JUDGMENT OF 9. 7. 1969 — CASE 10/69 PORTELANGE v MARCHANT

In Case 10/69 Reference to the Court under Article 177 of the EEC Treaty by the Tribunal de Commerce, Brussels, for a preliminary ruling in the case pending before the said court between

THE COURT composed of: R. Lecourt, President, A. Trabucchi and J. Mertens de Wilmars, Presidents of Chambers, A. M. Donner, W. Strauß, R. Monaco (Rapporteur) and P. Pescatore, Judges, Advocate-General: K. Roemer Registrar: A. Van Houtte

gives the following

JUDGMENT

Issues of fact and of law

I — Summary of facts and procedure

II — Observations submitted under Article 20 of the Statute

A — Observations submitted by SA Portelange

B — Observations submitted by the Commission of the European Communities

C — Oral observations submitted by SA Smith Corona Marchant International (Lausanne), Smith Corona Marchant GmbH (Frankfurt am Main) and Smith Corona Marchant Corporation (New York) at the hearing on 10 June 1969

Grounds of judgment

The jurisdiction of the Court

Substance

Costs

I —. Summary of facts and procedure

II —. Observations submitted under Article 20 of the Statute

A —. Observations submitted by SA Portelange

(a). SA Portelange recalled the various solutions put forward in legal literature and in case-law with regard to the concept of provisional validity and subscribed to the view that agreements falling under Article 85(1) and duly notified are completely valid so long as the Commission has made no decision on them.

(b). SA Portelange then observes that the question before the Court was only put because the court making the reference wrongly considered that the contract in dispute came under Article 85(1) of the Treaty. Although this contract guarantees SA Portelange the exclusive right of supplies from the producer, it neither prohibits re-exports nor contains any provision intended to prevent parallel imports. It does not therefore result in the partitioning of the markets.

B —. Observations submitted by the Commission of the European Communities

(a). The Commission first of all considers the problem whether SA Portelange may in this case rely on the provisional validity of the agreement in dispute. In this connexion it recognizes that the contract of 1 July 1961 concerning the exclusive right granted to SA Portelange to sell the appliances of Marchant, Smith Corona and Hamann was notified to the Commission in accordance with Regulation No 17/62 and that it is consequently provisionally valid.

(b). The Commission thus declares that it considers the said problem only in so far as is relevant. It disputes the view that the concept of provisional validity implies that the parties to the contract may proceed against each other with a view to enforcing the contract (or in the case of failure to do so to obtain compensation) and against third parties, enforcing their rights through the national courts.

C —. Oral observations submitted by SA Smith Corona Marchant International (Lausanne), Smith Corona Marchant GmbH (Frankfurt am Main) and Smith Corona Marchant Corporation (New York) at the hearing on 10 June 1969

1. By judgment dated 18 February 1969, received at the Court on 25 February 1969, the Tribunal de Commerce, Brussels, has raised, under Article 177 of the Treaty establishing the EEC, a question seeking interpretation of Article 85 of the Treaty and the implementing regulations.

2. The interpretation requested concerns the effects of the provisional validity acknowledged in the case of agreements which have been notified in due time to the Commission of the European Economic Community, before the commencement by the latter of the procedure provided for in Article 9 of Regulation No 17.

3. The Commission points out that in the present case a first agreement concerning the distribution and sale of office typewriters and calculating machines, entered into on 1 July 1961 between Portelange and Smith Corona Marchant International of Lausanne, was notified in accordance with Article 5 of Regulation No 17.

4. As the supplementary agreement, entered into at a later date for the distribution and sale of electric copying machines, which forms an independent agreement distinct from the prior contract, has not been notified, the Commission states that the question submitted to the Court by the Tribunal de Commerce, Brussels, does not arise in the present case, and is hence inadmissible.

5. Article 177 of the Treaty, which is based on a clear separation of functions between national courts and the Court of Justice, does not permit the latter either to take cognizance of the facts of the case, or to pass judgment on the reasons for requests for interpretation.

6. The question whether the provisions or concepts of Community law, whose interpretation is requested, are in fact applicable to the case in question lies outside the jurisdiction of the Court of Justice and falls within the jurisdiction of the national court.

7. When a court or tribunal requests the interpretation of a Community provision or of a legal concept connected with it, it must be assumed that that court considers such interpretation necessary to the solution of the dispute before it.

8. The objection raised by the Commission cannot, therefore, be sustained.

9. Article 85 of the Treaty is arranged in the form of a rule imposing a prohibition (paragraph (1)) with a statement of its effects (paragraph (2)) mitigated by the exercise of a power to grant exceptions to that rule (paragraph (3)).

10. To treat a given agreement, or certain of its clauses, as automatically void presupposes that that agreement falls within the prohibition of paragraph (1) of the said article and that it may not benefit from the provisions of paragraph (3).

11. In order to permit the parties to invoke the provisions of Article 85(3), Regulation No 17 lays down that the agreements or decisions mentioned in Article 85(1) must be notified to the Commission.

12. In the case of an agreement notified under Regulation No 17, the mere fact of its notification cannot imply that the agreement falls under the prohibition imposed by Article 85(1).

13. The question whether such an agreement is in fact prohibited depends on the appraisal of economic and legal factors which cannot be assumed to be present in the absence of an explicit finding that the individual agreement in question not only contains all the factors mentioned in Article 85(1), but does not qualify for the exemption provided by Article 85(3).

14. So long as such a finding has not been made, every agreement duly notified must be considered valid.

15. In view of the absence of any effective legal means enabling the persons concerned to accelerate the adoption of a decision under Article 85(3) — the consequences of which are all the more serious the longer such a decision is delayed — it would be contrary to the general principle of legal certainty to conclude that, because agreements notified are not finally valid so long as the Commission has made no decision on them under Article 85(3) of the Treaty, they are not completely efficacious.

16. Although the fact that such agreements are fully valid may possibly give rise to practical disadvantages, the difficulties which might arise from uncertainty in legal relationships based on the agreements notified would be still more harmful.

17. If the Commission considers that the implementation of an agreement notified infringes the competition rules, it is open to it to adopt, within the appropriate time, a decision either under Article 85(3) of the Treaty or under Article 15(6) of Regulation No 17.

18. Where Article 15(6) abovementioned has been applied, the persons concerned are put on notice that the Commission considers that the conditions for the application of Article 85(1) are fulfilled and that the application of Article 85(3) is not justified.

19. Hence, any parties who proceed, from then on, with the implementation of the agreement do so at their own risk.

20. It must therefore be concluded that the agreements mentioned in Article 85(1) of the Treaty, duly notified in accordance with Regulation No 17, are of full effect so long as the Commission has made no decision under Article 85(3) and the provisions of the said regulation.

21. The costs incurred by the Commission of the European Communities, which has submitted its observations to the Court, are not recoverable.

22. As these proceedings are, in so far as the parties to the main action are concerned, in the nature of a step in the action pending before the Tribunal de Commerce, Brussels, the decision on costs is a matter for that court.

On those grounds, Upon reading the pleadings; Upon hearing the report of the Judge-Rapporteur; Upon hearing the oral observations of the parties to the main action and the Commission of the European Communities; Upon hearing the opinion of the Advocate-General; Having regard to the Treaty establishing the European Economic Community, especially Articles 85 and 177; Having regard to Regulation No 17 of the Council of 6 February 1962; Having regard to the Protocol on the Statute of the Court of Justice of the European Economic Community, especially Article 20; Having regard to the Rules of Procedure of the Court of Justice of the European Communities, THE COURT in answer to the question referred to it for a preliminary ruling by the Tribunal de Commerce, Brussels, in accordance with its judgment dated 18 February 1969, hereby rules: