JUDGMENT OF 10. 7. 1980 — CASE 37/79 MARTY v LAUDER
In Case 37/79 REFERENCE to the Court under Article 177 of the EEC Treaty by the Tribunal de Commerce [Commercial Court], Paris, Third Chamber, for a preliminary ruling in the action pending before that court between
THE COURT composed of: H. Kutscher, President, A. O'Keeffe and A. Touffait (Presidents of Chambers), J. Mertens de Wilmars, P. Pescatore, Lord Mackenzie Stuart, G. Bosco, T. Koopmans and O. Due, Judges, Advocate General: G. Reischl Registrar: A. Van Houtte
gives the following
JUDGMENT
Facts and Issues
I — Facts and procedure
II — Written observations submitted pursuant to Article 20 of the Protocol on the Statute of the Court of Justice of the EEC
A — Observations of Estéé Lauder S.A.
1. The Estéé Lauder sales organization
2. The applicability of Article 85 (3)
3. French rules on the refusal to sell
4. Letters sent to Estéé Lauder by the Commission
5. Scope and nature of the letters sent by the Commission
B — Observations of the French Republic
The first question
The second question
The third question
C — Observations of the Commission
The first question
(1) The legal nature of the letter
(a) Competence
(b) Essential procedural requirements
(c) Binding nature
(2) The objective of the letter
The second question
The third question
III — Oral procedure
IV — Reopening of the oral procedure
Decision
The first and second questions
The third question
Costs
I —. Facts and procedure
1. Anne Marty S.A., the plaintiff in the main action, operates a retail outlet in Paris in which it sells perfumes.
2. By writ of 20 April 1978, Anne Marty formally requested Estéé Lauder to open for it an account and a depot for Estéé Lauder products and consequently to enter up and fill its first order, details of which were set out in that writ, and to deliver that order, specifying that Anne Marty would pay the amount of that order upon receipt of the invoice.
3. Before the national court Anne Marty claimed that Estéé Lauder's refusal to sell was contrary to the provisions of public policy laid down in the Regulation of 30 June 1945 and the Order of 24 June 1958 on the refusal to sell. That unlawful practice was said to confer territorial protection on Estéé Lauder distributors to the disadvantage of other sellers by eliminating competition in the sector and was contrary to improvement in the service given to customers. According to Anne Marty, Article 85 of the Treaty of Rome also laid down the principle of the prohibition on exclusive distribution contracts, except in the case of the derogation provided for in Article 85 (3). Estéé Lauder could not in any case rely on Article 85 (3). Finally, Anne Marty emphasized that it runs a prestige shop with an excellent reputation and qualifications.
4. In the judgment making the reference to the Court of Justice, the Tribunal de Commerce, Paris, considered that the rules laid down by Article 85 of the Treaty are applicable to the agreements between Estéé Lauder and its authorized distributors in France. The court reached that conclusion on the basis of the fact that the said agreements contain provisions affecting sales and supplies (the obligation on the distributors not to supply the products to persons other than authorized distributors; the obligation on the authorized distributor not to export new products to another authorized distributor in the common market within one year of their being launched without previously ascertaining that they have already been put on the market by Estéé Lauder in the country to which they are consigned; the obligation on Estéé Lauder not to deliver products of its brand to persons other than authorized distributors) and extending to the countries of the common market; as a result the Tribunal de Commerce took the view that the contracts between Estéé Lauder and its French distributors are capable of affecting trade between Member States. The court also relied upon the fact that Estéé Lauder's products are not manufactured in France, but in Belgium and Great Britain, and that the products delivered by the company in France to its authorized distributors are thus imported from another country of the Community, which also affects trade between Member States.
5. The Tribunal de Commerce observed, however, that the Commission informed Estéé Lauder by a registered letter of 23 March 1977 that its authorized distributorship agreement and its conditions of sale in France may be regarded as not capable of being affected by the rules on competition contained in the EEC Treaty. The full text of that letter, which is signed by R. Mussard, Acting Director, is as follows :
6. The Tribunal de Commerce, Paris, expressed doubts about the significance to be attributed to that letter in the following terms:
7. Considering that the matters reproduced above raise serious problems in the field of Community law, the Tribunal de Commerce, Paris, by a judgment of 28 February 1979, decided to stay proceedings and to submit to the Court of Justice the following preliminary questions:
8. The judgment making the reference was received at the Court Registry on 2 March 1979.
II —. Written observations submitted pursuant to Article 20 of the Protocol on the Statute of the Court of Justice of the EEC
A —. Observations of Estéé Lauder S.A.
1. The Estéé Lauder sales organization
2. The applicability of Article 85 (3)
3. French rules on the refusal to sell
4. Letters sent to Estéé Lauder by the Commission
5. Scope and nature of the letters sent by the Commission
B —. Observations of the French Republic
(a). The letter sent by the Commission to Estéé Lauder may seem to come within the definition of negative clearance given in Article 2 of Regulation No 17. Indeed, in that letter, upon application by the undertaking, the Commission certifies that on the basis of the facts in its possession, there are no grounds under Article 85 (1) or Article 86 of the Treaty for action on its part in respect of the agreements notified to it.
(b). In the French Republic's submission, the more logical view is that the letter of 23 March 1977 does not constitute a negative clearance.
(a). In the case in point, it is not possible to accept that the letter of 23 March 197 may be relied on absolutely as against third parties, since it was not published in any way. Consequently it must be recognized that Anne Marty may challenge the negative clearance in legal proceedings and it is for the Court of Justice, upon reference the Tribunal de Commerce, to pronounce that clearance irregular.
(b). The general problem, concerning the question whether a negative clearance is binding upon national courts for the purpose of applying Articles 85 (1) and 86 of the Treaty of Rome, is problematical.
C —. Observations of the Commission
(1). The legal nature of the letter
(a). Competence
(b). Essential procedural requirements
(c). Binding nature
(2). The objective of the letter
III —. Oral procedure
IV —. Reopening of the oral procedure
1. By judgment of 28 February 1979, which was received at the Registry of the Court on 2 March 1979, the Tribunal de Commerce, Paris, (Third Chamber), submitted to the Court of Justice for a preliminary ruling under Article 177 of the Treaty questions on the interpretation of Article 85 of the Treaty and of certain provisions of Regulation No 17 of the Council of 6 February 1962(Official Journal, English Special Edition 1959-1962, p. 87).
2. Those questions are put in the context of a dispute between Estéé Lauder S.A. and a perfumery retailer which does not form part of the selective distribution network set up by Estéé Lauder. After Estéé Lauder refused to fulfil an order placed by that retailer the latter, on 5 May 1978, brought proceedings against Estéé Lauder before the Tribunal de Commerce, Paris, claiming that Estéé Lauder should be ordered to deliver the goods requested and to pay damages. That action is based upon the infringement of Article 37 (1) (a) of the French Order No 45-1483 of 30 June 1945 on prices which prohibits a refusal to sell. The plaintiff in the main action also submits that the selective distribution system relied upon by Estéé Lauder in order to justify the contested refusal to sell is contrary to Article 85 (1) of the Treaty.
3. In its defence Estéé Lauder argued that the agreements setting up its distribution system, which is based upon both quantitative and qualitative criteria of selection, have been acknowledged by the Commission of the European Communities to conform with Community competition rules and that that approval by the Commission prevented the application of the prohibitions provided for by national competition law. In that regard Estéé Lauder made reference to a letter of 23 March 1977 from the Commission's Directorate-General for Competition informing it that the authorized distributorship agreement and the conditions of sale applied by your company in France may be considered, taking account of the economic context in which they operate, as not capable of being affected by the rules on competition contained in the EEC Treaty.
4. The Tribunal de Commerce, Paris, decided to stay the proceedings and submitted to the Court of Justice the following questions for a preliminary ruling:
5. In the first question the Court is asked to specify the legal nature of letters such as that which was sent to the defendant in the main action by the Commission's Directorate-General for Competition. The second question seeks to ascertain the effects which such letters may produce as regards national courts. These two questions should be considered together.
6. Article 87 (1) of the Treaty authorized the Council to adopt any appropriate regulations or directives to give effect to the principles set out in Articles 85 and 86. In accordance with that authorization the Council has adopted regulations, in particular Regulation No 17 of 6 February 1962 (Official Journal, English Special Edition 1959-1962, p. 87), which gave the Commission power to adopt various categories of regulation, decision and recommendation.
7. The instruments thus placed at the Commission's disposal for the accomplishment of its task include decisions granting negative clearance and decisions applying Article 85 (3). So far as decisions granting negative clearance are concerned, Article 2 of Regulation No 17 of the Council provides that, upon application by the undertakings concerned, the Commission may certify that, on the basis of the facts in its possession, there are no grounds under Article 85 (1) or Article 86 of the Treaty for action on its part in respect of an agreement, decision or practice. So far as decisions applying Article 85 (3) are concerned, Article 6 et seq. of Regulation No 17 provide that the Commission may adopt decisions declaring the provisions of Article 85 (1) to be inapplicable to a given agreement provided that the latter has been notified to it or notification has been dispensed with by virtue of Article 4 (2) of the regulation.
8. Regulation No 17 and the regulations issued in implementation thereof lay down the rules which must be followed by the Commission in adopting the aforementioned decisions. Where the Commission intends to give negative clearance pursuant to Article 2 or take a decision in application of Article 85 (3) of the Treaty, it is bound, in particular, by virtue of Article 19 (3) of Regulation No 17 to publish a summary of the relevant application or notification and invite all interested third parties to submit their observations within a time-limit which it shall fix. Decisions granting negative clearance and exemptions must be published, as provided for by Article 21 (1) of that regulation.
9. It is plain that a letter such as that sent to the defendant in the main action by the Directorate-General for Competition, which was despatched without publication as laid down in Article 19 (3) of Regulation No 17 and which was not published pursuant to Article 21 (1) of that regulation, constitutes neither a decision granting negative clearance nor a decision applying Article 85 (3) within the meaning of Articles 2 and 6 of Regulation No 17. As is stressed by the Commission itself, it is merely an administrative letter informing the undertaking concerned of the Commission's opinion that there is no need for it to take action in respect of the contracts in question under the provisions of Article 85 (1) of the Treaty and that the file on the case may therefore be closed.
10. Such a letter, which is based only upon the facts in the Commission's possession, and which reflects the Commission's assessment and brings to an end the procedure of examination by the department of the Commission responsible for this, does not have the result of preventing national courts before which the agreements in question are alleged to be incompatible with Article 85 from reaching a different finding as regards the agreements in question on the basis of the information available to them. Whilst it does not bind the national courts, the opinion transmitted in such letters nevertheless constitutes a factor which the national courts may take into account in examining whether the agreements or conduct in question are in accordance with the provisions of Article 85.
11. The first two questions put by the national court should therefore be answered in the manner indicated above.
12. The third question seeks to ascertain the powers of national courts to apply Article 85 (1), regard being had to the provisions of Article 9 (3) of Regulation No 17 which is worded as follows :
13. As the Court held in its judgment of 30 January 1974 in Case 127/73, BRTv SABAM [1974] ECR 51, since the prohibitions contained in Articles 85 (1) and 86 tend by their very nature to produce direct effects in relations between individuals, those articles create direct rights in respect of the individuals concerned which the national courts must safeguard. To deny, by virtue of Article 9 of Regulation No 17, the national courts' jurisdiction to afford that safeguard would mean depriving the individuals of rights which they hold under the Treaty itself. It follows that the initiation by the Commission of a procedure under Articles 2, 3 or 6 of that regulation cannot exempt a national court before which the direct effect of Article 85 (1) is pleaded from giving judgment.
14. Nevertheless, in such a case it is open to the national court, if it considers it necessary for reasons of legal certainty, to stay the proceedings before it while awaiting the outcome of the Commission's action. On that matter, however, it should be noted that, as the Court has already held in its judgment of 6 February 1973 in Case 48/72, Brasserie de Haecht II [1973] ECR 77, Article 9, when referring to the initiation of a procedure under Articles 2, 3 or 6, obviously concerns an authoritative act of the Commission, evidencing its intention of talong a decision under the said articles.
15. An administrative letter such as that sent to the defendant in the main action, far from evidencing such an intention, indicates, on the contrary, that the file on the matter has been closed and that the adoption of a decision is not contemplated.
16. Accordingly, the answer to the third question should be that the jurdisdiction of national courts before which the direct effect of Article 85 (1) is relied upon is not restricted by Article 9 (3) of Regulation No 17. In any case an administrative letter informing the undertaking concerned that the file on its case has been closed does not amount to the initiation of a procedure pursuant to Articles 2, 3 or 6 of Regulation No 17.
17. The costs incurred by the Belgian Government, the Danish Government, the Netherlands Government, the French Government, the Government of the Federal Republic of Germany, the Government of the United Kingdom and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. 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 national court, the decision on costs is a matter for that court.
On those grounds, THE COURT, in answer to the questions submitted to it by the Tribunal de Commerce, Paris, by order of 28 February 1979, hereby rules:
1 An administrative letter informing the undertaking concerned of the Commission's opinion that there is no need for it to take any action in respect of certain agreements under the provisions of Article 85 (1) does not have the effect of preventing national courts, before which the agreements in question are alleged to be incompatible with Article 85, from reaching a different finding as regards the agreements in question on the basis of information available to them. Whilst it does not bind the national courts, the opinion transmitted in such letters nevertheless constitutes a factor which the national courts may take into account in examining whether the agreements or conduct in question are in accordance with the provisions of Article 85.
2 The jurisdiction of national courts before which the direct effect of Article 85 (1) is relied upon is not restricted by Article 9 (3) of Regulation No 17. In any case an administrative letter informing the undertaking concerned that the file on its case has been closed does not amount to the initiation of a procedure pursuant to Articles 2, 3 or 6 of Regulation No 17.
1 Read 23 March 1977.
2 Read 23 March 1977.
3 The text of the order is reproduced in the judgment of the Court in Joined Cases 253/78 and 1 to 3/79.
4 The observations are summarized in the judgment of the Court in Joined Cases 253/78 and í to 3/79. The observations submitted by the defendant in the main action in the present case are identical to those put forward by the defendants in the main actions in the abovementioned joined cases.