“a judge should give his reasons in sufficient detail to show the Court of Appeal the principles on which he has acted and the reasons that have led him to his decision. They need not be elaborate. I cannot stress too strongly that there is no duty on a judge, in giving his reasons, to deal with every argument presented by counsel in support of his case. It is sufficient if what he says shows the parties, and if need be, the Court of Appeal the basis on which he has acted … (see Sachs LJ in Knight v. Clifton[1971] Ch 700 at 721).”
“(1) Subject to section 3, agreements between undertakings, decisions by associations of undertakings or concerted practices which- (a) may affect trade within the United Kingdom, and (b) have as their object or effect the prevention, restriction or distortion of competition within the United Kingdom, are prohibited unless they are exempt in accordance with the provisions of this Part. (2) Subsection (1) applies, in particular, to agreements, decisions or practices which- (a) directly or indirectly fix purchase or selling prices or any other trading conditions;”
“(1) In any of the following cases, the OFT may conduct an investigation. (2) The first case is where there are reasonable grounds for suspecting that there is an agreement which- (a) may affect trade within the United Kingdom; and (b) has as its object or effect the prevention, restriction or distortion of competition within the United Kingdom.” (a) may affect trade within the United Kingdom; and (b) has as its object or effect the prevention, restriction or distortion of competition within the United Kingdom.”
“(1) On making a decision that an agreement has infringed the Chapter I prohibition or that it has infringed the prohibition in Article 81(1), the OFT may require an undertaking which is a party to the agreement to pay the OFT a penalty in respect of the infringement. … (3) The OFT may impose a penalty on an undertaking under subsection (1) or (2) only if the OFT is satisfied that the infringement has been committed intentionally or negligently by the undertaking. … (8) No penalty fixed by the OFT under this section may exceed 10% of the turnover of the undertaking (determined in accordance with such provisions as may be specified in an order made by the Secretary of State).”
“(1) The OFT must prepare and publish guidance as to the appropriate amount of any penalty under this Part. … (4) No guidance is to be published under this section without the approval of the Secretary of State. … (8) When setting the amount of a penalty under this Part, the OFT must have regard to the guidance for the time being in force under this section. (9) If a penalty or a fine has been imposed by the Commission, or by a court or other body in another Member State, in respect of an agreement or conduct, the OFT, an appeal tribunal or the appropriate court must take that penalty or fine into account when setting the amount of a penalty under this Part in relation to that agreement or conduct.
“(1) Any party to an agreement in respect of which the OFT has made a decision may appeal to the Tribunal against, or with respect to, the decision. …… (3) In this section “decision” means a decision of the OFT- (a) as to whether the Chapter I prohibition has been infringed, … (i) as to the imposition of any penalty under section 36 or as to the amount of any such penalty,” (a) as to whether the Chapter I prohibition has been infringed, … (i) as to the imposition of any penalty under section 36 or as to the amount of any such penalty,”
“(1) An appeal lies to the appropriate court- (a) from a decision of the Tribunal as to the amount of a penalty under section 36; … (c) on a point of law arising from any other decision of the Tribunal on an appeal under section 46 or 47.”
“It follows that the concept of an agreement within the meaning of Article 85(1) of the Treaty, as interpreted by the case-law, centres around the existence of a concurrence of wills between at least two parties, the form in which it is manifested being unimportant so long as it constitutes the faithful expression of the parties’ intention.”
“That case-law shows that a distinction should be drawn between cases in which an undertaking has adopted a genuinely unilateral measure, and thus without the express or implied participation of another undertaking, and those in which the unilateral character of the measure is merely apparent.”
“101. However, such an agreement cannot be based on what is only the expression of a unilateral policy of one of the contracting parties, which can be put into effect without the assistance of others. To hold that an agreement prohibited by Article 85(1) of the Treaty may be established simply on the basis of the expression of a unilateral policy aimed at preventing parallel imports would have the effect of confusing the scope of that provision with that of Article 86 of the Treaty. 102. For an agreement within the meaning of Article 85(1) of the Treaty to be capable of being regarded as having been concluded by tacit acceptance, it is necessary that the manifestation of the wish of one of the contracting parties to achieve an anti-competitive goal constitute an invitation to the other party, whether express or implied, to fulfil that goal jointly, and that applies all the more where, as in this case, such an agreement is not at first sight in the interests of the other party, namely the wholesalers.”
“These two cases [Dyestuffs and SuikerUnie] provide the legal test of what constitutes a concerted practice for the purpose of Article 81: there must be a mental consensus whereby practical co-operation is knowingly substituted for competition; however the consensus need not be achieved verbally, and can come about by direct or indirect contact between the parties.”
“Thus, for example, if one retailer A privately discloses to a supplier B its future pricing intentions in circumstances where it is reasonably foreseeable that B might make use of that information to influence market conditions, and B then passes that pricing information on to a competing retailer C, then in our view A, B and C are all to be regarded on those facts as parties to a concerted practice having as its object or effect the prevention, restriction or distortion of competition. The prohibition on direct or indirect contact between competitors on prices has been infringed.”
“The cases about complaints cited above, notably Suiker Unie at paragraphs 282 to 283, and the Commission’s decision in Hasselblad at paragraph 42, show that if a competitor (A) complains to a supplier (B) about the market activities of another competitor (C), and the supplier B acts on A’s complaint in a way which limits the competitive activity of C, then A, B and C are all parties to a concerted practice to prevent, restrict or distort competition. We can see the sense of that case law. Were it otherwise, established customers would always be able to exert pressure on suppliers not to supply new and more competitive outlets, free of any risk of infringing the Chapter I prohibition. A competitor who complains to a supplier about the activities of another competitor should not in our view be absolved of responsibility under the Act if the supplier chooses to act on the complaint.”
“We find it difficult to see why Mr. Whelan, the Chairman of JJB, should speak directly to Mr. McGuigan, the Chief Executive of Umbro, about the activities of a competitor other than with a view to getting Umbro to do something about it.”
“Mr. Fellone states that he or Mr. Bryan would receive calls from either Colin Russell or Duncan Sharpe. In such calls JJB “would point out those retailers who were discounting replica product and ask us to do something about it”, as well as asking “why are they doing this, the products fly off the shelf”
“421. Mr. Russell accepted that discounting by Sports Soccer was a recurrent theme in his conversations with Mr. Bryan (Day 9, p. 126). We find it difficult to accept that Mr. Russell’s sole purpose in complaining to Mr. Bryan about discounting by Sports Soccer was “to get better terms for JJB”
“We therefore find that, to the extent set out above, JJB did make strong verbal complaints to Umbro in the Spring and early Summer of 2000 in relation to discounting by Sports Soccer and that such complaints exerted considerable pressure on Umbro to react in a way which would limit discounting by Sports Soccer and thus mollify JJB.”
“In our view it was JJB’s intention, or at least the reasonably foreseeable effect, of JJB’s complaints, that Umbro would be prevailed upon to do something about JJB’s discounting.”
“We do not think that it is necessary for the OFT to satisfy us of the dates or the precise sequence of the telephone conversations in question. In our view it is probable that the relevant “dialogue” went on in late April/ May 2000, but we do not think it matters whether Mr. Ronnie first sought assurances from JJB and then went back to Sports Soccer or whether it was some other process of going back and forth. Whatever the precise sequence, it is in our view established that in the course of Mr. Ronnie’s telephone conversations Mr. Sharpe of JJB gave Umbro an assurance, or at least an indication, that JJB would maintain the£39.99 price point if other retailers did not discount. Mr. Ashley gave Mr. Ronnie a reciprocal assurance at the meeting on 24 May. It is most unlikely, in our view, that Mr. Ronnie did not inform Mr. Sharpe of that reciprocal assurance. We accept Mr. Ronnie’s evidence that he did.”
“654. In those circumstances, we find (1) that there was an agreement, or concerted practice, within the meaning of the Chapter I prohibition involving at least JJB, Umbro and Sports Soccer, in which each of JJB and Sports Soccer either (a) agreed with Umbro, or (b) confirmed to Umbro their respective intention, not to discount from£39.99 during Euro 2000, on the understanding that no other major retailer would do so. (2) At the very least, each company knowingly gave Mr. Ronnie an intimation or assurance to that effect. Mr. Ronnie then confirmed to each company what the other’s intentions were. That in our judgment is properly characterised either as an agreement to fix the prices of the England shirts at£39.99 during Euro 2000, or as a concerted practice the object or effect of which was to influence the conduct on the market of a competitor, or to disclose to one competitor the future pricing intentions of another competitor, having both the object, and the effect, of maintaining the price of England shirts at£39.99 during Euro 2000. 655. We are satisfied on the evidence in this case that Mr. Ronnie of Umbro received assurances or intimations as to their future pricing intentions during Euro 2000 at least from each of Sports Soccer and JJB, and in each case passed those assurances or intimations on to the other company. In particular, we find that Mr. Ronnie confirmed to JJB Sports Soccer’s agreement not to discount and “guaranteed” to Sports Soccer that other retailers, including by necessary implication JJB, would not undercut. (3)(a) In those circumstances, JJB, Umbro and Sports Soccer are all in our view properly to be regarded as parties to the same agreement or concerted practice. (b) In any event, it is in our view immaterial whether, technically speaking, the agreements or concerted practices are between Umbro and JJB, and Umbro and Sports Soccer, respectively. In either case the effect on competition is the same.”
“If an undertaking acts on the complaints made to it by another undertaking in connection with the competition from the former’s products, this constitutes or is evidence of a concerted practice.”
“45. In addition to Victor Hasselblad, which, in its capacity as manufacturer, played a major role in formulating this policy of market compartmentalisation, Hasselblad (GB) and Prolux knowingly and intentionally prompted the other sole distributors to act as they did. By acting in this way, the sole distributors in question (Hasselblad (GB), Ilford, Têlos, Prolux and Polack) arranged also among themselves not to export to other member-States on the Common Market. They thus complied with Victor Hasselblad’s general sales policy, which had been notified to them, viz. to afford the soledistributors the maximum feasible territorial protection. This co-ordinated behaviour made normal market conditions, as they would have evolved in the presence of free circulation of goods, unattainable. … 47. Têlos’s and Ilford’s submission that they complied with the manufacturer’s export ban only in form (Têlos) or only as a result of extreme pressure being exerted on it (Ilford) is irrelevant to the question whether there was a concerted practice. For a concerted practice to exist it is sufficient for an independent undertaking knowingly and of its own accord to adjust its behaviour in line with the wishes of another undertaking. The motive or the knowledge that the act is unlawful is irrelevant.”
“49. The exchange of price-lists and business secrets between Victor Hasselblad, Hasselblad (GB), Ilford, Têlos, Prolux, Nordic and Polack was another ancillary device to ensure the market partitioning. No objections will normally be raised under competition law merely because a manufacturer asks its sole distributors for their price lists and for information regarding their terms of business (price rebates, bonuses, etc). However, Victor Hasselblad used the information it received to inform its sole distributors. As can be seen from Victor Hasselblad’s letters of18 June 1974 and13 October 1978 to Têlos and to Hasselblad (GB) respectively, this exchange of information was designed precisely to prevent exports (‘pirate exports’) or to remove the incentive for them.”
“This is all the more so where, as is usually the case, such information is sought or given for an anti-competitive purpose or with anti-competitive effects.”
“27. The applicant does not dispute that after the termination of the dealer agreement with Camera Care in 1978 it sought to stop supplies of Hasselblad cameras to Camera Care and with that end in view approached Victor Hasselblad, Ilford, Têlos and Prolux. However, it maintains that once Camera Care ceased to be an authorized distributor, it was justified in considering that authorized distributors and dealers could no longer supply Camera Care. In September 1979, however, following consultations with its lawyer, the applicant ceased its efforts to block supplies of equipment to Camera Care.”
“Those complaints were intended, or had the reasonably foreseeable effect, of putting commercial pressure on Umbro to do something about discounting”
“In the present case there is no evidence that JJB disclosed its future pricing intentions to Umbro for some legitimate purpose.”
“The agreements between Hasbro and Argos and between Hasbro and Littlewoods were inter-linked and each retailer specifically entered into and maintained the agreement on the understanding with Hasbro that the other would as well… Both Argos and Littlewoods were concerned about undercutting by any retailer, but each had a special concern about undercutting by the other. This was because they were the largest catalogue retailers, directly competing with each other, and because their retailing formats meant that they both had to commit themselves to a price for a forthcoming season without knowledge of the other’s intention except for the previous catalogue which was, by definition, out of date. Further, unlike with ordinary retailers where an agreement to price at X could be given public effect on the next day or within a very short space of time, any “agreement” or “understanding” that the other catalogue retailer would price at an agreed price (say RRP) would not be seen to be implemented until much later when it would be too late to change one’s own catalogue.”
“Neil [Wilson] and I have spoken to our respective contacts at Argos and Index [Littlewoods] and put together a proposal regarding the maintenance of certain retails within our portfolio. This is a step in the right direction and it is fair to say that both Accounts are keen to improve margins but at the same time are taking a cautious approach in case either party reneges on a price agreement. … It goes without saying that Action Man and Games prices will be maintained as per earlier agreements. [A list of Hasbro products and prices to which the initiative was being extended to is then set out] Both accounts have agreed to the above price points so this information should be translated to other accounts. The proof in the pudding will be when both Catalogues are published, but Neil and I are confident that they will play ball.”
“Following on from various conversations regarding Price Points and opportunities to make more margin I am able to confirm a list of products and prices that Argos have committed to. Games and Action Man prices will continue to be adhered to and the retails are on your range sheets provided by me as part of the selection proposal process.”
“512. There does not seem to us to be much dispute between Mr. Wilson and Mr. Needham, although the latter in our view tended to downplay the nature and extent of his conversations with Mr. Wilson. We accept Mr. Wilson’s evidence, which was not challenged to any material extent. On the basis of that evidence we make at this stage the following findings: (i) For the A/W 1999 catalogue Mr. Wilson established the products that were common to Argos and other retailers and identified the RRPs for those products. In the present context those products were, for practical purposes, Action Man and Core Games. (ii) Mr. Wilson asked Mr. Needham what Argos’ pricing intentions were in respect of those products. He did this by asking Mr. Needham whether Argos saw any problem in selling at any of the RRPs in question. This may not have involved going down a list, specific product by specific product. However we find that Mr. Needham would have known that Mr. Wilson was talking about Action Man and Core Games. (iii) Mr. Needham indicated to Mr. Wilson whether or not Argos would be happy to sell at Hasbro’s RRPs for the products in question. In most circumstances Mr. Needham informed Mr. Wilson that he was happy to sell at those RRPs, but there would be occasions when Mr. Needham indicated that a particular RRP would be problematic. Mr. Needham did not give Mr. Wilson any guarantee, but he did tell Mr. Wilson what Argos’ pricing intentions were in relation to the Hasbro products in question. (iv) Mr. Wilson passed on the information in question to other account managers at Hasbro who had been having similar conversations with other retailers. This included notably Mr. Thomson who dealt with Littlewoods. Mr. Wilson and Mr. Thomson had more of a dialogue with Argos and Littlewoods respectively than with other retailers because Argos and Littlewoods were the price setters or leaders in the market. Other account managers including Mr. Thomson would then pass other retailers’ pricing intentions back to Mr. Wilson. (v) Mr. Wilson then reverted to Mr. Needham and told him whether he thought that the future retail price of a product would or would not be at the RRP. Mr. Wilson did not identify particular retailers, but he did identify which products this related to. Mr. Wilson said to Mr. Needham words to the effect that “it was [his] belief from what retailers told us that this or that product would or would not be at RRP” (Wilson, paragraph 19). (vi) Although Mr. Needham stated that he was unaware of any “formal”
“513. We specifically reject Argos’ submission that the conversations in question were analogous to the sort of general conversations that might go on at a toy fair about the likely market price that a new product might be able to command. Whatever the legality of that type of conversation, there is a fundamental difference between a general conversation about the possible market price a new product might command, and a conversation between a retailer and a supplier in which the former states or indicates that he is prepared to sell at an RRP. This case concerns conversations of the latter, not the former, kind. Moreover, the conversations here in question concerned well established products such as Action Man and Core Games, and took place well after the ‘toy fair’ stage, which comes before the product is even selected for the catalogue. Mr. Wilson’s evidence is specifically directed to conversations between a retailer and a supplier about the former’s pricing intentions in respect of products that have already been selected for a particular catalogue. 514. Although Mr. Needham expressed his ‘disappointment’ that information about Argos’ pricing intentions was passed on to Littlewoods, in our view it must have been apparent to Argos that, if Hasbro was feeding back to Argos Hasbro’s views as to other retailers’ pricing intentions, by the same token Hasbro would be feeding such views to other retailers, based on Hasbro’s conversations with Argos. 515. Moreover, it is not denied Argos was anxious to achieve better margins on toys, and to avoid being undercut. The indications from Mr. Wilson about other retailers’ pricing intentions assisted Argos in achieving those objectives. Similarly, in telling Mr. Wilson Argos’ pricing intentions, Mr. Needham facilitated Hasbro’s efforts to persuade other retailers to price at RRPs. 516. At paragraph 21 of his witness statement Mr. Wilson characterised what had occurred as ‘a gentleman’s agreement’ between Argos and Hasbro that RRPs would be adhered to. That description was not challenged in cross-examination. In our judgment, ‘gentleman’s agreement’ is an appropriate expression to convey what the evidence shows. Argos told Hasbro what its pricing intentions were, namely that it was intending to price at RRPs in the next catalogue. Those pricing intentions are highly confidential. Argos may not have communicated its intentions product by product, by going through a list, but there was no doubt that the stated intention applied to Action Man and Core Games. It is true that there was no certainty, and no guarantee that Argos would price at RRPs, and certainly no legally enforceable agreement. There may also from time to time have been some exceptions where Argos did not price at the price it had previously indicated. However, it seems to us implicit in the arrangements as described, unchallenged, by Mr. Wilson, that Hasbro had aroused in Argos an expectation that it would not be undercut if it sold at RRPs, and that Argos had indicated to Hasbro that it would go out at Hasbro’s RRPs on the products in question in the next relevant catalogue. In our judgment, the above evidence establishes that there was an express or implied agreement, albeit verbal and with no guarantee, that Argos would sell at Hasbro’s RRPs, at least to a material extent, on Action Man and Core Games in the A/ W 1999 and S/ S 2000 catalogues.”
“530. Again, although there is a difference of emphasis between Mr. Thomson and Mr. Burgess, we do not detect a fundamental divergence in their evidence on the factual issues. We make the following findings in respect of the catalogues for A/W 1999 and S/S 2000. (i) Mr. Thomson gave detailed information to Littlewoods in spreadsheets showing Hasbro’s RRPs, Littlewoods’ cost prices, the margin between the two, and, in relation to Action Man and Core Games, the rebates available. (ii) Following on from his conversations with Mr. Burgess, Mr. Thomson considered that he had a ‘verbal guarantee’ from Littlewoods that their prices would be at RRPs in A/W 1999 (Thomson, paragraph 69). (iii) Following the publication of the A/W 1999 catalogue there was further increased confidence on the part of Littlewoods that other retailers would price at RRPs. (iv) In his discussions with Mr. Burgess, Mr. Thomson gave Mr. Burgess assurances that Argos would stick to RRPs in relation to Action Man and Core Games. Mr. Thomson told Mr. Burgess that that information was based on what he had been told by Mr. Wilson, Hasbro’s Argos account manager (Thomson, paragraphs 86, 87, 99, Day, 1, p. 181). (v) Mr. Burgess gave Mr. Thomson to understand that Littlewoods would go with (i.e. price at) the Hasbro RRPs, although Mr. Thomson would not be sure that they would do this until the catalogue came out. (vi) Mr. Thomson confirms Mr. Wilson’s evidence that it was Hasbro’s practice to monitor retail prices. If a retailer was pricing below RRPs, the relevant account manager would contact the retailer and tell it to put its price up. Unlike Argos there is, however, little or no direct evidence that Littlewoods queried other retailers’ prices with Hasbro. (vii) Mr. Thomson considered that although there was no binding guarantee, there was a commitment on the part of Littlewoods to follow Hasbro’s RRPs. There was ‘verbal agreement to say, yes, we will go along with you, we will go out at those prices’ (Day 1, pp. 145-146), ‘there was agreement to do it’, although no guarantee that the agreement would be adhered to (p. 176). Mr. Burgess would say to Mr. Thomson words to the effect ‘Ian, I will go along with you, but are you sure this is going to happen?’ and Mr. Thomson would say words to the effect ‘Yes, trust me, I will go back and talk to people to ensure that this happens’.” (i) Mr. Thomson gave detailed information to Littlewoods in spreadsheets showing Hasbro’s RRPs, Littlewoods’ cost prices, the margin between the two, and, in relation to Action Man and Core Games, the rebates available. (ii) Following on from his conversations with Mr. Burgess, Mr. Thomson considered that he had a ‘verbal guarantee’ from Littlewoods that their prices would be at RRPs in A/W 1999 (Thomson, paragraph 69). (iii) Following the publication of the A/W 1999 catalogue there was further increased confidence on the part of Littlewoods that other retailers would price at RRPs. (iv) In his discussions with Mr. Burgess, Mr. Thomson gave Mr. Burgess assurances that Argos would stick to RRPs in relation to Action Man and Core Games. Mr. Thomson told Mr. Burgess that that information was based on what he had been told by Mr. Wilson, Hasbro’s Argos account manager (Thomson, paragraphs 86, 87, 99, Day, 1, p. 181). (v) Mr. Burgess gave Mr. Thomson to understand that Littlewoods would go with (i.e. price at) the Hasbro RRPs, although Mr. Thomson would not be sure that they would do this until the catalogue came out. (vi) Mr. Thomson confirms Mr. Wilson’s evidence that it was Hasbro’s practice to monitor retail prices. If a retailer was pricing below RRPs, the relevant account manager would contact the retailer and tell it to put its price up. Unlike Argos there is, however, little or no direct evidence that Littlewoods queried other retailers’ prices with Hasbro. (vii) Mr. Thomson considered that although there was no binding guarantee, there was a commitment on the part of Littlewoods to follow Hasbro’s RRPs. There was ‘verbal agreement to say, yes, we will go along with you, we will go out at those prices’ (Day 1, pp. 145-146), ‘there was agreement to do it’, although no guarantee that the agreement would be adhered to (p. 176). Mr. Burgess would say to Mr. Thomson words to the effect ‘Ian, I will go along with you, but are you sure this is going to happen?’ and Mr. Thomson would say words to the effect ‘Yes, trust me, I will go back and talk to people to ensure that this happens’.”
“531. In our judgment Mr. Thomson’s view that there was “verbal agreement” on the part of Littlewoods to price at Hasbro’s RRPs on Action Man and Core Games is confirmed by the above evidence. Again, there was no guarantee that Littlewoods would do so, and no certainty, and there may have been occasional exceptions although few, if any, have been identified in the evidence. It also seems to us on the evidence that Hasbro had aroused in Littlewoods an expectation that Littlewoods would not be undercut by Argos if they priced at RRPs, and Littlewoods had indicated to Hasbro that it was willing to sell at Hasbro’s RRPs in the next relevant catalogue. On the above evidence, it seems to us to be established that there was an express or implied agreement, albeit verbal and with no guarantee, that Littlewoods would sell at Hasbro’s RRPs, at least to a material extent on Action Man and Core Games in the A/ W 1999 and S/ S 2000 catalogues.”
“702. As already indicated, a ‘concerted practice’ as defined in Dyestuffs falls short of ‘an agreement’, but constitutes a ‘form of coordination’ which ‘knowingly substitutes practical cooperation for the risks of competition’. The principle is that each ‘economic operator must determine independently the policy which it intends to adopt’ on the market. That principle precludes ‘direct or indirect contact’ between economic operators, ‘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’. A key concept in the idea of a concerted practice is that of ‘removing in advance any uncertainty as to the future conduct of … competitors’, as a result of ‘reciprocal contacts’ having that object or effect. 703. In our judgment the underlying idea of ‘concerted practice’ is equally applicable to the vertical relationship between a supplier and a retailer. In the present case Argos disclosed its pricing intentions to its supplier, Hasbro. Those pricing intentions are highly confidential matters which would not in normal circumstances be disclosed in advance. Argos was told by Mr. Wilson what Hasbro expected retail prices to be, based on Hasbro’s conversations with other retailers. Argos must have known or could reasonably have foreseen that its discussion with Hasbro reflected Hasbro’s discussions with other retailers. In our view such conduct was a ‘form of practical coordination’ which knowingly substituted practical cooperation for the risks of competition. In particular, those reciprocal contacts reduced uncertainty on Argos’ part as to what other retailers’ pricing intentions were, and reduced uncertainty on Hasbro’s part on what Argos’ prices would be. That, in turn, facilitated Hasbro’s conversations with other retailers especially Littlewoods, with a view to ensuring that they too priced at RRPs. 704. In our judgment the evidence set out above shows ample reciprocity on the part of Argos and Hasbro. Hasbro gave Argos the information at its disposal as to the likely retail prices other retailers and Argos shared with Hasbro its future pricing intentions. In practice, as a result, Argos priced at Hasbro’s RRPs on the vast majority of the products in question.”
“725. We have already dealt at length with the principal factual submissions made by Argos. We specifically reject Argos’ arguments that the contacts that took place were too vague and general to give rise to an agreement or concerted practice. In our judgment, both in relation to pricing on Action Man and Core Games, and later in relation to other toys, the evidence establishes the agreement or concerted practice which we have found to exist.”
“726. We conclude on the totality of the evidence that from1 March 2000 to15 May 2001 Hasbro and Argos were party to a verbal agreement or concerted practice for at least the S/S 2000, A/W 2000 and S/S 2001 catalogues to the effect that Argos would to a material extent price at or near Hasbro’s RRP on Action Man and Core Games and, for the A/ W 2000 and S/S 2001 catalogues, certain other products. That agreement or concerted practice had the object or effect of preventing, restricting or distorting competition and thus fell within the Chapter I prohibition. We are prepared to accept that the agreement or concerted practice terminated when the OFT visited Hasbro on15 May 2001 .”
“777. We conclude on the totality of the evidence that from1 March 2000 to15 May 2001 Littlewoods and Hasbro were party to a verbal agreement or concerted practice for at least the S/S 2000, A/W 2000 and S/ S 2001 catalogues to the effect that Littlewoods would to a material extent price at or near Hasbro’s RRPs on Action Man and Core Games and, for the A/W 2000 and S/S 2001 catalogues, certain other products. That agreement or concerted practice had the object or effect of preventing, restricting or distorting competition and thus fell within the Chapter I prohibition. We are prepared to accept that the agreement or concerted practice terminated when the OFT visited Hasbro on15 May 2001 .”
“659. Thus, for example, if one retailer A privately discloses to a supplier B its future pricing intentions in circumstances where it is reasonably foreseeable that B might make use of that information to influence market conditions, and B then passes that pricing information on to a competing retailer C, then in our view A, B and C are all to be regarded on those facts as parties to a concerted practice having as its object or effect the prevention, restriction or distortion of competition. The prohibition on direct or indirect contact between competitors on prices has been infringed. 660. As regards A, the position might in our view be different only if it could be shown that retailer A revealed its future pricing intentions to its supplier B for some legitimate purpose not related in any way to competition, and could not reasonably have foreseen that such information would be used by B in a way capable of affecting market conditions. It seems to us that such disclosure by a retailer to a supplier will rarely be legitimate, otherwise resale price maintenance could be reintroduced by the back door.”
“780. Dealing first with Littlewoods, the evidence already set out shows that Littlewoods was regularly given by Hasbro advance information about Argos’ pricing intentions. Thus the evidence shows, for example (i) Mr. McCulloch told Mr. McMahon at the Liverpool meeting of his discussions with Argos, to the effect that Argos was prepared to go to RRPs on Action Man and Core Games if it was reassured about not being undercut. (ii) Mr. Thomson subsequently went back to Mr. Burgess and informed him that a deal had been struck whereby Argos agreed to raise its prices to RRPs. (iii) In his discussions with Mr. Burgess during 1999, Mr. Thomson frequently reassured the latter that Argos was proposing to price at Hasbro’s RRPs, and that Littlewoods would not be undercut if it did the same. (iv) Mr. Cowley’s conversation with Mr. McMahon in late 1999 indicates that the latter was still aware of his conversations with Mr. McCulloch about Argos’ pricing intentions and took those conversations into account in saying to Mr. Cowley that he should price the Tweenies doll at Hasbro’s RRP. (v) Similar discussions took place between Mr. Thomson and Mr. Burgess in relation to the S/S 2000 catalogue. (vi) Littlewoods through Mr. Burgess in his conversations with Mr. Thomson informed the latter of Littlewoods’ intention to price at RRPs. (vii) Mr. Burgess at all material times knew, because Mr. [Thomson] told him, that parallel discussions were going on with Argos, and that Mr. Thomson was passing back to Mr. Wilson the gist of his conversations with Mr. Burgess. (viii) Littlewoods priced at or near RRPs on Action Man and Core Games for the A/W 1999 and S/S 2000 catalogues, and in our judgment cannot have failed to take the foregoing into account in reaching its pricing decisions (see also Case T1/89 Rhone Poulenc v Commission[1991] ECR II- 867 , paragraphs 122 and 123). 781. The Act came into force on1 March 2000 . In our judgment, the foregoing shows that, as of that date, there was an established concerted practice which involved the disclosure to Littlewoods, via the intermediary of Hasbro, of Argos’ pricing intentions, the object and effect of which was to influence the conduct on the market of Littlewoods, Argos’s principal competitor in catalogue retailing. In our view such a concerted practice constituted indirect contact between economic operators (Argos and Littlewoods) the object and effect of which was either to influence future conduct on the market, or to disclose future pricing intentions, within the principles of SuikerUnie and other cases cited above. 782. The facts in our judgment are even more explicit when it comes to the A/W 2000 catalogue. The evidence shows that Mr. Thomson had extensive discussions with Mr. Burgess and the other Littlewoods buyers on extending the pricing arrangement to other products. Littlewoods was then expressly informed, in the email of18 May 2000 , of ‘the prices that Argos has committed to’ in respect of a list of further products. That email also shows Littlewoods being expressly informed that the prices of Action Man and Core Games will be ‘adhered to’ which in the context can only mean that Argos intended to continue to price at RRPs on those products. Again, that in our judgment amounts to indirect contact between economic operators, the object or effect of which was to influence conduct on the market or reveal future pricing intentions. In fact Littlewoods priced at RRPs on the products in question. The contacts over Interactive Pikachu about25 May 2000 are further evidence of that concerted practice. 783. As to the S/S 2001 catalogue, the concerted practice continued, to all intents and purposes in the same way as before. The continued existence of that practice is shown in particular by Mr. Thomson’s conversation with Mr. Cowley about Tweenies dolls at the end of 2000, the email of28 December 2000 , and the emails of23 February 2001 and3 April 2001 . 784. Turning to Argos, the evidence is that in 1998 and 1999 Mr. McCulloch had conversations with Sue Porritt and Mrs. Thompson. In the course of these conversations Argos was informed of Hasbro’s retail pricing strategy to the effect that Hasbro was making a coordinated effort to persuade all retailers to price at RRPs on Action Man and Core Games. At some point Sue Porritt informed Hasbro (Mr. McCulloch or Mr. Brighty) that Argos was in principle prepared to price at RRPs on Action Man and Core Games, which information was passed within Hasbro to Mr. Thomson, who duly passed the information on to Mr. Burgess at Littlewoods. 785. It is in that context that from 1999 onwards contacts took place between Mr. Wilson and Mr. Needham in which the former would ascertain the latter’s pricing intentions on Action Man and Core Games. Mr. Wilson would then discuss the matter with Mr. Thomson in the light of Mr. Thomson’s knowledge of Littlewood’s pricing intentions. Mr. Wilson would then go back to Mr. Needham and indicate to him what he thought the retail prices of particular products would be. It is not disputed that Mr. Needham knew that Hasbro was having similar conversations with other retailers. 786. We assume in Argos’ favour that Mr. Wilson did not expressly say ‘these are Littlewoods’ prices’. We also assume that there was not necessarily a detailed discussion between Mr. Needham and Mr. Wilson about the specific prices of approximately 30 products in the Action Man and Core Games ranges. Nonetheless, the upshot of the conversations was that Mr. Wilson knew that it was Argos’ intention to price at RRPs on these products, and Argos knew that other retailers were likely to be at RRPs. 787. In our judgment, in participating in those discussions through Mr. Needham, Argos must be taken to have known, or could at least have reasonably foreseen, that the information about pricing intentions which it was passing to Hasbro would be used by the latter in a way that would facilitate the maintenance of prices at RRPs in the market. Since Argos was receiving from Mr. Wilson information which Argos knew was based on information Hasbro had received from other retailers, Argos must have known that Hasbro would have been engaged in similar conversations with other retailers, based on the information which Hasbro had received from Argos. In these circumstances it seems to us that Argos also participated in indirect contacts with other economic operators the object or effect of which was to influence conduct in the market or to disclose future pricing intentions. The element of reciprocity is to be found notably in the fact that Argos was conveying its future pricing intentions and Mr. Wilson was conveying back to Argos information about other [retailers’] pricing intentions. 788. In our judgment it is immaterial to the analysis whether or not Mr. Wilson specifically identified Littlewoods by name to Mr. Needham. Argos through Mr. Needham must have known that Hasbro’s conversation with other retailers would have included Littlewoods, and could have reasonably foreseen that, when Mr. Wilson indicated other retailers’ pricing intentions, that information must have been based in particular on information coming from Littlewoods. In our judgment undercutting by Littlewoods, the principal rival catalogue retailer, would have been of considerable concern to Mr. Needham (see e.g. Wilson, paragraph 30). 789. As regards the extension of the discussions between Mr. Wilson and Mr. Needham to other products in the A/W 2000 catalogue, in our judgment Argos through Mr. Needham must have known or could have reasonably foreseen that similar discussions were taking place with other retailers, including Littlewoods. In disclosing its expected pricing intentions on the products mentioned in the emails of18 May 2000 , and confirming, expressly or by implication, its adherence to RRPs on Action Man and Core Games, Argos in our judgment at the least supported Hasbro’s efforts to ensure that other retailers, and in particular Littlewoods, observed RRPs and did not engage in undercutting. The contents of the emails of18 May 2000 , discussed at length above, fully confirm that conclusion. That conclusion also applies to the other incidents involving the Interactive Pikachu and the Ferris Wheel. 790. In all those circumstances we further conclude on the evidence that Argos and Littlewoods are properly to be regarded as party to a tripartite concerted practice with Hasbro and, indirectly, each other to the effect that each party would to a material extent price at or near Hasbro’s RRPs on Action Man and Core Games and, for the A/W 2000 and S/S 2001 catalogues, certain other products. The object or effect of that concerted practice was to prevent, restrict or distort competition, within the meaning of the Chapter I prohibition. That concerted practice similarly lasted from1 March 2000 to15 May 2001 .”
“In our judgment, the above evidence establishes that there was an express or implied agreement, albeit verbal and with no guarantee, that Argos would sell at Hasbro’s RRPs, at least to a material extent, on Action Man and Core Games in the A/ W 1999 and S/ S 2000 catalogues.”
“[The Tribunal’s] failure to appreciate that the Bayer judgments qualified or clarified earlier case law on the meaning of agreement and concerted practice tainted the CAT’s entire approach to the evidence and led it wrongly to conclude that there was a tripartite agreement or concerted practice between Hasbro, Argos and Littlewoods. In cases such as the present where there is no direct contact between two undertakings (viz Littlewoods and Argos), it is particularly important to analyse the evidence carefully in order to establish whether . . . the subjective consensus requirement has been met. The CAT failed to do this and did not make any sufficient findings of fact on this point. The judgment is therefore defective as a matter of law as it did not deal with the essential element of the infringement i.e. the subjective consensus between the parties.”
“514. Although Mr. Needham expressed his ‘disappointment’ that information about Argos’ pricing intentions was passed on to Littlewoods, in our view it must have been apparent to Argos that, if Hasbro was feeding back to Argos Hasbro’s views as to other retailers’ pricing intentions, by the same token Hasbro would be feeding such views to other retailers, based on Hasbro’s conversations with Argos.”
“1.8 The twin objectives of the Director’s policy on financial penalties are to impose penalties on infringing undertakings which reflect the seriousness of the infringement and to ensure that the threat of penalties will deter undertakings from engaging in anticompetitive practices. The Director therefore intends, where appropriate, to impose financial penalties which are severe, in particular in respect of agreements 4 between undertakings which fix prices or share markets and other cartel activities 5, as well as serious abuses of a dominant position, which the Director considers are among the most serious infringements caught under the Act. The deterrent is not aimed solely at the undertakings which are subject to the decision, but also at other undertakings which might be considering activities that are contrary to the Chapter I and Chapter II prohibitions. 4 The term “agreement” includes a concerted practice and decision by an association of undertakings. 5 For the purposes of this guidance, cartel activities are agreements, decisions by associations of undertakings or concerted practices which infringe the Act and involve price fixing, bid rigging (collusive tendering), the establishment of output restrictions or quotas and/or market sharing or market dividing (based on the OECD definition of “hard core cartels”). 1.9 The Director also wishes to encourage members of cartels to come forward with evidence on the existence and activities of any cartel in which they are involved and therefore the guidance sets out in Part 3 a clear policy on when lenient treatment will be given to such undertakings. 1.10 The guidance has been drafted to increase transparency by setting out the steps which the Director will follow when calculating the amount of a penalty.”
“2.7 The starting point may be increased to take into account the duration of the infringement. Penalties for infringements which last for more than one year may be multiplied by not more than the number of years of the infringement. Part years may be treated as full years for the purpose of calculating the number of years of the infringement.”
“2.8 The penalty figure reached after the calculations in steps 1 and 2 may be adjusted as appropriate to achieve the policy objectives, outlined in paragraph 1.8 above, in particular, of imposing penalties on infringing undertakings in order to deter undertakings from engaging in anti-competitive practices. The deterrent is not aimed solely at the undertakings which are subject to the decision, but also at other undertakings, which might be considering activities which are contrary to the Chapter I and Chapter II prohibitions. Considerations at this stage may include, for example, the Director’s estimate of the gain made or likely to be made by the infringing undertaking from the infringement. Where relevant, the Director’s estimate would account for any gains which might accrue to the undertaking in other product or geographic markets as well as the “relevant” market under consideration. The assessment of the need to adjust the penalty will be made on a case by case basis for each individual infringing undertaking. 2.9 This step may result in a substantial adjustment of the financial penalty calculated at the earlier steps. The consequence may be that the penalty which is imposed is much larger than would otherwise have been imposed. The result of any one of steps 2 or 3 above or 4 below may well be to take the penalty over 10% of the “relevant turnover” identified as step 1, but the overall cap on penalties is 10% of the “section 36(8) turnover” referred to in step 5 below and must not be exceeded.”
“3.8 Undertakings which provide evidence of the existence and activities of a cartel before written notice of a proposedinfringement decision is given, but are not the first to come forward, or do not meet all the requirements under paragraphs 3.4 or 3.6 above, will be granted a reduction in the amount of a financial penalty which would otherwise be imposed of up to 50%, if the following conditions are met: the undertakings must: a) provide the Director with all the information, documents and evidence available to them regarding the existence and activities of the cartel; b) maintain continuous and complete cooperation throughout the investigation; and c) refrain from further participation in the cartel from the time they disclose the cartel.” the undertakings must: a) provide the Director with all the information, documents and evidence available to them regarding the existence and activities of the cartel; b) maintain continuous and complete cooperation throughout the investigation; and c) refrain from further participation in the cartel from the time they disclose the cartel.”
“3.12 An undertaking coming forward with evidence of a cartel may be concerned about the disclosure of its identity as an undertaking which has volunteered information. The Director will therefore endeavour, where possible, to keep the identity of such undertakings confidential throughout the course of the investigation.”
“As the Commission decided to apply in this particular case the differentiation method laid down in the Guidelines, it was required to adhere to them, and where it departs from them it must set out expressly the reasons for justifying such a departure.”
“499. It follows, in our judgment, that the Tribunal has a full jurisdiction itself to assess the penalty to be imposed, if necessary regardless of the way the Director has approached the matter in application of the Director’s Guidance. Indeed, it seems to us that, in view ofArticle 6(1) of the ECHR , an undertaking penalised by the Director is entitled to have that penalty reviewed ab initio by an impartial and independent tribunal able to take its own decision unconstrained by the Guidance. Moreover, it seems to us that, in fixing a penalty, this Tribunal is bound to base itself on its own assessment of the infringement in the light of the facts and matters before the Tribunal at the stage of its judgment. 500. That said, it does not seem to us appropriate to disregard the Director’s Guidance, or the Director’s own approach in the Decision under challenge, when reaching our own conclusion as to what the penalty should be. The Director’s Guidance will no doubt over time take account of the various indications given by this Tribunal in appeals against penalties. 501. We emphasise, however, that the only constraint on the amount of the penalty binding on this Tribunal is that which flows from the Maximum Penalties Order … It is clear from that Order that Parliament intended that it is the overall turnover of the undertaking concerned, rather than its turnover in the products affected by the infringement, which is the final determinant for the amount of the penalty … 502. We agree with the thrust of the Director’s Guidance that while the turnover in the products affected by the infringement may be an indicative starting point for the assessment of the penalty, the sum imposed must be such as to constitute a serious and effective deterrent, both to the undertaking concerned and to other undertakings tempted to engage in similar conduct. The policy objectives of the Act will not be achieved unless this Tribunal is prepared to uphold severe penalties for serious infringements. As the Guidance makes clear, the achievement of the necessary deterrent may well involve penalties above, often well above, 10 per cent of turnover in the products directly concerned by the infringement, subject only to the overall ‘cap’ imposed by the Maximum Penalties Order. The position in this respect is no different in principle under Article 15(2) of Council Regulation no. 17, albeit that the applicable maximum penalty under that provision is differently calculated.”
“See the Competition Act guideline Market Definition for further information on the relevant product market and relevant geographic market. The relevant product market and relevant geographic market will be determined as part of the Director’s decision that an infringement has taken place.”
“However, in the present context, lack of physical substitutability between different items does not in our view preclude the OFT from grouping certain items together as a relevant product market (or perhaps, technically speaking, a series of closely associated or neighbouring product markets) if such a grouping reflects commercial reality and it can reasonably be shown that the products so grouped were “affected by” the infringement.”
“The fact none the less remains that such a division by categories must comply with the principle of equal treatment, according to which it is prohibited to treat similar situations differently and different situations in the same way, unless such treatment is objectively justified (FETTCSA, paragraph 406).”
“405. The applicants claim that the Commission infringed the principle of non-discrimination by dividing them into groups, since undertakings of very different sizes are included in the groups identified in the contested decision and the undertakings at the top and bottom of adjacent groups, which are similar in size, are treated differently whilst lines at the top and bottom of any single group which are different in size are treated similarly. 406. According to settled case-law, the principle of equal treatment is infringed where comparable situations are treated differently or different situations are treated in the same way, unless such difference in treatment is objectively justified (Case 106/83 Sermide [1984] ECR 4209, paragraph 28, andCase C-174/89 Hoche[1990] ECR I-2681 , paragraph 25).”
“572. The Commission enjoys a degree of latitude in determining fines and, in so far as its Guidelines do not require it to take account systematically of any given circumstance (see paragraphs 537 and 553 above, and the case-law cited), it can determine which factors should be taken into account for that purpose, which enables it to adapt its assessment to specific cases. Its assessment must, however, be carried out in compliance with Community law, which includes not only the provisions of the Treaty but also the general principles of law (see, by analogy,Case C-50/00 P Unión de Pequeños Agricultores v Council[2002] ECR I-6677 , paragraph 38). 573. By thus omitting to take account of the infringement found in Article 2 of the contested decision in determining the fine imposed on the European producers, the Commission treated different situations in the same way but without relying on objective reasons capable of justifying that approach. It follows that it infringed the general Community law principle of equal treatment (see, to that effect,Case T-311/94 BPB de Eendracht v Commission[1998] ECR II-1129 , paragraph 309, and the case-law cited). 574. Consequently, the present plea alleging breach of the principle of equal treatment must be upheld. Accordingly, it is appropriate for the Court to exercise its unlimited jurisdiction, deriving from Article 229 EC and Article 17 of Regulation No 17, to adjust the amount of the fines imposed by Article 4 of the contested decision. 575. In that connection, the Commission observed at the hearing that the possible existence of unequal treatment referred to above should logically lead to an increase in the fines imposed on the European producers, rather than a reduction of the amount of the fines imposed on the Japanese producers. It must be observed, in that context, that, contrary to the views put forward by JFE-Kawasaki in this case in connection with another plea (see paragraph 512 above), Commission representatives may, subject to any express instructions to the contrary from their superiors, lawfully plead that the Community judicature should exercise its unlimited jurisdiction to increase the amount of a fine set by the Members of the Commission. The mere fact that a Commission representative asks the Community judicature to exercise a power available to it and puts forward arguments which might justify such a course of action cannot mean that the representative is acting in the stead of the Members of the Commission. 576. It must be considered that, in the circumstances of this case, the most appropriate way of restoring a fair balance between the addressees of the contested decision would be to increase the amount of the fine imposed on each of the European producers which brought an action calling upon the Court to change the amount of its fine and therefore to reassess the amount of the fine, rather than to reduce the amount of the fines imposed on the Japanese applicants. The abovementioned unequal treatment does not relate to the proportionally over-severe fine imposed on the Japanese producers, the method of calculation adopted by the Commission in setting their fines having been held to be perfectly lawful in itself (see paragraphs 531 to 558 above), but, on the contrary, relates to the fact that the gravity of the offending conduct of the European producers, appraised as a whole, was under-evaluated by comparison with the unlawful conduct of the Japanese producers. 577. Moreover, the applicants in Cases T-44/00, T-48/00, and T-50/00, namely Mannesmann, Corus and Dalmine, each asked the Court in their applications to exercise in that connection its unlimited jurisdiction to change the amount of the fine imposed. It must be recognised that, where the exercise of that jurisdiction is requested by an applicant, including in connection with an application for reduction of a fine, the Court is therefore empowered to amend the contested measure, even if it does not annul it, having regard to all the factual circumstances, in order to amend the amount of the fine imposed (see, to that effect, Limburgse Vinyl Maatschappij and Others v Commission, cited in paragraph 180 above, paragraph 692). Moreover, the unlimited jurisdiction conferred on the Community judicature by Article 17 of Regulation No 17 in accordance with Article 229 CE, expressly includes the power to increase the fine imposed, if appropriate.”
“It follows that the most suitable way of remedying the unequal treatment observed in this case is, for the purpose of determining the amount of the fine imposed on each of the Japanese applicants, to reduce the amount decided on by the Commission in respect of the gravity of the infringement, in recital 163 to the contested decision. In the exercise of its unlimited jurisdiction, the Court considers, having regard to all the circumstances of this case, that the fine should be reduced from EUR 10 million to EUR 9 million for each of the Japanese applicants.”
“Lastly, in so far as the applicant submits that it has been the subject of discrimination in comparison with Stora and Rena, the Court points out that, in accordance with settled law, the principle of equal treatment, a general principle of Community law, is infringed only where comparable situations are treated differently or different situations are treated in the same way, unless such difference in treatment is objectively justified (Case 106/83 Sermide [1984] ECR 4209, paragraph 28,Case C-174/89 Hoche[1990] ECR I-2681 , paragraph 25; to the same effectCase T-100/92 La Pietra v Commission [1994] ECR-SC II-275, paragraph 50).”
“553. First, the OFT is satisfied that all but one of the agreements covered by this decision had as their object the price-fixing of various Umbro licensed Replica Shirts. The England Direct Agreements went wider than this and extended to other FA Licensed Merchandise. In each case, sales of Replica Shirts are the most important item of Replica Kit and drive sales of replica shorts and socks. Therefore, whilst a Replica Kit is comprised of several products (adult and junior shirt, shorts, socks and infant kits) which are sold separately and whilst a fan who wants to wear a pair of shorts cannot substitute this for a Replica Shirt, this does not necessarily mean that each kind of product is a distinct relevant product market. A Replica Kit is designed and marketed at launch as a single product and with the same purpose of showing visible support for a particular club or team by distinguishing itself from the Replica Kits of other clubs or teams. The home, away, third and goalkeeper’s Replica Kits have the same characteristics, prices and intended use as each other. 554. Secondly, a manufacturer is normally exclusively licensed to manufacture all these items together and, in the case of Umbro during the period of the infringement, to distribute and sell all products comprising a club or team’s Replica Kit. The OFT therefore remains satisfied that the most appropriate market definition in the present case, for the purposes of the imposition of a penalty, is each club or team’s Replica Kit and in particular that the relevant product market is not narrower than this.”
“In our view, other things being equal, there is likely to be a relationship between the price of the normal replica shirt and the goalkeeper shirt in the sense that the one is unlikely to be out of proportion to the other. We see no reason to exclude goalkeepers’ shirts from the relevant market for the purposes of the penalty calculation.”
“147. Even though, in the Decision, the infringements found are limited to shirts, it does not seem to us that these appellants can reasonably complain that the OFT has based its calculation on the turnover in replica kit as a whole in circumstances where (a) the pressure from these appellants to eliminate discounting extended to replica kit generally and (b) the aims of the appellants were largely achieved in that, with the one exception of the MU shorts and socks sold by Sports Soccer at the time of the MU launch in 2000, the shirts, the socks and shorts were not discounted by any principal retailer during key selling periods, including JJB, Allsports and MU. 148. In all those circumstances we do not think the OFT acted unreasonably as regards JJB, Allsports and MU in bringing into account the turnover relating to shorts and socks, as well as shirts, as turnover “affected by the infringement” as the starting point for the calculation.”
“The OFT emphasises that the agreements concerned key selling periods for high profile products; that the products are mass market consumer products; that many consumers are children; and that the parties were exploiting the loyalty of fans in question. We have also found, in the Liability Judgment, that there was a culture of resale price maintenance in the industry despite the 1999 assurances: see paragraphs 369 to 372 of that Judgment. In all those circumstances, we see nothing unreasonable in the OFT selecting a percentage of 9% as the percentage of relevant turnover to be applied as the starting point in this case of price fixing. That is in accordance with paragraphs 1.8 and 2.4 of the Guidance.”
“As it is, Umbro’s penalty as a proportion of turnover and as a proportion of the statutory maximum is significantly more severe than the penalty imposed on the other appellants, which is a matter to which we revert later in this judgment.”
“242. All that said, we remain conscious of the argument advanced by Argos that, by bringing into the penalty calculation the whole of Argos and Littlewoods turnover in girls’ toys, creative, infant and pre-school and hand-held electronics, the OFT did include as ‘relevant turnover’ some turnover which may have been affected only peripherally by the infringements. 243. It is true that we have held that, even if the OFT had included a smaller proportion of that turnover, the OFT would have been fully entitled to include a multiplier of between 2 and 3 at Step 3 to bring the penalty up to an appropriate deterrent level. Nonetheless, in our view care should be taken to ensure that any penalties so re-calculated should not inadvertently become inflated above the level necessary for deterrence. 244. In those circumstances we propose to reassess the penalties on Argos and Littlewoods on the basis of assumptions that seem to us both realistic and conservative. In our view, in the context of the Tribunal’s jurisdiction to make a broad assessment we have decided to reduce the penalties on Argos and Littlewoods to£15 million and£4.50 million respectively, on the technical ground that the OFT’s method of calculation may have given rise to penalties that are slightly too high.”
“247. On the other hand, it is necessary to take account of the fact that the above calculations are extremely conservative. We also bear in mind that, in this case, the infringements affected not just the prices and turnover of Argos and Littlewoods but the prices and hence the turnover of other retailers which is not reflected in the calculations at all. In those circumstances a small rounding up of the above figures is in our view fully justified. The above approach gives rise to an average reduction of around 15 per cent in the penalties compared with the penalties imposed by the OFT. In percentage terms the reduction is slightly more for Littlewoods and slightly less for Argos as a result of the different “mix” within the relevant turnovers of the two companies. Nonetheless the overall result is in our view fair to both Argos and Littlewoods. 248. Taking all the above into account, our assessment is that a penalty of£15.0 million for Argos and£4.50 million for Littlewoods is the lowest penalty that could reasonably be justified in the circumstances, to meet the gravity of the case and to have an appropriate deterrent effect.”
“The fact that Hasbro, one of the largest toy manufacturers in the world, did not challenge the OFT’s market categories, but only which toy belonged to which, strongly suggests to us that Hasbro saw the sense of the market categories relied on by the OFT”
“However, it is also made clear in the statements that in practice RRPs were generally adhered to and that the more this was observed to happen the more smoothly Hasbro’s initiative worked with less need for Hasbro’s active involvement in facilitating the arrangements.”
“The Director’s case is that what may have started as a lawful pricing initiative by Hasbro led directly to the infringing agreements. There is no confusion between the two: the one led to the other. There is ample evidence, both documentary and in the statements of the Hasbro employees, that it was a vital part of the pricing initiative to persuade (rather than “make”, which the Director accepts Hasbro was not in a position to do) retailers to move towards adhering to RRPs. There is equally persuasive evidence (see the statements of Mike McCulloch and Lesley Paisley (among others)) that it was indeed Hasbro that took the initiative in proposing a move to RRPs. The result was the unlawful agreements. Once the agreements were up and running and being seen to be effective, Hasbro could then properly be regarded as the facilitator in ensuring that the arrangements went on working (and indeed could be extended). It is difficult on the evidence to infer that this extension, as described in Ian Thomson’s e-mails of18 May 2000 …, was likely to have been prompted by anyone other than Hasbro. It is not the Director’s case that the setting of the RRPs was part of the unlawful arrangements; it was agreeing to adhere to them (or, on occasion, to some other price) on the understanding that the other would do so also that was unlawful, irrespective of how the prices in question were set or at what level they were pitched. It is entirely irrelevant that Hasbro could not coerce retailers into abiding by RRPs – that has never been the Director’s contention. Nor is it part of the Director’s case that monitoring the market was in itself unlawful. It is the Director’s view that the evidence of monitoring by Hasbro and the way in which it is described in statements and documents goes towards demonstrating the existence of arrangements that were unlawful.”
“In the OFT’s view the evidence is strongly persuasive that at all times Hasbro was both fixer and facilitator in that it set the arrangements up, arranged for them to be extended and kept a close eye on their smooth running. That Hasbro may have had to do little active intervening only goes to demonstrate how effective the agreements were in stifling price competition in the products in question.”
“Section 56(2) applies to certain representations made by Hasbro which relate to the application of the OFT’s leniency programme, where it is necessary in the public interest to treat these representations as confidential in order to preserve the integrity of the leniency programme. The desirability for confidentiality does not solely concern the identity of the party which has applied for leniency, but also the OFT’s reasons for granting or refusing leniency. This is in the form of a private agreement between the OFT and the applicant and as part of the duty of full co-operation that is involved, the applicant is expected to enter into a dialogue with the OFT that in other circumstances it would be likely to regard as contrary to its commercial best interests and which could in many cases lead to reprisals against it or its employees from the other parties involved. In this case Hasbro was given assurances that any representations it made would be regarded by OFT as confidential.”
“The Director has considered the evidence regarding who should be considered to have been an instigator or the instigator of the infringing agreements. As noted in paragraph 252 above, it is the Director’s view that discussions between Hasbro and Argos and Hasbro and Littlewoods took place over a period of time and that there evolved an understanding (which the Director can accept was partly influenced by a desire on the part of both Argos and Littlewoods to increase profitability on toys and games by moving towards RRPs) that both Argos and Littlewoods would agree to adhere to RRPs on Action Man and core games on the understanding that the other would do likewise. In the circumstances the Director accepts it would be difficult to point to a particular meeting or discussion as the occasion when the infringing price-fixing agreements came into being. However, on any reading of the evidence the Director believes that it is sufficiently persuasive for it to find that Hasbro acted as an instigator of the infringements. Therefore the Director has decided to increase the amount of the penalty by 10 per cent.”
“Where an undertaking has acted in breach of Article 85(1) of the Treaty, it cannot escape being penalized altogether on the ground that another trader had not been fined, when that trader’s circumstances are not even the subject of proceedings before the Court.”
“In any event, the Court, or in this case the Tribunal, would risk being drawn into the essentially collateral exercise of determining what was the proper penalty for the other undertaking not before it, rather than determining whether the penalty imposed on the appellant who was before it was appropriate to the infringement committed by that appellant. To attempt such a collateral exercise would, in our view, normally be inappropriate.”
“Even assuming that the matter is not entirely precluded by the Woodpulp jurisprudence, in our judgment any investigation by the Tribunal at the behest of A as to whether the OFT had followed the Guidance as regards the treatment of B, could extend at most to the question whether it is established that the OFT’s treatment of B fell outside a reasonable application of the Guidance given the OFT’s margin of appreciation in that regard.”
“in our judgment the Tribunal should at most interfere only if it is satisfied that the OFT’s failure to apply the Guidance in any reasonable way vis-à-vis B gave rise to a manifest injustice vis-à-vis A.”
“The desirability for confidentiality does not solely concern the identity of the party which has applied for leniency, but also the OFT’s reasons for granting or refusing leniency.”
“While there is some evidence that Argos was an instigator, there is no clear evidence against Argos in this respect and therefore it is not appropriate to make an adjustment to the penalty for Argos in respect of this aggravating factor.”