Opinion of Mr Advocate General Van Gerven
Mr President,
Members of the Court,
1. The Oberlandesgericht (Higher Regional Court) Frankfurt am Main has referred the following questions to the Court for a preliminary ruling under the third paragraph of Article 177 of the EEC Treaty:
2. The national court points out that the questions submitted by it are probably not all equally necessary for resolving the dispute before it, but that they may in any event serve to develop the Court's case-law. The Court has consistently held that the greatest possible account is to be taken of the assessment of the national court with regard to the relevance of the questions raised. Accordingly I shall consider all the questions.
3. As stated in the order for reference, Mr Delimitis, the applicant in the main proceedings, is asking the national court to declare that the beer supply agreement between him and Henninger Bräu, the defendant in the main proceedings, on 14 May 1985, is not valid. The flat-rate penalty stipulated in the agreement for failure to observe the agreed minimum purchasing obligation has, therefore, in his view, no effect. The applicant in the main proceedings argued that the agreement and the minimum purchasing obligation are invalid since in his view that obligation infringes Article 85(1) of the EEC Treaty, and is not saved by Commission Regulation No 1984/83 of 22 June 1983 on the application of Article 85(3) of the Treaty to categories of exclusive purchasing agreements (hereinafter referred to as the block exemption regulation).
The national court's questions in the context of the regulatory system of European competition law
4. By way of introduction to the reply to be given to the questions submitted for a preliminary ruling, I consider it important to recall certain fundamental points which do not so much concern the substantive objectives of the competition provisions of the Treaty and the policy based thereon, as the division of competences and the procedural techniques laid down by the Treaty and by the basic Regulation No 17 in this regard. A proper understanding of these matters is important in assessing the questions raised in the main proceedings.
5. Central to Community competition policy is the Commission. Article 9 of Regulation No 17 gives the Commission exclusive competence to declare the provisions of Article 85(1) of the EEC Treaty to be inapplicable on the basis of Article 85(3); it may exercise this power by means of an individual decision or, where it is authorized to do so by the Council, by means of a generic exemption regulation. No such power is conferred upon national competition authorities or national courts. The national competition authorities do, however, concurrently with the Commission, have the power to apply the prohibition under Article 85(1) (and Article 86) as long as the Commission has not itself initiated a procedure. For their part the national courts are also empowered, without limitation as to time, to apply Article 85(1) (and Article 86), since those provisions are Treaty provisions having direct effect, and, where Article 85(1) is unreservedly applicable, also to make a declaration of nullity pursuant to Article 85(2). Thus it is also for the national court to interpret the provisions of a block exemption drawn up by the Commission, since those provisions also have direct effect. In all these cases, the national court may refer questions to the Court for a preliminary ruling on the interpretation (or the validity) of the Community provisions they are called on to apply.
6. The first questions which therefore fall to be dealt with are those submitted by the national court under B. If the agreement entered into between the applicant and the defendant in the main proceedings comes within the terms of block exemption 1984/83, the questions set out under A with regard to the assessment of a bundle or network of in themselves insignificant agreements are of no real practical importance in the resolution of the dispute in the main proceedings, nor is indeed the question set out under C with regard to the obtaining of an individual exemption.
7. It is only when the agreement is not covered by the block exemption — a finding to which I shall come later in connection with the agreement in issue in the national proceedings (infra, paragraphs 10 and 11) — and the brewery has knowingly assumed the risk of entering into an agreement which is not automatically exempt, that the situation is less clear. The question whether Article 85(1) applies to such agreements, having regard in particular to the fact that they form pan of a network of agreements, then arises in sharp relief. If the parties wish to ensure that the agreement is valid, they must notify it to the Commission and request individual exemption under Article 85(3) should the agreement appear to fall within the prohibition under Article 85(1).
8. It is self-evident that the uncertainty as to the applicability of Article 85(1) in a given case will be greatest where the national court is required to take into consideration not only the legal context, but also the economic context of an agreement, since that agreement, as in the present case, forms part of a whole network of agreements. The questions raised by the national court under A bear this out, although it may be noted at this stage that the Court may answer those questions only in so far as they concern the interpretation of Community law (see paragraph 14 infra).
Individual and block exemption and the questions under C and B
9. The foregoing observations enable me, before proceeding to reply to the questions under B, to give an answer to the question asked under C It is as follows.
10. That reply to the question under C presupposes that the agreement in question does not come within block exemption Regulation No 1984/83, which remains to be examined. That is the issue raised in the questions under B. If the contract is indeed covered by the block exemption, the reply to the questions under A, which is discussed below, is strictly speaking superfluous (see paragraph 2 supra).
II. For the proper understanding of the Question B(2) it is important to know that the contract in question includes the letting by the defendant to the applicant of the public house in question. In accordance with recital 18 in the preamble to the block exemption regulation, in the case of such contracts
12. For the sake of completeness I would point out that in the agreement in issue there are other features restrictive of competition which are not in accordance with the block exemption regulation.
13. Moreover, the agreement in issue imposes upon the applicant in the main proceedings the obligation to purchase a minimum of 132 hectolitres of beer a year, which is enforced by a penalty clause and by the right granted to the defendant to terminate the agreement without notice.
The scope of Article 85(1) and the questions under A
14. If it is accepted, as I have argued, that the agreement in question is not covered by the block exemption under Regulation No 1984/83, it then becomes necessary for the national court — possibly with the help of the Commission from which it may obtain information and unless it wishes to give the parties time to notify the agreement to the Commission in order to obtain an individual exemption (see paragraph 8 supra) — to examine whether the agreement is compatible with Article 85(1). In that case it is faced with the questions under A.
15. The questions set out under A relate to the impact on competition. As a preliminary matter it is necessary to define the relevant market on which competition must be assessed. The Commission and the defendant in the national proceedings, together with the French Government, proceed on the assumption that in the present case the Federal Republic of Germany must be deemed to be the relevant market on the ground that there is in fact very little trade in beer between the Member States. That is all the more so because exclusive purchase agreements, such as the present agreement, are apparently, without any notable exceptions, entered into between parties established in the same Member State, although as a secondary matter, they may provide for beer to be supplied from abroad.
16. In addition to the geographical delimitation of the market, it is also necessary to define the product market. In the various submissions made to the Court two points of view have been argued. According to the defendant in the main proceedings, not only beer sold in public houses, restaurants, etc., must be taken into account, but also beer sold by supermarkets and other retailers. Both channels of trade are said to be closely connected, having regard also to the fundamental concern of Community law to ensure the interpénétration of national markets: foreign beers which find a ready market in the retail trade will inevitably find their way into the public-house trade. The fact that the prices charged by breweries to publicans are higher than those charged to retailers is not a decisive factor. Moreover, in certain regions, (white) wine should also be included in the analysis as a close substitute for beer.
17. The questions submitted under A relate in the first place to the criterion under Article 85(1) of the effect on trade between States. That criterion is closely connected with the other criterion, namely the restriction of competition within the common market, particularly where there is within a Member State a network of similar agreements covering the same relevant market. Where such a network is extensive, it may restrict not only the competitive freedom of the contracting parties and third parties and reduce the number of supply and demand possibilities and thus compromise the competitive nature of the market structure, but also protect the national market from imports from other Member States. Consequently I will deal with both criteria together.
18. The answer to those questions is contained in the Court's case-law. In its judgment in the Société Technique Minière case, the Court emphasized in connection with the criterion with regard to restriction of competition and with particular reference to a sole distributorship agreement:
19. In the Brasserie de Haecht I judgment the Court made clear that the existence of a bundle of exclusive sales agreements in the beer sector constitutes one factor which, taken together with other factors, may prompt the national court to apply Article 85(1) to an agreement which at first sight appears insignificant. That, then, is the reply to be given to Question A(l).
20. I now come to Question A(3). As I understand it, the national court wishes to know whether — in a case where the fact that the agreement forms pan of a network involving a high proportion of tied outlets does not constitute the sole factor leading to a conclusion that an agreement that is in itself insignificant falls within the terms of Article 85(1) — it may reach that conclusion if, having regard in particular to a number of criteria which it tentatively enumerates, the facts of the case show that the cumulative effect of all exclusive beer supply agreements in the Federal Republic of Germany and the place occupied by the agreement under examination within that whole entail in the circumstances under consideration a breach of Article 85(1). Essentially, then, the national court wishes the Court to give more specific details with regard to the passages cited (in paragraph 18 supra) from the Brasserie de Haecht I judgment.
21. With regard, first to the second group of criteria, which are the most difficult for the national court to apply, it is striking how little definite information is available to the Commission. Questioned by the Court on the criteria listed by the national court, the Commission's representatives were compelled to admit that the Commission possessed only approximate information concerning the volume of sales in tied outlets as a whole, which the Commission estimates at 25% of the overall beer market (third indent), and it has practically no information concerning the number, duration and the volume of tied-outlet agreements, or the relationship to quantities sold by untied distributors (fourth indent); as regards the volume of sales to public houses by wholesalers who are not tied, it has only general data relating to the volume of beer distributed directly by the breweries and the volume distributed through the intermediary of wholesalers (sixth indent), it has no figures relating to tied-outlet agreements with foreign producers (seventh indent) nor any information either as regards the possibility of opening up other sales outlets or acquiring them (tenth indent). The general impression is that both the calculation of the proportion of tied outlets and the setting of a theoretical percentage above which trade is appreciably affected is largely arbitrary.
22. That leads me to the first group of criteria (see paragraph 20 supra), which, as I have pointed out, relate to the agreement in question itself and to the contracting parties. Those criteria are also linked to Question A(4) which also relates to a specific clause in the agreement in question.
The access clause and the restriction on trade between States
23. The remaining criterion mentioned by the national court and falling within the first group, namely the nature of the commitments entered into by the publican under the tenancy agreement, points to another factor in assessing the applicability of Article 85(1), also mentioned by the Court in the Société Technique Minière judgment. That factor is as follows: the severity of the clauses intended to protect the exclusive dealership or, alternatively, the opportunities allowed for other commercial competitors in the same products by way of parallel re-exportation and importation (cited in paragraph 8 supra). It is also envisaged in Question A(4) as to the possibility for the reseller to purchase drinks from undertakings established in other Member States, in conjunction with his obligation to buy a specified minimum quantity of beer.
24. The next question is whether and to what extent the so-called access clause, that is to say the possibility afforded to the reseller under the agreement to purchase, notwithstanding the abovementioned non-competition clause, beer and soft drinks (other than the contract goods supplied by the defendant) from other Member States, in any way precludes the applicability in principle of Article 85(1). Thanks to that clause, there is less restraint on the freedom of action of the reseller and third party suppliers and above all on trade between Member States. I will make three observations in this connection.
Conclusion
25. In the light of the foregoing, it seems to me that, assuming block exemption Regulation No 1984/83 does not apply, so that the national court is confronted with the question whether it is sufficiently certain that Article 85(1) does or does not apply to the concrete situation before it not to suspend the procedure pending any individual declaration of inapplicability applied for by the parties (or by one of them) — the national court has sufficient information available to it to acquire that certainty. As the Court stated in its judgment in Société Technique Minière to which I have already referred on a number of occasions, three kinds of circumstances must be taken into account: (1) the nature and quantity of the contract products and above all the market position of the contracting parties; (2) the fact that a network of parallel agreements exists in the market sector; (3) the degree of severity of the exclusivity clause and other clauses in the agreement).
26. Having regard to the foregoing considerations, I suggest that the Court give the following reply to the national court's questions:
1 Original language: German.
2 See for example the judgment in Case 126/80 Salonia [1981] ECR 1563, at paragraph 6, and also the judgment in Case 26/62 Van Gcnd en Loos [1963] ECR 1.
3 OJ L 173, p. 5.
4 Regulation No 17, first regulation on the implementation of Article 85 and 86 of the Treaty, Official Journal, English Special Edition 1959-1962, p. 87
5 Judgment in Case 63/75, Roubaix v Roux [1976] ECR 111, at paragraph 11.
6 In the judgment in Case 47/76 De Norre v Brouwerij Concordia [1977] ECR 65, the Court, in paragraph 31, gave the following clear direction to the Commission: There is, in fact, every reason for extending, in so far as the Treaty so permits, a group exemption to agreements which come within the scope of the prohibition contained in Article 85 only because of the cumulative effect produced by the existence of one or more networks of similar agreements, that is, because of factors unconnected with the agreement in question, of which, in consequence, the contracting parties generally have no specific knowledge ana an appraisal of which requires the consideration of circumstances so numerous and complicated that a national court would be placed in a position of extreme difficulty. It was evidently partly as a result of that direction that the Commission drew up block exemption Regulation No 1984/83 which contains special provisions for beer supply agreements.
7 In the abovementioned De Norre v Brouwerij Concordia case, the Court alluded to this possibility in paragraph 32: If the Commission were to consider triat the cumulative effect of all the agreements involved is so restrictive that group exemption did not appear justified, it would have the right and the duty to use the powers conferred on it by Article 7 of Regulation No 19/65 (I shall return to this subsequently), which states: Where the Commission... finds that in any particular cases agreements... to which a regulation adopted pursuant to Article I [that is, a regulation providing for exemption by categories] of this regulation applies have nevertheless certain effects which are incompatible with the conditions laid down in Article 85(3) of the Treaty, it may withdraw the benefit of application of that regulation and issue a decision in accordance with Articles 6 and 8 of Regulation No 17, without any notification under Article 4(1) of Regulation No 17 being required.
8 Regulation No 19/65/EEC of the Council on application of Article 85(3) of the Treaty to certain categories of agreement and concerted practices (Official Journal, English Special Edition 1965-1966, p. 35).
9 See M Waelbroeck, Concurrence, in Mcgrct and Others, Le Droit de la Communauté Economique Européenne, pp 157-138. with references, and also the Commission Nonce on Regulations Nos 1983/83 and 1984/83 of 22 June 1983. OJ 1984 C 101, p 2, paragraph 24 lt would however appear from the reference made in Amele 7 of Regulation No 19/65 to Anieles 6 and 8 of basic Regulation No 17 that the sole decision which may be taken is a decision exempting the agreement under certain conditions, and thus not a decision purely and simph with-drawing the exemption Waelbroeck, loc cit., but sec paragraph 24 of the Commission Notice
10 Sec in this connection the ludgment of the Court of First Instance in Case T-51/89 Tetra Pak [1990] ECR II-309, at paragraph 20 and particularly paragraph 25
11 That provision deals with so-called new or existing agreements, that is to sav agreements entered into after Regulation No 17 came into force or became applicable, in so far as they do not constitute a faithful reproduction of an old, dulv notified standard agreement dudgment in Case C-l/70 Rochai v Ilmel [1970] ECR 515, at paragraph 6) In the present case it does not appear to be disputed that the agreement in question is a new agreement and not a reproduction of an old one (that is to save one entered into prior to 13 March 1963)
12 Case C-43/69 Bilger v Jehle [1970] ECR 127, ai para graphs 5 and 6 The negative condition mentioned in Article 4 (2)11), namely that the agreement must not relate to impons and expons between Member Stales ncvenhclcss has, according to the Coun. a narrower signification than the condition regarding restrictions on trade between States laid down m Article 85(1) (paragraph 5).
13 See footnote 10 above.
14 Judgment in Case 48/72 Brasserie de Haecht v Wilkin-Janssen [1973] ECR 77, at paragraph 12. That applies, the Court held, both to agreements which must be notified (and are notified) and to agreements exempted from notification (paragraph 13).
15 Thirteenth Commission Report on Competition. 1983. pp 148-149 See also the Fifteenth Report. 1985, pp 52 et seq., particularly p 55
16 In principle it is only those provisions of the agreement which are incompatible with Article 85(1) that are void. The consequences of nullity for all other parts of the agreement are governed not by Community law but by the applicable national law (judgment in Case 319/82 Société de Vente Je Cimenti et Bétons [1983] ECR 4173, at paragraph 11, with references to earlier case-law).
17 A reading of the purchase obligation stipulated in the agreement between the applicant and the defendant discloses another derogation not mentioned in the order for reference: pursuant to the contract (Clause 6(1)) the obligation is applicable in und außer Haus (on and off the premises) and therefore is applicable also to sales off the premises mentioned in the contract (for example at street markets or festivals).
18 This additional protection for the reseller as regards drinks except beer may be read together with the provision contained in Article 8(2)(a) which allows the brewery to impose on the reseller exclusive purchasing obligations and prohibitions on competition during the whole period during which he is actually operating the premises for the sale and consumption of drinks
19 In accordance with the terms of paragraph 52 of the Commission's Notice, the installation by the reseller of amusement machines may be made subject to the owner's permission in order not to impair the character of the premises. The appointment of a recommended installer is permissible only if the choice of installers is made on the basis of objective, uniform and non-discriminatory criteria as to quality.
20 The Commission Notice mentions, however, at paragraph 57, that the obligation to purchase minimum quantities may not impede the full exercise of the rights of the reseller/tenant which arc protected under Article 8(2)(b) of Regulation No 1984/83, but which are not provided for in the agreement in question (see paragraph 11 supra).
21 It appeared at the hearing that in its investigation into the market in beer the Commission did not discover any transnational beer supply agreements.
22 The Commission has already defended that view in the Brouwerij Concordia case The same point of view was also expressed in the reply to Written Question No 1764/82 (OJ 1983 C 93, p 22 at paragraph 1(a)) and in the Seventeenth Report on Competition Policy, 1987, paragraph 29.
23 At the hearing the defendant in the main proceedings mentioned a recent scientific investigation from which it appeared that, as regards the Federal Republic of Germany, beer price increases in public houses led to a decline in sales in favour of the retail trade-
24 Case C-56/65 Société Technique Minière v Maschinenbau Uim GmbH[1966] ECR 235.
25 Case 23/67 Brasserie de Haecht v Wilkin-Janssen [1967] ECR 407, at p. 415 and 416.
26 That applies both to agreements entered into by a single brewery and agreements entered into by other breweries sec judgment in Case 43/69 Bliver v Jeble, cued above in footnote II, at paragraph 5. Tne inference to be drawn from that is that it is not necessary for the agreements to be exactly the same
27 Most of these criteria were already mentioned by Mr Advocate General Roemer in his Opinion of 21 November 1967 in Case 23/67 Brasserie de Haecht v Wilkin-Janssen [1967] ECR 407, at p. 417
28 At the hearing the Commission's representative produced a copy of the press communique distributed on 14 June 1990 by the Commissioner for Competition on the result of an investigation into the Community beer market. It appears from that summary text that compared to the other Member States the Federal Republic of Germany has a relatively low degree of concentration.
29 OJ 1986 C 231, p. 2.
30 See the Société Technique Minière judgment, cited above, at p. 249, and, as regards more recent case-law the judgment in Case 42/84 Remia v Commission [1985] ECR 2545, paragraph 22)
31 Judgment in Case 246/86 Belasco v Commission [1989] ECR 2117, paragraph 33.
32 Saloma judgment, cited above, at paragraph 15.
33 Salonia judgment, cited above, at paragraph 14; to the same effect, see the judgment in Case 8/72 Nederlandse Cementhandelaren [1972] ECR 977, paragraph 29.
34 Cued above in footnote 23.
35 The p ress communique contains only a summary and the policy conclusions drawn by the Commission from its investigation.