CJEC, March 28, 1985, No 298-83

1. By an application lodged at the Court registry on 29 December 1983 the Comité des industries cinématographiques des Communautés Européennes (hereinafter referred to as 'the CICCE ') sought a declaration under the second paragraph of Article 173 of the EEC treaty that the Commission's decisions of 12 July and 28 October 1983 to the effect that no further action would be taken on an application made by the CICCE pursuant to Article 3 of Council Regulation No 17 of 6 February 1962 (Official Journal, English special edition 1959-62, p. 87) are void.

2. In its application to the Commission, the CICCE cited the conduct of the three French television companies, namely Société nationale de la télévision française 1 (TF1), Société nationale de la télévision en couleur Antenne 2 (A2) and Société nationale des programmes France régions (FR3). The CICCE claimed that by setting very low licence fees for broadcasting films the television companies concerned were in breach of Article 86 of the EEC treaty.

3. The CICCE stated that in view of the fact that they had exclusive rights to provide the television service in France, the French television companies occupied a dominant position within the common market, or at least in a substantial part of it, within the meaning of Article 86 of the EEC treaty. The CICCE further contended that the alleged conduct of the television companies was liable to affect intra-community trade in so far as the programmes that they broadcast were received in neighbouring Member States either directly or indirectly via cable.

4. In support of its contention that the television companies' conduct was unfair the CICCE made the following points in its application to the Commission :

(a) The French television companies allocate a tiny fraction (about 3.3%) of their budget for the purchase of film broadcasting rights whereas the films themselves constitute when broadcast on television the 'main programme' in terms of both audience ratings and the cost of advertising time ; advertising time preceding the showing of a film is charged for at the most expensive rate.

(b) The average film licence fee paid by the French television companies (ff 250 000) is less than the cost to them of making a television film (which may be as much as ff 2 million).

(c) On 28 June 1979 the French Commission de la concurrence (competition Commission) delivered an opinion in which it expressed the view that the French television companies were in breach of the last paragraph of Article 50 of French Ordonnance No 45-1483 prohibiting abuses of dominant positions.

(d) Numerous statements in reports of parliamentary committees on the supervision of radio and television and by members of the French Government attest to the very low average film licence fee paid by the French television companies and call for the introduction of a system of fair minimum fees.

5. During the investigation of the complaint the Commission, acting pursuant to Article 11 of Regulation No 17, requested the CICCE by letter of 9 February 1982 for certain information, including film production costs, the time taken to amortize them, the relative burden of amortization as between the cinema, television, video cassettes and exports and the average licence fee paid by cinemas and television companies respectively in the other Member States.

6. By letter of 16 March 1982, the CICCE gave the Commission detailed answers to those questions, stating, inter alia, what were the average film licence fees paid in 1977 by television companies in some Member States other than France (Italy, the Netherlands and the Federal Republic of Germany).

7. After collecting other information the Director-General for competition at the Commission wrote to the CICCE on 12 July 1983 stating that whether the television companies had acted improperly by fixing unfair licence fees depended on the relationship between the price paid and the economic value of the service provided. In that regard, the Commission stated that the economic value of a film was 'very variable, depending on (a) the artistic quality of the film, (b) the film's success in the cinemas, (c) the size of the potential television audience, (d) whether the film was being shown for the first time, (e) the time for which broadcasting rights were granted, etc. '. The Commission argued that in view of the many different criteria of assessment abuse had to be established not in relation to all films for which broadcasting rights had been purchased but in relation to each film.

8. The Commission also pointed out that No comparison could be made between the production cost of a film and the licence fee paid by a television company to broadcast that film, since the amortization of a film was based not only on the sale of broadcasting rights to television companies but also on showings in cinemas, exports and the exploitation of new technologies. By the same token, the Commission considered that the film licence fees paid by television companies could not be compared with the cost of a television film produced by one of those companies, since the television film remained the property of the television company which produced it whereas in the Case of cinematographic films the television company merely purchased the right to show them once or on a number of occasions. As a result they could continue to be exploited commercially at cinemas, on television, through exportation and on video cassette and video disk.

9. For all those reasons the Commission considered that the CICCE's application failed to substantiate the alleged abuse. It therefore stated that it intended to proceed No further with the matter. At the same time, in accordance with Article 6 of Regulation No 99-63-EEC of the Commission of 25 July 1963 (Official Journal, English special edition 1963-64, p. 47), the Commission invited the CICCE to submit any further comments in writing.

10. In a letter from its president dated 29 August 1983 the CICCE claimed that the position adopted by the Commission did not accord with the facts. In a letter from its legal representative dated 13 September 1983, the CICCE argued that the French Commission de la concurrence, among others, had held there to be abuse on the part of the television companies, which was therefore manifest. It asked the Commission to use its powers of investigation in order to obtain more information about inter alia the licence fees paid for each of the films broadcast by the French television companies. Once those fees were made known the CICCE would, where appropriate, provide the Commission with documentary evidence that the fee paid for each film was wholly inadequate.

11. In a letter dated 28 October 1983 from the Director-General for competition, the Commission stated that the comments submitted by the CICCE had not adduced any new element of law or fact capable of altering the Commission's view. It pointed out in particular that the opinion of the French Commission de la concurrence cited by the CICCE was 'based on French legislation, which does not fulfil the same criteria and conditions as Article 86 of the treaty '. Accordingly, the Commission notified the CICCE that it had decided to proceed No further with the matter.

12. The CICCE has brought this action against the decision of 28 October 1983 discontinuing the procedure and against the letter of 12 July 1983.

13. By letter dated 13 July 1984, the Court asked the parties to inform it of the average audience recorded in France and in the other Member States for cinematographic films broadcast on television in the six months preceding the submission of the CICCE's application to the Commission and of the average film licence fee paid by public and private television companies in France and in the other Member States in that same period. The CICCE did not comply with that request. The Commission provided the information requested for France but stated that it had No particulars of the situation in the other Member States.

14. By the same letter of 13 July 1984, the Court also requested the Commission to provide it with a list of the licence fees paid for each film broadcast by the French television companies in the six months preceding the CICCE's application to the Commission. The latter complied with that request.

Admissibility of some of the submissions made in the application

15. Although the Commission does not contest the admissiblity of the CICCE's action, it contends that some of the submissions set out therein are inadmissible.

16. It contends that where a person has made an application under Article 3 (2) of Regulation No 17 and subsequently contests the Commission's decision suspending the procedure with respect to that application by bringing an action before the Court in which he seeks to have that decision declared void, the avenue of appeal available to such a person has the sole object of ensuring that the decision suspending the procedure was taken in the light of the comments submitted by that person pursuant to Article 6 of Regulation No 99/63/EEC. As a result, in the Commission's view, where an applicant appeals against a decision suspending the procedure only such arguments as were set out in the comments submitted pursuant to Article 6 are admissible before the Court.

17. On those grounds the Commission argues that the submissions relating to matters which, although mentioned in the CICCE's original application to the Commission, were not alluded to in the comments submitted pursuant to Article 6 of Regulation No 99-62-EEC, are inadmissible.

18. As to whether that argument is well-founded it should be stated first and foremost that, as far as the present Case is concerned, the Court must review the legality of the decision taken by the Commission to discontinue the procedure in the CICCE's Case. That review must be effected inter alia in the light of the elements of law and fact that were brought to the Commission's notice by the CICCE, and which, according to the judgment of 11 October 1983 in Case 210-81 (demo-studio Schmidt v Commission (1983) ECR 3045), the Commission was under a duty to examine in order to decide whether the competition rules of the treaty were infringed in this Case.

19. For that purpose the Court must consider itself to be seised of all the elements of fact and law which, in so far as they were contained in the application to the Commission or in the comments submitted by the CICCE, were taken into account by the Commission in reaching the contested decision to suspend the procedure.

20. It follows that it is not appropriate for the purposes of determining their admissibility in this action to draw a distinction between arguments based on information contained solely in the application made by the CICCE to the Commission and arguments relating to information expressly mentioned in the comments submitted by the CICCE pursuant to Article 6 of Regulation No 99-63-EEC. The objection of inadmissibility raised by the Commission must therefore be rejected.

Substance

21. It should be observed, first, that the decision challenged in this Case does not determine whether or not Article 86 of the treaty was infringed but relates to a preliminary stage in the procedure, concerned with assessing the arguments and evidence adduced by the CICCE with a view to establishing that the film licence fees paid by the television companies were unfair within the meaning of subparagraph (a) of the second paragraph of Article 86 of the treaty.

22. In its letter of 12 July 1983, the Commission, having first acknowledged that 'the fact that an undertaking in a dominant position imposes unfair purchase prices may constitute an abuse within the meaning of Article 86 of the treaty ', stated that such an abuse depended on the relationship between the cost and the economic value of the service provided and that in the Case of film broadcasting rights it was impossible, in view of the variety of potential criteria for assessing the value of films, to determine a yardstick that was valid for all films. Consequently, the Commission contends that if there was an abuse it had to be demonstrated and confirmed in relation to specific films and not, as the CICCE contended in its application to the Commission, by reference to all films for which broadcasting rights had been purchased by the television companies, since each film was different and each film should be considered separately in the light of Article 86.

23. In the CICCE's view the Commission's argument that abuse must be proved in relation to specific films is unfounded. It contends that in this Case the existence of a general abuse should be found, evidenced by a consistent practice, and that in that regard it is sufficient that the French television companies allocate a very small fraction of their budgets for the purchase of film broadcasting rights and that the average film licence fee paid is very low.

24. As far as that point is concerned, it must be observed that in this Case No criticism can be levelled at the Commission for having based its decision to suspend the procedure on the need to prove the alleged abuse by reference to actual Cases involving specific films rather than by reference to the average licence fee paid for all the films for which the television companies acquired broadcasting rights.

25. It appears from the list provided by the Commission at the Court's request that the licence fees paid for films broadcast by the television companies in the six months preceding the submission of the application by the CICCE to the Commission are not consistent but vary considerably from film to film. As far as this Case is concerned, that means that crucial importance need not be attached to considerations based on the average level of film licence fees or to the proportion of the television companies 'budgets that is allocated thereto, and shows that the Commission was justified in requiring the abuse alleged by the CICCE to be proved or at least corroborated by examples relating to specific films.

26. That finding is in No way prejudiced by the opinion delivered on 28 June 1979 by the French Commission de la concurrence, in which it was held, on the basis of information similar to that set out by the CICCE (such as the small proportion of the television companies' budgets set aside for film licence fees and the very low average film licence fee paid), that the French television companies were abusing a dominant position within the meaning of Article 50 (2) of French Ordonnance No 45-1483.

27. Any similarity there may be between the legislation of a Member State in the field of competition and the rules laid down in Articles 85 and 86 of the treaty certainly cannot serve to restrict the Commission's freedom of action in applying Articles 85 and 86 so as to compel it to adopt the same assessment as the authorities responsible for implementing the national legislation.

28. With regard to whether the French television companies abused a dominant position when purchasing broadcasting rights in respect of specific films, the Commission considered that the CICCE's complaint did not establish that such abuses had taken place. Neither the documents in the Case nor the proceedings before the Court cast doubt on the Commission's assessment in that regard.

29. It must therefore be held that the applicant has not established that the Commission's decision to take No further action in the matter is vitiated by an error such as to warrant its being declared void. Nevertheless, that finding does not preclude the Commission from taking the matter up again, in accordance with the intention expressed in its letter of 12 July 1983 where it is stated that the Commission will continue 'to monitor developments in the film sector in France and in particular those provisions of the television companies 'charter for 1983 which are specifically concerned with relations between the cinema and television '.

30. Accordingly the action brought by the CICCE must be dismissed.

Costs

31. Pursuant to Article 69 (2) of the rules of procedure, the unsuccessful party is to be ordered to pay the costs if they have been asked for in the successful party's pleading.

32. The Commission asked that the CICCE be ordered to pay the costs only in its rejoinder. Since that request is out of time and hence inadmissible, each party shall bear its own costs.

On those grounds,

THE COURT

Hereby :

(1) Dismisses the action;

(2) Orders each party to pay its own costs.