Opinion of Advocate General Tesauro
Mr President,
Members of the Court,
1. By the present application, the French Republic seeks the annulment under Article 33 of the ECSC Treaty and the first paragraph of Article 173 of the EEC Treaty of the Agreement between the Commission and the Government of the United States regarding the application of their competition laws (hereinafter the Agreement), which was signed in Washington on 23 September 1991 and entered into force on the same date.
2. It is appropriate to begin by recalling the circumstances of this dispute, and briefly to recapitulate the events which led to the conclusion of the Agreement in question.
3. Noting that the changes which had occurred in the international economy in recent years called for more ambitious objectives, in particular the drawing up of a legally binding document rather than a non-binding recommendation, with a more incisive and innovatory content, the Commission suggested to the United States authorities, in the course of meetings held at the end of 1990, the possibility of negotiating an agreement formalising relations between them, hitherto founded on a voluntary basis within the context of OECD recommendations, with a view to establishing closer cooperation based on a binding act.
4. At the meeting on 5 September 1991, organized by the Commission in order to enable the representatives of the Member States to submit their observations, certain States expressed reservations regarding the legal basis of the Agreement and in particular the Commission's power to conclude it, as well as on the need for a negotiating brief from the Council also concerning the responsibility of the Communities. They also raised questions concerning other aspects of the Agreement, such as the protection of the principle of confidentiality and the consultation procedures, and therefore asked for another meeting to be held so as to enable the working party of national experts to discuss the act in question. However, the Commissioner responsible for competition ruled out that possibility so far as matters of principle were concerned, in particular as to whether it was advisable to conclude a cooperation agreement with the United States in the chosen form; he agreed to a further meeting only on condition that the national experts confined themselves exclusively to the technical aspects. At the meeting on 9 September, the national experts accordingly confined themselves to technical considerations, some of which were subsequently incorporated in the draft agreement.
5. The stated purpose of the Agreement is to promote cooperation and coordination and lessen the possibility or impact of differences between the parties in the application of their competition laws (Article 1(1)). Its aim is therefore to avoid, through prevention, any conflicts arising from the extraterritorial application of the rules of competition.
6. The Agreement, as outlined above, lays down a number of instrumental and procedural requirements aimed at coordination to prevent the difficulties which arise from the applicability of several rules of competition to the same set of facts.
Admissibility
7. As we know, under the first paragraph of Article 173, the Court reviews the legality of acts of the institutions other than recommendations or opinions. According to the relevant case-law, however, for the purposes of judicial review, it is not the form of the act which matters but its effects and its content which must be verified. The Court pointed out in the AETR judgment that an action for annulment must be available against all measures adopted by the institutions, whatever their nature or form, which are intended to have legal effect.
8. Since France has formally challenged the Agreement as such, however, it is essential, so far as concerns the admissibility of the application under consideration, to turn to the question whether an agreement may be regarded as an act of the institutions within the meaning of Article 173, and, if not, whether the application may be regarded, as the French Government maintained at the hearing, as aimed by implication against the Community decision which authorized the conclusion of the Agreement.
9. In that regard, it should be noted first of all that the relevant case-law of the Court does not by any means rule out the possibility of challenging an agreement directly. In fact, quite the opposite is true, as suggested by the weight of evidence.
10. Still more important for the purposes of this case is the fact that the Court's jurisdiction to carry out an a posteriori review of legality in relation to international agreements concluded by the Communities has already been affirmed by the Court unequivocally, albeit in an obiter dictum-, in Opinion 1/75. In that Opinion, the Court stated that the question whether the conclusion of a given agreement is within the power of the Community and whether, in a given case, such power has been exercised in conformity with the provisions of the Treaty is, in principle, a question which may be submitted to the Court of Justice, either directly, under Article 169 or Article 173 of the Treaty, or in accordance with the preliminary procedure.
11. Admittedly, the Court has not so far had occasion to exercise that power of a posteriori review in a specific case, although it has already ruled on the legality of a Community act relating to the conclusion of an agreement. The question remains, therefore, for the purposes of this case, whether such review is permissible only indirectly, that is to say where it is carried out as a result of an action challenging the regulation or decision relating to the conclusion of the agreement, or also where the agreement is challenged directly.
12. So far as concerns the consequences, with regard to the existence of an agreement, of a finding that the authority of one of the parties lacks jurisdiction, a problem which in academic writings has frequently been viewed in conjunction with that just considered, and wrongly so in my opinion, a few comments will suffice. Let me point out first of all that it constitutes another matter, which is regulated to a sufficient extent by international law and, in particular, by Article 46 of the Vienna Convention of 21 March 1986 on the law of treaties concluded by international organizations; secondly, it is a problem which normally arises — and this has never been disputed in any way — in most legal systems in which the management of external relations by the executive does not escape judicial review, at least so far as concerns the legality of the procedures for concluding agreements.
13. Should the Court instead come to a different conclusion, it is necessary to ascertain whether, as the French Government also maintains, the application under consideration may be regarded as being directed against the decision which authorized the conclusion of the Agreement.
14. The decision to conclude the Agreement was therefore simply recorded in the minutes of the Commission meeting of 10 September 1991 and was not published, notified or brought to the attention of the Member States in any other way. It is far from clear, therefore, how the applicant could have challenged a decision when it was not aware of its existence, and which finally came to light only subsequently when, with a view to completing the inquiry preparatory to these proceedings, the Court asked for it to be produced.
15. So far as concerns the Commission's other argument, that the applicant could also have challenged the letter of 7 October 1991 which was sent together with the Agreement, it is sufficient to note that it is merely a covering letter which, moreover, is not from an institution but only from one of its officials; accordingly, it constitutes a document which is not intended to, nor can it, adversely affect the addressee in any way and which, in any event, cannot be regarded as a decision or, in any event, as an act capable of being challenged as such in accordance with the relevant case-law of the Court referred to earlier.
16. That being so, it seems to me that it would, in a case such as this, be excessively formalistic to declare that the application is inadmissible and would amount to stating, paradoxically to say the least, that it is impossible to review the legality of the Agreement itself in the light of the rules on the power to conclude agreements, as laid down in the Treaty, in a situation in which there has been a failure to adopt either a formal act authorizing negotiations or approval or else another Community act connected with the Agreement.
Substance
17. The main problem therefore consists in ascertaining whether or not the Commission has power to conclude an agreement of the kind at issue, which the Commission has defined as an administrative arrangement. That definition constitutes the fundamental basis on which the Commission has developed its defence, inasmuch as it states, now as before, that it has power to conclude agreements with non-member countries, at least those of an administrative nature.
Definition of the Agreement
18. In order to dispel any possible ambiguity, and for the sake of the argument that follows, therefore, I consider it appropriate to begin by defining the Agreement under consideration on the basis of international law.
19. Against that background, it should be noted first of all that, although the Commission is expressly referred to as a party, it is clear from certain provisions of the Agreement that it is the Community which has committed itself at international level. In that regard, it is sufficient to consider the provisions of the Agreement which refer to the party's territory (Article 2(2)(b)), to the party's States or Member States (Article 2(2)(c)) and, in particular, to the fact that the Commission is designated as the competition authority for the European Communities (Article l(2)(b)(i)), and that competition law for the purposes of the Agreement is defined once again in relation to the European Communities (Article l(2)(a)(i)).
20. The will of the parties to bind themselves is also quite clear. It is scarcely necessary to recall that the Commission itself expressly stated that the conclusion of such an Agreement was dictated by the intention of going beyond the recommendations of the OECD, not only by envisaging more far-reaching forms of cooperation and coordination but also, and above all, by providing for fixed and obligatory forms of conduct in a legally binding act.
21. Furthermore, the Agreement contains an express provision for its revocation, laying down that a period of two months must elapse between notice and termination of the effects of the Agreement. That is undoubtedly a provision typical of a legal instrument aimed at imposing obligations on the parties.
22. It is scarcely necessary to add that the class of administrative arrangements, viewed as a category distinct from that of international agreements, is as such unknown in international law. Rather, it designates a standard internal procedure, evidently where that type of arrangement assumes a specific connotation. Under international law, there are binding agreements and — taking the most generous view — the unusual category of non-binding agreements, which are variously described but which are essentially either gentlemen's agreements, which at times have considerable political significance and are in fact endowed with an international control mechanism to ensure compliance therewith, or else understandings designed to consolidate trends and courses of action in certain sectors, but which lack the force of law altogether, as is frequently apparent moreover from the express will of the parties. Nor is it superfluous in that regard to emphasize that such agreements are in any event normally concluded by the authorities empowered to do so and not by any other authority or institution.
Interpretation of Article 228 of the EEC Treaty
23. The relevant Treaty provision is therefore Article 228, as it was worded prior to the entry into force of the Treaty of Maastricht, which seems to identify in general terms the Council as the only body with power to conclude international agreements, entrusting the Commission with responsibility for negotiations. More specifically, Article 228(1) provides that external agreements subject to the powers vested in the Commission in this field ... shall be concluded by the Council, after consulting the European Parliament where required by this Treaty.
24. Article 228 of the Treaty, and in particular the phrase relating to the powers vested in the Commission, cannot be read as having the meaning and the effects claimed by the Commission. Rather, it refers to the fact that the Commission has limited power to conclude agreements at Community level in certain expressly specified cases. Here I would refer to Article 7 of the Protocol on the Privileges and Immunities of the European Communities, which empowers the Commission to conclude agreements with non-member countries for laissez-passer for Community nationals issued by the Community to be recognized within the territory of those countries, and to the powers by implication conferred on it by Articles 229 to 231 in order to ensure the maintenance of appropriate relations with other international organizations.
25. Perhaps aware that Article 228 cannot be relied upon in any way in support of its argument, the Commission added, however, that the power thus vested in it is based on and restricted by the same conditions as those referred to in the third paragraph of Article 101 of the Euratom Treaty, relating to agreements which do not impose financial burdens on the Community and do not require action by the Council (in other words, mere implementing agreements).
26. I cannot endorse the Commission's view that the power to conclude international agreements is based on the criteria listed in Article 101 of the Euratom Treaty. It is sufficient to point out in that respect that Article 101 deliberately provides for a procedure which is wholly different from that in Article 228 of the EEC Treaty: that is all the more significant if it is borne in mind that the Treaties were signed on the same date and contain several provisions which are absolutely identical.
27. In conclusion, it does not seem to me that the actual wording of Article 228 and, in particular, the limb of sentence at issue, can support the Commission's view that it has been vested with the power to conclude agreements of a certain type, or that reference can be made to Article 101 of the Euratom Treaty so far as concerns the limits of and the conditions for the exercise of that power, in view of the fact that the two provisions in question are quite different so faias concerns the power to conclude agreements.
Practice of the Commission
28. That said, it must be acknowledged that the Commission has brought into being acts in the nature of agreements in other fields as well. Agreements have been concluded on the subject of the privileges and immunities of diplomatic missions, on economic relations with countries belonging to the General Agreement on Tariffs and Trade and on technical matters, in particular in the field of plant health protection and scientific and technological cooperation.
29. I do not believe the problem can seriously be approached in those terms, without even raising the question whether and to what extent the Council and the Member States have actually been aware of the existence of a practice of that kind and have therefore consciously tolerated a limited exercise of the Commission's power in that field.
30. Against that background, it is superfluous in my view to verify whether the contested Agreement can be equated, in terms of content or type, with those hitherto concluded by the Commission. Furthermore, indirect confirmation, if it were still needed, of the fact that it is not possible to interpret Article 228 as empowering the Commission, albeit within limits, to conclude international agreements independently is provided in fact by examination of the conditions which, according to the Commission itself, govern the exercise of the power in question.
31. In view of the considerations set out in paragraphs 18 to 22, it is sufficient to point out, once again, that the Agreement under consideration imposes a set of instrumental and procedural obligations on the Community: even if those obligations were described as limited, the terms of the problem would nevertheless remain unchanged, in that the Agreement still constitutes an international agreement. Nor is it of any significance, from that angle, whether or not the Agreement is implemented within the limits set by the budget.
32. The possibility cannot be excluded, having regard to the conditions set out above, that by the term administrative arrangement, the Commission is in fact referring to the agreements in a simplified form, which, on the basis of the internal law of most States, are concluded by the executive, without parliamentary action, and normally concern — if we exclude secret arrangements — technical and administrative matters, whose implementation does not entail legislative amendments or which supplement or define pre-existing agreements concluded in accordance with the usual procedures, when they accordingly form part of the legislative framework established by other agreements. During the proceedings, the Commission frequently referred to the practice applied by the Member States, and in particular to agreements concluded by Governments without reference to the procedures laid down by the Constitution with regard to ratification, which are in fact described in some legal systems as administrative arrangements. The practice in question is based on the view that the power to conclude a specific type of agreement is inherent in the function of the executive.
33. If the problem were expressed in those terms, it would be necessary to determine whether the power of the Commission to conclude an agreement can be made to depend on the designation of such an institution as the Community executive.
34. It is scarcely necessary to add, in that regard, that each institution shall act within the limits of the powers conferred on it by this Treaty (Article 4(1)) and that Article 228 confers on the Council in general terms the power to conclude international agreements after consultation — where required — of the European Parliament, which, it is worth emphasizing, would have been necessary had the Agreement been concluded by the Council. Instead the Commission is merely accorded responsibility for negotiations and a limited power to conclude agreements in certain situations specified, as we have seen, by the Treaty itself.
Parallel internal and external powers
35. The AETR judgment, as we know, is the frame of reference for identifying the external powers of the Community, the Court having stated that the possibility of concluding international agreements exists not only in the situations exhaustively listed in the Treaty but also whenever the Community has internal powers.
36. The Commission itself has acknowledged, however, that the aforesaid judgment is not relevant to this case, in so far as it concerns the division of powers between the Community and the Member States and not, as is the case here, between the various institutions.
37. The power to assume obligations at international level is thus vested in the same bodies as are empowered to exercise (Community) legislative powers internally, with the result that the Commission could be seen as having autonomous powers in areas in which it has its own legislative powers.
38. That said, and in the event of the Court endorsing that construction, I consider it appropriate to make certain observations which concern the powers of the Commission in the field of competition and which invariably coincide with the complaints of the French Government and the interveners concerning the alleged breach of the rules of competition.
39. It is already apparent from those observations that the Commission does not have exclusive powers in the field in question and, in particular, that legislative powers remain firmly vested in the Council. The latter is called upon inter alia to adopt any appropriate regulations or directives to give effect to the principles set out in Articles 85 and 86 (Article 87(1)), and to define the ... functions of the Commission ... in applying the provisions laid down in this paragraph (Article 87(2)(d)), as it has done through the adoption, in particular, of Regulation No 17.
40. It is clear from the foregoing that the power to conclude the Agreement in question cannot in any circumstances be treated, given the rationale behind the AETR judgment, as flowing from the Commission's internal powers in the field of competition. Nor could it reasonably be argued, on the ground that the Commission is obliged to carry out the Agreement in its capacity as the body responsible for supervising and implementing the rules of competition, that the cooperation established with the United States authorities is merely a function of its internal supervisory power.
41. In particular, the French Government has alleged that the provisions of the Agreement are in breach of Article 3(2) of Regulation No 17, which restricts the power to apply to the Commission to Member States and natural or legal persons who claim a legitimate interest, in that Article 5 of the contested Agreement confers such a power on the United States authorities as well.
42. The French and Spanish Governments have also alleged the infringement of Article 20 of Regulation No 17, which enshrines the principle of secrecy for the protection of the interests of individuals with regard to information acquired by the Commission in connection with its proceedings. The obligation to provide information, imposed by the Agreement, would in fact, according to those Governments, adversely affect undertakings under investigation by the Commission on the basis of Community competition law.
43. In the light of the foregoing, I consider it superfluous to examine the other submissions relied upon by France in support of its application which, let us remember, is also based on Article 33 of the ECSC Treaty, even though the parties themselves have referred, in the course of the proceedings, solely to the relevant provisions of the EEC Treaty. It is scarcely necessary to point out in that regard that even if the view is taken that the Commission could have concluded such an Agreement only so far as the ECSC Treaty rules are concerned, it should have done so on the basis of Article 95 of the ECSC Treaty and therefore with the unanimous assent of the Council and after the consultative committee has been consulted. If it failed to comply with those conditions, however, it would be in breach of essential procedural requirements, the consequences of which would be no different from those of a finding that the Commission has no power under the relevant provisions of the EEC Treaty.
44. In the light of the foregoing considerations, therefore, I suggest that the Court uphold the application and order the Commission to pay the costs, excluding those of the interveners.
1 Original language: Italian.
2 On this matter, and for an analysis of the relevant recommendations issued, see the OECD publication Mise en œuvre dn droit de lit concurrence. Coopération internationale pour la collecte de renseignements, Paris, 1984.
3 For an analysis of those problems, see Picone: L'applicazione extraterritoriale delle regole sulla concorrenza e il diritto internazionale in II fenomeno delle concentrazioni di imprese nel diritto interno e internazionale, Padova, 1989, p. 80 et seq.
4 The Recommendation of 25 September 1979 had in turn amended and replaced the Recommendations of 5 October 1967 and 3 July 1973.
5 As stated by the Commission in its Explanatory note on the draft agreement between the Government of the United States and the Commission of the European Communities regarding the application of their competition laws, forwarded to the Member States together with the draft agreement. Emphasis added.
6 So far as concerns the Community, those rules include Articles 85, 86, 89 and 90 of the EEC Treaty, Council Regulation (EEC) No 4064/89 on the control of concentrations between undertakings, Articles 65 and 66 of the ECSC Treaty and their implementing regulations, including High Authority Decision No 24/54, as well as such other laws or regulations jointly agreed in writing by the parties to be competition law for the purposes ofthe Agreement (Article 1(2)(a)(ii)).
7 Explanatory note to the Member States, annexed to the draft agreement.
8 See, most recently, the judgment in Case C-325/91 France v Commission [1993] ECR I-3283, at paragraph 9.
9 Judgment in Case 22/70 Commission v Coimai [1971] ECR 263, at paragraph 42.
10 See pp. 5 and 6 of the defence.
11 See, in particular, the judgment in Case 181/73 Haegeman [11974] ECR 449.
12 Cited above, at paragraphs 3 to 5.
13 This solution has also been adopted in relation to mixed agreements; see, for instance, the judgment in Case 12/86 Demirel [1987] ECR 3719, at paragraph 7.
14 Opinion 1/75 [1975] ECR 1355.
15 Opinion 1/75, cited above, at p. 1361.
16 Judgment in Case 165/87 Commission v Cornial [1988] ECU. 5545.
17 Sec, for both, J. Rideau: Les accords internationaux dans la jurisprudence de la Cour de justice des Communautés européennes: réflexions sur les relations entre les ordres juridiques international, communautaire et nationaux in Revue Générale de Droit International Public, 1990, p. 289 et seq., in particular p. 380 et seq.
18 It is scarcely necessary to add that the issue concerning the effects of annulment arises in the same terms, so far as concerns compliance with the obligations assumed at international level, whether there has been a declaration of nullity of the agreement, so far as concerns the Community of course, or of the act which enabled the agreement to be concluded and which therefore constitutes its legal basis.
19 I am referring to the fact that normally decisions relating to the signature of agreements are indeed recorded in the minutes, but are followed by a decision approving the agreement (the act concluding it) which is published: that, however, evidently applies to agreements concluded by the Council.
20 See paragraph 7. Sec, in addition, the judgment in Case C-198/91 Cook [1993] ECR I-2487, in which the Court held that a mere letter sent for information does not constitute a decision that may be challenged in proceedings for an annulment (paragraph 14).
21 In that regard, it is sufficient to point out that this designation distinguishes agreements concluded by the President without the Senate's approval. That procedure is widely used in the United States and is based on a practice endorsed by the Supreme Court. It is scarcely necessary to add that executive agreements' do not differ in any way, so far as concerns their effects and their status in the international order, from international agreements concluded on the basis of the procedure involving congressional approval under the Federal Constitution.
22 See, on that point, Schachter: The twilight existence of non-binding international agreements in American Journal of International Law, 1977, p. 296 et seq.
23 It is sufficient to recall the agreements on security and cooperation in Europe, set out in the Final Act of the 1975 Helsinki inter-governmental conference.
24 In that regard, reference should be made to the Memorandum of Understanding between the United States and Canada of 9 March 1984 (see American Journal of International Law, 1984, p. 659 et seq.), which expressly provides in Article 12 that it does not constitute an international agreement.
25 See, in that regard, the provisional report of the Institut de Droit International, Virally: La distinction entre textes internationaux de portée juridique et textes internationaux dépourvus de portée juridique, in Annuaire de VIOI, Cambridge Session, Vol. 60-1, 1983, p. 166 et seq. at p. 212 et seq.
26 It has also been argued that the sentence in question could also help to define the scope of the terms negotiation and conclusion in relation to one another in view of the difficulty of establishing where to draw the line between the two. See, for that view, Louis and Bruckner: Relations extérieures in Megret, Le droit de l a Communauté économique européenne. Vol. XII, 1980, p. 20 et seq.
27 In other words, this procedure is completely different from that laid down in Article 228 of the EEC Treaty. In that regard, see Raux: La procédure de conclusion des accords externes de la Communauté européenne de l'énergie atomique in Revue générale de droit international public, 1965, p. 1019 et seq.
28 In its pleadings, the Commission had referred in particular to 25 instances of bilateral cooperation with non-member countries, all of which were subsequent to 1974. However, only the contested Agreement was formally designated as an agreement. On other occasions, the designation has varied: exchange of letters (18), memorandum of understanding (two), administrative understanding (three), agreed minute (one). No fewer than eight of those agreements were concluded with the United States, some directly with the Government, others with specific departments.
29 In that regard, it should be noted that, on the one hand, the establishment of delegations in non-member countries may be deemed to fall within the Commission's power to organize its own departments and, on the other, there is in any event tacit approval by the budgetary authorities (Council and Parliament) which can be inferred from the adoption of the appropriations necessary for them to function.
30 The agreements concluded by the Commission in that sector, in the form of an exchange of letters and relating to the closure of the Panel, are in any event the subject of preliminary discussions within the Council's 113 Committee.
31 In this case, the agreements form part of legislation already in force, in that they supplement or define other agreements or acts of secondary legislation adopted by the competent authorities of the Community.
32 Judgement in Case 68/86 United Kingdom v Council [1988] ECR 855, at paragraph 24.
33 In that regard, it is scarcely necessary to add that under national law agreements of that type are provided for expressly (see, for instance, Article 59(2) of the German Constitution) or at least by implication, in that provision is made for cases in which the prior assent of Parliament is called for (see, for instance, Article 87 of the Italian Constitution), with the result that the agreement is deemed to have been validly concluded by the executive in all other cases. On the other hand, neither Article 228 nor other Treaty provisions contemplate such a possibility even indirectly.
34 This doctrine is linked to the fact that traditionally the power to conclude international treaties was a sovereign prerogative, accordingly vested in the executive, and was taken away or in any event severely restricted by the intervention, in the procedure for concluding agreements, of the representative bodies.
35 Judgement cited above, paragraphs 12 to 15 and 20 to 22.
36 For the same view see, most recently, Opinion 1/92 oí 10 April 1992 on the draft agreement between the Community and the EFTA countries concerning the creation of a European Economic Area [1992] ECR I-2821, paragraph 39.
37 Judgment cited above, at paragraphs 16 to 19.
38 Council Regulation (EEC) of 21 December 1989 on the control of concentrations between undertakings (OJ 1990 L 257, p. 14).
39 For that view, see Cannizzaro: Sulla competenza della Commissione CEE a concludere accordi internazionali in Rivista di diritto internazionale, 1993, p. 657 et. seq..
40 Regulation No 17 of the Council, First regulation implementing Articles 85 and 86 of the Treaty (OJ, English Special Edition 1959-62, p. 87).
41 Council Regulation (EEC) of 22 December 19886 laying down detailed rules for the application of Articles 85 and 86 of the Treaty to maritime transport (OJ 1986 L 378, p. 4).
42 See, in that regard, the judgment in Case C-67/91 Asociación Española de Banca Privada [1992] ECR I-4785, in particular at paragraphs 37 and 38, in which the Court refers to the importance of that principle and its effect on relations between the Commission ana the Member States.