax from the Melchers prices. When reconstructing his calculations before the Court, he did not however deduct 11% from Melcher's prices less the discounts, as Melchers did, but rather he deducted 11% from those prices without discount. Furthermore, he added a profit of 5.5%, in accordance with Mr Hauser's memorandum of 16 December 1975 (see above, subparagraph (a)), whereas Melchers worked on the basis of a profit of 6%. Nor did he deduct 4% in respect of annual bonus, as Melchers did. By following this procedure, he nevertheless did not arrive at the figure appearing in his quotation to Iffli. For the SA-5300 amplifier, he in fact arrived at the price of DM 236.20 (the price offered to Iffli was DM 234.90). For the CSE 220 loudspeakers, he arrived at the price of DM 81.79 (the price quoted to Iffli was DM 84.30). He emphasized that he also made an error regarding value-added tax in the case of the loudspeakers.

In reply to a question put by the Court, Mr Schreiber was unable to explain why he deducted 11/100and not 11/111, having regard to the fact that the rate of value-added tax, namely 11%, is to be calculated on the price net of value-added tax.

According to the explanations given by Mr Schreiber on 18 September 1981, the reason why Gruoner did not deliver the goods ordered by Iffli was that because of the VAT error it was no longer able to deliver at the prices quoted to Iffli on 31 December 1975.

In the opinion of the Commission, that explanation cannot be correct in view of the fact that under its agreement with Pioneer Melchers was obliged to provide after-sales services only in Germany.

Mr Full explained at the bearing of witnesses that he took the initiative in asking EVB to confirm that it would not sell equipment in the Community, in order to ensure that EVB respected the oral undertaking which it had given him to export the goods to Turkey. Mr Full took that initiative because the re-importation into Germany of goods exported to other countries in the common market had in the past caused considerable problems for Melchers. It was unlikely that an exporter who had completed the formalities for importation into Turkey would have the goods brought back into the Community. Mr Full further stated that he had discussed the question of reimportations with Mr von Bonin. He did not recall having discussed that question with Mr Schreiber and thought that it was unlikely that he would have done so.

The Commission then instructed Mackintosh Consultants Company of London to draw up a report on the volume of the hi-fi market in the Member States in question. On the basis of that report and of the two applicant's turnover in Pioneer products, the Commission estimated the French hi-fi market share in 1976 at 11.5% and the British market share at 10.5%. For that reason, the Commission adhered, in paragraph 25 of its decision, to the figures given in the statement of objections.

Part of the abovementioned report was made available to the applicants on 6 March 1980, that is to say after the adoption of the decision; the rest of the report was made available to Pioneer GB and MDF on 26 and 27 January 1982 respectively. They claim that because the report was disclosed to them at such a late stage their right to a proper hearing was infringed.

Excluding music centres from the hi-fi market, which gave a distorted picture of that market;

Pioneer GB considers that its share in the United Kingdom hi-fi market was 3.18 % in 1976. MDF considers that the share of Pioneer products in the French hi-fi market in 1976 was 3.38%, on the basis of the SIERE survey. According to the BREF survey, which relates to the French market in 1975, that share was 4.33%.

The report drawn up by Mackintosh Consultants Co., upon which the Commission relies, concerns the market for separate, items of hi-fi equipment, namely loudspeakers, turntables, cassette recorders, tuners and amplifiers, expressed in terms of ex-factory prices. The report values that market in 1976 at UKL 70 million in the United Kingdom and FF 670 million in France.

As regards the turnover of Pioneer GB, the Commission takes into account the total turnover in Pioneer products in 1976, namely UKL 7.3 million:

For its part, Pioneer GB considers that there must be deducted from the above amount the turnover in products which are not hi-fi products, namely music centres, inexpensive units and car radios. On that basis, Pioneer puts its turnover in the United Kingdom in 1976 at UKL 3.3 million. To make those figures, which are calculated on the basis of the prices charged to retailers, comparable with the figures given by it for the total hi-fi market in the United Kingdom, expressed in terms of current selling prices, Pioneer GB increases them by 125 % and thus arrives at a turnover of UKL 4.13 million.

As regards the size of the hi-fi market, Pioneer GB relies upon the 1978 Mackintosh Yearbook of European Electronics Data, according to which the turnover in hi-fi equipment in the United Kingdom in 1976 was UKL 130 million. The Mackintosh Yearbook is based on current selling prices.

That figure, relates to hi-fi units and tape-recorders. It includes complete units, plus amplifiers sold separately, tuners, amplifiers and the related furniture, but not car radios, batteries or radios, radio-recorders, radio-receivers or portable record-players. Pioneer GB admits that the figure quoted' above includes some mid-fi products, but adds that the definition upon which it is based is the definition used in the published figures which is closest to that put forward by Pioneer GB in 1976.

As regards MDF's turnover, the Commission adopts the figure of FF 77 million.

MDF adopts the figure of FF 50660000, which, according to it, constitutes its turnover in Pioneer hi-fi products.

As regards the size of the French market in hi-fi equipment, MDF relies in the first place on the SIERE study, which valued that market at more than UKL 1500 million in 1976. That figure includes the 20% of music centres which are capable of being classified as hi-fi. The SIERE survey includes within the hi-fi market the separate component units (tuners, loudspeakers, turntables, cassette tape-recorders and reel-to-reel tape decks) and also stereo music centres, amplifiers and preamplifiers, and amplifier-tuners, provided that those units comply with DIN 45-500. MDF also relies on the BREF survey, which includes magnetic tapes, cassettes and music centres.

Pioneer also considers that the Commission overestimated the market shares of Pioneer products. In its opinion, the fine should therefore be reduced.

Pioneer (Europe) relies upon similar arguments to demonstrate that the concerted practice did not extend over the period alleged in the decision (see also paragraph IX. 10, below).

Pioneer GB considers that its right to a proper hearing has been infringed because the Commission disclosed only a wholly irrelevant part of Mr Mason's statement before the adoption of the decision. In fact, by letter of 9 October 1978 the Commission disclosed paragraphs 1 and 2 of the statement and the signature. The relevant paragraphs, namely numbers 3, 4 and 5, were disclosed to Pioneer GB by Comet on or about 21 November 1978 (the date of the hearing at the Commission). The Commission disclosed the full text only in its letter to the Court of 6 April 1981.

Pioneer (Europe) relies upon the same argument.

Pioneer GB also considers that its right to a proper hearing has been infringed because the report which the Commission's inspector drew up regarding his visit to Comet and the other evidence, including Comet's invoices upon which the Commission relied for its statement that Comet had ceased to export following Mr Todd's letter, were not disclosed to it before the adoption of the decision.

According to the Commission, Mr Mason's remarks cannot be used to establish that the absence of Pioneer products in Comet's exports was attributable solely to commercial reasons because those reasons would have applied equally to the other brands of hi-fi equipment which Comet continued to export.

According to the Commission, those are, with certain exceptions amounting to UKL 13678, all the exports which Audiotronic made to undertakings other than Allwave.

The handwritten notes which the inspector in question took during his meeting with Messrs Smith and Keighley were disclosed for the first time in the Commission's letters to the Court dated 6 April 1981 and 11 June 1981.

Pioneer and Pioneer GB ask the Court to declare the statements of Messrs Smith and Keighley inadmissible as evidence since they did not make written statements, the inspector's notes were not disclosed until after service of the rejoinder and they are not dated, signed or approved by the person to whom they are attributed. In the event of the Court's considering that the notes in question are admissible as evidence, Pioneer submits that their content does not support the Commission's allegations referred to above.

The Commission considers that the statements of Messrs Smith and Keighley are admissible as evidence and that they support the conclusions drawn from them.

Pioneer GB also claims that its right to a proper hearing was infringed in so far as the abovemendoned notes, the report of the Commission's inspector on his visit to Audiotronic and all the other evidence on which the Commission relies for its allegation that Audiotronic stopped exporting Pioneer equipment following Mr Todd's letter were not disclosed to it before the adoption of the decision. Pioneer GB argues finally that its right to a proper hearing was infringed in so far as the information to the effect that Audiotroņic received orders for UKL 150000 but only executed orders for UKL 55000 appears for the first time in the decision.

A large number of questions were discussed at the Antwerp meeting. Mr Setton reiterated his complaints concerning parallel imports into France. Mr Todd advised him to reduce his prices but there is nothing to suggest that there was any agreement between Pioneer, MDF and Pioneer GB on that occasion.

Mr Todd wrote his letters to Audiotronic and Comet in the hope that Mr Setton would leave him alone and not as a result of an agreement with Pioneer and MDF. Thus there was not the necessary interdependence between that act and the Antwerp meeting for there to have been a concerted practice within the meaning of Article 85 (1) of the Treaty.

The Commission refers to the judgment of 29 October 1980 in Joined Cases 209 and 215 and 218/78 (Van Landewyck and Others v Commission [1980] ECR 3125) in which the Court held that the Commission is not a tribunal within the meaning of the abovemcntioned article.

The Commission replies that in refusing to disclose the aforesaid opinion it was merely applying Article 10 (6) of Regulation No 17, which provides that such an opinion shall not be made public. The purpose of that provision is to ensure the impartiality and independence of the members of the committee.

Pioneer (Europe) puts forward the same argument.

MDF also submits that, in so far as the average MDF prices calculated by the Commission in the tables annexed to its defence are not weighted according to the volume of sales, the calculations are fundamentally distorted and that the Commission's figures concerning the differences between the prices quotes by Gruoner to Mr Iffli and MDF's prices do not take account either of the VAT and other charges affecting the German price or of the bulk discounts granted in certain cases by MDF.

Pioneer (Europe) also uses the latter argument. In the submissions lodged by Pioneer during the written procedure it expressed the view that the Commission wrongly took as a basis the unit prices invoiced by the distributors rather than the prices applicable to sales in large quantities. After the protracted exchange of pleadings which followed the preparatory meeting of 3 December 1981, Pioneer admitted that it is very difficult to evaluate the prices applicable to such sales on a comparable basis and that the trend remains the same in both cases.

Pioneer further points out that the tables drawn up by the Commission do not show the price changes for 1977, whereas both MDF and Shriro changed their prices during that period.

Finally, MDF points out that Shriro's prices were excessively low and could not therefore be regarded as a valid basis of comparison and that the French prices indicated by the Commission also included a profit margin for the subdistributors, who very often sell at a price considerably lower than the catalogue price.

The Commission points out that the order for DM 550000 which Melchers received from Gruoner represented 2.5% of Melchers' annual turnover in Pioneer products and was therefore large enough to warrant the view that the concerted practice had a direct influence on trade between Member States. The indirect and potential influence of the concerted practice on trade between Member States may be envisaged with a sufficient degree of probability, as indicated in the judgment of 9 July 1969 (already cited under VI.C.7); Mr Iffli obtained pro forma invoices from Jung for a further sum of DM 1300000 and he told the Commission's inspectors that if he had been able to obtain supplies freely at the prices quoted by Gruoner, he would within a few months have had a turnover in Pioneer equipment of approximately FF 5 million. Melchers offered Pioneer products to Gruoner at about 25% below its normal list prices.

The Commission relies upon the dicta of the Court in the judgment of 13 February 1979 in Case 85/76 Hoffmann-La Roche v Commission [1979] ECR 461) and in the Van Landewyck judgment (cited in paragraph 4).

In reply the Commission states that notification constitutes a condition sine qua non for the applicability of the abovementioned provision. Moreover, exemption would not have been possible even if the practice had been notified.

The statement which Mr Setton made during the hearing at the Commission to the effect that the meeting had been organized in order to discuss music centres;

The fact that Mr Todd wrote to Audiotronic and Comet stating that he had been summoned to Antwerp to discuss parallel imports (see above, paragraph VI.A.2) was intended only to reinforce his request.

If the Antwerp meeting had been convened in order to discuss parallel imports, the Italian distributor, who had also complained to Pioneer about such imports, and the Belgian distributor (Belgium was one of the main sources of parallel imports into France) would have been invited, whilst the Swiss distributor, who had no interest in parallel imports, would not have been invited.

Pioneer and Pioneer GB also claim that the statement of objections did not indicate that the purpose of the Antwerp meeting was to discuss parallel imports or that Pioneer was invited to explain why there was no written mention of the Antwerp meeting in its records. According to Pioneer and Pioneer GB, that procedural irregularity ought to lead to the annulment of the decision.

The absence of written records is perfectly normal for ad hoc meetings of distributors, such as the one in question. For regular meetings, the participants receive a written invitation and a copy of the agenda; for ad hoc meetings they normally receive no written invitation and no agenda. Moreover, Pioneer does not keep minutes and does not retain notes concerning what it said at a meeting, whether it be regular or ad hoc.

Pioneer accounts for those documents by the fact that, although it is not usual to send invitations or agendas for ad hoc meetings, that procedure may have been followed on certain occasions. As regards the meeting concerning Technics, it was convened on the occasion of a regular meeting. Since a written invitation had been sent to the people invited to participate in the regular meeting and since it was understood that an ad hoc meeting would be held at the same time and place, it was quite normal for the invitation to that meeting also to be sent in writing. Moreover, each distributor had been given a task before that meeting, namely to monitor the activities of Technics on its territory.

Pioneer concludes that the circumstances surrounding the Antwerp meeting do not disclose any illegality. Indeed it cannot be maintained that the mere discussion of a problem is tantamount to an agreement that the problem shall be resolved by recourse to illegal means.

There exists no proof that at the time of the Antwerp meeting Pioneer did more than listen to Mr Setton's complaints and advise him to reduce his prices. In fact, all the participants in that meeting deny that concerted action was suggested by Pioneer, that Pioneer indicated its consent to such action, that it exerted pressure on distributors, or even that it requested their assistance for the purpose of restraining parallel imports.

There is nothing to prove that Pioneer contributed to the conclusion of the gentlemen's agreement between Mr Todd and Mr Şetton (see above, paragraph VI.8).

Pioneer cannot agree with the Commission's statement concerning its power to control the activities of its distributors. It points out that it is not even strong enough to compel its distributors in France and the United Kingdom to accept a written contract.

As regards the question whether Pioneer's conduct constituted participation in a concerted practice, the Commission does not accept that Pioneer did no more than passively allow its distributors to talk to each other about parallel imports. Pioneer had the power to ensure that the distributors did everything they could to prevent parallel imports. It was in order to discuss that problem that Pioneer called the meeting and organized the discussions.

In the present case, the concertation, which is the first essential ingredient of a concerted practice, was the contract between the persons involved in the Antwerp meeting, the purpose of which was to influence the general behaviour of the participants. Pioneer took an active part in that meeting. The practical behaviour of the participants, which constitutes the second prerequisite for a concerted practice, is clear from the facts: the participants created conditions of competition which do not correspond to the normal market conditions. In support of its argument, the Commission cites the judgments of the Court of 14 February 1972 in Case 48/69 (ICI v Commission [1972] ECR 618, paragraphs 64 to 57) and of 16 December 1975 in Joined Cases 40 to 48, 50, 54 to 56, 111, 113 and 114/72 (Suiker Unic and Others v Commission [1975] ECR 1663, paragraphs 26, 173 and 174).

According to MDF and -Pioneer, the mere fact that MDF complained, which is a unilateral act, cannot constitute the beginning of a concerted practice, particularly since Pioneer replied to those complaints by saying that it could do nothing. Thus that practice could not have begun before 19 and 20 January 1976, on the occasion of the Antwerp meeting.

The Commission states in reply that MDF complained to Pioneer of the existence of parallel imports into France at the end of 1975 and that Pioneer acknowledges that it sent the information on parallel imports to Melchers at that time.

In addition, it is apparent from paragraphs 43 to 46 of the decision that at the beginning of December 1975, Office pour le Développement de l'Acoustique Appliquée Sail, of Rungis, near Paris, 95% of whose capital is held by MDF, carried out test purchases to prove the existence of parallel imports from the United Kingdom. That fact, which is not denied by Pioneer, shows that MDF and Pioneer had prior knowledge of the existence of parallel imports and that MDF had attempted to prevent them. It also shows that in 1975 there was already a concerted practice intended to prevent such imports and that MDF knew that as soon as it had proof that the imports had taken place it would be able to use that proof to force Shriro to act.

According to Pioneer, such a conceited practice designed to prevent parallel imports continues only for as long as the parties take measures to give effect to it.

Pioneer and Melchers point out that the alleged concerted practice between MDF, Pioneer and Melchers was perpetrated on 27 January 1976 when Mr von Bonin told Mr Schreiber that Melchers would not deliver the goods; it therefore lasted for a maximum of eight days.

In the event of the Court's accepting the Commission's view summarized in paragraph 10, Pioneer states that even after MDF increased its prices in April 1976 the difference between MDF's prices and those of Melchers was no more attractive than in January and, in any case, was insufficient to make parallel imports into France from Germany profitable (see also paragraphs 12 to 14 below and paragrph VII. 7, above).

The Commission states in that regard that if, for the purposes of Pioneer's calculation regarding April 1976, no account is taken of the three models for which MDF's prices were temporarily lower than those of Melchers, MDF's average prices for the remaining models were 13.33% higher than the corresponding prices of Melchers, which, according to the Commission, represents a sufficient difference to make parallel imports profitable.

Finally, the applicants claim that no proof exists that the alleged concerted practice between MDF, Shriro and Pioneer lasted for two years (see above, paragraph VI.6.8—12). Pioneer adds that in August and September 1976, the price differences had fallen to the point where parallel imports were no longer profitable (see also paragraphs 12 to 14, below, and paragraph VII.7, above).

The applicants also allege that the Commission infringed Article 4 of Regulation No 99/63 of the Commission of 25 July 1963 on the hearings provided for in Article 19 (1) and (2) of Regulation No 17 (Official Journal, English Special Edition 1963-64, p. 47), inasmuch as the duration of the infringements indicated in the statement of objections was shorter than that on which the decision is based.

The profit which Audiotronic and Comet achieved on sales in the United Kingdom was higher than the profit which they would have achieved by selling to a French parallel importer;

MDF stresses in particular that the French purchasers of products deriving from parallel imports enjoyed certain benefits offered by it, MDF, which did not refuse them its after-sales service.

The Commission replies that, according to the information available to it, that is not true.

The Commission considers that the French consumers were entitled to choose to pay either a high price and thus benefit from service and warranties or a lower price and thus risk having to pay a little more for any service and repairs which might be necessary later.

The Commission also submits that transport costs are very low in relation to the value of hi-fi products and that the profit margin of the parallel importer in question, Euro-Electro, was minimal.

The volume of parallel imports from the United Kingdom did not change;

In reply, the Commission states that prohibitions imposed on distributors also affect competition between brands.

The Commission replies that a distributor may wish to prevent exports in the expectation that he may later wish to prevent parallel imports himself, and that it is always beneficial for an undertaking to allow its distributors stable profit margins.