Joined opinion of Mr Advocate General Jacobs delivered on 28 January 1999. - Albany International BV v Stichting Bedrijfspensioenfonds Textielindustrie. - Reference for a preliminary ruling: Kantongerecht Arnhem - Netherlands. - Case C-67/96. - Brentjens' Handelsonderneming BV v Stichting Bedrijfspensioenfonds voor de Handel in Bouwmaterialen. - Reference for a preliminary ruling: Kantongerecht Roermond - Netherlands. - Joined cases C-115/97 to C-117/97. - Maatschappij Drijvende Bokken BV v Stichting Pensioenfonds voor de Vervoer- en Havenbedrijven. - Reference for a preliminary ruling: Hoge Raad - Netherlands. - Case C-219/97. - Compulsory affiliation to a sectoral pension scheme - Compatibility with competition rules - Classification of a sectoral pension fund as an undertaking.



European Court reports 1999 Page I-05751



Opinion of the Advocate-General

I - Introduction

1 In the present cases, referred to the Court by the Netherlands Hoge Raad, the Kantongerecht (Cantonal Court) Roermond and the Kantongerecht Arnhem, the Court is asked to give a ruling on a number of questions concerning the compatibility of a system of compulsory affiliation to sectoral pension funds with the competition rules of the Treaty. Those questions arise in the context of proceedings brought by three undertakings challenging orders issued by sectoral pension funds demanding payment of the contributions to their respective schemes.

2 The cases raise several issues of general importance which have to be addressed before the more specific substantive questions can be considered. At issue in all three cases is whether a national system in which, at the request of the representatives of employers and employees in a particular sector of the economy, affiliation to a sectoral pension fund is made compulsory for all undertakings in that sector infringes either Article 5 of the Treaty in conjunction with Article 85 or Article 90(1) of the Treaty in conjunction with Article 86. The cases also raise the issue, in the context of Articles 5 and 85 of the Treaty, whether a collective agreement between employers and employees within a particular sector setting up a sectoral pension scheme falls under Article 85(1) of the Treaty. The Court is thus called upon for the first time to give a ruling on the relationship between the competition rules of the Treaty and agreements reached by collective bargaining between the two sides of industry. A further issue, relevant to the application of Articles 90(1) and 86 of the Treaty, is whether the Netherlands sectoral pension funds operating in the framework of the rules requiring compulsory affiliation to a sectoral pension fund constitute undertakings for the purposes of the competition rules of the Treaty.

II - The national law background

3 It appears that the system of pensions in the Netherlands is based on three pillars:

- First a statutory basic pension, granted by the State under the Algemene Ouderdomswet (1) (General law on old age pensions, `the AOW') and the Algemene Nabestaandenwet (General law on survivors' benefits), provides the whole population with a flat-rate benefit which is a certain percentage of the minimum wage. The benefit is reduced for any year in which an individual has not been insured. Participation is compulsory.

- Secondly, in most cases the basic pension is topped up by supplementary pensions provided in the context of employment or self-employed activity. Those supplementary pensions are normally managed by collective schemes covering a sector of industry, a profession or the employees of an undertaking.

- Finally, there is the possibility of concluding individual pension or life insurance contracts on a voluntary basis.

4 The present cases are all concerned with second pillar sectoral pension schemes granting supplementary pensions to employees. In that respect they are different from the supplementary pension scheme at issue in Van Schijndel (2) which granted pensions to members of a profession.

5 Under Netherlands law employers are in principle free to decide whether or not to offer supplementary pensions to their employees. If they want to do so they can set up a company pension scheme either in the form of a company pension fund or through a group pension insurance contract with an insurance company. They can also set up a sectoral pension scheme together with other employers or join an existing sectoral scheme.

6 However, in practice employers are often obliged to affiliate their employees to a compulsory sectoral pension fund. Those funds are set up by collective agreement between management and labour in a particular sector of industry. The State then makes affiliation to the scheme offered by those funds compulsory.

7 The first set of rules applicable to such schemes is the Wet betreffende verplichte deelneming in een bedrijfspensioenfonds of 17 March 1949 (3) (Law on compulsory affiliation to a sectoral pension fund, the `BPW', as amended on several occasions).

8 The central rule is Article 3(1). It empowers the Minister for Social Affairs, at the request of a group of employers' associations and trade unions deemed by him to be sufficiently representative, to issue a decree requiring all groups of persons belonging to a given sector of the economy to be affiliated to a sectoral pension fund. In the absence of a specific request the Minister has no such power. Before taking his decision the competent Minister has to consult inter alia the Sociaal-Economische Raad (Social and Economic Council) and the Verzekeringskamer (Insurance Board), which supervises insurance and pension funds.

9 By virtue of Article 3(2) of the BPW all persons falling under the decree, together with their employers, have to abide by the rules of the relevant sectoral pension fund. The obligations resulting from those rules, including the obligation to pay the contributions, are legally enforceable. Article 18 empowers the pension fund to issue an enforceable order for recovery of unpaid premiums.

10 In the parliamentary proceedings leading to the adoption of the BPW the Government gave the following explanation of the objectives of the rules on compulsory affiliation: (4)

`... The present Bill is intended to lay down rules in the field of pension arrangements for individuals which are similar to those contained in the Wet op het Algemeen Verbindend Verklaren van Bepalingen van Collectieve Arbeidsovereenkomsten (Law on declaring provisions of collective employment agreements generally binding) with regard to conditions of employment. It seeks therefore to avoid the possibility of some employers in the sector gaining an advantage over other employers in the same sector by not granting pensions ...'

The then Minister for Social Affairs stated: (5)

`... occupational pension insurance of the type aimed at by this Bill is particularly expedient since it is based on the concept of collective insurance, that is to say, the notion that the members of an industrial sector, primarily employers and employees ..., should collectively assume responsibility for collecting the necessary funds with a view to ensuring that all persons who have completed a sufficient number of years of employment in that sector and have attained a certain age can obtain the benefits which they need. Where this is done on an individual basis - as it is in certain cases - and matters are left at that, the consequence is that those finding themselves in the most favourable circumstances are able to provide for themselves with relative ease, by contrast with those who are less favourably placed.'

11 According to Article 5(2) of the BPW a number of requirements must be fulfilled before the Minister can make affiliation compulsory. For example under Article 5(2), subparagraph IV, the representatives of the employers and the workers have to sit in equal numbers on the management board and under subparagraph V the pension fund must have legal personality.

12 Article 5(2), subparagraph II, specifies a number of issues that have to be dealt with by the statutes and regulations of the pension fund. More specifically, by virtue of Article 5(2), subparagraph II, letter l), the statutes and regulations of the fund have to provide for the possibility of exemption from compulsory affiliation in certain circumstances or at least from certain obligations resulting from affiliation.

13 Article 5(3) empowers the Minister for Social Affairs to adopt `richtlijnen' (guidelines) concerning exemption from compulsory affiliation. Pursuant to that provision the competent Minister issued the Beschikking van 29 december 1952 betreffende de vaststelling van de richtlijnen voor de vrijstelling van deelneming in een bedrijfspensioenfonds wegen een bijzondere pensionsvoorziening (Decree of 29 December 1952 relating to the adoption of the guidelines on the exemption from participation in a sectoral pension fund in case of special pension arrangements, `the exemption guidelines' or `the guidelines', since amended on several occasions). (6)

14 By virtue of Article 1 of those guidelines, in the version applicable to the facts of the main proceedings, it is the sectoral pension fund itself which grants exemptions. Exemptions have to be requested either by an employee on an individual basis or, as in the main proceedings, by an employer for all his employees.

15 Under Article 1 the fund has a discretion to grant an exemption from the obligation to participate where the participant firm has its own pension arrangements and where the conditions specified in Article 1(a) to (d) of the guidelines are met. Article 1(a) enumerates the kinds of alternative pension arrangements which are accepted, namely a company pension fund, a different sectoral pension fund or a group insurance agreement with a private insurer. Article 1(b) states that the benefits granted by the special pension arrangements of the firm have to be at least equivalent to the ones granted by the sectoral fund. Article 1(c) requires that the alternative scheme provides sufficient guarantees for the fulfilment of its pension obligations. Article 1(d) states that if the exemption leads to the withdrawal of employees from the fund then reasonable compensation must be paid for the actuarial loss incurred.

16 By virtue of Article 5 of the guidelines the fund must grant an exemption where the special pension arrangements of the firm concerned meet the first three of the abovementioned conditions and were in force six months before the submission of the request as a result of which participation in the pension fund was made compulsory.

17 According to Article 8 of the guidelines every decision on a request for exemption must be reasoned and a copy must be sent to the Insurance Board.

18 Article 9 of the guidelines provides for the possibility of a complaint (`bezwaar') against a pension fund's refusal of exemption. That complaint is heard by the Insurance Board. According to the Netherlands Government the Insurance Board's decision is merely a proposal for conciliation and has no legal authority. There is no appeal against the Board's decision.

19 According to the Netherlands Government an exemption may in the past have been granted where an undertaking forming part of a group of undertakings had its own policy on working conditions, or where an employer came only temporarily under the obligation to affiliate. By contrast, the plaintiff undertakings maintained at the hearing that in practice exemptions have never or only very rarely been granted. I will consider below recent amendments concerning the exemptions.

20 Article 3(4) of the BPW empowers the competent Minister to end compulsory affiliation for the whole sector. By virtue of Article 3(5) of the BPW, wherever the rules governing the pension fund are modified, the competent Minister must end compulsory affiliation, unless he declares that he has no objections to the modifications.

21 The second set of rules applicable to sectoral pension funds is contained in the Wet van 15 mei 1962 houdende regelen betreffende pensioen- en spaarvoorzieningen (Law on pension and savings funds, the `PSW', as amended on several occasions). The law lays down a general framework for all categories of pension and savings funds. Its aim is to protect insured persons, where an employer does make such arrangements, by seeking to ensure that the funds intended for pensions are actually used for that purpose.

22 In order to achieve that objective Article 2(1) of the PSW obliges employers to choose one of three arrangements aimed at separating the funds collected for pension purposes from the remainder of the company's assets. The employer can either join a sectoral pension fund, set up a company pension fund, or arrange group or individual life assurance policies with an insurance company.

23 Article 1(6) of the PSW makes clear that it also applies to sectoral pension funds to which affiliation has been made obligatory under the BPW.

24 Under Article 6a and 6b of the PSW, which were introduced in 1990, the management board of each fund has to set up at the request of a certain number of affiliated persons a `deelnemersrad' (council of affiliated persons) with consultative tasks regarding the management of the fund.

25 In the interest of the members of the scheme Articles 9 and 10 of the PSW determine the manner in which the collected funds have to be administered. The general rule is Article 9 which obliges pension funds to transfer the risk linked to the pension commitments or to reinsure it. Thus, in order to eliminate the risk of maladministration or bad investments by the fund, the latter may use the collected capital solely for the purpose of entering into agreements with insurance companies.

26 By way of exception to that rule Article 10 empowers the funds to administer and invest the collected capital themselves at their own risk. Before it can do so the fund must present to the competent authorities a management plan explaining in detail the way it proposes to handle the actuarial and financial risk. The plan must be approved by the Insurance Board. Furthermore the fund is subject to continuous supervision. The scheme's actuarial profit and loss accounts must be submitted regularly to the Insurance Board for approval. It seems that in practice all existing sectoral pension funds administer the collected pension contributions themselves at their own risk and that the exception has therefore become the rule. (7)

27 Articles 13 to 16 of the PSW lay down rules on the investment of the collected capital. By virtue of Article 13 the assets of the scheme together with expected income must be sufficient to cover pension liabilities. Under Article 14 investments have to be made `op solide wijze' (in a prudent way).

28 The Netherlands tax rules are also of a certain relevance for the present cases. According to the Commission, under the Netherlands legislation tax advantages with respect to pensions are limited to cases where the total pension does not exceed a `reasonable' level. In practice that level is set at 70% of an individual's final salary over a 40-year career. Thus in practice the rules limit the levels of benefit which may be provided by pension schemes.

29 According to the Netherlands Government, there are now 81 sectoral pension funds in the Netherlands, affiliation being compulsory in the case of 66. According to the defendant funds, 91.6% of the persons affiliated to a sectoral pension fund participate in a fund in which participation is compulsory. 80% of the employed workforce in the Netherlands is compulsorily affiliated to a sectoral pension fund.

30 Of the 15 sectoral pension funds where affiliation has not been made compulsory by the State, the Government says that such intervention of the State is not necessary in most cases either because there are collective agreements obliging de facto all employers of the sector to affiliate their employees or because there is only a limited number of big employers in the sector which in any event have opted for affiliation of their employees to the relevant sectoral fund. The Netherlands Government says that the remaining voluntary sectoral funds cover only a limited number of small sectors or sectors where there is no longer any significant industrial activity.

III - The facts in the main proceedings

A - Case C-67/96 Albany International BV v Stichting Bedrijfspensioenfonds Textielindustrie

31 The defendant in the main proceedings, Stichting Bedrijfspensioenfonds Textielindustrie (`the Textile Industry Fund' or `the Fund'), is a sectoral pension fund within the meaning of the BPW covering the textile industry. The plaintiff in the main proceedings, Albany International BV (`Albany'), is an undertaking operating inter alia in that industry.

32 According to the parties to the main proceedings and the Netherlands Government, affiliation to several pension funds each covering a different part of the textile industry was made compulsory at the request of the representatives of employers and employees by a decree issued in 1952. A number of mergers took place and in 1975 the merger of the last two remaining funds in the textile industry and the setting up of a single fund for the whole industry made it necessary to issue a new decree making affiliation to the defendant Fund compulsory. Since 1975 Albany has complied with its obligation to participate in the scheme.

33 From 1975 onwards the Fund operated on the basis of a so-called fixed-sum plan. The pension benefits were not related to salary but consisted of a fixed sum per year of service. According to Albany the maximum pension a worker could expect after 50 years of service was merely NLG 200 per month.

34 In 1981 Albany therefore set up a supplementary pension plan managed by an insurance company. The plan provided its workers with benefits which, when combined with the basic pension under the AOW and the supplementary pension granted by the Fund, resulted after 40 years of service in a total pension of 70% of final salary.

35 As from 1 January 1989, after negotiations between the two sides of industry, the Fund modified the rules governing its complementary pension scheme and introduced a salary-related pension plan. The objective of the plan is similar to Albany's supplementary plan: workers should enjoy total pension benefits of 70% of their final salary if they have worked for 40 years.

36 Albany considered that its own pension arrangement was still more generous than the new scheme and that the changes to its own plan which became necessary after the modification of the compulsory sectoral scheme were too burdensome and disproportionate. It therefore asked the Fund to exempt it from participation.

37 The Fund refused that request by decision of 28 December 1990. It argued inter alia that under the exemption guidelines it was not obliged to grant an exemption because Albany's special pension arrangements had not been in force for six months before the submission of the request to make participation in the pension scheme compulsory. Albany would therefore have been entitled to an exemption only if it had established its own scheme before 1975.

38 Albany lodged an objection against that decision with the Insurance Board. By letter to the parties of 18 March 1992 the Insurance Board stated that under the exemption guidelines the Fund had been right not to consider itself under an obligation to grant exemption.

39 However, it went on:

`Since at the time of the introduction of this amendment (1 January 1989), the complainant had for several years provided for its staff a supplementary pension plan which is at least comparable to the one introduced on that date by the Fund, the Board considers it reasonable to request the Fund to make use of its power to grant exemption or, if it can demonstrate to the Board - which it has not yet done - that there is no justification for a flexible approach in this case, in any event to allow for a period of notice.'

40 Despite that ruling, the Fund did not reconsider its decision and Albany was served on 11 November 1992, upon application by the Fund, with an injunction ordering it, pursuant to Article 18 of the BPW, to pay the statutory contributions for 1989, interest on that amount and collection costs.

41 Albany appealed against that injunction to the Kantongerecht Arnhem contending inter alia that the Netherlands system of compulsory affiliation was incompatible with the competition rules of the Treaty.

42 The Kantongerecht adopted the finding of the Insurance Board that the Albany plan was at least comparable to the arrangements introduced as from 1 January 1989 by the Fund. Furthermore, it considered that the relations between the Fund and its participants were governed by `requirements of reasonableness and fairness and/or by general principles of sound administration'. Consequently any sectoral pension fund should take careful account, when deciding whether or not to grant an exemption, of the ruling of the Insurance Board as an independent statutory body.

43 As regards the alleged violation of Community law, the Kantongerecht decided by judgment of 4 March 1996 to seek a preliminary ruling on the following questions:

`1. Is a sectoral pension fund within the meaning of Article 1(1)(b) of the Wet betreffende verplichte Deelneming in een Bedrijfspensioenfonds an undertaking within the meaning of Articles 85, 86, or 90 of the EC Treaty?

2. If so, is the fact of making membership of the sectoral pension fund for industrial undertakings compulsory a measure adopted by a Member State which nullifies the effectiveness of the competition rules applicable to undertakings?

3. If question 2 must be answered in the negative, can other circumstances render compulsory membership incompatible with Article 90 of the Treaty, and if so, which?'

B - Joined Cases C-115/97, C-116/97 and C-117/97 Brentjens' Handelsonderneming BV v Stichting Bedrijfspensioenfonds voor de Handel in Bouwmaterialen

44 By a Decree of 28 June 1958 (`the 1958 Decree' or `the Decree') following a request made on 8 March 1958 by representatives of employers and employees in the building materials trade, the State Secretary for Social Affairs made participation in the Stichting Bedrijfspensioenfonds voor de Handel in Bouwmaterialen (`the Building Materials Trade Fund' or `the Fund') compulsory. The Decree, which is based on the BPW, has since been further amended on a number of occasions. Under the Decree, participation is compulsory for workers aged between 23 and 64 years inclusive who are employed in an undertaking which is exclusively or principally engaged in wholesale trade in building materials.

45 According to the parties to the main proceedings, the Fund operates on the basis of a fixed-sum plan. The pension benefits granted are not related to salary, but consist of a fixed amount per year of service which is the same for all employees. According to the Fund, the maximum pension, depending on length of service, is NLG 5 300 per year. In practice the majority of employees in the sector reach a total pension of 70% of their final salary.

46 Brentjens' Handelsonderneming BV (`Brentjens') commenced trading in 1963. On 1 January 1968 Brentjens made pension arrangements for its employees with the life assurance company De NV Levensverzekerings Maatschappij de Nederlanden van 1870, which subsequently became Generali Levensverzekeringsmaatschappij n.v. (`Generali'), a Netherlands undertaking falling under the Wet toezicht verzekeringsbedrijf 1993 (Law on the control of insurances of 1993) and belonging to the Italian group Assicurazioni Generali.

47 In 1989 the Fund became aware of Brentjens' existence and affiliated it to its scheme as of 1 January 1990, exempting it from contributions in respect of previous periods. Thus the Fund undertook to respect Brentjens' existing pension arrangements for the period from 1963 to 1 January 1990.

48 Brentjens considered that the pension arrangements with Generali were superior to the scheme offered by the Fund as regards the level both of contributions and of benefits and asked for an exemption from compulsory affiliation. By decision of 23 August 1994 the Fund refused Brentjens' request. Brentjens lodged an objection against the decision with the Insurance Board. The Insurance Board did not agree with Brentjens' objections and held, by decision of 18 May 1995, that the Fund's decision was correct.

49 On 13 May 1996 the Fund then served Brentjens with three separate demands for payment of the contributions due under its pension regulations for the years 1990 to 1994, 1995 and 1996.

50 Brentjens instituted three sets of proceedings before the Kantongerecht Roermond seeking annulment of the demands. It appears that Brentjens and Generali also, acting jointly, lodged a parallel complaint with the Commission of infringement by the Netherlands and the Fund of Articles 3(g), 5 and 85, 90 and 86, and 52 and 59 of the Treaty.

51 On 18 March 1997 the Kantongerecht delivered three identical judgments in which it dismissed three of the four pleas raised by Brentjens. As regards Brentjens' fourth plea to the effect that compulsory participation in the Fund was contrary to Community law, the Kantongerecht put the following questions to the Court:

`1. Must Article 85(1) of the EC Treaty be interpreted as meaning that there is an agreement or decision of an undertaking or association of undertakings which restricts competition or affects trade between Member States, as those elements are respectively referred to in that provision, where representatives of employers and employees within a particular sector of activity make agreements concerning pensions under which a single sectoral pension scheme is set up for the whole sector, to which all workers employed within the sector are in principle to be compulsorily affiliated and which is to have the sole right to administer the funds collected for that purpose within the sector?

2. Must Articles 3(g), 5 and 85 of the EC Treaty, read together, be interpreted as meaning that there is an infringement of those provisions where the authorities make participation in a single sectoral pension scheme, as described in question 1, compulsory for undertakings within a particular sector of activity?

3. Must the term "undertaking", as used in the competition provisions (Articles 85 to 94) of the EC Treaty, be interpreted as including a sectoral pension fund within the meaning of the Wet betreffende verplichte Deelneming in een Bedrijfspensioenfonds (Law on Compulsory Participation in a sectoral Pension Fund)?

4. Must Articles 86 and 90 of the EC Treaty, read together, be interpreted as meaning that there is an infringement of those provisions where the authorities accord a sectoral pension scheme an exclusive right which gives rise to a serious restriction of the freedom to make pension arrangements with a private insurer?'

C - Case C-219/97 BV Maatschappij Drijvende Bokken v Stichting Pensioenfonds voor de Vervoer- en Havenbedrijven

52 The appellant in the main proceedings, BV Maatschappij Drijvende Bokken (`Drijvende Bokken'), carries on the business of hiring out floating derricks, often together with tugboats, for use in the offshore industry, for construction and building activities, for shipbuilding and ship repair work, in the chemical industry and for hoisting heavy loads on to pontoons and ships.

53 The respondent in the main proceedings, the Stichting Pensioenfonds voor de Vervoer- en Havenbedrijven (`the Dock Fund' or `the Fund'), is a sectoral pension fund within the meaning of the BPW. By Decree of 9 September 1959 (`the 1959 Decree' or `the Decree') the State Secretary for Social Affairs and Public Health, acting on behalf of the Minister, made affiliation to the fund compulsory for all male employees aged 18 years or more who are employed by a dock business in the dock area of the port of Rotterdam. By Decree of 17 December 1991 the scope of the Decree was extended to cover all employees who are regularly employed in a dock or similar business.

54 According to Drijvende Bokken, the Fund operates on the basis of a fixed-sum plan in which pension benefits are not related to salary.

55 Drijvende Bokken considered that it did not fall within the scope of the Decree and therefore joined another pension fund. Following the extension of the scope of the Decree in 1991 the Fund maintained that Drijvende Bokken fell within the scope of the Decree and that affiliation to the fund was compulsory for Drijvende Bokken's employees. The Fund therefore served a final demand on Drijvende Bokken, requiring it to pay pension contributions amounting to NLG 132 000 together with interest and costs.

56 Drijvende Bokken appealed against the demand for payment to the Kantongerecht. It argued, first, that it did not fall within the scope of the Decree and, secondly, that compulsory affiliation was contrary to the Community competition rules.

57 The Kantongerecht held that Drijvende Bokken's employees were not employed in a dock business within the meaning of the Decree and that therefore Drijvende Bokken's appeal was well founded.

58 On appeal by the Fund the Rechtbank (District Court) held that Drijvende Bokken's employees were employed in a dock business or equivalent business and that the Decree therefore applied. The Rechtbank further rejected Drijvende Bokken's contention that the requirement of compulsory affiliation to the Fund was contrary to Community competition rules. It held that the Fund could not be regarded as an undertaking within the meaning of Articles 85 and 86 of the Treaty but rather as a social institution.

59 Drijvende Bokken's appeal to the Hoge Raad was based solely on the ground that the compulsory affiliation rule was contrary to Community law. The Hoge Raad decided to refer the following questions to the Court for a preliminary ruling:

`1. Is a sectoral pension fund such as the fund in the main proceedings, to which all or one or more specified groups of employees in the relevant sector are obliged to be affiliated by virtue of and in accordance with the BPW, to be regarded as an undertaking within the meaning of Articles 85, 86 or 90 of the EC Treaty?

2. Where a number of organisations which the Minister subsequently regards as being sufficiently representative of the employers' associations and trade unions in a particular sector, within the meaning of the first paragraph of Article 3 of the BPW, apply to the Minister pursuant to that provision for affiliation to a particular pension fund within the meaning of that Law to be made compulsory, is that joint action on the part of those organisations to be regarded as an agreement between undertakings, a decision by associations of undertakings or a concerted practice within the meaning of Article 85(1) of the EC Treaty which, within the meaning of that Treaty provision, (i) may affect trade between Member States and (ii) has as its object or effect the prevention, restriction or distortion of competition within the common market?

3. Is compulsory affiliation as described above to be regarded as a measure which may render ineffective the competition rules applicable to undertakings, or, at least, as a measure by which a Member State requires or favours the adoption of agreements contrary to Article 85 or reinforces their effects, or is that the case only in certain circumstances and, if so, inwhat circumstances?

4. If Question 3 is to be answered in the negative, are there other circumstances which may render such compulsory affiliation incompatible with the provisions of Article 90 of the EC Treaty and, if so, what circumstances?

5. Can such compulsory affiliation be regarded as the grant to a sectoral pension fund of an exclusive right within the meaning of Article 90(1) of the EC Treaty, and is such pension fund placed as a result in a dominant position which it abuses merely by exercising that exclusive right, in particular on the ground that such compulsory affiliation may affect trade between Member States and the provisions of services is limited, contrary to subparagraph (b) of the second paragraph of Article 86, to the detriment of compulsorily affiliated undertakings and/or employees?

Or, can such compulsory affiliation create a situation in which a pension fund is induced to commit such an abuse or is at least placed in a position which it itself could not take up without infringing Article 86, whilst, in any event, a system of undistorted competition is not guaranteed.

6. If such compulsory affiliation is contrary to Community law, does that mean that it is not legally valid?'

IV - Admissibility

60 In Case C-67/96 Albany the French and Netherlands Governments, citing Meilicke, (8) Telemarsicabruzzo, (9) and Max Mara, (10) suggest that the questions may be inadmissible because the referring court does not explain sufficiently the legislative and factual context in which its questions arise. The Commission, too, expresses doubts on that point. In Joined Cases C-115/97 to C-117/97 Brentjens the French Government raises a similar objection.

61 It follows from the case-law of the Court that the information on the factual and legal context provided in references for a preliminary ruling serves essentially two purposes.

62 First it enables the Court to give an interpretation of Community law which will be of use to the national court. (11) As the Court has observed, the need for adequate information is particularly acute in the field of competition law which is characterised by complex factual and legal situations. (12) In that regard the parties to the main proceedings, the Netherlands Government and the Commission have given the Court in their respective written observations a considerable amount of background information on the factual circumstances in which the cases arise and on the Netherlands legislation. Notwithstanding any lacunas which there may be in the referring courts' decisions I therefore consider that the Court is in a position to give a useful reply to the national courts' questions.

63 The requirement to provide adequate information on the legal and factual context also serves a second purpose, namely to give the Governments of the Member States and other interested parties the opportunity to submit observations pursuant to Article 20 of the Statute of the Court. It is the Court's duty to ensure that this opportunity is safeguarded. (13) In that regard it must be borne in mind that only the orders for reference are notified to the interested parties. (14)

64 As regards, first, the legal context, I agree with the two Governments and the Commission that in Albany the Kantongerecht gives relatively little information. It merely mentions certain rules of the BPW which are applicable. However, the two parallel references in Brentjens and in Drijvende Bokken were notified to the Governments and the Commission four and three months respectively before the end of the written procedure in Albany as a result of the proceedings in Albany being suspended. The Hoge Raad's reference in Drijvende Bokken, in particular, contains a detailed account of the Netherlands legal framework. The French and the Netherlands Governments and the Commission submitted their written observations in Albany after those in Brentjens and in parallel to those in Drijvende Bokken. It is apparent from their observations in Albany that they were aware of the two other references. In the circumstances, therefore, it is clear that those wishing to submit observations were sufficiently apprised of the relevant Netherlands legal background in time to take a position on the issues raised.

65 As regards, secondly, the factual context, I do not agree with the contention that the orders for reference in Albany and Brentjens are not explicit enough. The orders explain clearly why the referring courts need an interpretation of Community law in order to be able to give judgment in the respective cases and the reasoning underpinning their questions.

66 I therefore consider that the questions referred in all three proceedings are admissible.

V - The scope of the questions referred

67 I agree with the Commission that the referring courts' questions raise the following five distinct issues.

68 First, is Article 85(1) of the Treaty infringed where representatives of employers and employees within a particular sector of the economy agree collectively to set up a single sectoral pension fund with an exclusive right to administer the collected contributions and apply jointly to the authorities to make affiliation to the fund compulsory for all persons belonging to that sector? (15) Secondly, does a Member State infringe Article 5 read together with Article 85 of the Treaty where, at the request of the representatives of employers and employees, it makes participation in a sectoral pension scheme compulsory for all undertakings belonging to that sector? (16) Thirdly, are the Netherlands sectoral pension funds `undertakings' within the meaning of the competition provisions of the Treaty? (17) Fourthly, does a Member State infringe Articles 86 and 90 of the Treaty, read together, where it provides for compulsory affiliation to a sectoral pension fund and grants the pension fund an exclusive right to administer the collected contributions? (18) Fifthly, if such compulsory affiliation is declared to be contrary to Community law, what is the legal consequence of such a decision? (19)

69 Albany, Brentjens and Drijvende Bokken ask the Court to address as a sixth issue the compatibility of the Netherlands legislation with Article 90, read in conjunction with Article 52 or 59 of the Treaty. They argue that the Kantongerecht Arnhem indirectly raises the problem in Albany in its question 3 by asking whether `other circumstances' can render compulsory membership incompatible with Article 90 of the Treaty.

70 It is apparent from the order for reference in Albany that the Kantongerecht modelled its questions on the Hoge Raad's last three questions in Van Schijndel, (20) which for procedural reasons the Court did not have to answer. It is also clear that the Kantongerecht understood the three questions as being concerned solely with the Community competition rules. Nothing in the file indicates that the parties or the national court discussed the applicability of Article 52 or Article 59 of the Treaty, which require the abolition of restrictions on the freedom of establishment and on the freedom to provide services within the Community. In Albany, in contrast to the situation in Brentjens where a foreign insurance company acting through its Netherlands branch is involved, there does not seem to be any cross-border element. I therefore consider that the Kantongerecht's question, despite its apparently broad wording, cannot be interpreted as including the issue of applicability of Article 52 or 59 of the Treaty.

VI - Article 85(1) of the Treaty

71 I now turn to the first question, namely whether Article 85(1) of the Treaty is infringed where representatives of employers and employees within a particular sector of the economy agree collectively to set up a single sectoral pension fund with an exclusive right to administer the collected contributions and apply jointly to the authorities to make affiliation to the fund compulsory for all persons belonging to that sector.

72 Albany, Brentjens and Drijvende Bokken contend that in circumstances such as these the employers of a given sector infringe Article 85(1) of the Treaty. Their argument runs as follows.

73 First, there are `agreements between undertakings' within the meaning of Article 85(1). Every collective agreement between representatives of employers and employees implies an agreement between employers to negotiate jointly and to be bound by the result of the bargaining. In the present cases, all employers have committed themselves to affiliating their employees to a single pension fund and to complying with the rules of the fund.

74 Secondly, the agreements `restrict competition'. Competition with regard to the employing undertakings is restricted, because one important cost factor is harmonised throughout an entire sector, the freedom to choose the most attractive pension arrangement is limited and employers cannot attract employees through more advantageous pension arrangements. With regard to life assurance, insurance companies are excluded from an important part of the market.

75 Thirdly, the agreements also `affect trade between Member States'. The employers involved have cross-border activities. Moreover, foreign insurance companies are effectively prevented from offering cross-border services or from establishing themselves through branches in the Netherlands.

76 Finally, the agreements have an appreciable impact on competition and trade between Member States. Each pension fund covers an entire sector of the economy. Moreover, as those agreements exist in virtually all sectors of the Netherlands economy, their cumulative effect has to be taken into account.

77 The Commission, the three Governments who have submitted observations to the Court on this point and the Funds which are parties to the main proceedings all agree that Article 85(1) of the Treaty is not infringed. In support of that conclusion they put forward a variety of arguments.

78 It is argued first that Article 85(1) is not applicable ratione materiae to collective agreements between representatives of employers and employees. Alternatively, it is said either that there is no agreement between `undertakings', or that competition is not restricted, or that trade between Member States is not affected, or that in any event under the `de minimis' rule the agreements are not caught by Article 85(1) of the Treaty because their impact on competition or trade is negligible.

79 Those arguments raise the fundamental issue of the relationship between the prohibition contained in Article 85(1) of the Treaty and collective agreements concluded between representatives of employers and employees, an issue which the Court has not yet had occasion to consider. (21) In view of its relative novelty and the potentially far-reaching implications of the Court's answer it may be helpful to examine how the antitrust systems of different Member States and of the United States deal with the problem.

A - Comparative overview

80 In France the prohibition of cartels (22) is applicable to collective agreements between management and labour. According to the Conseil de la Concurrence (Competition Authority) collective agreements are not excluded by their nature from the material scope of the competition rules. Freedom of collective bargaining is seen as a mere variation of freedom of contract subject to similar general limitations including the prohibition of cartels. (23) Trade unions are analysed as economic actors which jointly with the employers' side may influence the competitive process. (24) However, after an analysis of the restrictive effects or a balancing of their anticompetitive features with their social advantages, the Conseil de la Concurrence has classified most of the clauses of the agreements under scrutiny as being compatible with the French competition rules. (25)

81 A good example of that line of reasoning is an Avis (opinion) of the Conseil de la Concurrence in a case similar to the present cases which concerned the French system of prévoyance collective. (26) That system provides social benefits which are complementary to the State social security system. It covers three kind of risks: first, illness and maternity, secondly, working incapacity and invalidity, thirdly, death. It is set up - at least partly - by sectoral collective agreements between management and labour. Those agreements designate inter alia an organisme de prévoyance as exclusive contractor to administer the funds. On joint application by management and labour, affiliation to the system is often made compulsory for the entire sector by a decision of the competent minister.

82 An association of assureurs-conseils which wanted to offer services on the market for prévoyance complained to the competition authority about the last two of the above features of the system, namely the contractor's exclusivity and the compulsory affiliation of employers which had not taken part in the collective bargaining process. The Conseil de la Concurrence held that the organismes de prévoyance provided services and that they therefore fell under the competition rules. Employers and employees were also subject to the rules of competition law, either directly or indirectly through their representatives, in so far as concerned the content of their collective agreements. In designating a single contractor, however, the employers' and employees' representatives were merely exercising their ordinary right to choose with which service provider to contract. As to the extension of the agreement to the entire sector, the Conseil held that it contributed, first, to equal conditions of competition in the sector and, secondly, to economic and social progress. There was therefore no infringement of the competition rules.

83 In Finland Law 480/1992 on competition (Laki kilpailunrajoituksista) excludes by its Article 2(1) agreements concerning the labour market from its scope of application. According to the travaux préparatoires collective agreements on working conditions are therefore sheltered from the competition rules. However, it is said, competition rules are applicable to collective agreements which are not concerned with working conditions, but for example with the commercial relations between the employer and his clients. (27)

84 The Supreme Administrative Court decided on the scope of that exception in a case (28) concerning a collective agreement in the paper industry which restricted the possibility for employers to subcontract to independent service providers certain tasks (e.g. cleaning) which were traditionally fulfilled by employees. The court held that only clauses directly affecting working conditions, such as for example wages, working time, and protection against dismissal, were excluded from the scope of the prohibition of cartels. The restrictions in question were therefore not covered by the exception. Employees were sufficiently protected by a legal provision prohibiting dismissal in case of subcontracting.

85 In Denmark Article 2(1) of the recently adopted law on competition (29) provides that it is applicable to any kind of economic activity. According to the travaux préparatoires the notion of `economic activity' has to receive a wide interpretation and includes all kinds of economic activities on markets for goods and services. Neither a profit-making purpose nor a certain legal form are required for the law to be applicable.

86 Article 3 provides that the law is not applicable to wages and working conditions. According to the travaux préparatoires that exception is limited to the relationship between employers and employees.

87 It follows also from the travaux préparatoires that the exception contained in the new law must be interpreted in conformity with the interpretation of the former laws on monopolies. A judgment of the Supreme Court of 1965 (30) is therefore still of importance. The court had to decide on rules in a collective agreement which resulted in excluding certain groups of consumers from the supply of clothes produced in a less expensive way. It held that the exception was not applicable since the agreement went further then regulating wages and working conditions. Furthermore, the law was applicable ratione personae to the `social partners' in so far as they were dealing with `such economic interests'. Thus, the Danish prohibition of cartels is applicable to rules in collective agreements which are `related to an economic activity' and which `do not concern wages or working conditions'.

88 In Germany the Federal Law against Restrictions on Competition (Gesetz gegen Wettbewerbsbeschränkungen, `GWB') excludes certain fields of the economy and agreements from its material scope of application. However, neither the labour market nor collective agreements are expressly mentioned.

89 The general prohibition of cartels concerns only agreements `in so far as they are likely to influence ... market conditions with respect to trade in goods or commercial services'. (31) According to the travaux préparatoires dependent labour cannot be classified as `commercial services'. Thus, it is said, collective agreements between management and labour on wages and working conditions are sheltered from the prohibition of cartels. (32)

90 The courts and the Federal Cartel Office have on several occasions had to consider the legality of collective agreements between management and labour which affected shop opening or more generally trading hours in certain sectors of industry, either directly, or indirectly through the regulation of working time schedules.

91 The Bundesarbeitsgericht (Federal Labour Court) held (33) that collective agreements between management and labour fell as a matter of principle outside the material scope of the competition rules. There were several reasons. First, the court stated by way of introduction that collective bargaining was one of the activities protected by the fundamental rights granted by Article 9(3) of the Grundgesetz (German Basic Law). Secondly, the labour market enjoyed a special status (ordnungspolitische Sonderstellung). Thirdly, the conditions for paragraph 1 of the GWB to apply were not fulfilled: trade unions could not be classified as undertakings for the purpose of competition law, since they were not acting on the markets for goods or services. Thus, collective agreements were not agreements between undertakings. In consequence, the necessary preconditions for the conclusion of such agreements, namely the decision by employers to negotiate jointly, also had to enjoy antitrust immunity. Fourthly, a balancing of the interests involved was not possible because there were no clear normative criteria available. Fifthly, the prohibition of cartels would apply only in the case of abusive collusion by employers who intentionally used the framework of collective agreements to cover an anticompetitive cartel on the markets for goods or services.

92 The Bundeskartellamt (Federal Cartel Office) reached a different result. In an opinion on a collective agreement which harmonised directly the end of trading activity on Saturdays and holiday periods in the sector of wholesale distribution (34) the Office held that such agreements directly affected the markets for goods and commercial services and were therefore not a priori sheltered from the application of paragraph 1 of the GWB. It distinguished those agreements from agreements merely regulating working time.

93 On a second occasion the Office went even further. (35) Management and labour in the retail sector had agreed on harmonised working-time schedules which indirectly prevented shop owners from opening after a certain hour. The Office held that the regulation of working time through collective bargaining was a special case due to its dual nature. On the one hand, opening hours in retailing were an important factor of competition. The trade unions and employers influenced indirectly but effectively the activity of the employing undertakings on the markets for goods and services and were therefore engaged in an economic activity. On the other hand, collective bargaining was protected by fundamental rights in so far as it concerned working conditions. In that specific and exceptional case of conflict only a balancing of the interests involved could lead to a workable solution. In the case under examination the interest in competition had to prevail.

94 The Kammergericht (Higher Regional Court, Berlin), ruling on appeal (36) on the same working-time schedules on which the Bundeskartellamt had commented, (37) adopted a third line of reasoning. It held that neither collective agreements nor the contracting parties to such agreements were a priori excluded from the scope of application of the German cartel law. Collective agreements on working conditions and wages were nevertheless normally lawful under paragraph 1 of the GWB, since they were not likely to influence `market conditions with respect to trade in goods or commercial services'. As regards the particular collective agreements under scrutiny, the indirect but effective restrictive influence on shop opening hours on the market for goods led in principle to an infringement of the prohibition of cartels. However, agreements on working time were at the heart (im Kernbereich) of the German fundamental right to bargain collectively. Such agreements were fully sheltered from prohibitions contained in ordinary laws.

95 In the United Kingdom under the Fair Trading Act 1973 the Secretary of State could refer restrictive labour practices to the Monopolies and Mergers Commission for it to consider their impact on the public interest. Until recently that provision was never used: traditionally competition law has not been invoked in the United Kingdom to deal with industrial relations issues. (38) In 1988 the first such reference was made under the Act: it concerned labour practices in television and film-making. The Monopolies and Mergers Commission concluded that the practices in question did not operate against the public interest. (39) The position does not seem to be substantially different under the new Competition Act 1998, which is broadly modelled on Articles 85 and 86 of the Treaty.

96 In the United States trade union activities are in principle sheltered from the prohibition of cartels contained in Section 1 of the Sherman Act (40) through a `statutory' and a `non-statutory' labour exemption. Those exemptions are however limited in their respective scope.

97 As to the `statutory' exemption, Congress enacted as early as 1914 the Clayton Act which was designed to confer antitrust immunity on unilateral activities of trade unions in the course of labour disputes. It provided inter alia that `[t]he labour of a human being is not a commodity or article of commerce'. Since the intention of the legislator was partly frustrated by the federal courts' narrow interpretation of the Act, (41) Congress passed in 1932 the Norris-LaGuardia Act, which was meant to extend the scope of the previous exemption. In United States v Hutcheson (42) the Supreme Court stated the three conditions for that statutory exception to apply. First, there must be a labour dispute. Secondly, the trade union must act in its `self-interest'. Thirdly, the union must not combine with non-labour groups, i.e. employers.

98 Although the statutory exemption did not cover agreements between unions and employers, the Supreme Court recognised in its subsequent case-law the existence of a non-statutory exemption, albeit limited in principle to agreements on wages and working conditions. In Connell (43) the Supreme Court stated:

`The non-statutory exemption has its source in the strong labour policy favouring the association of employees to eliminate competition over wages and working conditions. Union success in organising workers and standardising wages ultimately will affect price competition among employers, but the goals of federal labour law never could be achieved if these effects on business competition were held a violation of the antitrust laws. The Court therefore has acknowledged that labour policy requires tolerance for the lessening of business competition based on differences in wages and working conditions. ... Labour policy clearly does not require, however, that a union have freedom to impose direct restraints on competition among those who employ its members. Thus, while the statutory exemption allows unions to accomplish some restraints by acting unilaterally ..., the non-statutory exemption offers no similar protection when a union and a non-labour party agree to restrain competition in a business market.'

99 It will be helpful to examine briefly three major decisions of the United States Supreme Court on the scope of the non-statutory labour exemption.

100 United Mine Workers of America v Pennington (44) concerned an alleged conspiracy between the trade unions and large coal companies to impose inter alia the wages contained in a collective agreement on all operators in the sector, regardless of their ability to pay, in order to force small employers out of business.

101 The majority (6-3) held that the behaviour did not enjoy antitrust immunity. The statutory exemption was not applicable since there was an agreement between a union and employers. A collective agreement on selling prices of coal would clearly be a violation of the antitrust rules. By contrast, wages were at the very heart of the matters on which employers and unions bargained. Therefore, the effect on the product market resulting from the elimination of competition based on wages among employers in a bargaining unit was in principle `not the kind of restraint Congress intended the Sherman Act to proscribe'. Accordingly, a union was entitled to conclude a wage agreement with a multi-employer bargaining unit and to seek, in pursuance of its own interests, and not by agreement with all or part of the employers of that unit, the same wages from other employers. However, `one group of employers may not conspire to eliminate competitors from the industry and the union is liable with the employers if it becomes a party to the conspiracy'. Therefore, the alleged agreement between the union and the large coal producers to secure uniform labour standards throughout the entire industry was not exempt from the antitrust laws.

102 Meat Cutters v Jewel Tea Co., (45) which was decided on the same day, concerned shop opening hours. A local union representing virtually all the butchers in the area agreed with a trade association of food retailers that food store meat departments would be open only from 9 a.m. to 6 p.m. from Monday to Saturday inclusive. Faced with a strike unless it agreed to such terms, an employer signed the contract and then sued the union seeking invalidation under the Sherman Act.

103 The majority (6-3) held that the antitrust rules were not applicable, but disagreed on the reasoning. Three of the majority argued that the marketing-hours restriction was so intimately related to wages, hours of work and working conditions that bona fide, arm's-length bargaining for such a provision was exempt from the Sherman Act. The three other judges of the majority, who had dissented in Pennington, stated that collective bargaining activity on mandatory subjects of bargaining under the relevant labour laws was by its very nature not subject to antitrust law. They argued primarily that judges had to respect the intentions of the legislator and that there were no normative criteria available to an antitrust judge to distinguish beneficial from harmful collective agreements.

104 The minority expressed the view that the agreement directly concerned the product market and had no pro-competitive effects whatsoever. It was therefore prohibited by the Sherman Act.

105 In its recent decision in Brown v Pro Football (46) the Supreme Court was faced with employers collectively and unilaterally imposing employment terms on their employees after a collective bargaining impasse. The case dealt with the somewhat special case of bargaining between the National Football League and the football players' union.

106 The majority (8-1) held that the non-statutory labour exemption shielded post-impasse agreements among several employers to implement the terms of the employers' last best good-faith wage offer, on the assumption that such conduct was unobjectionable as a matter of labour law and policy. It argued, first, that multi-employer bargaining itself was a well-established, important and pervasive method of collective bargaining, offering advantages to both management and labour. Secondly, to subject the practice in question to antitrust law was to require antitrust courts to answer a host of important practical questions about how collective bargaining on working conditions was to proceed - the very result the labour exemption sought to avoid. Thirdly, to permit antitrust liability threatened to introduce instability and uncertainty into the collective bargaining process.

107 The dissenting justice (Justice Stevens) expressed the view that neither the policies underlying the labour and antitrust statutes, nor the purpose of the non-statutory exemption, provided a justification for exempting from antitrust scrutiny collective action initiated by employers to depress wages below the level that would be produced in a free market.

108 The results of that comparative overview can be summarised as follows.

109 In all the systems examined collective agreements between management and labour are to some extent sheltered from the prohibition of anticompetitive cartels. However, that immunity is not unlimited.

110 The legal sources from which the immunity flows and the legal mechanisms through which it is reached differ widely. One can find

- supremacy of a fundamental right to bargain collectively (Germany),

- an express exemption in the antitrust or other statutes (Denmark, Finland, statutory exemption in the United States),

- creations of the courts (non-statutory exemption in the United States),

- the requirement of a specific condition, normally not fulfilled by the agreements in question, without which the prohibition of cartels is not infringed (Germany),

- application of the general conditions for an infringement of the prohibition of cartels in such a way as to lead to the desired result (France),

- a traditional practice of not applying the competition rules to industrial relations (United Kingdom).

111 The scope of immunity also varies. However, the courts regularly ask the following questions:

- Are the agreements under scrutiny concerned with wages, working time or other working conditions, which are core subjects of collective bargaining?

- To what extent do the agreements affect the markets for goods and services on which the employers operate?

- To what extent do the agreements affect third parties? Third parties potentially affected are undertakings acting on the same market which did not take part in the bargaining process, undertakings acting on other markets, and consumers.

- Do the agreements have an anticompetitive purpose?

- Is it more appropriate to apply hard and fast rules or to engage in a case by case balancing process of the conflicting interests involved?

112 Against that background, I turn now to the analysis of Article 85(1) of the Treaty. I will examine successively, first, the applicability ratione materiae of Article 85(1) of the Treaty, secondly, whether there is an agreement or concertation between undertakings and, thirdly, whether that concertation restricts competition to an appreciable extent.

B - Applicability ratione materiae of Article 85(1) of the Treaty

113 According to the Funds and the Netherlands, French and Swedish Governments, Article 85(1) is not as a matter of principle applicable ratione materiae to collective agreements between representatives of employers and employees on pensions. Their arguments can be summarised as follows.

114 First, those agreements deal with social matters and promote the Treaty's objectives in the social field. The applicability of Article 85(1) would jeopardise the achievement of those objectives.

115 Secondly, to apply Article 85(1) of the Treaty would deprive the two sides of industry of their fundamental right to bargain collectively recognised by various international and European instruments.

116 Thirdly, the applicability of Article 85(1) would be incompatible with various rules of Community law expressly encouraging and promoting collective bargaining between the representatives of employers and employees.

117 Those arguments raise two distinct issues which I will address separately.

118 The first argument is related to the subject-matter of the agreements. It raises the question whether a given agreement, irrespective of its form, falls outside the scope of the competition rules because it deals with social issues such as labour conditions or pensions and has a social objective. In other words, is there in Community competition law a generalised exception for the social field?

119 The second and third arguments are related to the framework in which the agreements in question are concluded. They raise the more limited question whether collective agreements between management and labour have a special status under Community law with the result that Article 85(1) cannot apply to them as a matter of principle. Is there an exception for collective bargaining between management and labour?

1. Is there a general exception for the social field?

120 Article 85(1) of the Treaty is part of the `system ensuring that competition in the internal market is not distorted' which is, according to Article 3(g) of the Treaty, one of the activities of the Community.

121 Article 3(i) provides that the activities of the Community shall also include `a policy in the social sphere'. Article 2 defines as tasks of the Community inter alia `to promote ... a harmonious and balanced development of economic activities' and `a high level of employment and of social protection'.

122 According to the Funds, it follows from those provisions that the social field is not subject to the competition rules. Because of the special features of that area, competition law cannot and should not interfere. They contend that collective agreements between representatives of employers and employees have as their purpose the promotion of the social objectives of the Treaty. Accordingly, they are part of that social field which as a matter of principle is not subject to Articles 85 and 86 of the Treaty.

123 I do not share that view. The Court has consistently held that `where the Treaty intended to remove certain activities from the ambit of the competition rules, it made an express derogation to that effect': (47) examples of such Treaty rules are Article 42(1) with respect to agriculture, Article 223(1)(b) with respect to military equipment and to a limited extent Article 90(2) with respect to certain undertakings.

124 As regards the social field, there is no provision in the Treaty which like Article 42 expressly excludes the application of the competition rules or makes it subject to a decision by the Council.

125 Furthermore, the Court has unequivocally upheld the applicability of the Community competition rules to a number of other `special' sectors which fall outside the scope of the competition rules in certain Member States. In those sectors, the applicability of the competition rules has frequently been contested, with arguments based on the special features of the sectors concerned and on the conflicting policy objectives enumerated in Article 3 of the Treaty.

126 The Court has however regularly rejected such arguments and applied Articles 85 and 86 to such sectors as transport, (48) energy, (49) banking (50) and insurance (51) on the basis that there are other mechanisms such as, for example, exemptions under Article 85(3) of the Treaty through which Community competition law allows account to be taken of the special characteristics of certain branches of the economy. (52) In those cases the Court did not take the view that the existence of conflicting policy objectives - as contained for example in Article 3(f) (a common policy in the sphere of transport) and Article 3(t) (Community measures in the energy sector) - in itself precluded the application of the competition rules to the sectors concerned. It does not follow from the fact that the Community pursues a certain policy that that area of the economy is thereby excluded from the competition rules.

127 Moreover, and of particular relevance to the present cases, the Court has already accepted in a series of important decisions the principle that the competition rules apply to the social field, and in particular to employment and to pensions. Thus the Court accepted that principle as regards labour markets in Höfner (53) and in Job Centre (54) and as regards pensions in Poucet (55) and in Fédération Française des Sociétés d'Assurances. (56) It will be necessary to consider those cases more fully below. It suffices at this stage to note that, in examining whether the bodies concerned were to be classified as undertakings within the meaning of Article 85 or 86, the Court implicitly accepted that the competition rules applied ratione materiae in those areas. More recently in Sodemare the Court - without even examining whether private non-profit-making bodies engaged in health-care activities were to be classified as undertakings - simply applied the competition rules and found that there was no agreement within the meaning of Article 85(1). (57)

128 That conclusion is not negated by the judgment of the Court in Garcia, which is relied upon in particular by the French Government. (58) At issue there was the applicability ratione personae of the third non-life insurance directive, (59) which is based on the rules on free movement of services and on freedom of establishment. The Court held that Article 2(2) of the directive `must be interpreted as meaning that social security schemes such as those in issue in the main proceedings are excluded from the scope of the directive'.

129 Contrary to the contention of the French Government, paragraph 14 of that judgment deals with the personal scope of the directive in question, i.e. the bodies to which the directive applies, and does not concern the applicability of the competition rules to the social field. The Court, in referring to the reasoning used in Poucet, merely recalled its case-law on the applicability ratione personae of the competition rules to certain institutions which provide social benefits. Moreover, paragraph 12 of the judgment confirms that the Court adhered to the approach adopted in Poucet and in Fédération Française des Sociétés d'Assurances already cited. As I have explained, that approach presupposes that the area of pensions and other social benefits does not ipso facto fall outside the material scope of the competition rules.

130 Accordingly, in my view, there is no generalised exception sheltering the social field as a whole from the competition rules. (60)

2. Is there an exception for collective agreements between management and labour?

131 As I have already noted, two arguments are put forward to support the view that collective agreements between management and labour should be given a special status. The first is based on an alleged fundamental right to bargain collectively and the second on the fact that Community law itself encourages the conclusion of such collective agreements.

(a) Is there a fundamental right to bargain collectively?

132 The Funds, the Netherlands and French Governments and the Commission maintain that it follows from a number of international legal instruments that in the Community legal order there is a fundamental right to bargain collectively. To apply Article 85(1) to those agreements, it is said, would be equivalent to depriving management and labour of that fundamental right.

133 Does the Community legal order really contain such a fundamental right? That is a seminal question since if there is such a right, any impairment of the substance of the right, even in the public interest, might be unlawful. (61)

134 For analytical purposes, I will distinguish between three rights: first, the right of individuals to form and join a trade union or an association of employers; secondly, the general right of a trade union or association to take collective action in order to protect occupational interests; and, thirdly, the specific right at issue in the present cases of trade unions and associations of employers to bargain collectively.

135 The EC Treaty itself, although - as discussed below - encouraging collective bargaining, does not explicitly grant any of the three above rights.

136 Under the Community Charter of the Fundamental Social Rights of Workers, (62) employers and workers shall have the right to form and to join professional organisations or trade unions `for the defence of their economic and social interests' (Article 11). Management and labour shall have `the right to negotiate and conclude collective agreements under the conditions laid down by national legislation and practice' (Article 12). Accordingly, the Charter encompasses the three aforesaid `rights'.

137 However, the Charter has very limited legal effects. It is not a legal act of the Community but a solemn political declaration adopted by Heads of State or Government of 11 of the then 12 Member States, and it has not been published in the Official Journal. In the Agreement on social policy attached to the Treaty on European Union the same 11 Member States which adopted the Charter were not willing to confer legal effect on the rights to which they had given their political support in the Charter.

138 The Court's case-law gives more guidance on the general question whether Community law recognises any of the abovementioned three rights. The Court has consistently held that `fundamental rights form an integral part of the general principles of law whose observation the Court ensures. For that purpose the Court draws inspiration from the constitutional traditions common to the Member States and from the guidelines supplied by international treaties for the protection of human rights on which the Member States have collaborated or of which they are signatories.' (63) `The European Convention on Human Rights has special significance in that respect.' (64)

139 In Union Syndicale, Massa and Kortner (65) the Court stated: `Under the general principles of labour law the freedom of trade union activity recognised under Article 24a of the Staff Regulations means not only that officials and servants have the right without hindrance to form associations of their own choosing, but also that these associations are free to do anything lawful to protect the interests of their members as employees.' Thus, the Court arguably recognised, first, the individual right to form and join an association and, secondly, the collective right to take action. The fundamental nature of those two rights was confirmed in Bosman with respect to freedom of association in general (66) and in Maurissen more specifically with regard to trade unions. (67) The question whether there is a third specific fundamental right to bargain collectively has not yet been decided.

140 I now turn to the relevant international legal instruments invoked by the Funds, by certain Member States and by the Commission.

141 The Commission in particular contends that the right to collective bargaining on pay and other conditions of employment is a fundamental right guaranteed by Article 11 of the European Convention on Human Rights, Article 6 of the European Social Charter, Article 22 of the International Covenant on Civil and Political Rights and Article 8 of the International Covenant on Economic, Social and Cultural Rights, as well as Conventions Nos 87 and 98 of the International Labour Organisation.

142 An analysis of the relevant international legal instruments does not however support that contention.

143 Taking first the European Convention on Human Rights, the central relevant right guaranteed by the Convention (Article 11) is the individual right to form or to join a trade union. That right is also recognised by the European Social Charter (Article 5), the International Covenant on Civil and Political Rights (Article 22), the International Covenant on Economic, Social and Cultural Rights (Article 8), as well as the Freedom of Association and Protection of the Right to Organise Convention and the Right to Organise and Collective Bargaining Convention both adopted within the framework of the International Labour Organisation.

144 As regards the right of trade unions to take collective action, the European Court of Human Rights relied on the phrase `for the protection of his interests' in Article 11(1) of the European Convention on Human Rights in holding that freedom of association included the rights that were `indispensable for the effective enjoyment' or `necessarily inherent elements' of trade union freedom. (68) Article 11 therefore also `safeguards the freedom to protect the occupational interests of trade union members by trade union action, the conduct and development of which the Contracting States must both permit and make possible'. (69)

145 However, that apparently broad statement seems to cover only a core of specific activities. To date the only right expressly recognised by the Court has been to be `heard' by the State. (70) On the other hand, a trade union has no right to be consulted by the State, (71) nor is the State obliged to conclude collective agreements, (72) nor does Article 11 necessarily imply a right to strike, since the interests of the members can be furthered by other means. (73)

146 As to the right to bargain collectively, contrary to the contentions of the Funds, the Commission and the abovementioned Governments, solely Article 6 of the European Social Charter seems expressly to recognise its existence. However the mere fact that a right is included in the Charter does not mean that it is generally recognised as a fundamental right. The structure of the Charter is such that the rights set out represent policy goals rather than enforceable rights, and the States parties to it are required only to select which of the rights specified they undertake to protect.

147 Article 4 of the carefully drafted `Right to Organise and Collective Bargaining Convention' imposes on the Contracting States an obligation to `encourage and promote' collective bargaining. No right is granted.

148 In the case-law of the European Court of Human Rights there is a telling absence of any reference to the right to bargain collectively. In Swedish Engine Drivers' Union v Sweden for example the majority of the Commission of Human Rights had argued in favour of the recognition of trade unions' right to engage in collective bargaining. The Court held that it did not have to give a ruling on that question since, it said, such a right was not at issue and was granted to the applicant union under national law. (74) Since then, the European Court of Human Rights has never expressly recognised the existence of that right. On the contrary, there is evidence that the Court is reluctant to do so.

149 First, the Court's interpretation of Article 6 of the European Social Charter suggests such reluctance. As to Article 6(1), which requires that the States `promote joint consultation between workers and employers', the Court has said that `[t]he prudence of the terms used shows that the Charter does not provide for a real right to consultation'. (75) As to Article 6(2), which requires the State `to promote, where necessary and appropriate, machinery for voluntary negotiations between employers and employees', the Court has held that `the prudence of the wording ... demonstrates that the Charter does not provide for a real right to have any such agreement concluded ...'. (76)

150 Secondly, the Court has consistently stressed that `trade union freedom is only one form or a special aspect of freedom of association' and that `Article [11] does not secure any particular treatment of trade unions'. (77)

151 Thirdly, the judgment in Gustafsson (78) is of interest. The Court had to consider a conflict between a trade union and an employer who did not want to take part in the collective bargaining process in his industry. Through boycotts and other actions the trade union exercised pressure on him to join the employers' side of a sectoral collective agreement. The employer contended that compulsion to participate in the collective agreement would in practice amount to compulsion to join an employers' association. Thus, in his view the Swedish Government should have intervened in order to protect his negative freedom not to join an employers' association.

152 It is interesting to consider first two dissenting opinions.

153 Eight judges argued in their partly dissenting opinion that in reality the employer's claim was not based on his negative freedom not to join an association but on his negative freedom not to bargain collectively. They interpreted the previous case-law as meaning that `the right of collective bargaining is not an inherent component of freedom of association'. In their view Article 11 was therefore not applicable at all. (79)

154 Two dissenting judges took the opposite view. They considered that the right to bargain collectively was an inherent part of freedom of association. Accordingly, the Court should have entered into a balancing process between the trade union's positive right to bargain collectively and the employer's negative right not to be involved in such a process against his will. (80)

155 Both opinions have in common that the Court would have had to take a definitive position on the existence of such a right.

156 Instead, the majority of the Court chose a third solution. With regard to trade union activities it first held that `[I]n view of the sensitive character of the social and political issues involved in achieving a proper balance between the competing interests ... and the wide degree of divergence between the domestic systems in the particular area under consideration, the Contracting States should enjoy a wide margin of appreciation in their choice of the means to be employed'. (81) Then it merely stressed that it saw `no reason to doubt that the union action pursued legitimate interests consistent with Article 11 of the Convention'. It continued that `[I]t should also be recalled in this context that the legitimate character of collective bargaining is recognised by a number of international instruments.' (82) Thus the Court appears to have been careful to avoid concluding that the Convention guarantees the right to collective bargaining.

157 This analysis leads me to the following conclusions concerning the recognition by Community law of a right to collective bargaining.

158 The Community legal order protects the right to form and join trade unions and employers' associations which is at the heart of freedom of association.

159 In my view, the right to take collective action in order to protect occupational interests in so far as it is indispensable for the enjoyment of freedom of association is also protected by Community law.

160 However, it cannot be said that there is sufficient convergence of national legal orders and international legal instruments on the recognition of a specific fundamental right to bargain collectively.

161 Moreover, the collective bargaining process, like any other negotiation between economic actors, is in my view sufficiently protected by the general principle of freedom of contract. Therefore, a more specific fundamental right to protection is not needed. In any event the justified limitations on the alleged right to bargain collectively would arguably be identical to those on freedom of contract.

162 In that context it may also be recalled that, in its case-law on the free movement of workers and on equal pay, the Court regularly examines whether clauses in agreements between management and labour infringe Community prohibitions of discrimination on grounds of nationality (83) or of sex. (84) That could be seen as an application of the general rule that the exercise of a fundamental right may be restricted, provided that the restriction in fact corresponds to objectives of general interest pursued by the Community and does not constitute in relation to the aim pursued a disproportionate and intolerable interference, impairing the very substance of the rights guaranteed. (85) There can be no doubt that in the present cases Article 85(1) pursues an important aim of the Treaty, namely the creation of a system ensuring that competition in the internal market is not distorted (Article 3(g)).

163 It follows from those considerations that, while management and labour are in principle free to enter into such agreements as they see fit, they must, like any other economic actor, respect the limitations imposed by Community law. The mere recognition of a fundamental right to bargain collectively would therefore not suffice to shelter collective bargaining from the applicability of the competition rules.

164 However, it is also clear from the foregoing analysis that there is international consensus on the legitimate and socially desirable character of collective bargaining.

165 That leads me to the second argument against the applicability of the competition rules, namely that those rules are incompatible with various provisions in the Treaty encouraging collective bargaining.

(b) Encouragement of collective bargaining under Community law

166 Article 118 of the Treaty provides that `the Commission shall have the task of promoting close cooperation between Member States in the social field, particularly in matters relating to:

...

- the right of association and collective bargaining between employers and workers'.

167 Article 118b of the Treaty provides:

`The Commission shall endeavour to develop the dialogue between management and labour at European level which could, if the two sides consider it desirable, lead to relations based on agreement.'

168 In addition the Agreement on social policy concluded between the Member States of the European Community with the exception of the United Kingdom of Great Britain and Northern Ireland, annexed to the Protocol on social policy (86) attached to the Treaty on European Union, contains the following provisions.

169 According to Article 1 of that Agreement `[t]he Community and the Member States shall have as their objectives the promotion of ... dialogue between management and labour ...'.

170 Article 2(4) states: `A Member State may entrust management and labour, at their joint request, with the implementation of directives ...'.

171 Under Article 3(1) `[t]he Commission shall have the task of promoting the consultation of management and labour at Community level ... .'

172 Article 4(1) provides: `Should management and labour so desire, the dialogue between them at Community level may lead to contractual relations, including agreements.'

173 According to Article 4(2) `[a]greements concluded at Community level shall be implemented ... in matters covered by Article 2, at the joint request of the signatory parties, by a Council decision on a proposal from the Commission'.

174 The Funds, the Netherlands and French Governments and the Commission draw the following conclusions from those rules. The Treaty and the Agreement on Social policy expressly encourage the process of collective bargaining and the conclusion of agreements between management and labour. Community law accepts that the dialogue between management and labour may contribute to the legislative process at Member State and even Community level. Therefore, Article 85 of the Treaty clearly cannot apply to this category of agreements.

175 The Commission maintains in its written submissions that, if Article 85 were applicable, most collective agreements would fulfil the conditions of restriction of competition and effect on trade between Member States. Under Article 85(1) and (2) they would thus be prohibited and void. Even an exemption under Article 85(3) would be unlikely, because, it is said, that provision does not allow social objectives to be taken into account.

176 To a certain extent I agree with those arguments.

177 This follows, first, from a systematic interpretation of the Treaty. Two potentially conflicting sets of rules are relevant. On the one hand there are the aforesaid rules encouraging the conclusion of collective agreements. Those rules clearly start from the assumption that collective agreements between management and labour are in principle legal. There is, on the other hand, Article 85. According to Article 85(1) certain categories of agreements are prohibited. Those prohibited agreements are automatically void under Article 85(2). Only if the requirements of Article 85(3) are satisfied may the Commission declare the prohibition of Article 85(1) inapplicable.

178 As illustrated by the present cases and the comparative survey of national law, there is in any legal system potential tension between those two sets of rules. Normal collective agreements on core subjects of collective bargaining such as wages and other working conditions admittedly restrict competition between employees: they cannot offer to work for a wage below the agreed minimum. However the main purpose of trade unions and of the collective bargaining process is precisely to prevent employees from engaging in a `race to the bottom' with regard to wages and working conditions. That is why collective bargaining is encouraged by all national legal orders, international legal instruments and more particularly by the Treaty itself; moreover Community legislation in the employment field contains elaborate provisions for measures to be implemented by means of collective bargaining as well as by legislation. (87) If such agreements were to fall under the prohibition of Article 85(1), it would be necessary to apply to the Commission for negative clearance or for exemption. Such agreements by their very nature however do not fit comfortably into the framework of the competition rules.

179 The authors of the Treaty either were not aware of the problem or could not agree on a solution. The Treaty therefore does not give clear guidance. In those circumstances one has to draw a line according to established principles of interpretation. Since both sets of rules are Treaty provisions of the same rank, one set of rules should not take absolute precedence over the other and neither set of rules should be emptied of its entire content. Since the Treaty rules encouraging collective bargaining presuppose that collective agreements are in principle lawful, Article 85(1) cannot have been intended to apply to collective agreements between management and labour on core subjects such as wages and other working conditions. Accordingly, collective agreements between management and labour on wages and working conditions should enjoy automatic immunity from antitrust scrutiny.

180 There are also considerations of a practical nature reinforcing that basic conclusion.

181 It is widely accepted that collective agreements between management and labour prevent costly labour conflicts, reduce transaction costs through a collective and rule-based negotiation process and promote predictability and transparency. A measure of equilibrium between the bargaining power on both sides helps to ensure a balanced outcome for both sides and for society as a whole.

182 Furthermore, collective agreements on wages, working time or other working conditions, although they may restrict competition between employees, probably do not have an appreciable restrictive effect on competition between employers. As regards competition on the demand side of the labour market, normally each employer remains free to offer more advantageous conditions to his employees. As regards competition on the product or services markets on which the employers operate, first, agreements on wages or working conditions harmonise merely one of many production cost factors. Therefore only one aspect of competition is affected. (88) Secondly, as follows from the practice of the Commission, (89) proximity to the market of the factor in issue is an important criterion for assessing appreciability. In the case of collective agreements on wages and working conditions the final price of the products or services in question will be influenced by many other factors before they reach the market. Thirdly, and perhaps most importantly, production factor costs are only apparently harmonised, because in economic terms labour - in contrast to raw materials - is not a homogeneous commodity. The fact that employees earn nominally the same wage does not mean that the real costs for their respective employers are identical. Real costs can be determined only when the employees' productivity is taken into account. Productivity itself is determined by many factors such as for example professional skills, motivation, technological environment, work organisation. All those factors can be and are in reality influenced by employers. That is precisely the task of efficient management of human resources. Thus, competition on labour as a cost factor is in reality strong. Finally, it may be seen as empirical support for the lack of appreciable effects that it has taken almost 40 years for the first case on the compatibility of a collective agreement with Article 85 to reach the Court and that in the above survey of national law there is not a single case dealing with normal agreements on wages and working conditions.

183 This conclusion in favour of a limited antitrust immunity for collective agreements between management and labour is not incompatible with the arguments developed above to the effect that there is no exception for the social field as a whole. The main difference is that with regard to collective bargaining I advocate an exception based not merely on the subject-matter of the agreement but mainly on the framework in which it is concluded.

184 The rationale underlying the competition rules' wide scope of applicability ratione materiae is simple. It can be presumed that private economic actors normally act in their own and not in the public interest when they conclude agreements between themselves. Thus, the consequences of their agreements are not necessarily in the public interest. Competition authorities should therefore be able to scrutinise private actors' agreements even in special areas of the economy such as banking, insurance or even the social field. The Treaty consequently contains only a very limited number of sectoral exceptions to the applicability of the competition rules based solely on the subject-matter of the agreement. As already stated, the Court should continue to construe those exceptions narrowly.

185 However, by encouraging the conclusion of collective agreements between management and labour, the Treaty recognises the possibility of an exception to the general presumption on the consequences of agreements between private actors on the ground that under normal circumstances this particular category of agreements furthers the public interest. That is confirmed by the national law and practice of the competition authorities and courts of the Member States, which treat collective bargaining as normally fulfilling a valuable social function. To regard collective bargaining as falling within the competition rules would in fact reverse the practice generally followed in the Member States. Not only would it require such agreements to be notified under Community and/or national competition law; it would also make them justiciable in the courts.

186 Nevertheless I consider that the proposed antitrust immunity for collective agreements between management and labour should not be without limitations.

187 That follows first and foremost from the Treaty interpretation I adopted above. If on the one hand Article 85(1) cannot interfere with the majority of agreements encouraged by the rules on collective bargaining, on the other hand those rules cannot deprive Article 85(1) of all its meaning.

188 That is also evident from the wording of the Treaty: Article 117 (`... such a development [improved working conditions and an improved standard of living for workers] will ensue ... from the functioning of the common market ...') and Article 118 (`Without prejudice to the other provisions of this Treaty ...') seem to presuppose that the competition rules apply to a certain extent to collective agreements between management and labour. As to the Agreement on social policy, the preamble to the Protocol states expressly that `this Protocol and the said Agreement are without prejudice to the provisions of this Treaty ...'.

189 Furthermore, the above survey of national law has shown that there may be instances where collective bargaining is used as a framework for agreements between employers with seriously anticompetitive effects on third parties or third markets. In fact the reported agreements examined by the different national courts and authorities all dealt with third markets or third parties. None of those agreements was a normal agreement on wages or working conditions.

190 I propose therefore three conditions for ipso facto immunity.

191 First, as the Commission has pointed out, the agreement must be made within the formal framework of collective bargaining between both sides of industry. Unilateral coordination between employers unconnected with the collective bargaining process should not be automatically sheltered, whatever the subject of the coordination may be.

192 Secondly, the agreement should be concluded in good faith. In that context account must be taken of agreements which apparently deal with core subjects of collective bargaining such as working time but which merely function as cover for a serious restriction of competition between employers on their product markets. In those exceptional cases, too, competition authorities should be able to examine the agreement in question.

193 Thirdly, it is necessary to delimit the scope of the collective bargaining immunity, so that the immunity extends only to those agreements for which it is truly justified. It will not be easy to find a criterion which draws the line in the right place and also provides the requisite legal certainty. I would tentatively suggest as a possible criterion that the collective agreement must be one which deals with core subjects of collective bargaining such as wages and working conditions and which does not directly affect third parties or markets. The test should be whether the agreement merely modifies or establishes rights and obligations within the labour relationship between employers and employees or whether it goes beyond that and directly affects relations between employers and third parties, such as clients, suppliers, competing employers, or consumers. The above survey of national law provides several examples of the latter type of agreement. Since those agreements have potentially harmful effects on the competitive process, they should be subject to antitrust scrutiny by the Commission or other competent authorities, which would examine whether there was in fact an appreciable restriction of competition. If so, the Commission should be able to balance the different interests involved and where appropriate grant an exemption according to Article 85(3) of the Treaty. Both the Court and the Commission have on occasions recognised the possibility of taking account of social grounds in that context, in particular by interpreting the conditions of Article 85(3) broadly so as to include concerns for employment. (90)

194 Accordingly, my conclusion on ant