CJEC, February 1, 1977, No 47-76

THE COURT OF JUSTICE OF THE EUROPEAN COMMUNITIES,

1. By interlocutory judgment of 26 May 1976, received at the Court registry on 4 June 1976, the Hof Van Beroep, Ghent, referred to the Court under Article 177 of the EEC treaty a series of questions on the interpretation of Article 85 of the treaty, of Regulation No 17 of the Council of 6 February 1962 implementing Articles 85 and 86 of the treaty (OJ English special edition 1959-1962, p. 87), and of Regulation No 67-67-EEG of the Commission of 22 March 1967 on the application of Article 85 (3) of the treaty to certain categories of exclusive dealing agreements (OJ English special edition 1967, p. 10).

2. The file discloses that the parties to the main action are a brewery, which accounts for about 0.5 % of Belgian beer production, and the owners of a cafe at Grammont, Belgium, and that it concerns the validity, in the light of Article 85 of the treaty, of a contract under which, in consideration for a long-term loan, the cafe owners undertook with the said brewery'not to stock or sell beverages of any kind whatever other than those of (that brewery) or supplied by it... in their business'.

3. Consideration must first be given to the second question from the national Court.

Second question

4. This question calls for the interpretation of Regulation No 67-67, which was adopted under Article 85 (3) of the treaty, and of Regulation No 19-65-EEC of the Council of 2 March 1965 on the application of Article 85 (3) of the treaty to certain categories of agreements and concerted practices (OJ, English special edition 1965-1966, p. 35).

5. More specifically, it is asked whether it may be deduced by analogy with the judgment of the Court of 3 February 1976 in Fonderies de Roubaix (Case 63-75 (1976) ECR 111) that the group exemption provided for by Regulation No 67-67 in favour of certain categories of agreements ' is applicable to all exclusive dealing agreements of the type at issue, concluded between undertakings in a single Member State '.

6. (1) By its nature and purpose, that Regulation applies only to agreements which, in the absence of exemption, fall under the prohibition contained in Article 85 (1) of the treaty.

7. On the other hand, as the Court declared in its judgment of 12 December 1967 in Brasseries de Haecht v Wilkin (Case 23-67 (1967) ECR 407), ' agreements whereby an undertaking agrees to obtain its supplies from one undertaking to the exclusion of all others do not by their very nature necessarily include all the elements constituting incompatibility with the common market ' but may exhibit them ' where, taken either in isolation or together with others, and in the economic and legal context in which they are made ' (in particular, the existence of similar contracts and the cumulative effect produced by all those contracts), they ' may affect trade between Member States and where they have either as their object or effect the prevention, restriction or distortion of competition '.

8. In these circumstances, this question must be understood as asking whether, on the assumption that, owing to the cumulative effect of all similar agreements, agreements such as that at issue fall under the prohibition contained in Article 85 (1), they benefit from the exemption by categories provided for in Regulation No 67-67.

9. (2) Under Article 1 (1) of that Regulation, as that provision was amended by Regulation (EEC) No 2591-72 of the Commission of 8 December 1972 (OJ L 276 p. 15), ' it is hereby declared that until 31 December 1982 Article 85 (1) of the treaty shall not apply to agreements to which only two undertakings are party and whereby... (b) one party agrees with the other to purchase only from that other certain goods for resale '.

10. It is impossible to accept the contention of the Commission that, despite its wording, this provision does not apply to agreements such as that involved in this Case since they do not define the area of the common market within which resale of the products concerned is to take place.

11. The fact that the inclusion of such a territorial stipulation in the agreement is an express condition of the application of Article 1 (1) (a) of Regulation No 67-67, which relates to agreements embodying an untertaking for exclusive supply, is explained by the fact that, in the Case of such agreements, the definition of the area to which they are to apply is inherent in this type of contract.

12. On the other hand, in the case of exclusive purchase agreements, an express definition of the area to which they apply is generally unnecessary, in particular in the Case of brewery contracts such as that in question since, necessarily, it is only on his own premises that the cafe owner sells beverages covered by the contract.

13. Consequently, agreements such as that in question fulfil the conditions laid down in Article 1 (1) (b) of Regulation No 67-67.

14. However, paragraph (2) of that Article reads : ' paragraph 1 shall not apply to agreements to which undertakings from one Member State only are party and which concern the resale of goods within that Member State '.

15. Since the wording of this provision covers agreements such as that involved in the present Case, the question arises whether those agreements may nevertheless benefit from group exemption in so far as they fall under the prohibition contained in Article 85 (1) of the treaty.

16. In the judgment of this Court in Roubaix-Wattrelos, referred to by the National Court, it was held that the effect of the said Article 1 (2) ' is to exclude from the scope of Article 85 (1) and, therefore, from Regulation No 67-67, exclusive dealing agreements which are purely domestic in nature and are not capable of significantly affecting trade between Member States ' but that, on the other hand, it ' is not intended to exclude from the benefit of exemption by categories those agreements which, although concluded between two undertakings from one Member State, may nevertheless by way of exception significantly affect trade between Member States but which, in addition, satisfy all the conditions laid down in Article 1 of Regulation No 67-67 '.

17. That decision is based on the fourth recital of the preamble to the Regulation which states that ' since it is only in exceptional Cases that exclusive dealing agreements (of the kind covered by the Regulation) concluded within a Member State affect trade between Member States, there is No need to include them in this Regulation '.

18. The fact that under paragraph (2) of Article 1 of the Regulation, group exemption is withheld from purely domestic agreements is explained by the fact that, under that Article, they are considered, as a rule, to have so little effect on trade between Member States that there is No need for them to be exempted from a prohibition which applies to them only by way of exception.

19. In consequence, Article 1 (2) must be interpreted to mean that such agreements benefit from the exemption when, by way of exception, they are caught by the prohibition contained in Article 85 (1) of the treaty since this interpretation alone makes it possible to avoid the absurd result that purely domestic agreements of a particular type are treated less favourably than multi-national agreements of the same type although, as a general rule, the latter seem more likely to prejudice the working of the common market.

20. The said interpretation applies not only to exclusive supply agreements but also to exclusive purchase agreements.

21. The foregoing considerations lead to the conclusion that agreements covered by Article 1 (1) (b) of Regulation No 67-67, concluded between two undertakings from one Member State, fulfil the conditions for the application of Article 1 in so far as they fall under the prohibition contained in Article 85 (1) of the treaty.

22. In order that an agreement may benefit from group exemption, it must, in addition, satisfy the conditions laid down in Articles 2 and 3 of the said Regulation.

23. Article 2 is concerned only with exclusive supply agreements whereas Article 3 covers circumstances which manifestly do not apply to brewery contracts of the type referred to by the national Court.

24. (3) Although the foregoing considerations suggest that the questions raised by that Court should be answered in the affirmative, it nevertheless remains to be determined whether such a reply would not conflict with certain objections raised during the proceedings.

25. (a) It has been contended that a ruling in which Regulation No 67-67 was held to be applicable to agreements such as those in question would be inconsistent with previous decisions of the Court to the effect that, although, taken in isolation, exclusive supply or purchase agreements do not fall under the prohibition contained in Article 85, they may nevertheless do so if they form part of a series of similar agreements which, considered as a whole, may significantly affect trade between Member States and competition within the common market.

26. The Case-law referred to was concerned only with the question whether, and if so in what circumstances, the abovementioned agreements are prohibited under Article 85 (1) of the treaty and not with the conditions in which, in those circumstances, they benefit or may benefit from group or individual exemption under the third paragraph of that Article.

27. The only judgment of the Court which dealt with an issue similar to that to be decided in the present Case, namely the judgment in Roubaix-Wattrelos, supports the conclusion that the question should be answered in the affirmative, as is clear from the considerations set out above.

28. It cannot be argued that it would be contrary to the spirit and objectives of Regulation No 67-67 to hold that it applies to agreements which fall under the prohibition contained in Article 85 only because of the cumulative effect produced by the existence of one or more networks of similar agreements.

29. On the contrary, apart from the fact that there is nothing in the text of the Regulation to justify this contention, its result would be, to a large extent, to deprive the Regulation of any purpose, since it specifically relates to categories of agreements which are often part of such networks.

30. This view is confirmed by the fact that Regulation No 67-67 is designed to promote legal certainty for the benefit of parties concerned and to make it easier to apply the community provisions on competition.

31. 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 would generally have No specific knowledge and 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.

32. If the Commission were to consider that 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, which states : ' Where the Commission... Finds that in any particular Cases agreements... To which a Regulation adopted pursuant to Article 1 (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 '.

33. In this connexion it must be borne in mind that, as the statements of the Commission themselves make clear, the latter has, in the first place, been notified of a series of brewery contracts without having, up to the present, taken a decision thereon and, in the second place, has conducted an inquiry within the meaning of Article 12 of Regulation No 17 into the brewing industry which was, however, restricted to the six original Member States and has not yet itself produced a decision.

34. (b) Finally, the applicability of Regulation No 67-67 to agreements such as that in question cannot be challenged on the ground that, as they come under Article 4 (2) (1) of Regulation No 17, they are exempt from notification, although Regulation No 67-67 makes No provision governing the status of agreements which are the subject of such exemption.

35. It would be unreasonable to exclude from the benefit of group exemption agreements which are not subject to the obligation to notify (and, accordingly, considered as a general rule to be less harmful to the functioning of the common market) when, although fulfilling the conditions for the application of Regulation No 67-67, they fall under the prohibition in Article 85 of the treaty.

36. The truth of this is confirmed in that in the penultimate recital of the preamble to Regulation No 67-67 it is expressly stated that even agreements which it is possible to notify under Regulation No 17, but which come within the ambit of Regulation No 67-67, ' need No longer be notified '.

37. Accordingly, the answer which should be given to the Hof Van Beroep, Ghent, is that agreements to which only two undertakings from one Member State only are party, under which one party agrees with the other to purchase only from that other certain goods for resale and which do not display the features set out in Article 3 of Regulation No 67-67, qualify for the exemption by category provided for in that Regulation if, failing exemption, they would fall under the prohibition contained in Article 85 (1) of the EEC treaty.

The other questions

38. From the answer which has been given to the second question it follows that agreements such as those defined by the National Court are valid either because they fall outside the scope of the prohibition contained in Article 85 (1) of the treaty directly or because they benefit from the group exemption provided for in Regulation No 67-67.

39. In these circumstances, there is No need to answer the other questions raised by that Court.

Costs

40. The costs incurred by the Belgian Government and by the Commission of the European communities, which have submitted observations to the Court, are not recoverable and as 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 as to costs is a matter for that Court.

On those grounds,

THE COURT,

In answer to the questions referred to it by the Hof Van Beroep, Ghent, hereby rules :

Agreements to which only two undertakings from one Member State only are party, under which one party agrees with the other to purchase only from that other certain goods for resale and which do not display the features set out in Article 3 of Regulation No 67-67 of the Commission, qualify for the exemption by category provided for in that Regulation if, failing exemption, they would fall under the prohibition contained in Article 85 (1) of the EEC treaty.