CJEC, June 16, 1981, No 126-80

THE COURT,

1 By order of 12 May 1980, received at the Court on 27 May 1980, the Tribunale civile, Ragusa, referred to the Court, under Article 177 of the EEC treaty, several preliminary questions on the interpretation of the provisions of the treaty relating to competition and, in particular, of Article 85, in order to enable it to assess the compatibility with the requirements of the treaty of certain clauses contained in the national agreement regulating the resale of daily newspapers and periodicals (hereinafter referred to as "the national agreement") concluded on 23 October 1974 between the Italian Federation of Newspaper Publishers (federazione italiana editori giornali) and the United Federation of Trade Unions of Newsagents (federazione sindacale unitaria giornalai).

2 These questions were raised in connexion with a dispute between the holder of a licence issued by the administrative authorities for the retail selling of Newspapers and periodicals in general and the proprietors of the warehouses for the distribution of Newspapers and periodicals in Ragusa, concerning the refusal of the latter in 1978 to deliver Newspapers and periodicals to the said licence-holder.

3 In support of their refusal, the warehouse proprietors contended that they were under No obligation to supply Newspapers and periodicals to holders of a retail-selling licence issued by the administrative authorities since such a licence affords licence-holders No more than a possibility of being supplied. They maintained that at the time the distribution system for Newspapers and periodicals in Italy was governed by the above-mentioned national agreement and that the plaintiff in the main action did not meet the requirements of Article 2 of that agreement. They emphasized in this connexion that under that provision, in communes with over 2 500 inhabitants, Publishers might supply their publications for sale only to holders of a licence issued by an inter-regional joint Committee which entitles them to receive from the distributors publications intended for sale.

4 The Tribunale civile, Ragusa, hearing the case at first instance, took the view, on the basis of judgment No 2387 of 4 September 1962 of the Court of cassation, that the before-mentioned rules were not contrary to Italian domestic law and, in particular, were not contrary to the provisions of Article 2598 of the civil code. However, it did not rule out the possibility that the clauses of the national agreement prohibiting Publishers of Newspapers and periodicals from delivering these products to sellers who had not obtained the trade licences might prove to be incompatible with the rules of competition contained in the EEC treaty and in order to clarify this point it referred the following questions to the Court :

1. Does the national agreement of 23 October 1974 regulating the resale of daily Newspapers and periodicals constitute a national agreement protecting the market in the distribution and sale of all types of Newspapers, national and foreign, is it an infringement of the prohibition on agreements laid down by Article 85 of the treaty and, having regard to the special provisions governing admission to the Newspaper trade, the minimum requirements, the obligations and penalties imposed upon retailers, does the agreement lead to a distortion of the conditions of competition?

2. Is not the said agreement incompatible with and does it not therefore come within the prohibition laid down by Article 85 (1) of the treaty to the extent to which it creates discrimination against retailers, in spite of the proper licence for the sale of Newspapers issued to them by the competent administrative authority, merely because they do not agree to obtain a licence to engage in the retail trade, the issue of which is, under the provisions of the said agreement, left to the discretion of the inter-regional joint Committees (and now the national Committee for the distribution of daily Newspapers and periodicals (Commissione nazionale per la diffusione dei quotidiani e periodici)?

3. Does not the agreement interfere with freedom of competition, in which the choice expressed by consumers determines the number of sales outlets for Newspapers, in the same way as the rules regulating the market applied by the Netherlands association of dealers in bicycles and related goods, which contain principles and restrictions similar to those of the agreement on daily Newspapers and which were prohibited by the Commission (decision of 2 December 1977, Official Journal L 20 of 25 January 1978)?

4. May the clauses prohibiting supply for sale, contained in Article 2 of the agreement in question and Article 1 of the rules governing the functioning of the joint Committees, be regarded as satisfying objective criteria such as to preclude any abuse and May they be exempted under Article 85 (3) even if they were laid down for the purpose of contributing to an improvement in distribution?

5. Does the fact that supplies are cut off from retailers who, like Mrs Salonia, have not obtained the licence required by the said agreement, thus preventing such categories of persons from obtaining the products for sale in another way, preclude reliance upon the exemption provided for by Regulations 19 and 67 and, if such exemption has been granted, does that fact not lead to an assumption that the benefit thereof has been revoked?

6. Does not the conduct laid down in and governed by the agreement in question constitute an abuse of a dominant position?

The jurisdiction of the Court

5 The defendants in the main action allege that in the present case the Court has not been validly seised, under Article 177 of the treaty, of a request for a preliminary ruling. They maintain, in the first place, that the questions referred to the Court bear No relation to the real subject-matter of the dispute since neither the plaintiff nor the defendants have relied on any rule of Community law in support of their arguments. They contend, moreover, that the questions submitted relate to an agreement to which none of the parties to the case is a signatory. Finally, they point out that the interpretation of the treaty sought by the national court serves No useful purpose since the national agreement of 23 October 1974 was No longer in force when the facts giving rise to the action occurred and it could not therefore at that time constitute the legal basis for the refusal on the part of the Newspaper distributors to supply the plaintiff.

6 As the Court stated in its judgment of 19 December 1968 in case 13-68 Salgoil (1968) ECR 453, Article 177 of the treaty, which is based on a distinct separation of functions between national courts and the Court of justice, does not allow the latter to criticize the reasons for the reference. Consequently, a request from a national court May be rejected only if it is quite obvious that the interpretation of Community law or the examination of the validity of a rule of Community law sought by that court bears No relation to the actual nature of the case or to the subject-matter of the main action.

7 However, that is not so in this case. In the first place, the fact that the parties to the main action failed to raise a point of Community law before the national court does not preclude the latter from bringing the matter before the Court of justice. In providing that reference for a preliminary ruling May be submitted to the Court where "a question is raised before any court or tribunal of a Member State", the second and third paragraphs of Article 177 of the treaty are not intended to restrict this procedure exclusively to cases where one or other of the parties to the main action has taken the initiative of raising a point concerning the interpretation or the validity of Community law, but also extend to cases where a question of this kind is raised by the national court or tribunal itself which considers that a decision thereon by the Court of justice is "necessary to enable it to give judgment".

8 Similarly, the fact that neither the plaintiff nor the defendants to the main action are parties to the national agreement forming the subject-matter of the questions on the interpretation of the treaty referred to the Court of justice by the national court does not call in question the Court ' s jurisdiction since the application of Article 177 of the treaty is subject to the sole requirement that national courts must be provided with all the relevant elements of Community law which are necessary to enable them to give judgment.

9 Finally, although it is true that the agreement in question was repudiated by one of the parties with effect from 31 march 1977, with the result that it was No longer in force at the time when the facts giving rise to the case occurred, or when the main action was commenced, that is to say on 21 and 22 September 1978, nevertheless the defendants in the main action themselves did not rule out, in their oral argument, the possibility that certain clauses of the agreement might have continued to be applied in practice after 31 March 1977. Furthermore, it is clear from the order referring the matter to the Court that in the main action the defendants had relied on the provisions of the above-mentioned national agreement and, more particularly, on those of Article 2 in order to have the application dismissed.

10 For those reasons, the objection raised by the defendants in the main action must be dismissed.

Substance

11 The purpose of the first and third questions submitted by the national court is, in the first place, to establish whether the terms of an agreement, which is national in its scope, and which restricts the supply of Newspapers and periodicals merely to retailers approved by a trade body comprising the representatives of the national Newspaper Publishers ' and newsagents ' associations, constitute an infringement of the rules of competition under Article 85 of the EEC treaty.

12 According to that Article, an agreement which "May affect trade between Member States" and which has as its "object or effect" to harm "competition within the common market" is prohibited as incompatible with the common market. This applies to an agreement which, as the Court stated in its judgment of 6 May 1971 in Case 1-71 Cadillon (1971) ECR 351, makes it possible to foresee, on the basis of all the objective factors of law or of fact, 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 and which has as its object or effect the restriction or distortion of competition within the common market.

13 In the present Case, the agreement referred to by the national court provides for the exclusive distribution in Italy of Italian Newspapers and periodicals and involves, inter alia, the application of a selective distribution clause contained in Article 2 whereby only approved retailers have access to the supply of Newspapers and periodicals.

14 Such an agreement, which extends throughout the territory of a Member State May by its very nature have the effect of reinforcing the partitioning of the market on a national basis, thereby impeding the economic interpenetration which the treaty is designed to bring about and protecting national production.

15 Although it is true that in the present Case the sole subject-matter of the agreement in question is the distribution of national Newspapers and periodicals and that the agreement is not concerned with the distribution of Newspapers and periodicals from other Member States, the fact remains that a closed-circuit distribution system applying to most of the sales outlets for Newspapers and periodicals on national territory May also have repercussions on the distribution of Newspapers and periodicals from other Member States.

16 Having regard to these factors therefore, it is impossible to rule out in principle the possibility that an agreement such as that referred to by the national court May, in view of its content and its scope, affect, as far as the distribution of Newspapers and periodicals is concerned, trade between Member States within the meaning of Article 85 (1) of the treaty.

17 However, it should be recalled that such an agreement escapes the prohibition laid down by Article 85 if it has No appreciable effect on trade between member sates. Although, in the Case of Newspapers and periodicals, an assessment of the appreciability of the effects which a distribution agreement May have on the market is stricter than in the Case of other products, it is necessary nevertheless to take into account, for the purpose of determining whether an agreement is capable of having an appreciable effect on the market in Newspapers and periodicals from other Member States, first the fact that this market May employ, for the sale of Newspapers in the area concerned, channels of distribution other than those governed by the agreement and, secondly, that demand for the aforesaid products is rigid inasmuch as it shows No substantial variations as a result of the entry into force and the termination of the agreement in question.

18 In this connexion, the fact that the statistics produced by the Commission during the written procedure and supplemented at the sitting reveal that the demand for Newspapers and periodicals from other Member States has not been subject to substantial variations between 1972 and 1979 constitutes one of the factors which have to be assessed.

19 It is for the national court to determine, on the basis of all the relevant information which it May have at its disposal, whether the agreement in fact satisfies the above-mentioned conditions and thus comes within the prohibition laid down by Article 85 (1).

20 Having regard to those facts, the answer to the first and third questions should therefore be that an exclusive distribution agreement for Newspapers and periodicals such as that referred to by the national court comes within the prohibition laid down by Article 85 (1) of the treaty only if it proves capable of having an appreciable effect on trade between the Member States.

The second and sixth questions

21 In its second question, the national court asks whether the clause in the contested agreement which provides that only retailers in possession of a trade licence issued by the inter-regional joint Committees are allowed to sell Italian Newspapers and periodicals creates discrimination contrary to the treaty.

22 In its sixth question, it asks whether such a rule is capable of constituting an abuse of a dominant position, prohibited by the first Paragraph of Article 86 of the treaty.

23 The purpose of these two questions is essentially to ascertain whether the agreement to which the national court refers is compatible with the provisions of the treaty relating to competition in view of the fact that Article 2 of the agreement contains a clause providing for the application of a criterion of selective distribution.

24 As the Court has held, in particular in its judgment of 25 October 1977 in Case 25-76 Metro (1977) ECR 1875, selective distribution systems constitute an aspect of competition which accords with Article 85 (1), provided that retailers are chosen on the basis of objective criteria of a qualitative nature relating to the capacity of the retailer and his staff and the suitability of his trading premises in connexion with the requirements for the distribution of the product and that said criteria are laid down uniformly for all potential retailers and are not applied in a discriminatory fashion.

25 In the Case of an agreement such as that referred to by the national court, it is necessary to take account of those of its provisions which define the criteria governing the choice of approved retailers, such as the tenth Paragraph of Article 3 and Article 4 of the contested national agreement which provide that the licence shall be granted as a rule to persons who "possess the aptitude to pursue the occupation of newsagent".

26 In the present Case, it is for the national court to determine, in the light of all these factors, whether genuine conditions exist which are capable of justifying the application, in the context of the agreement with which it is concerned, of the contested selective distribution criterion.

27 The answer to the second and sixth questions must therefore be that a selective distribution clause such as that contained in the national agreement referred to by the national court, restricting the supply of the products covered by the agreement to approved licence-holders alone, does not infringe Article 85 (1) or the first Paragraph of Article 86 of the treaty if it appears that the authorized retailers are selected on the basis of objective criteria relating to the capacity of the retailer and his staff and the suitability of his trading premises in connexion with the requirements for the distribution of the product and that such criteria are laid down uniformly for all potential retailers and are not applied in a discriminatory fashion.

The fourth question

28 In its fourth question, the national court asks whether the clauses of the contested national agreement and in particular those contained in the rules governing the functioning of the inter-regional joint Committees May qualify for exemption under Article 85 (3) of the treaty if it is established that their purpose is to contribute to an improvement in distribution.

29 Article 4 (1) of Regulation No 17 of the Council of 6 February 1962 (Official Journal English special edition 1959-1962, p. 87) provides that "agreements, decisions and concerted practices of the kind described in Article 85 (1) of the treaty which come into existence after the entry into force of this Regulation and in respect of which the parties seek application of Article 85 (3) must be notified to the Commission. Until they have been notified, No decision in application of Article 85 (3) May be taken".

30 It is common ground that the contested agreement, which was concluded after the entry into force of the aforesaid Regulation, has not so far been notified to the Commission. In these circumstances, it has not been possible for any decision pursuant to Article 85 (3) to be taken in regard to the agreement.

31 It is therefore necessary to conclude that the agreement referred to by the national court could not, in the absence of notification to the Commission in accordance with Article 4 (1) of Regulation No 17 of the Council of 6 February 1962, be the object of a declaration of inapplicability under Article 85 (3) of the treaty.

The fifth question

32 In its fifth question, the national court asks whether the contested agreement May qualify for block exemption under Regulation No 19-65 of the Council of 2 March 1965 and under Regulation No 67-67 of the Commission of 22 March 1967.

33 Article 1 (1) of Regulation No 19-65 of the Council (Official Journal English special edition 1965-1966, p. 35) provides that in accordance with Article 85 (3) of the treaty, Article 85 (1) does not apply to categories of agreements "to which only two undertakings are party" and which display certain characteristics.

34 The same provision is contained in Article 1 (1) of Regulation No 67-67 of the Commission (Official Journal English special edition p. 10). Therefore it follows from these provisions that an agreement May qualify for block exemption under the aforesaid Regulations nos 19-65 and 67-67 only on condition that it is an agreement "to which only two undertakings are party".

35 It is undisputed that the national agreement referred to by the national court was concluded between the Italian Publishers ' association and the Italian newsagents ' association. Since the parties to the agreement are trade-union associations, both of which have a large membership, they cannot be regarded as "two undertakings" within the meaning of the aforesaid Regulations nos 19-65 and 67-67, with the result that the condition contained in Article 1 (1) of those Regulations does not appear to have been met in the present Case.

36 The answer to the fifth question should therefore be that since the agreement referred to by the national court is not an agreement "to which only two undertakings are party" within the meaning of Article 1(1) of Regulation No 19-65 of the Council of 2 March 1965 and of Regulation No 67-67 of the Commission of 22 March 1967, it does not come within the categories of agreements which, under the aforesaid Regulations, May be exempted from the application of Article 85 (1) of the treaty.

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

On those grounds,

THE COURT,

In answer to the questions referred to it by the Tribunale civile, Ragusa, by order of 27 May 1980, hereby rules :

1. An exclusive distribution agreement for Newspapers and periodicals such as that referred to by the national court comes within the prohibition laid down by Article 86 (1) of the treaty only if it proves capable of having an appreciable effect on trade between Member States.

2. A selective distribution clause, such as that contained in the national agreement referred to by the national court, restricting the supply of the products covered by the agreement to authorized licence-holders alone, does not infringe Article 85 (1) or the first Paragraph of Article 86 of the treaty if it appears that the authorized retailers are selected on the basis of objective criteria relating to the capacity of the retailer and his staff and the suitability of his trading premises in connexion with the requirements for the distribution of the product and that such criteria are laid down uniformly for all potential retailers and are not applied in a discriminatory fashion.

3. The agreement referred to by the national court could not, in the absence of notification to the Commission in accordance with Article 4 (1) of Regulation No 17 of the Council of 6 February 1962, be the object of a declaration of inapplicability under Article 85 (3) of the treaty.

4. Since the agreement referred to by the national court is not an agreement "to which only two undertakings are party" within the meaning of Article 1 (1) of Regulation No 19-65 of the Council of 2 March 1965 and of Regulation No 67-67 of the Commission of 22 March 1967, it does not come within the categories of agreements which, under the aforesaid Regulations, May be exempted from the application of Article 85 (1) of the treaty.