Opinion of Advocate General Tesauro delivered on 16 june 1994

1 Original language: Italian.

2 Regulation No 26/62 of the Council applying certain rules of competition to production of and trade in agricultural products (OJ, English Special Edition 1959-1962, p. 129).

3 Council Directive of 15 July 1991 concerning the placing of plant protection products on the market (OJ 1991 L 230, p. 1).

4 Judgment in Case 61/80 Coöperatieve Stremsel- en Kleursfabriek v Commission [1981] ECR 851.

5 See the judgment in Case 131/86 United Kingdom v Council [1988] ECR 905, in which the Court held that Council Directive 86/113, which governed the dimensions of and other requirements for the cages of layer hens (something clearly not included in Annex II), could be applied to the sphere of competition mentioned in Article 43.

6 See for example the SOCEMAS decision of 17 July 1968 {Journal Officiel 1968 L 201, p. 4) and the Intergroup decision of 14 July 1975 (OJ 1975 L 212, p. 23).

7 See in particular the National Sulphuric Acid Association decision of 9 July 1980 (OJ 1980 L 260, p. 24), in which the Commission granted an exemption to a consortium for the purchase of sulphur, made up of the main United Kingdom producers of sulphuric acid (the consortium was non-profitmaking and withdrawal was possible each year), after assessing the impact on the various markets concerned and taking account of the fact that the members of the consortium had signed an exclusive purchasing commitment in respect of only 25% of their requirements.

8 See the Coöperatieve Stremsel decision of 5 December 1979 (OJ 1979 L 51, p. 19), confirmed by the Court in the judgment of the same name, cited above, and the Hudson's Bay decision of 28 October 1988 (OJ 1988 L 316, p. 43), confirmed by the Court of First Instance judgment in Case T-61/89 Dansk Pelsdyravlerforening [1992] ECR II-1931. Both cases were concerned with loyalty commitments given by the members of agricultural cooperatives.

9 Judgment in Case 26/76 Metro v Commission [1977] ECR 1875.

10 Judgments in Case 56/65 Société Technique Minière v Maschinenbau Ulm [1966] ECR 235 and Case C-234/89 Delimitis v Henninger Brau [1991] ECR I-935.

11 Judgment in Joined Cases 29 and 30/83 CRAM [1984] ECR 1679.

12 Judgment in Case 45/85 Verband der Sachversicherer [1987] ECR 405.

13 Technique Minière, cited above.

14 Technique Miniére, cited above.

15 Judgment in Case 42/84 Remia v Commission [1985] ECR 2545.

16 Judgment in Case 161/84 Pronuptia [1986] ECR 353.

17 Judgment in Case 65/86 Bayer v Süllhöfer [19881 ECR 5249.

18 Delimita, cited above.

19 See in particular the judgment in Delimitis, cited above.

20 It must be emphasized that the distinction is normally disregarded by the Commission, which, in its decisions, usually makes an overall assessment, on conclusion of which it merely sutes that a particular agreement infringes, or does not infringe, Article 85(1). In the case-law, on die other hand, the distinction is clearly observed, at least in principle. Less clear, however, is the way in which that principle is applied. A clear-perhaps the clearest-example of the application of the analytical approach based on the distinction between object and effect is to be found in Delimitis, cited above.

21 Sec the judgments in Coöperatieve Stremsel and Dansk Pelsdyravlerforening, both cited above.

22 It is noteworthy that the clauses at issue, which lay down specific grounds for the expulsion of any member who makes purchases (of fertilizers and pesticides) by joining an organization competing with the cooperative, differ from clauses such as the non-competition clause or the exclusive-supply requirement (as indicated, an exclusive-supply requirement was included in the statutes of DLG until 1975) in that, by contrast with the latter, they do not contemplate a specific obligation to do or refnun from doing something (an obligation which, in turn, might, if not complied with, prompt an application for an injunction and an action in liability against the offending member). The difference is, however, of scant importance for practical purposes. In cooperative associations, a member's breach of his obligations, in particular those which we may describe genetically as those requiring the member to be loyal to the cooperative (non-competition, exclusive-supply arrangements, exclusive sales arrangements), is normally penalized (other remedies apart) precisely by expulsion, which as a rule entails adverse financial consequences for the person concerned. Thus, whether the association imposes on the member a specific obligation of loyalty, breach of which gives rise to expulsion, or does not impose such an obligation, although reserving the right to expel disloyal members, the result appears to be equivalent: in both cases the expulsion represents a punishment for conduct mentioned in the statutes as being incompatible with the interests of the association and of the members in general. Moreover, DLG, in reply to a question asked by the Court, expressly confirmed that the aim of the clauses at issue was specifically to dissuade members (the B members) from joining organizations competing with the cooperative. On a functional level, therefore, it is undisputed that the clauses at issue were intended to pursue the same purpose of securing loyalty as non-competition and exclusive-supply clauses.

23 This solution also seems to me to be in conformity with the direction taken by the Commission in its recent Notice concerning the assessment of cooperative joint ventures pursuant to Article 85 of the Treaty (OJ 1993 C-43, p. 2). Since, in my opinion, a joint venture can also take the form of a cooperative whose members are undertakings or associations of undertakings (the assessment of cooperative joint ventures pursuant to Article 85(1) and (3) does not depend on the legal form which the parents choose for their cooperation), it must be observed that, according to the Commission, it is not impossible that, at least in certain circumstances (those described in paragraph 17 of this Opinion might be an example), a buyers' joint venture comprising compering undertakings might fall outside the scope of Article 85(1) (see in particular paragraph 39 of the Notice). In such a case, a clause of the kind at issue would have to be described as a mere ancillary restraint, in other words as a restriction direcdy related to and necessary for the ... operation of the joint venture (see paragraph 65 of the Nonce), and as such not subject to Article 85(1).

24 See Artide 3(d) of Regulation (EEC) No 1984/83 of 22 June 1983 on the application of Article 85(3) of the Treaty to categories of exclusive purchasing agreements (OJ 1983 L 173, p. 5).

25 See in particular paragraph 26 of the judgment in Delimitis, cited above, in wnich, when considering the effects of a beer supply contract, the Court states:The contribution of the individual contracts entered into by a brewery to the sealing-off of that market also depends on their duration. If the duration is manifesdv excessive in relation to the average duration of beer supply agreements generally entered into on the relevant market, the individual contract falls under the prohibition under Article 85(1). A brewery with a relatively small market share which ties its sales oudets for many years may make as significant a contribution to the sealing-off of the market as a brewery in a relatively strong market position which regularly releases sales oudets at shorter intervals.

26 The judgments in Coöperatieve Stremsel and Dansk Pelsdyravlerforening, both cited earlier.

27 In particular, in Coöperatieve Stremsel, the Court stated:The Cooperative's rules, which require its members to purchase from the Cooperative all the rennet and colouring agents for cheese which they need, and which reinforce that obligation by stipulating the payment of a not inconsiderable sum in the event of resignation or expulsion, have clearly as their object to prevent members from obtaining supplies from other suppliers of rennet or colouring agents or from making them themselves should those alternatives offer advantages from the point of view of quality or price. Since, according to information which has not been challenged, the members now account for more than 90% of Netherlands cheese output, those provisions in addition contribute to maintaining the present situation, in which the Cooperative is virtually the only supplier of rennet on the Netherlands market. As regards the Dansk Pelsdyravlerforening judgment, it will be observed that the Court of First Instance emphasizes, inter alia, that the disputed clause makes it very difficult for competing third parties to gain access to the market, compte tenu de la très forte position de la requérante sur le marché' (paragraph 78). It is true that that judgment also contains statements of a more peremptory nature, from which it is to be inferred that loyalty clauses are, inherently and by virtue of their very purpose, incompatible with Article 85(1) (see in particular paragraphs 98 to 110, in which the Court concludes that a requirement of selling exclusively to a cooperative has an anticompetitive object as well as anticompetitive effects). I consider, however, that the Court's dicta must necessarily be toned down, in other words, they must be essentially understood in relation to the particular market situation prevailing in that case. Otherwise, the repercussions would be excessive and difficult to justify. If one starts from the premise that exclusivity clauses or other loyalty clauses contained in the statutes of an agricultural cooperative are, in principle, by reason of their very object, incompatible with Article 85(1), then it follows-again in principfe-that an agricultural cooperative has no opportunity to protect itself against situations in which its members conduct themselves in the market in a way which clearly conflicts with the interests of the cooperative and the other members. In my opinion, on the other hand, the opposite view is the correct one: if the setting up of the cooperative is in itself in conformity with the protection of competition and with other principles laid down in the relevant legislation, the cooperative should also be given the freedom to adopt such measures as it considers appropriate for the protection of its essential interests; Article 85(1 ) cannot therefore be interpreted as providing absolute protection for the freedom of commercial action of members, to the detriment of the interests of the cooperative and of the other members. Any other interpretation would undermine the very stability of the cooperative and would therefore be at odds with the favour shown by the law, inter alia from the standpoint of the protection of competition, towards certain types of cooperation between undertakings, particularly in the agricultural sector. It is therefore only in those cases where the cooperative finds itself in a market situation in which there is an appreciable risk of adverse changes in the sphere of competition or in which the freedom of members becomes excessively restricted as a result of other stipulations (excessive length of membership, disproportionate penalties in the event of expulsion) that the specific effects of loyalty clauses fall to be scrutinized in the light of Article 85(1).

28 Judgments in Case 85/76 Hoffmann-La Roche [1979] ECR 461, Case C-62/86 AKZO [1993] I-3359 and Case T-65/89 BPB [1993] ECR II-389.

29 From the methodological point of view, I think it is entirely correct, in assessing the impact of certain clauses on competition, also to take account of developments which have already occurred in the relevant market in the period following the entry into force of those clauses. Naturally, the developments occurring in the market cannot be the only factor to be considered: it is clear that in order to assess the compatibility of an agreement it is not possible to rely solely on the consequences flowing from the_ agreement; otherwise the absurd result would be that, in order to establish whether the agreement is in breach of Article 85, one should wait several years to see what results (and damage!) it has caused and to decide, then, whether and how to intervene. Although an analysis a posteriori can never take the place of an analysis a priori (based on an examination of the object and foreseeable effects of the agreement), that does not mean that the results actually flowing from the agreement, where ascertainable, are to be regarded as wholly irrelevant. They must be seen as a relevant factor in so far as they serve to confirm or contradict the conclusions reached on the basis of a legal and economic assessment of the object and foreseeable effects of the agreement. In that regard, see for example the SOCEMAS decision (paragraph II, sixth recital) and the Intergroup decision (paragraph 6), cited in footnote 3 above.

30 OJ, English Special Edition 1959-1962, p. 87.

31 See also the judgment in Delimiti?, cited above, paragraph 43 et seq.

32 See, recendy, the judgment in Case T-30/89 Hilti [1991] ECR II-1439.

33 See the judgment in Case 27/76 United Brands [1978] ECR 207.

34 Judgments in Hoffmann-La Roche and United Brands, both cited above.

35 Judgment in Hoffmann-La Roche, cited above.