31975D0073

ext/celex/31975D0073

CELEX: 31975D0073
Datum: 1974-12-13
Källa: eur-lex.europa.eu

3 . 2 . 75 Official Journal of the European Communities No L 29/ 1

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION of 13 December 1974 relating to a proceeding under Article 85 of the EEC Treaty ( IV/ 14.650 — Bayerische Motoren Werke AG)

(Only the German text is authentic)

(75 /73 / EEC)

THE COMMISSION OF THE EUROPEAN to the standard form of contract notified to the COMMUNITIES, Commission . BMW had obliged such wholesalers and main dealers to base their agreements with BMW Having regard to the Treaty establishing the European retail dealers on standard forms which BMW had also Economic Community, and in particular Article 85 notified to the Commission . The purpose of these thereof ; agreements was to promote sales of BMW motor vehi Having regard to Council Regulation No 1 7 (') of 6 cles and motor cycles, spare parts, accessories, and February 1962, and in particular Articles 4 and 5 after-sales service in respect thereof, and to concen thereof ; trate efforts in the fields of sales and after-sales service on the goods covered by the agreements, in the parti Having regard to the notification which the cular territory within Germany assigned under the Bayerische Motoren Werke Aktiengesellschaft, agreements . Within such territories, dealers, whether Munich, submitted on 31 January 1963 , pursuant to wholesalers, main dealers or retail dealers, were given Regulation No 17, concerning the standard forms of some protection against sales of BMW products by contract in use for the sale of their products in BMW or a third party. BMW dealers in Germany, as Germany ; was the case with all BMW dealers in other countries, Having regard to the publication of the essential were prohibited from delivering new BMW vehicles to content of that notification pursuant to Article 1 9 (3) countries other than their own . On 3 March 1972, of Regulation No 17, in Official Journal of the Euro BMW was sent a statement of the Commission's objec pean Communities No C 98 of 16 November 1973 ; tions in respect of this prohibition on exports within the common market and has no longer practised such Having regard to the Opinion delivered on 26 a prohibition . September 1974 by the Advisory Committee on Restrictive Practices and Dominant Positions pursuant to Article 10 of Regulation No 17 ; 2 . BMW is in the course of revising all its distribu Whereas : tion agreements throughout the common market. In Germany revised distribution agreements for German I BMW dealers came into force on 1 January 1973 . At that time BMW introduced one standard form of 1 . The Bayerische Motoren Werke Aktiengesell agreement for main dealers and in turn required these schaft (BMW) had entered into distribution agree main dealers to use a new standard form of agreement ments with selected German wholesalers and main when appointing retail dealers (see clause 12 of the dealers who buy directly from BMW, which conform standard main dealer's agreement). These agreements are worded almost identically. Following the publica (>) OJ No 13, 21 . 2. 1962, p. 204/62. tion of the essential content of the notification on 16

Official - Journal of the European Communities No L 29 / 2 3 . 2 . 75

November 1973 (') pursuant to Article 19 (3) of Regu iv. not without the consent of BMW, to sell, directly lation No 17, observations on these standard agree or indirectly, products of competing makes as ments were submitted to the Commission (see 9 specified below : below). On the basis of these observations and the related intervention by the Commission , BMW made — new vehicles of another make ; statements supplementing the notification with regard to the interpretation and application of certain clauses in the standard agreements and informed all BMW — spare parts, exchange parts and accessories of other makes to other dealers ; main dealers and retail dealers in Germany of the content of these statements by circular letter. — parts of other makes, which are not of the BMW standard of quality, to the customer for The following provisions containing obligations are to repair purposes ; this does not apply to parts be found in the new agreements concluded with which are of no particular importance for the German dealers : safety of BMW vehicles ;

3 . Each BMW dealer ( main dealer or retail dealer) the consent of BMW may not be withheld if is to represent the interests of BMW within the terri reasonable cause is shown , and in this respect the tory assigned to him under his agreement, but economic circumstances of the BMW dealer are conducts business under his own name, on his own to be taken into consideration ; and account and at his own risk (see clauses 2 and 3.1 , and the first sentence of clause 3.2 of the standard agree ments ; save where otherwise stated , further references are references to the standard agreements). not, without the consent of BMW, to become an agent in any way for any other motor vehicle manufacturer or to have any direct or indirect Each dealer undertakes vis-à-vis the other party to the interest in such an agency ; such consent may contract (the principal, i.e. BMW or a BMW main not be withheld if reasonable cause is shown , and dealer) : the grounds for the decision to withhold consent must be set but in writing and state the extent to which the attainment of the commercial objec i . to endeavour, within the territory covered by the tives of BMW is hindered by the acceptance of agreement, to sell at least such quantity of the another agency (clauses 3.6 and 13 (c) of the goods covered by the agreement as is specified by main dealer's agreement, 3.6 and 12 (c) of the BMW in agreement with the main dealer on the retail dealer's agreement, and the BMW circular) ; basis of an estimate of demand and sales poten tial in the territory and of after-service potential (annual sales targets — clauses 1 , 3.1 and 6) ; and further to place his orders monthly and give an v. to follow instructions given by BMW regarding* estimate of his requirements for the following advertising and to discontinue immediately any months (clause 5.1 ); advertising to which BMW objects ; in this respect BMW's authority extends only to adver tising designed to draw attention to BMW ii . not to sell goods covered by the agreement to products and their properties, but not to the dealers not authorized by BMW, unless such sales advertising by BMW dealers of prices and condi are of genuine BMW parts for repair (second tions of sale (clause 3 (v) and the BMW circular) ; sentence of clause 1.1 );

iii . not to operate branches or distribution depots or vi . to obtain the consent of BMW before partici use intermediaries outside his own territory, nor pating in exhibitions or fairs ; BMW may with to advertise or canvass in any other way, outside hold its consent if such participation : his territory, unless the principal obligation under the agreement is fulfilled, namely the dili gent promotion of sales and after-sales service — were to jeopardize the success of BMW's parti within his territory (clauses 1 , 3.1 and 6); in any cipation in the exhibition or fair, or event he is free to advertise in publications having a circulation outside his territory and to — is in breach of obligations undertaken by sell goods covered by the agreement in territories BMW under the rules of the Bureau perma outside his own (second sentence of clause 3.2) ; nent international des constructeurs d'automo biles ( B.P.I.C.A.) (clauses 6.3.2 and 13 (c) or 12 (') OJ No 98, 16. 11 . 1973, pp. 5 and 6. (e) and the BMW circular) ;

3 . 2 . 75 Official Journal of the European Communities No L 29 / 3

vii . to operate a business the layout of whose prem of clause 12) and to determine their field of ises, equipment and technical and commercial activity (clause 12.1 ); management satisfy BMW's requirements (clauses 9 to 11 , 13 and 12 (a) (b) and (d) respectively ; iii . to terminate at BMW's request any standard agree instructions relating to spare parts service under ments concluded with appointed retail dealers the BMW dealer's agreement and the after-sales (first sentence of clause 12.3) ; service instructions under BMW agreements) ; iv. to ensure that appointed retail dealers keep viii . to operate a service department and workshop in adequate stocks and provide proper after-sales accordance with BMW's requirements, to employ service (clause 12.2 (a) and (b)) ; properly qualified staff and to ensure that they receive further training as required (clauses 6.2 v. to see that appointed retail dealers have the plant, and 7.2 and the servicing instructions referred to equipment and staff required to cope with the in vii above) ; volume of business (clause 12.2 (c)).

ix. to provide after-sales service in accordance with 5 . BMW undertakes vis-à-vis BMW main dealers the instructions laid down by BMW (clauses 1.2 and the latter vis-à-vis BMW retail dealers : and 7), including taking delivery of BMW vehi cles from car delivery firms, storage and delivery i . to deliver goods in accordance with the conditions to customers, servicing and maintenance, repair, of sale and delivery published by BMW and under modifications, work under guarantee and the terms and conditions of delivery as regards the extended free service (clause 7.1 ; after-sales sales of parts (clause 5) ; service instructions under BMW agreements) ; to carry out the free pre-delivery check on the ii . to set up no branches and appoint no further supply of a new BMW vehicle to a customer dealers in the territory and not to change the terri (clause 3.3 of the after-sales service instructions) ; tory without giving the BMW main dealer or retail dealer at least 60 days' notice and giving him the x. to maintain a stock of goods sufficient to satisfy opportunity of commenting on the planned reor expected demand in the territory (clauses 6.1 and ganization (clause 3.3). 7.1 and the after-sales service instructions) ; 6 . BMW undertakes vis-à-vis BMW main dealers : xi . to grant, on sale to the customer, a guarantee in the terms of the guarantee granted by BMW i . not to sell or deliver goods whether directly or indi (clauses 5.3 , 5.3.1 and 5.3.2 ; clause 4 of the after rectly to persons other than fleet operators, public sales service instructions for BMW dealers) ; to authorities, racing drivers, foreign tourists, and staff carry out work under guarantee for the customer of BMW or its subsidiaries (clause 3.4) ; free of charge, whether or not the customer has purchased the BMW product from a different ii . to guarantee goods both towards main dealers and BMW dealer whether in Germany or abroad retail dealers in accordance with the conditions of (clause 4.6 of the guarantee instructions for BMW sale and delivery (clause 5.3) ; to give effect to the dealers) ; guarantee by repairing or replacing defective parts xii . to use BMW trade marks without additions or (clause 6.2 of the conditions of sale and delivery) and to bear the reasonable costs of dismantling and alterations and only in such manner as is justified fitting and the costs of the cheapest means of by the method and scope of business (clause 6.4) ; delivery (clause 6.3 of the conditions of sale and delivery) ; to reimburse BMW dealers for their xiii . to supply BMW with any information required on his trading situation and sales trends, market expenditure on services provided under guarantee situation , stocks and expected demand (second and extended free service, broken down into expen sentence of clause 8 , clauses 8.1 and 8.2 ; after diture on labour, BMW replacement parts and goods and services supplied by third parties sales service instructions for BMW dealers). (clauses 4.7 to 4.9 of the guarantee instructions for 4 . Every main dealer further undertakes vis-à-vis BMW dealers). BMW : 7. The standard agreements are of five years' dura i . not to conclude any standard agreements with tion but may be terminated on six months' notice at BMW retail sellers or to modify or terminate any time by the party other than the principal ; the existing agreements with BMW retail dealers principal (BMW or the main dealer) may terminate without the consent of BMW ( first sentence of the agreements immediately, but only for a substantial clause 12 and second sentence of clause 12.3 of breach ; for less substantial breaches the agreements the main dealer's agreement) ; may be terminated on three months' notice, such ii . to conclude agreements at BMW's request with notice to run from a date six months after a warning retail dealers selected by BMW (second sentence is given (clauses 14 to 17 ).

No L 29/4 Official Journal of the European Communities 3 . 2 . 75

8 . The rules governing selective distribution 10 . Agreements affecting BMW dealers in the other (clauses 3 (ii), (v) to (viii), 4 and 5 (ii) appear to have countries of the common market outside Germany are the following application in practice. BMW's qualita not the subject of these proceedings . In some coun tive requirements of BMW dealers for their selection tries of the common market, in which BMW distri and retention for the duration of the agreement are butes its products through its own subsidiaries and not applied uniformly. Furthermore, in making the through independent importers, standard agreements quantitative decision whether to increase the number similar to those in Germany are applied as far as of dealers in the German network or to conclude a market and regional conditions and national law new agreement to replace one that has expired, BMW permit . will in each case need to consider whether turnover and service will be improved . Particular factors to be taken into account are whether the applicant has suffi II cient personnel and equipment to fulfil BMW's re quirements as to sales promotion, and whether, having 1 1 . The agreements notified to the Commission by regard to sales expectations and the presence of BMW (which were applied until 1972) between BMW existing BMW dealers, he can achieve the minimum and German BMW-wholesalers and main dealers (who income necessary to fulfil his obligations. bought direct from BMW) and between the latter and appointed BMW retail dealers (see 1 and 2 above) were agreements falling within Article 85 ( 1 ) of the EEC Treaty. The prohibition contained in those agree BMW further stated that its right under the agreement ments on the export of new BMW vehicles by BMW to obtain information from dealers (see 3 (xiii) above) dealers to other Member States was one of the prin would not be used to prevent goods being sold outside cipal measures which had as its object and effect the their territory. restriction and distortion of competition within the common market, and was likely to affect trade between Member States .

9. After publication of the essential content of the 12. The condition laid down in Article 85 (3) of the notification pursuant to Article 19 (3) of Regulation EEC Treaty, under which the provisions of Article 85 No 17 (see 2 above), the Commission received observa ( 1 ) may be declared inapplicable, were not satisfied in tions from two national associations of wholesalers, the case of these agreements. Because of the export from an international association of motor vehicle prohibition , consumers were not guaranteed a fair traders, from a national motoring association and from share of the benefits which might otherwise result a BMW general importer. The observations may be from exclusive dealing agreements, as the export prohi summarized as follows : bitions led to a form of territorial protection enabling different retail prices to be charged in the various countries of the common market. The export prohibi tions were not indispensable to the improvement of Wholesale trade in spare parts and accessories is in distribution and protection of the goods . Such competition with BMW, so that a restriction on improvements are possible with less restrictive provi dealing in competing products imposed on BMW sions . dealers which was too extensive would limit exces sively a wholesaler's selling outlets, to the disadvan tage of both the consumer and the supplier of such a III wholesaler. Moreover many suppliers, since they also supply vehicle manufacturers with original equipment and spare parts, are often in a position of considerable The use by BMW of the new forms of both main economic dependence. Dealers appointed by BMW dealer and retail dealer agreements (see 2 to 8 above) should at least be allowed to deal in competing leads to agreements between undertakings, produces products through subsidiaries ; their obligation to several forms of restriction and distortion of competi supply BMW with information should not be too tion within the common market, and is likely to affect extensive ; advertising and participation in fairs or trade between Member States . exhibitions should be a matter for cooperation between the two parties to the agreement, and not 13 . The obligations imposed on BMW dealers to depend merely upon the wishes of BMW ; the discre operate a business of a certain scale (see 3 (vii) and tion enjoyed by BMW in selecting BMW main dealers (viii) above), to provide an after-sale service complying and retail dealers is too wide . As far as the sale of with instructions laid down by BMW (see 3 (ix) above), BMW products in other countries of the Community to maintain a certain stock of goods (see 3 (x) above) is concerned , many of the clauses cannot be enforced and to provide a guarantee on sale to a customer in in the way that BMW applies them in Germany, this the terms of the guarantee granted by BMW (see 3 (xi ) is particularly true of the prohibition on dealing in above) specify objective criteria and constitute competing products . minimum requirements which BMW applies

Official Journal of the European Communities 3 . 2 . 75 No L 29 5

uniformly to the selection of BMW main dealers and (see 5 (ii) (above), potential dealers of BMW products retail dealers in Germany. These criteria and require are prevented from concluding standard agreements ments do not preclude the offer of more extensive for the acquisition and sale of BMW products without services of greater advantage to the customer. They do, first consulting the authorized BMW dealer in that however, lead to the exclusion of those undertakings territory ; it is also made difficult for BMW simply to which are prepared to sell BMW products but which establish subsidiaries (see 5 (ii) above) through which are not prepared to provide the additional service to deliver products directly to customers and to required by BMW for the distribution of its products provide them with service. or to provide the service depots mentioned above . The combined effect of the objective criteria and obliga tions is to prevent, to an appreciable extent, the appointment of undertakings as BMW dealers and 16. Because of BMW s undertaking to sell only in their admission to the trade in BMW products. specified cases, whether by itself or through its subsidi aries, to consumers (see 6 (i) above), direct sources of supply are denied to the consumer in that he may not As in any particular case BMW can exclude from approach the manufacturer or its subsidiaries in the recognition as a BMW dealer even those undertakings common market, except in the abovementioned cases . which satisfy all the objective criteria and are prepared :o fulfil the minimum obligations (see 8 above), the BMW distribution system has an even more restrictive effect on competition in BMW products, and leads to :he quantitative selection of dealers. 17. The prohibitions, affecting all BMW dealers, on operating branches or distribution depots or using intermediaries in any other territory, and on adver tising and otherwise canvassing in another territory, The obligations of BMW main dealers vis-à-vis BMW unless they , fulfil their obligation under the agreement is regards selecting BMW retail dealers, placing them to promote diligently sales and after-sales service in under contract, terminating or modifying their their own territory (see 3 (iii) above), restrict their standard form of agreement and determining and freedom to promote sales outside their territory, even supervising their activities (see 4 above) result in main in respect of customers and BMW dealers appointed dealers having little scope, when appointing retail in countries other than Germany. dealers to follow their own views on sales policy where these differ from those of BMW. Selection depends, not on varous individual decisions by BMW main dealers based on their respective sales policies, > ut on the wishes of BMW . 18 . Since BMW dealers may not, without the consent of BMW, become the agents for any other motor vehicle manufacturers nor sell competing products for resale, and since they are allowed to use The result is to enable BMW to restrict access to trade and to sell to the customers parts of other makes n BMW products at all levels of distribution . which are of particular importance for the safety of BMW vehicles only where they satisfy BMW stand ards of quality (see 3 (iv) above), other manufacturers ( 4 . Since neitner BMW main dealers nor BMW and suppliers of motor vehicles and parts cannot to that extent use these German dealers as sales intermed etail dealers are allowed to sell goods other than orig iaries . nal BMW parts for repair purposes to dealers not uthorized by BMW (see 3 (ii) above), all independent lealers who are not part of the BMW distribution ;system are denied the opportunity of selling new BMW vehicles, and similarly denied the opportunity 19 . All the clauses mentioned ( 13 to 18 ) are also )f trading in BMW parts except where they them likely to have an appreciable effect on trade between selves use such parts in repairs rather than reselling Member States . Owing to the selective system (see 13 :hem . This exclusion affects all independent dealers to 1 5 above), those German undertakings which are throughout the common market. prepared to deliver BMW products to other Member States but have not been authorized by BMW are thereby prevented from delivering to purchasers in 15 . In so far as BMW has undertaken vis-à-vis its such countries . As BMW is also to ensure that its own main dealers , and the latter vis-à-vis their retail subsidiaries in other Member States will deliver only dealers, to appoint further dealers in the territory and in the agreed exceptional cases to consumers in to change the territory only on certain conditions Germany (see 16 above), trade between Member States (prior notification and opportunity of commenting) is to that extent affected . The intensity of trade with

No L 29 / 6 Official Journal of the European Communities 3 . 2 . 75

Member States is also diminished in that BMW BMW with information on their trading position , dealers are prevented from promoting sales outside sales trends, the market situation , stocks and expected their territory to consumers or selected BMW dealers demand (see 3 (xiii) above) amounts to a restriction of in .. other Member States (see 17 above). Finally, even competition simply because BMW thereby learns of the restricted scope of the prohibition on dealing in all the ways in which BMW dealers compete among competing products (see 18 above) has a diminishing themselves, and in which competing products are effect on the exchange of goods between Member sold . A final question to be considered was whether States, because German BMW dealers are largely the power possessed by BMW or the BMW main excluded from becoming distributors of competing dealer as principal to terminate a BMW contract for products emanating from other Member States and substantial breach (see 7 above), or their power to alter from selling such parts as are essential to safety and the territory or instal further dealers in such a territory do not satisfy BMW standards of quality. (see 4 and 5 (ii) above), amounted to an economic sanc tion which could be used to impose more extensive restrictions of competition on BMW dealers than Article 85 ( 1 ) is therefore applicable to the BMW those apparent from the wording of the agreement. standard forms of agreement. Provided BMW does not recommend BMW dealers not to sell BMW products outside the territory or not to sell competing products, or does not maintain IV resale prices, and offers neither incentives nor disin centives in order to attain these objectives, it cannot be assumed that the opportunities afforded to the prin The standard forms of agreement contain further obli cipal to collect information , to terminate the agree gations which, normally applied, place no restrictions ment and to alter the territory have a restrictive effect on competition within the meaning of Article 85 ( 1 ) on competition (see 8 above). At the present time, the (see also Article 2 (2) of Commission Regulation No Commission has no evidence to suggest that the 67/67/ EEC ('). BMW distribution system would be operated in such a manner . 20 . The obligation undertaken by BMW dealers to follow instructions given by BMW regarding adver tising does not amount to an appreciable restriction of competition, provided it is confined only to adver V tising designed to draw attention to BMW products and their properties. The Commission has no evidence which might suggest that BMW is operating 23 . The Commission has to decide whether the these provisions in a restrictive manner, especially as selective distribution system operated by BMW, BMW expressly stated in the circular to BMW dealers containing a partial prohibition on dealing in that its authority did not extend to advertising by competing products, can be exempted under Article BMW dealers concerning prices and conditions of sale 85 (3) from the prohibition contained in Article 85 ( 1 ) (see 3 (v) above). of the EEC Treaty.

In so far as BMW is entitled to refuse to conscnt to In considering the selective distribution system oper BMW dealers participating in an exhibition or fair ated by BMW in Germany, the Commission is under the conditions mentioned in the circular (see 3 prepared to accept that such a system may contribute (vi) above), the Commission's decision on the scope of both to improving the production and distribution of this clause remains subject to the proceedings goods and to promoting technical progress. concerning decisions on the participation at exhibi tions and fairs notified by the ' Bureau permanent international des constructeurs d'automobiles ' 24 . Limiting the number of dealers can be regarded ( IV/417). as more beneficial , so far as it is based on the require ment by BMW of minimum standards for selection and continued employment of dealers . By such means 21 . The obligation to use BMW trade marks in a the following can in particular be ensured : specified manner (see 3 (xii) above) does not come within the scope of Article 85 ( 1 ), as the resulting — that BMW motor vehicles are received and stored prohibition on using these trade marks in any other in technically perfect condition and arc delivered way is an incident of the protection under the law of trade marks to which BMW is entitled . to customers after a pre-delivery check carried out in accordance with BMW's instructions (see 3 (vii) to ( ix ) and 13 above); 22 . Furthermore it is not to be assumed that the obligation undertaken by BMW dealers to supply — that both maintenance and preparation and also services carried out under guarantee and extended (') OJ No 57, 25 . 3 . 1967, p. 849/67 . tree service are not only sufficiently available but

No L 29 /7 3 . 2 . 75 Official Journal of the European Communities

are also of an adequate quality for the consumer 25 . The restrictions imposed by BMW on its main (see 3 (ix) and (xi) and 1 3 above) ; dealers and by the latter on retail dealers as regards the appointment of further dealers or changing the territory (see 5) (ii) and 15 above) do not preclude the — that any modifications to vehicles which become conclusion of main dealer or retail dealer agreements, necessary may be carried out (see 3 (ix) and 13 but only delay the conclusion of such agreements in above) ; the interests of main dealers or retail dealers already appointed . The latter are thus given an opportunity to remedy any poor performance which has become — that sufficient plant, equipment and BMW-trained apparent, so that BMW or a main dealer may consider whether the addition of further main dealers or retail personnel are available for the provision of the above services (see 3 (vii) and (viii) and 1 3 above) ; dealers to the group already selected, or a change in the territory covered remains necessary. The above provision is closely connected with the clauses on — that the store of spare parts is adequate in range selection and finds its justification in the same con and quality (see 3 (x) and 1 3 above) ; and siderations as justify the latter (see 24 above).

— that BMW may rapidly and fully inform its appointed dealers of technical problems as they arise (see 3 (xiii) and 22 above). 26 . The obligation undertaken by BMW not to sell vehicles directly to consumers (see 6 (i) and 16 above) provides a line of demarcation between the activities of BMW and its dealers, allows BMW to concentrate its marketing activity, and relieves BMW of the need to maintain a multitude of business relationships. It is BMW has in addition reserved the right to make indi accepted that the obligation leads to an improvement vidual appointments from those applicants satisfying of sales promotion by the appointed dealers and thus the objective requirements for BMW dealers, on the rationalizes distribution . basis of considerations for which there are no univer sally predictable and objective criteria (see 8 and 1 3 above). The reservation of such a right is to be accepted in the present case, in so far as it relates to the selection by BMW of its main dealers. The restric tive influence which BMW has over the selection of 27. The restrictions imposed on BMW dealers from taking certain measures to promote sales outside their BMW retail dealers by BMW main dealers facilitates territory (see 3 (i), 3 ( iii ) and 17 above) may be simi rationalization , because BMW also cooperates directly larly conducive to concentration of efforts in selling with BMW retail dealers with the aim of improving BMW products and to rationalization in that they service. The cooperation between BMW and its channel dealers' activities primarily towards potential dealers, which goes beyond the mere marketing of purchasers in their own territory without impeding products, provides, in the view of the Commission in sales to consumers and other BMW dealers outside this particular case, a major factor justifying the BMW the territory . selective distribution system . It can be considered to be a method of rationalizing the sale and servicing of BMW vehicles ard parts and thereby provides a better service to the consumer than a system of free marketing to which such cooperation is not attached . Motor vehicles, being products of limited life, high 28 . The fact that BMW dealers may not deal in :ost and complex technology, require regular mainte competing products, should BMW withhold its nance by specially equipped garages or service depots, consent, does mean that suppliers of motor vehicles, jecause their use can be dangerous to life, health and parts and accessories of makes other than BMW property and can have a harmful effect on the environ cannot normally use BMW dealers as sales intermedi nent. It is therefore of importance that those respon aries (see 3 (iv) and 18 above). Nevertheless the advan sible for the maintenance of vehicles are made aware tages of this clause outweigh its disadvantages . Since jf the latest technical knowledge which the manufac in principle appointed BMW dealers have to concen urer has acquired in the development and construc trate their efforts in selling vehicles and parts on : ion of the vehicle . Moreover, continual cooperation BMW products , it may be expected that technical between BMW and its main dealers and retail dealers expertise and advice are provided for BMW vehicles nay assist BMW in the preparation of its maintenance and parts and that competition between the products nstructions and training programmes, and may also of the different manufacturers of motor vehicles and ead indirectly to improvements in the design of parts is strengthened at the different levels of distribu /ehiclcs . tion .

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29 . In the present case it can also be accepted that BMW main dealers and BMW retail dealers, can consumers receive a fair share of the benefit resulting provide the kind of service which BMW considers from the improvements and progress achieved necessary for the maintenance and safety of its vehi through the standard forms of agreement used by cles. Since consumers have complete freedom in BMW. The measures which are restrictive of competi purchasing BMW products within the common tion (see 24 to 28 above) not only have direct advan market and can take delivery from any undertaking tages for the consumer in the form of improved they wish to act on their behalf, the restrictions service , but also allow adequate competition at the concerned with selective distribution are in this distribution level , so that there remains a pressure to respect limited to their essential content. pass on to consumers the benefits resulting from rationalization . Such competition is assured by the fact that not only are consumers free to purchase goods and request service wherever they wish within The obligation undertaken by BMW not to sell to the common market, but also that BMW dealers are consumers (see 26 above) and the restrictions imposed free to purchase BMW products not only from the on BMW dealers on taking certain measures to BMW dealer for their territory but also from any other promote sales outside their territory (see 27 above) are BMW dealer anywhere in the common market (sec 27 similarly indispensable ; for only restrictions of this above). A corresponding freedom is enjoyed by the nature can provide a more effective encouragement to consumer, who may choose parts of other makes from promote sales within the territory. The obligation BMW dealers, unless they are such as are of particular undertaken by BMW dealers to sell minimum quanti importance for the safety of BMW vehicles and do not ties within their territories, such minimum quantities satisfy the standards of quality of BMW parts (see 28 being agreed by BMW with the main dealer on the above). basis of estimates (see 3 (i), 17 and 27 above), is also no more restrictive than is essential . By comparing the estimated and actual sales figures , an account can be taken of goods covered by the agreement which the BMW dealer did not obtain from , his principal . 30 . The restrictions imposed on parties to the Figures for goods required and for which payment is standard agreements are considered to be indispens due, must be declared to the principal at monthly able to the attainment of the improvements and tech intervals and at the same time an estimate given of nical progress mentioned . requirements for the following month (see 3 (i) above). In giving such estimates, the BMW dealer can provide for those quantities of goods which he expects to sell outside his territory .

The provisions on selective distribution (see 24 and 25 above) are indispensable, because on economic grounds a continuing cooperation between BMW and The prohibition against dealing in competing dealers would be subject to a limitation if BMW had products (see 28 above) is also confined to its essential to cooperate with all dealers prepared to sell BMW content . BMW dealers are indeed prohibited , where goods and provide pre - and after-sales service to BMW withholds consent, from selling new motor vehi customers . The minimum requirements placed by cles of other makes , from selling parts of other makes BMW on the provision of service could not be met if to dealers , and from selling to consumers such parts as BMW were only to issue service instructions to each are particularly important for the safety of BMW vehi main dealer or retail dealer on delivery of its products . cles and which do not comply with the standard of Moreover, BMW has left untouched the option of quality of BMW parts . But BMW dealers may ask every customer to have his vehicle serviced at an inde their principal to relax this prohibition against dealing pendent establishment, the latter being able to in competing products, where they can show reaso purchase all its requirements of BMW parts from any nable cause (see 3 ( iv) above). In such cases they are BMW main dealer or retail dealer . entitled to be allowed to sell such competing products as least interfere with the sale of BMW products . More over, the prohibition against dealing in competing products does not apply to the sale to the consumer of accessories of other makes which arc of no particular The creation by BMW, with the assistance of importance for the safety of BMW vehicles. Further appointed dealers , of a BMW service network does not more , the sale to the consumer of parts of other prevent third parties from servicing BMW vehicles . In makes and their use for repair purposes is in any case operating the selective system , BMW is doing no not restricted where they comply with the standard of more than ensure that, in addition and parallel to quality of BMW parts . A prohibition against dealing servicing by third parties, there is a service network in competing products which is restricted in this way which , because of the cooperation between BMW , allows sellers of accessories and parts of other makes

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adequate sales opportunities without impairing the Article 5 ( 1 ) of Regulation No 17, before 1 February quality of the BMW dealer's service . 1963 . These agreements did not satisfy the conditions laid down in Article 85 (3) (see 11 and 12 above). 31 . The BMW standard agreements provide the However, BMW has amended the new standard forms parties with no opportunity to eliminate competition of agreement (see 1 and 2 above) in such a way that in respect of a substantial part of the goods concerned . they do now satisfy the conditions laid down in In the first instance, they concern BMW vehicles, Article 85 (3). Under Article 7 ( 1 ) of Regulation No which compete with a range of other vehicles 17, the Commission may fix the period during which throughout the common market ; in the second , as the prohibition contained in Article 85 ( 1 ) shall apply. has already been stated (see 29 and 30 above) competi As BMW ended the export prohibition when it tion between BMW and competing products is main became clear that an exemption for such restriction tained at the various levels of distribution within the could not be granted in the automobile sector, the BMW network . necessary conditions prevail for the Commission to state that the prohibition shall not apply from 13 For none of its motor cars — even with a narrow defi March 1962, the date of entry into force of Regulation nition of the market — does BMW have a share of No 17 , to 1 January 1973 , the date on which the old the German market which would exclude competition standard agreements were replaced by the new. in respect of a substantial part of the products concerned . In that respect the Commission had to 35 . Conditions are to be attached to the Decision consider whether the fact that in Germany BMW has so that the Commission may be in a position to a considerable share of the market in motor cycles of examine whether access to trade in motor vehicles, 250 cc capacity and above militated against the spare parts and accessories is being unreasonably granting of an exemption . The BMW share of motor restricted by the BMW distribution system, and cycles of 250 cc capacity and above registered in whether the cooperation between BMW and its Germany in 1972 was approximately 32% . In 1973 dealers is being used to restrict competition to an BMW produced 197 446 cars and 20 856 motor cycles extent greater than is apparent from the content of and sold 193 378 cars and 19 918 motor cycles ; its the distribution agreements . Annual reports are to be turnover for motor cars was DM 1 040 000 000 and for submitted to the Commission giving details of any motor cycles DM 79 035 000 . Bearing in mind the cases where BMW has refused to conclude distribu lesser importance of the trade in motor cycles when tion agreements or has terminated or amended such compared with that in motor cars and the great simi agreements, or where BMW has refused permission to larity in sales and service methods for the two its dealers to sell competing products . These require products, it would be unreasonable to impose on ments are based on Article 8 ( 1 ) of Regulation No 17, BMW a different method of distribution for motor cycles ; moreover, BMW is subject to effective competi tion in the motor cycle market in Germany and even more so in the other countries of the common market . HAS ADOPTED THIS DECISION :

All the conditions laid down in Article 85 (3) have therefore been fulfilled . Article 1

VI The provisions of Article 85 ( 1 ) of the Treaty esta blishing the European Economic Community are, 32. Pursuant to Article 6 ( 1 ) of Regulation No 17, pursuant to Article 85 (3), declared inapplicable to the the date of operation of the exemption under Article standard forms of main and retail dealership agree 85 (3) is to be 1 January 1973 , since it was on that ment made by the Bayerische Motoren Werke Aktien date that BMW began to use their new standard forms gesellschaft and used by them in Germany since 1 of agreement, which were covered by the previous January 1973 . notification . This Decision shall have effect from 1 January 1973 33 . The new standard forms of agreement are valid to 31 December 1977 . until 31 December 1977. It is considered appropriate to limit the period of validity of the exemption under Article 85 (3) in accordance with Article S ( 1 ) of Regu Article 2 lation No 17 to 31 December 1977 , so that the Commission may thereafter reexamine the operation of the BMW distribution system . The prohibition contained in Article 85 ( 1 ) shall not be applicable to the standard forms of wholesaler, 34 . BMW had notified the Commission of the main dealer and retail dealer agreement made and earlier agreements, pursuant to the second sentence of used in Germany by the Bayerische Motoren Werke

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Aktiengesellschaft during the period 13 March 1962 Article 4 to 1 January 1973 . This Decision is addressed to the Bayerische Motoren Article 3 Werke Aktiengesellschaft, 8 München 40 , Petuelring 1 30 . The Bayerische Motoren Werke Aktiengesellschaft is hereby required to submit an annual report to the Done at Brussels, 13 December 1974. Commission, the first to be prepared by 31 December 1975, setting out : — any cases of refusal to conclude distribution agree For the Commission ments in Germany, and any termination or modifi cation of such agreements, The President — any cases where BMW dealers in Germany are refused permission to sell competing products. François-Xavier ORTOLI