Opinion of Mr Advocate General Lenz
Mr President,
Members of the Court,
According to its constitution, the applicant in the present proceedings comprises the most representative associations in the Member States of the European Communities of film makers, distributors and technical industries and its objects include safeguarding the interests of the film industry. On 3 February 1981 it made an application to the Commission under Article 3 of Regulation No 17 of 6 February 1962 (Official Journal, English Special Edition 1959-62, p. 87). That article reads as follows :
The application was directed against the conduct of the three French television companies, Société nationale de télévision française 1 (TF 1), Société nationale de télévision en couleur Antenne 2 (A 2) and Société nationale de programmes France Régions (FR 3), towards makers and distributors of cinematographic films in connection with the purchase of broadcasting rights. The applicant claims that the three television companies infringed Article 86 of the EEC Treaty by taking unfair advantage of their statutory monopoly to fix film licence fees abnormally low — as evidenced by average fees — having regard to their economic value and to the service they represented.
The Commission, to which a similar complaint had already been submitted by the Bureau de liaison des industries cinématographiques in a letter of 23 November 1978, followed up the application in February 1982 by making a request for information to the applicant and the three television companies. The questions asked covered, among other things, film production costs and their amortization, the six or seven major film suppliers in France which are in a position to negotiate prices, the licence fees paid by the three French television companies between 1979 and 1981 and the average fees paid by television companies in other Member States.
After assessing all the information received, the Director General for Competition at the Commission of the European Communities concluded that it did not suggest that Article 86 of the EEC Treaty had been infringed. The applicant was notified of that finding and of the Commission's intention to proceed no further with the matter in a letter dated 12 July 1983. The letter stated essentially that, in view of the fact that different films had different values depending on a number of factors (which it listed), it was not possible to determine a single yardstick valid for all films. Furthermore, for that reason and in view of the ratio legis of Article 86, it was not possible to apply Article 86 to that part of the television companies' budgets that was earmarked for purchasing films and reach the conclusion that it was abnormally low. Any abuse would have to be determined with reference to specific films, for it was on that basis alone that the Commission would be able to pursue the matter of unfair prices. The letter continued by stating that it was impossible, for the purposes of Article 86, to compare the fees paid by a television company for the right to broadcast a film with the amount the film had cost to make nor, by the same token, could the comparison reasonably be made with the cost of a similar television production. Finally, after assuring the applicant that it would continue to monitor developments in the film sector in France, the Commission gave it one month to submit comments pursuant to Article 6 of Regulation No 99/63 of 25 July 1963 (Official Journal, English Special Edition 1963-64, p. 47), which reads as follows:
The applicant's first response was a letter dated 29 August 1983, in which it stated generally that it disagreed with the decision to discontinue the procedure, on the ground that the arguments put forward by the Commission did not accord with the facts and failed to take account of the conditions in which the film industry operated and of the damage inflicted by the television companies on that industry.
On 13 September 1983, the applicant submitted further comments. It referred to an assessment of the material circumstances (in the light of French law) which was set out in an Opinion of 28 June 1979 of the French Commission de la Concurrence [Competition Commission] and to an interview given by the present President of the Republic in which he acknowledged that the film licence fees paid by the television companies were unusually low because of their abuse of a dominant position and that the fees should be raised to the average cost of making a television film. The applicant also contended that if the existence of generalized abuse could be determined it could at least be presumed that abuses had occurred in several individual instances. If, however, the Commission had insufficient information about the film licence fees paid it should initiate suitable inquiries with the television companies. The applicant would then be able to state its views on the amount paid for each film.
In fact, on appeal by the Fédération de la production cinématographique française [Federation of the French Cinematographic Industry] pursuant to Regulations of 30 June 1945, the Law of 19 July 1977 and the Decree of 25 October 1977, the Commission de la Concurrence held in the aforementioned Opinion that in view of the licence fees which had been paid, the three French television companies (which together have a statutory monopoly of the broadcasting of films on television) had infringed Article 50 of the Regulation of 30 June 1945, which provides:
It came to that conclusion on the following ground. The licence fees paid were so low as to bring about an unbalanced distribution of amortization costs between the cinemas, on the one hand, and the television companies, on the other, on the basis that one third of television programmes were paid for with between 3% and 6% of the aggregate budget and of a comparison of the average film licence fees paid in 1978 with the cost of a television programme. However, at the same time Article 51 of the Regulation of 30 June 1945 was held to apply (whereby the activities of an undertaking with a dominant position are not caught by Article 50 if they arise as a result of the application of legislation), since a cluster of constraints (limitation of the receipts of television companies and the need for parliamentary approval) narrowly limit the television companies' freedom of action. Accordingly the 1979 Report of the Commission de la Concurrence also mentions the need for the public authorities to adjust the legal framework within which the television industry must operate (apparently, however, it was not adjusted sufficiently, despite an approach by the Bureau de Liaison des Industries Cinématographiques to the competent French authorities).
Even after receipt of that Opinion the Director-General for Competition at the Commission of the European Communities did not alter his views, as he stated in a letter to the applicant dated 28 October 1983. In it he contended first that the Opinion of the Commission de la Concurrence was based on French legislation, which does not fulfil the same criteria and conditions as Article 86 of the Treaty of Rome. Secondly he maintained that since the applicant had adduced no new factors the finding could remain that Article 86 was not applicable for the reasons stated in the letter of 12 July 1983 and the procedure was therefore discontinued.
That prompted the CICCE to apply to the Court of Justice on 29 December 1983 to have the Commission's decisions of 12 July 1983 and 28 October 1983 declared void.
My views on that application are as follows.
I — Admissibility
1. No doubt has been cast on the admissibility of the application itself and indeed no reservations should arise in that regard.
2. In contrast, two other serious objections as to admissibility have been raised.
II — Substance
As far as the material question of the extent of the Commission's obligations vis-à-vis an applicant under Article 3 of Regulation No 17 is concerned, I consider it appropriate in the first place to cite the relevant previous decisions of the Court.
The Court has held (in the judgment in Case 125/78 paragraph 18) that an applicant under Article 3 of Regulation No 17 is not entitled to require the Commission to take a final decision as to whether there was an infringement and that the Commission is therefore not under a duty to continue with the procedure up to the stage of a final decision in every case. Accordingly, there was no cause for complaint on the ground that the Commission had not deemed a decision to be warranted under Article 86 of the Treaty because it had doubts as to whether a dominant position existed and, if so, whether it had been abused.
Admittedly, the judgment in Case 210/81 (concerning the operation of a selective distribution system vis-à-vis the applicant) refers to the Commission's duty of vigilance (paragraph 22) and the duty, on receipt of a complaint, to examine the facts put forward by the applicant in order to decide whether the competition rules have been infringed (paragraph 19). However, it was also held (paragraph 22) that the complaint contained no factor capable of supporting the view that the Community's competition rules had been infringed, and also (paragraph 20) that there was no evidence that the undertaking operating the selective distribution system had contravened competition law in applying the system. In addition, the judgment refers to the limited scope for judicial review by the Court of Justice in such matters, for it was considered relevant that the Commission's findings were not based on a materially incorrect appreciation of the facts and were not vitiated by any manifest abuse of discretion.
It is therefore apparent that the Court's previous decisions do not support the view, sometimes advanced in the literature, that anyone with a legitimate interest who puts forward facts which are reasonably capable of indicating that competition law has been breached (it is not necessary to provide detailed evidence or offers of proof) is entitled to the full procedure (including the requisite inquiries) and to a decision, and that the only case in which such entitlement would be denied is where the application is vexatious or malicious (see Steindorf, loc. cit.; similarly Deringer, loc. cit., who says that an applicant may compel an undertaking to terminate a breach of the competition rules; and von der Groeben, loc. cit., according to whom an applicant who indicates sufficient cause for suspicion is entitled to the intervention of the Commission, which, according to the principle that every offence must be prosecuted (Legalitätsprinzip), is under a duty to take the necessary steps to eliminate any breach of the law).
Rather, it seems that in such cases the Commission has a wide discretion and that in the exercise of that discretion what the applicant states is of substantial importance (the applicant — especially if it is a large undertaking or a powerful interest group — has extensive duties of cooperation). Bearing in mind that interested persons may seek redress directly in the national courts, and that the Commission, which acts primarily in the public interest, does not have the necessary funds to pursue all the (obviously numerous) complaints, it appears therefore that the Commission is not bound, merely because its attention has been drawn to suspicious factors, to conduct competition proceedings, with all the attendant consequences thereof, culminating in a decision either that there is an infringement, or that the existence of an infringement cannot be proved.
Where the Commission acts accordingly — as it did in this case — complaints about its manner of proceeding are only warranted if there is a manifest abuse of discretion or if it transpires that its findings were based on wrong facts.
3. The applicant's individual complaints
Consequently the action challenging the Commission's decision of 28 October 1983 should be dismissed as unfounded.
As far as the costs are concerned, I consider that each party should be ordered to pay its own costs, since the Commission's application for costs was only set out in the rejoinder, contrary to Article 40 of the Rules of Procedure, and must therefore be ignored.
1 Translated from the German.
2 Judgment of 25 October 1977 in Case 26/76, Metro SBGroßmärkte GmbH & Co. KG v Commission of the European Communities, [1977] ECR 1875.
3 Judgment of 11 October 1983 in Case 210/81, Oswald Schmidt, trading as Demo-Studio Schmidt v Commission of the European Communities, [1983] ECR 3045.
4 Judgment of 18 October 1979 in Case 125/78, GEMA, Gesellschaft für musikalische Auffübrugs- und mechanische Vervielfältigungsrechte v Commission of the European Communities, [1979] ECR 3173.
5 Judgment of 18 October 1979 in Case 125/78, GEMA, Gesellschaft für musikalische Aufführungs- und mechanische Vervielfältigungsrechte v Commission of the European Communities, [1979] ECR 3173.
6 Judgment of 11 October 1983 in Case 210/81, Oswald Schmidt, trading as Demo-Studio Schmidt v Commission of the European Communities, [1983] ECR 3045.
7 Judgment of 13 November 1975 in Case 26/75 General Motors Continental NV v Commission of the European Communities [1975] ECR 1367.
8 Judgment of 14 February 1978 in Case 27/76 United Brands Company and United Brands Continentaal BV v Commission of the European Communities [1978] ECR 207.
9 Judgment of 14 February 1978 in Case 27/76, United Brands Company and United Brands Continentaal BV v Commission of the European Communities, [1978] ECR 207.
10 Judgment of 14 February 1978 in Case 27/76, United Brands Company and United Brands Continentaal BV v Commission of the European Communities, [1978] ECR 207.