61979C0037
OPINION OF MR ADVOCATE GENERAL REISCHL
DELIVERED ON 22 NOVEMBER 1979 (
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Mr. President,
Members of the Court,
The case in which I now have to deliver an opinion also concerns a selective distribution system in the perfume industry of the type which was involved in Joined Cases 253/78 and 1 to 3/79.
That system is operated by the French company Estée Lauder, which was founded in 1967 and is a subsidiary of the Canadian company Estée Lauder Cosmetics Limited. The former obtains beauty aids and perfumes manufactured in Belgium and in Great Britain and distributes them through a network of authorized dealers in the common market. For details, reference should be made to the order for reference from the Tribunal de Commerce, Paris in particular to page 7 et seq. and 10 of the English version of that judgment.
The Commission learned of the distribution organization when Estée Lauder notified it on 11 January 1977 of the standard-form contract and general conditions of sale applicable to dealers in France. A letter of 23 March 1977 signed by a director in the Directorate-General for Competition stated that it might be assumed that those texts might “be considered, taking account of the economic context in which they operate, as not capable of being affected by the rules of the competition contained in the EEC Treaty”. After Estée Lauder had stated at the request of the Commission that in the other eight Member States distribution took place through branch offices which entered into corresponding agreements with dealers, a letter of 8 June 1978, signed in the same way, explained “that this case has been filed and that no further action is being taken”.
That distribution system and the attitude taken by the Commission on the question are important for the main action for the following reasons.
The plaintiff in the main action is the proprietor of a shop in Paris in which perfume is also sold. It requested Estée Lauder in April 1978 to open an account for it and to supply it in the future, its first order being attached at the same time to that request. As Estée Lauder did not comply, the plaintiff commenced proceedings in the Tribunal de Commerce, Paris, claiming that the conduct of Estée Lauder constituted an infringement of the French Regulation of 30 June 1945, with which we are familiar as a result of the other abovementioned cases. The plaintiff sought a declaration that the defendant was obliged to supply it and that it must pay damages for a wrongful refusal to sell.
In its defence the defendant pleaded that in Community law a distribution system based on qualitative and quantitative selection criteria is permissible. It had notified the contracts for the sales outlets in France to the Commission in order to obtain exemption under Article 85 (3) of the EEC Treaty; the Commission had decided thereupon to tolerate that distribution system. As the system had thus been recognized as permissible by the Commission, it must also be valid in national law. In the alternative the defendant claims that the contracts contained only provisions which complied with the requirements of a “circulaire Fontanet” [Fontanet Circular] of 30 March 1960 issued pursuant to the Regulation of 30 June 1945. Therefore, they cannot be impeached under French law either: Estée Lauder can rely thereon as against the plaintiff mainly because the latter is not concerned principally with the sale of perfume, but deals mainly in clothing. On consideration of these facts the court before which the proceedings were trought came to the view that Article 85 of the EEC Treaty was applicable to the contracts concluded by Estée Lauder. As for the letter from the Commission of 23 July 1977 (obviously the letter of 23 March 1977 is meant) the court considered that it seemed to amount to negative clearance and not to an exemption under Article 85 (3) of the EEC. However, negative clearances are decisions of the Commission of which the courts of Member States must take note because of the primacy of Community law over internal legislation.
However, in order to clarify that matter and also having regard to the initiation of a procedure under Article 9 of Regulation No 17 and the course and termination thereof, the court stayed proceedings by a judgment of 28 February 1979 and referred to the Court of Justice the following questions for a preliminary ruling pursuant to Article 177 of the EEC Treaty:
“1.
Does the letter of 23 July 1977 from the Commission of the European Communities, which does not contain the words ‘negative clearance’ and seems to have been issued without being published as laid down in Regulation No 17, constitute a negative clearance?
2.
If the answer is in the affirmative, does the letter of 23 July 1977 constitute a Commission decision which may be invoked in relation to third parties and is binding upon the courts of the Member States of the Community?
3.
If the answer to the first or the second question is in the negative, has a procedure been initiated within the meaning of Article 9 (3) of Regulation No 17, and which authorities at present have jurisdiction to apply Article 85 (1) of the Treaty?”
My opinion on these questions is as follows.
1.
In my view it is necessary to begin by examining the question whether the said letter constitutes a decision of the Commission at all.
This was denied by the Commission itself, which cited in particular the case-law of the Court of Justice on the concept of a decision. According to that case-law the question depends on whether the measure is intended to produce legal effects (Case 54/65, Compagnie des Forges de Châtillon, Commentry et Neuves-Maisons v High Authority of the ECSC, judgment of 16 June 1966 [1966] ECR 185). Accordingly, in the judgment of 5 December 1963 in Joined Cases 23, 24 and 52/63, S.A. Usines Henncot and Others v High Authority of the ECSC [1963] ECR 217, importance was attached to the question whether an act shows that it is intended to grant rights or impose duties upon those to whom it is addressed, and in the judgment of 15 March 1967 in Joined Cases 8 to 11/66, S.A. Cimenteries C.B.R and Others v Commission of the EEC [1967] ECR 75, the decisive test was considered to be whether a measure produced legal effects touching the interests of the undertakings concerned and whether the measure was binding on them. Further, it was considered to be important, if a measure was to be classified as a decision, that it should mark the culmination of the internal administrative procedure and be a definitive expression of intentions (Case 54/65 and Joined Cases 23, 24 and 52/63). A factor of considerable importance is that the measure should be identifiable as a statement of the competent institution and that its external form enables it to be said that it is a decision. In Joined Cases 23, 24 and 52/63 it was held that it was necessary for the persons concerned to be able to recognize the nature of the statement from its external form; above all it had to be clear that there was a decision of the responsible institution, acting as a body, for which under the law of the ECSC the signature of a member of the High Authority was essential.
According to the Commission, the letter involved in the present case clearly does not comply with those requirements. Its only effect is that the Commission cannot afterwards — unless new circumstances arise — take action under Article 85 (1); on the other hand it is impossible to speak of damage to the interests of the addressee because it may in any case rely on its notification of the distribution system. Another important factor — and in this respect the Commission cites the judgment of 15 May 1975 in Case 71/74 Nederlandse Vereniging voor Fmk en Groentenimporthandel and Nederlandse Bond van Grossiers in Zuidvruchten en ander Geïmporteerd Fruit v Commission [1975] ECR 563 — is the fact that the letter was only signed by a Director in the Directorate-General for Competition. According to the Rules of Procedure of the Commission, such a Director has no power to take measures under Article 2 of Regulation No 17; moreover, the letter does not even create the impression that a binding declaration of the Commission is involved or that any decisive action has been taken on behalf of the Commission.
On the other hand, the defendant in the main action takes the view that its interests were indeed affected by the said letter. Moreover, it claims that like other undertakings, it inferred from the Commission's Fifth Report on Competition Policy that the Commission had sought to apply a “uniform general arrangement throughout the perfume industry”. From that, it is argued, it was possible to conclude that the Commission itself had adopted a decision. If, however, the transmission of that decision by officials of the Commission involved certain procedural defects, that cannot have any decisive significance.
As far as this dispute is concerned, the question whether the communication addressed to Estéé Lauder could be regarded as a decision from its content may now remain open. However, I should like none the less to state that I do not think that this can be ruled out. I say so because, as regards the material concept of a decision, the fact that legal effects are attached to a declaration ought to be sufficient — which is certainly true in the case of the statement, binding upon the Commission, that the competition rules contained in the EEC Treaty did not apply — whereas the question of an adverse effect upon the interests of those concerned should not be a decisive factor.
Of greater importance is, first, the fact that according to the Rules of Procedure of the Commission (Oficial Journal, English Special Edition, Second Series VII, p. 14) only the Commission has power to adopt formal decisions in the field of competition (negative clearances, finding of an infringement of Article 85 (1), exemption or refusal to grant exemption under Article 85 (3)). According to those rules there is no delegation of powers to individual members of the Commission or indeed to officials of the Commission. Such a possibility was only introduced by Commission Decision of 23 July 1975 (Official Journal L 199 of 30 July 1975, p. 43), and even then only for “measures of management or administration”. Of importance, secondly, is the Commission's undisputed account of the events which led to the letter concerned in this case and also to the other letters to be appraised in the references for preliminary rulings in Joined Cases 253/78 and 1 to 3/79. Thus, as I have already remarked in the other cases, after notification of a number of agreements on selective distribution systems in the perfume industry, it was decided to initiate procedures against three undertakings — not against Estéé Lauder — with regard to particular clauses affecting trade between Member States and to send them the appropriate notices of complaint.
For that purpose an act of the member of the Commission responsible for competition matters was obviously sufficient. During the administrative procedure negotiations took place between departments of the Commission and the undertakings concerned, resulting in the removal of the offensive clauses. There was however never any decision of the Commission for that purpose, that is to say, the members of the Commission did not as a body form an intention to judge those events in a particular way. In view of the cumbersomeness of the formal procedure — it is necessary to publish the application pursuant to Article 19 of Regulation No 17 and to consult the Advisory Committee on Restrictive Practices and Monopolies — and in view of the necessity of concentrating the work of the Directorate-General for Competition, which is understaffed, on more important competition cases, formal negative clearances were dispensed with and such matters were left to the judgment of the Commissioner responsible for competition matters. That judgment was then applied to all similar cases arid letters were then addressed to the undertakings, signed by the Director-General for Competition or by a Director of that Directorate-General.
Thus it is impossible to escape the decisive conclusion that there were no acts of the Commission itself in the nature of negative clearances. Moreover, in my opinion it may also be said — should the matter depend on that — that no such impression was aroused either. The Commission's Fifth Report on Competition Policy, to which Estéé Lauder referred, speaks only of a general conception of the Commission for the perfume industry, not thus of an appraisal of individual cases, which, if a guiding principle had been devised by the Commission itself, could of course still have been included in that general solution. Besides, it is clear from that report that no formal decisions were to be taken.
Therefore the letter referred to in the first question submitted by the court making the reference should be regarded not as a decision nor as the communication of a decision, but only as an administrative communication to the effect that the departments of the Commission saw no reason to take action under Article 85 (1). According to this appraisal of the letter, it cannot be a negative clearance within the meaning of Article 2 of Regulation No 17 either. That view is indicated by the fact that the term “negative clearance” was avoided, that the form which was normally used for negative clearances was not chosen, that it was not published in accordance with Article 21 of Regulation No 17 and that the communication is not contained in the list of decisions which is annexed to the Fifth Report on Competition Policy. That this hardly seems satisfactory from the point of view of the undertakings concerned, which wish to plan their business on a firm basis, must be conceded forthwith. However, that question cannot be dealt with now, any more than the question whether after notification of an agreement the undertakings had at their disposal suitable means of prompting the Commission to issue a fromal decision.
2.
After answering the first question in this way it is not really necessary to go into the second question, as it was asked only in the event of its being necessary to regard the said letter as a decision. However, I shall at least make two brief observations on that matter.
(a)
The Court making the reference rightly assumes that Estéé Lauder's distribution system was not granted exemption pursuant to Article 85 (3) of the EEC Treaty. In this regard reference may be made to the remarks made in relation to Joined Cases 253/78 and 1 to 3/79, which, since the Commission sought a uniform general solution for the perfume industry, are also valid in the case of Estéé Lauder. Moreover, that conclusion is supported by the wording of the letter involved in the present case. When that letter states that the agreements concluded with the dealers in France “may be considered, taking account of the economic context in which they operate, as not capable of being affected by the rules on competition contained in the EEC Treaty”, the view is quite clearly expressed that those contracts are not caught by Article 85 (1). Therefore, it is at most an opinion similar to that contained in a negative clearance under Article 2 of Regulation No 17, which merely states that in the Commission's view, on the basis of the facts in its possession, there are no grounds for it to take action under Article 85 (1) against an agreement.
(b)
The Commission is also right when it emphasizes that even a formal negative clearance may not as a rule be relied on as against third parties and is not binding on national courts. Indeed, as has already been said, such clearances — and here reference may be made to the sixth recital of the preamble to Regulation No 17 — merely state that in the Commission's view, on the basis of the facts in its possession, there are no grounds for action. Therefore, they do not constitute a definitive appraisal nor in particular a statement which the Commission would have had exclusive power to make. Since Article 85 (1) — as has already been stated repeatedly — is directly applicable, with the result that individuals may rely on it before national courts and derive rights from it, and as national courts may have different information regarding the details of the case, they are naturally obliged to form an opinion as to the applicability of Article 85 (1) to particular agreements on the basis of the facts known to them.
However, since in the present case there is not even negative clearance, that is to say, no decision of any binding nature — the information given could at most be significant in relation to claims in public liability — it may be said without hesitation that such an act (it was not published either, incidentally) may not be relied on as against third parties and national courts.
3.
The third question awaiting consideration does not require lengthy comments either.
(a)
As regards the first part of the question it is sufficient in the first place to refer to the judgment of 6 February 1973 in Case 48/72 S.A. Brasserie de Haechtv Wilkin and Janssen [1973] ECR 77. According to that judgment the initiation of a procedure under Articles 2, 3 and 6 of Regulation No 17 implies an authoritative act of the Commission, evidencing its intention of taking a decision under the said articles. Also of interest is the express declaration of the Commission that it never initiated a procedure within the meaning of Article 9 (3) of Regulation No 17 in relation to the defendant in the main action. Indeed, it seems that a corresponding notification was never — as was of course required — addressed to the defendant in the main action. Further, it is clear that the notification of objections to three other undertakings cannot be regarded as sufficient, even though it is established that the Commission wished to use those cases as test cases for the whole industry.
(b)
As regards the second part of the third question it is possible to cite the judgment in Case 127/73 Belgische Radio en Televisie and Société Belge des Auteurs, Compositeurs et Editeurs v SV SABAM and NV Fonior, judgment of 30 January 1974 [1974] ECR 51 and judgment of 21 March 1974 [1974] ECR 313. There it was established that after the initiation of a procedure by the Commission the authorities of the Member States lost the power to take action against the same practices under Article 85 (1) and that the authorities include courts especially entrusted with the task of applying domestic legislation on competition. However, it was also emphasized in that judgment that the jurisdiction of the national courts to apply the provisions of Community law derives from the direct effect of Article 85 (1) and that their juridiction to apply that provision cannot be questioned by invoking Article 9 of Regulation No 17. Thus it is clear, and this alone should be of interest as regards the proceedings in the main action, that if the Commission has not initiated any procedure and if in national proceedings the direct applicability of Article 85 (1) is pleaded, national courts always have jurisdiction to take that provision into consideration.
For the rest, as regards the individual problems of applying Article 85 (1) to a case such as the present one, I refer to my comments in the opinion in Joined Cases 253/78 and 1 to 3/79. The only special feature of the present case which it is necessary to point out is that the agreements drawn up by the defendant in the main action — as the company was not formed until 1967 — were accordingly notified later, so that we are not dealing with so-called old agreements and therefore the case-law which has been developed in this field is not relevant either.
4.
The questions referred by the Tribunal de Commerce, Paris, may therefore be answered as follows:
(a)
The letter of 23 March 1977 addressed to the defendant in the main action does not constitute a negative clearance within the meaning of Article 2 of Regulation No 17.
(b)
That statement, signed by a Director of the Directorate-General for Competition, and not supported by any decision of the Commission, may not be relied on as against third parties and is not binding on the courts of Member States.
(c)
A procedure under Article 9 (3) of Regulation No 17 has not been initiated in relation to the defendant in the main action. The courts of the Member States also have jurisdiction to apply Article 85 (1).
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