JUDGMENT OF 1. 2. 1978 — CASE 19/77 MILLER v COMMISSION

In Case 19/77

THE COURT, composed of: H. Kutscher, President, M. Sørensen and G. Bosco, Presidents of Chambers, A. M. Donner, P. Pescatore, Lord Mackenzie Stuart and A. O'Keeffe, Judges, Advocate General: J.-P. Warner Registrar: A. Van Houtte

gives the following

JUDGMENT

Facts and issues

I — Statement of the facts

II — Written procedure

III — Conclusions of the parties

IV — Submissions and arguments of the parties

A — The applicant's position on the market

B — The importance of the prohibitions on exports

C — Article 15 (2) (a) of Regulation No 17

V — Oral procedure

Decision

The incidence of the prohibition of exports on intra-Community trade

The fine

Costs

I —. Statement of the facts

II —. Written procedure

III —. Conclusions of the parties

1. Annul the Decision of the Commission of the European Communities dated 1 December 1976, notified on 6 December 1976, relating to a proceeding under Article 85 of the EEC Treaty;

2. Order the Commission of the European Communities to pay the costs;

1. Appropriately reduce the fine fixed by the Commission at 70000 u. a. (DM 256200);

2. Permit the applicant to pay the said fine by instalments of an acceptable amount, having regard to the strain on its liquid assets occasioned by investments and investment plans;

3. Order the Commission to pay a proportion of the costs.

IV —. Submissions and arguments of the parties

A —. The applicant's position on the market

B —. The importance of the prohibitions on exports

C —. Article 15 (2) (a) of Regulation No 17

V —. Oral procedure

1. By an application which was received at the Court on 4 February 1977 the undertaking Miller International Schallplatten GmbH (hereinafter referred to as Miller), having its head office in Quickborn near Hamburg, instituted proceedings against the Commission Decision of 1 December 1976 relating to a proceeding under Article 85 of the EEC Treaty (Official Journal, L 357/40) in which it was found that the prohibitions on the export of records, tapes and cassettes inserted by Miller in an exclusive dealing agreement and in its terms and conditions of sale constituted infringements of Article 85 (1) of the Treaty and a fine of 70000 u.a. (being DM 256200) was imposed upon the undertaking.

2. The file indicates that the applicant produces sound recordings (records, cassettes and tapes) which it sells chiefly on the German market, exporting only a limited proportion of its production, partly to Community countries and partly to third countries.

3. The applicant's behaviour, which resulted in the contested decision, is not disputed as to the facts but the parties differ as to the appraisal of the effects of that behaviour and, consequently, of its gravity.

4. It is common ground that on 11 June 1971 the applicant concluded an exclusive dealing agreement with the undertaking Sopholest of Strasbourg for the distribution of all of its products under the Europa and Somerset labels within Alsace-Lorraine, which agreement included at Clause 5 the following provision: No Miller products shall as a rule be exported from Alsace-Lorraine to other countries.

5. Further, it has been established that Miller charged its German customers prices differing sharply from the export prices, the latter being lower than the prices charged to wholesalers and much lower than the prices of products supplied to department stores, retail trade organizations, retailers and private consumers.

6. Although the applicant does not dispute that these facts are substantially correct it nevertheless maintains that they cannot have appreciably affected trade between Member States in view of the insignificance of the undertaking on the market in sound recordings, the nature of its products, which are chiefly intended for the German-speaking public, and the nature of its customers.

7. In this connexion it must be held that, by its very nature, a clause prohibiting exports constitutes a restriction on competition, whether it is adopted at the instigation of the supplier or of the customer since the agreed purpose of the contracting parties is the endeavour to isolate a part of the market.

8. First, Miller relies upon its weak position on the market in question and the derisory proportion of the total market formed by its production in order to maintain that its behaviour cannot have affected intra-Community trade.

9. However, according to the dau produced by it in the course of the administrative procedure its share of the total market in sound recordings in the Federal Republic of Germany was assessed for 1970 at 5.19 %, for 1971 at 5.05 %, for 1972 at 4.91 %, for 1973 at 5.87 %, for 1974 at 5.05 % and for 1975 at 6.07 % in terms of volume of sales.

10. In assessing Miller's position on the market it is necessary to pay particular attention to the market of the Federal Republic of Germany, if only because, as Miller itself has stated, its production programme is directed principally at a German-speaking public.

11. Miller adds that, nevertheless, its behaviour cannot affect intra-Community trade because its programme is largely intended for a German-speaking public and can be of only marginal interest to the public in other Member States.

12. It is unnecessary to establish the extent to which this statement is accurate since it is sufficient to find that Miller has concluded contracts for exports to other Member States and has in fact exported a part, albeit a relatively minor part, of its production to those States.

13. Finally, Miller continues to maintain that neither its German customers nor its exporters or foreign customers were interested in intra-Community trade, so that the prohibitions on exports did not interfere with their freedom of competition.

14. Arguments based on the current situation cannot sufficiently establish that clauses prohibiting exports are not such as to affect trade between Member States, even if it were possible to establish beyond reasonable doubt the accuracy of such general statements, since that situation may vary from one year to the next in terms of changes in the conditions or composition of the market, both in the common market as a whole and on the various national markets.

15. It is clear from the foregoing as a whole that the clauses in dispute were such as to affect trade between Member States.

16. The contested decision was thus justified in its finding that in the contested clauses prohibiting exports Miller infringed the provisions of the said article.

17. The applicant has requested in the alternative that the fine of 70000 u.a. should be annulled or reduced.

18. As is clear from the foregoing as a whole, the clauses in question were adopted or accepted by the applicant and the latter could not have been unaware that they had as their object the restriction of competition between its customers.

19. With regard to the gravity of the infringement, the clauses prohibiting exports constitute a form of restriction on competition which by its very nature jeopardizes trade between Member States.

20. The applicant has further maintained that the amount of the fine is extremely burdensome for an undertaking of its nature.

21. Nevertheless, by its refusal to produce its accounts, which the Court requested, it has prevented verification of this statement.

22. It follows that the application in respect of Article 2 of the contested decision is not well founded and accordingly must also be dismissed.

23. Under Article 69 (2) of the rules of procedure the unsuccessful party shall be ordered to pay the costs if they have been asked for in the successful party's pleading.

On those grounds, THE COURT, hereby:

1 Dismisses the application as unfounded;

2 Orders the applicant to pay the costs.