Opinion of Mr Advocate General Reischl

Mr President,

Members of the Court,

The four procedures for obtaining a preliminary ruling in which I must give my opinion today concern selective distribution systems practised by four French perfume manufacturers involved in criminal proceedings before the Tribunal de Grande Instance, Paris, and also apparently practised by most well-known manufacturers in this sector.

The present form of these systems may briefly be described as follows:

In France, the country of manufacture, if the manufacturer has no dealers of its own, the goods are distributed, bypassing wholesalers, through specific retailers, selected by the manufacturer in accordance with qualitative criteria (location and fittings of the shops and qualified staff) and in accordance with quantitative criteria, in which connexion the purchasing power of the population of a specific area is of importance. In other Member States, if there are no subsidiary companies the goods are distributed through exclusive distributors who are in each case appointed for one country. In their turn the exclusive distributors, just like the manufacturers in France and apparently using standard agreements drawn up by the manufacturers, select specific retailers in accordance with qualitative and quantitative criteria and deliver supplies only to them or to retailers who form part of the distribution system in other Member States. The authorized retailers may only deliver supplies to final consumers or other sales points expressly authorized to distribute.

These distribution systems, which originally contained other elements with which it will be necessary to deal below, were notified to the Commission on various dates; as a result the Commission attempted to work out a general solution for the whole sector (see its Fourth Report on Competition Policy, Nos 35 and 97 and its Fifth Report on Competition Policy, Nos 57, 58 and 59).

The following details must be stated as regards the procedure before the Commission:

On 31 January 1963 Guerlain S.A. notified a standard agreement applicable to distribution in France and also the agreements entered into with the general representatives in the other Member States at the time; in addition it notified on 20 June 1973 the agreements entered into with the general representatives in the United Kingdom and Denmark.

On 30 January 1963 Parfums Rochas S.A. notified to the Commission two standard agreements, one for distribution in France and one for the general representatives in the other Member States at the time; in addition it notified on 29 June 1973 a standard agreement intended for the general representatives in Ireland and Denmark and agreements which the English subsidiary had entered into with authorized retailers, and finally on 14 September 1973 a standard agreement which the Danish general representative had fixed for retailers in that country.

On 30 January 1963 Lanvin S.A. notified to the Commission the agreements entered into with the general representatives in the other Member States at the time and on 31 January 1963 it notified a standard agreement intended for distribution in France.

Nina Ricci S.à r.L, finally, notified to the Commission on 31 January 1963 a standard agreement for distribution in France and also the agreements entered into with the Belgian, Netherlands and German general representatives; in addition, on 12 September 1972 it notified an agreement entered into with an Italian undertaking, and, finally, on 3 August 1973 the agreements entered into with the general representatives in the United Kingdom, Ireland and Denmark.

If they were not duly notified, the Commission was informed, during the administrative procedure which it carried out, of the agreements which the general representatives or subsidiaries had entered into in the various Member States with specific retailers.

The majority of the distribution systems practised in the perfume industry, including those of the companies involved in the main actions in these proceedings, contained clauses which the Commission regarded as incompatible with Article 85 (1) of the EEC Treaty. These were on the one hand the undertaking by retailers only to deliver supplies to final consumers, which was, according to the Commission, an indirect export ban, in addition, the undertaking by retailers only to purchase from the general representative in their country, or, in France, only from the manufacturer, which was considered to be an indirect import ban, and finally the undertaking by retailers to abide by imposed prices if the goods were re-imported or re-exported.

For this reason the Commission initiated on 27 April 1972 a procedure against three undertakings which had notified such a distribution system, Rochas, Dior and Lancôme. Within the context of that procedure a notice of complaints was delivered on 24 July 1972, followed by a hearing; an additional notice of complaints was delivered to Rochas on 25 May 1973, followed by another hearing. After this, the Commission reached the view that there was no need for it to take action under Article 85 (1) if all direct or indirect export or import bans and the undertaking by retailers to abide by the imposed prices when the goods were re-imported or re-exported were removed from the distribution system. This was evidently accepted on 17 September 1974 by the Comité de Liaison des Syndicats Européens de la Parfumerie, a federation to which the national associations of perfume manufacturers belong; it was assumed that this solution would apply to all undertakings in that sector. The three undertakings against which a procedure had been initiated therefore stated that they were prepared to alter their distribution systems accordingly. As a result they were informed by the Commission that following this it could no longer see any reason to take action under Article 85 (1). When the procedures against the three abovementioned perfume undertakings had been terminated the Commission published on 24 December 1974 a press release according to which the principles and criteria which should apply in the appraisal of similar distribution systems in this field could be deduced from the Commission's attitude in the three abovementioned cases. The Commission's Fourth Report on Competition Policy published in April 1975 contained a corresponding statement. It may be deduced from this that the Commission, in view of the structure of the market — the large number of competing undertakings and the small market shares held by the individual undertakings — and provided that the restrictions which caused a disturbance of the market were lifted, saw no reason to take action under Article 85 (1) against the selective distribution systems in the perfume industry.

Accordingly the Commission also requested the other undertakings to remove clauses restricting trade or clauses having a similar effect. When this had been done and the Commission had been informed of it, the undertakings concerned received letters stating that their distribution systems were in harmony with competition law and that there was no reason to initiate a procedure against them under Article 85 (1). Such a letter was sent to the Guerlain company on 28 October 1975. In addition, after it had informed the Commission of a corresponding agreement of 1 September 1976, this company received the information, dated 13 September 1976, that the sales organization existing in Belgium, the Netherlands and Luxembourg could be regarded as satisfactory as regards the competition rules contained in the EEC Treaty. Letters such as that sent to Guerlain on 28 October 1975 were also sent to Rochas on 26 March 1976 and to Lanvin on 23 September 1976. In the case of Nina Ricci it was stated first of all in a letter of 16 March 1976 that the agreements intended for the German retailers should be regarded as satisfactory as regards Community competition law. Similar statements were made on 7 February 1977 in the case of the Italian and Netherlands retail agreements, on 6 April 1977 in the case of the Danish exclusive dealing agreement and the French retail agreements and on 5 August 1977 in the case of the agreements with the general representatives in Belgium, Luxembourg, the United Kingdom and Ireland. Finally, Nina Ricci received a letter on 20 January 1978 the wording of which corresponds grosso modo to the letter sent to Guerlain on 28 October 1975.

For the purpose of the main actions the distribution systems thus viewed by the Commission are relevant for the following reasons:

In all these cases the accused or defendants claimed in their defence that the Commission of the European Communities had approved the distribution systems practised by the perfume manufacturers — in some cases decisions under Article 85 (3) of the EEC Treaty were mentioned — and that this should not be called in question by the application of derogating provisions of national law over which Community law takes precedence. In some cases also reference was made to the alleged authorization of selective distribution systems in the case-law of this Court. In addition in some cases the objection was also made that the shops of the plaintiffs claiming damages did not meet the requirements laid down and were therefore not admitted to the sales organizations for good reason. In view of these defences and because the court considered that it did not have sufficient information, it stayed the proceedings by judgments of 5 July 1978. It ordered (according to the judgment at the origin of Case 253/78) that

The operative parts of the judgments initiating the procedures for obtaining preliminary rulings in Cases 1 to 3/79 are worded in similar terms.

I adopt the following viewpoint on these questions:

I — I shall begin with a few introductory remarks.

1. Since according to the operative parts of the references to the Court of Justice for preliminary rulings the exclusive dealing agreements entered into by the various perfume manufacturers involved must be submitted to the Court and since it is afterwards asked whether these undertakings benefit from Article 85 (3) of the EEC Treaty, it is appropriate to point out at the beginning the fact that in procedures under Article 177 of the EEC Treaty the Court of Justice may not apply Community law to an individual case, as it seems to be requested to do. If the validity of measures of Community law is not involved, it has power only to interpret Community law, in other words to construe the contents of that law; naturally, in order to give assistance in reaching a decision which is appropriate and restricted to the essentials, the special features of the main action must be taken into consideration in so doing. Accordingly the questions which have been raised should be reformulated, as the Court of Justice may do and has already done on many occasions. They might accordingly read as follows, as suggested by the Commission:

2. In addition it is necessary to point out that there is no objection to referring such a question to the Court for a preliminary ruling even if it may be deduced from Article 9 of Regulation No 17 that national courts and national authorities have no jurisdiction to apply Article 85 (3) and that the court making the reference therefore could not reach the finding that the conditions for the application of Article 85 (3) were fulfilled in the cases brought before it.

3. In raising such a question, the Tribunal de Grande Instance, Paris, assumes, and this is a logical condition for the application of Article 85 (3), that Article 85 (1) applies to the case before it. It is necessary however to examine this assumption. In the procedure for obtaining a clear that the Commission takes the view that, after the deletion of several clauses which were initially applicable to the distribution systems, in other words according to the version of the relevant agreements now in force, the prohibition laid down in Article 85 (1) no longer applies. It is necessary to point this out clearly to the court making the reference and in this connexion it is no doubt appropriate also to say a few words in clarification of Article 85 (1). As the Commission has suggested, the following question might be formulated which may be regarded as contained by implication in the request for interpretation: Must article 85 (1) of the EEC Treaty be interpreted as meaning that agreements which are the outcome of a sales organization based not only on qualitative but also on quantitative criteria of selection in the sector of certain luxury products whose brand image is important are incompatible with the common market and therefore prohibited pursuant to that provision?

4. Finally, I still have the impression that the main problem in the main action is the question whether after the Commission's appraisal of the distribution systems it is still possible to apply the abovementioned stricter French provisions on refusal to sell, according to which it is evidently impossible to rely upon such selective distribution systems.

II — Following these preliminary observations I shall now deal with the individual questions the examination of which is suggested by the references for a preliminary ruling.

1. The problem whether Article 85 (1) is applicable to distribution systems according to which not every interested retailer is supplied but a selection is made according to qualitative and quantitative criteria logically takes first place.

2. If the court making the reference should reach the view with the help of such considerations that the distribution systems are covered by Article 85 (1), then the questions further arise whether for example the regulation on block exemption, Regulation No 67/67/EEC, is applicable, whether it is not necessary in fact to assume that the Commission took ą decision of exemption under Article 85 (3), and finally whether the application of Article 85 (3) comes into consideration at all or whether it may no doubt be excluded in such cases.

3. Following this I now reach a final series of questions in the request for a preliminary ruling, those which are surely the most important from the point of view of the court making the reference. According to that court what is involved is the applicability of the Fench provisions on refus de vente (refusal to sell) which, together with the penalties laid down by the provisions, is under consideration, although the selective distribution systems which are supposed to justify the refusal to sell are appraised by the Commission from the point of view of Community law.

III — All in all, I therefore conclude that the questions referred to the Court of Justice by the Tribunal de Grande Instance, Paris, should be answered as follows:

1 Translatai from ihc German.