CJEC, May 6, 1971, No 1-71

THE COURT OF JUSTICE OF THE EUROPEAN COMMUNITIES,

1. By decision of 24 September 1970, received at the Court registry on 6 January 1971, the Tribunal de commerce, Lyon, has requested the interpretation of Article 85 of the EEC treaty and of the implementing Regulations issued there under in the action pending before that Court between SA Cadillon and Firma Höss.

2. As appears from that decision, SA Cadillon sued Firma Höss before that Court for the payment of ff 533 000 damages following the unilateral breach of the contracts of 19 March 1967 and 30 January 1968 granting exclusive rights of sale.

3. Firma Höss opposed this claim and maintained inter alia that the agreement of 30 January 1968 is void on the ground that Article 85 prohibits exclusive dealing arrangements.

4. Although the request for interpretation has not been made in the form of a precise question, it can be deduced from the wording of the decision that the Court wishes to be informed whether agreements granting exclusive rights of sale which have not been notified to the Commission but were entered into between two undertakings situated in different Member States and relate to transactions to be carried out within the common market fall within the prohibition contained in Article 85 (1) of the EEC treaty.

5. First of all, for Article 85 of the treaty to apply to an agreement, that agreement must be capable of affecting trade between Member States.

6. This condition is fulfilled if the agreement, on the basis of all the objective factors of law or of fact, makes it possible to foresee with a sufficient degree of probability that it may have an influence, direct or indirect, actual or potential, on the pattern of trade between Member States in such a way that it might hinder the attainment of the objectives of a single market between States.

7. Moreover, the prohibition in Article 85 (1) is applicable only if the agreement has as its object or effect the prevention, restriction or distortion of competition within the common market.

8. Those conditions must be understood by reference to the actual circumstances of the agreement.

9. An exclusive dealing agreement may escape the prohibition laid down in Article 85 (1) because, in view of the weak position of the parties on the market in the products in question in the territory covered by the exclusive dealing arrangement, it is not capable of hindering the attainment of the objectives of a single market between States, even if it creates absolute territorial protection.

10. This is even more the case when such an agreement does not prohibit third parties from effecting parallel imports into the territory covered by the agreement or the licencee from re-exporting the products covered by the agreement.

11. However it falls to the national court to examine whether these conditions are fulfilled in each case.

12. Where the agreement falls within the prohibition contained in Article 85 (1) the possible effect of Regulation No 67-67 of the commission which provides for block exemption for exclusive dealing arrangements must also be examined with regard to agreements of this type which have not been notified.

13. It follows from the decision making the reference that the objection that the agreement is illegal, which is based on Article 85 of the treaty, only relates to the contract dated 30 January 1968.

14. Therefore Regulation No 67-67 need only be examined with regard to agreements entered into after its entry into force.

15. It follows from Article 7 (2) of that Regulation that such agreements, where they would fall within the prohibition contained in Article 85 (1), may obtain the benefit of the block exemption in spite of failure to notify them to the commission, provided that they satisfy the specific conditions laid down in Articles 1 to 3 of the said Regulation.

16. The costs incurred by the Commission, which has submitted its observations to the Court, are not recoverable and since these proceedings are, in so far as the parties to the main action are concerned, a step in the action pending before the national court, the decision on costs is a matter for that Court.

The COURT

In answer to the question referred to it by the Tribunal de commerce, Lyon, pursuant to the judgment given by that Court on 24 September 1970, hereby rules :

1. An exclusive dealing agreement entered into between parties which occupy a weak position on the market in the products covered by the agreement may escape the prohibition in Article 85 (1) especially when it does not create absolute territorial protection.

2. An exclusive dealing agreement which falls within the prohibition contained in Article 85 (1) and which was entered into after Regulation No 67-67 came into force may, even where there has been a failure to notify it to the Commission, obtain the benefit of the block exemption laid down in Article 1 of that Regulation if it fulfils the conditions prescribed by Articles 1 to 3 of the said Regulation.