OPINION OF ADVOCATE GENERAL

FENNELLY

delivered on 6 July 1995 ( *1 )

1. Three licences for the opening of new shops in rwo Italian towns have been refused by reason of a commercial planning system established by Italian law. The Court has to consider the compatibility with Community competition law of this type of State intervention.

A — The Italian Law at issue

2. The Tribunale Amministrativo Regionale per il Veneto, Seconda Sezione, has referred questions relating to the compatibility with Articles 85, 86 and 30 of the Treaty of Italian Law No 426 of 11 June 1971 (‘the Law’) concerning the regulation of retail trading licences. ( 1 )

3. The Law subjects the opening of a shop for the retail sale of certain goods to the grant of a trading licence issued by the mayor of the commune in question. The latter must take into account the criteria provided for in Anieles 11 and 12 of the Law and consult the committee provided for in Articles 15 and 16.

4. Article 11 requires each municipal council to draw up a plan for the development and transformation of the commercial network, with the stated purpose of ensuring that consumers are served as well and as efficiently as possible. It also requires that the plan should, as far as possible, provide for a balance between permanent trading establishments and the likely extent of demand by the habitually resident and floating population, taking into account the activities of mobile street vendors and other customary forms of distribution. According to Article 12, the plan must fix the maximum extent of the commercial network for the distribution of what are described as goods of wide and general consumption, in respect of each specified class of goods, so as to promote the development and the productivity of the system and to ensure free competition and a balance between the various forms of distribution. ( 2 ) The plan should be revised by the municipal council every four years.

5. Articles 15 and 16 provide for the composition of committees whose opinion must be sought both for the approval of the development plan and for the granting of individual trading licences. In communes of more than 50000 inhabitants, or which are the administrative centre of a province, the committee consists of fifteen members; in other cases ten. The composition of fifteen-member committees is: (i) the mayor or his delegate who acts as chairman; (ii) two experts on urban planning and traffic circulation assigned by the municipal council; (iii) the director of ‘UPICA’ (a public provincial office representing industry, commerce and artisans); (iv) one representative of the provincial tourist office; (v) one representative of the chamber of commerce; (vi) five persons, described as experts on distribution problems, appointed by the traders' organizations concerned, of whom three are appointed by the union of shopkeepers with fixed premises (one representing the major distributors), one is appointed by the consumers' cooperative organizations ( 3 ) and one by the union of stallholders; (vi) four representatives nominated by the national workers' confederation.

6. The ten-member committees include three (as distinct from five) experts on distribution problems who are appointed by the municipal council; although the views of traders' and consumers' cooperative organizations must be taken into account they do not, in the case of these committees, make the appointment. Furthermore, on these smaller committees neither UPICA nor the provincial tourist office is represented, and there are only three workers' representatives. These last are appointed by the municipal council on the advice of the workers' confederation. Finally, the smaller committees include a representative of the social security office.

7. Arnele 23 of the Law requires the mayor to obtain the opinion of the committee on all individual licence applications, regardless of whether they be to set up, transfer or extend a trading concern. Generally this opinion is advisory only and does not bind the mayor. However, Article 43 of the Law provides that, during the transitional period, before the development plan has been approved and, also, after a plan has lapsed but before the adoption of a new one, the grant of a licence (whether it be to set up, transfer or extend a shop) is subject to the approval of the committee. Thus, it is only in the absence of a current development plan that the opinion of the committee is binding.

8. It appears that the Law was amended by Decree-Law No 384 of 18 April 1994. ( 4 ) As the amendments were made subsequent to the disputes giving rise to the present references, they are not germane to consideration of the issues before the Court. ( 5 ) Furthermore, the Court was informed at the oral hearing that the Law was to be the subject of one of a series of national referendums to be held on 11 June 1995 at which the Italian people would have the right to vote for its abolition. I understand that the proposal to repeal the Law has been rejected, but this is also irrelevant.

B — Factual circumstances and questions

9. In the present cases the applicants in the main proceedings (‘the applicants’) applied unsuccessfully for trading licences. In Case C-140/94, D. I. P. S. p. A. applied to the municipality of Bassano del Grappa for a trading licence to open a shop for the sale of watches and jewellery. ( 6 ) The remaining cases concern the Commune of Chioggia, which is a large commune for the purposes of the Law. In Case C-141/94, S. r. 1. LIDL Italia applied for a trading licence for the sale of hardware products for domestic use, whereas in Case C-142/94 S. r. 1. LINGRAL applied for a trading licence for the sale of goods included in the List of Marketable Goods No II of the Law. ( 7 )

10. In Case C-140/94, the application was refused on the ground that the development plan in force in the municipality did not provide for the issue of new licences in respect of the goods to which the application related. In the other two cases, it was refused on the ground that the development plan had lapsed and the opinions of. the committee, binding in those cases, were adverse.

11. The applicants challenged the decisions rejecting their applications for trading licences before the Tribunale Amministrativo Regionale per il Veneto, Seconda Sezione, which referred the present questions to the Court. The three orders were received at the Registry of the Court on 24 May 1994. By order of the President of the Court made on 29 June 1994, the three cases were joined for the purposes of the written and oral procedure.

12. The Tribunale Amministrativo has referred the following two questions pursuant to Article 177(2) of the Treaty: ‘Whether Articles 85 and 86 of the Treaty give rise to a prohibition on the introduction by a Member State of: 1. legislation providing for a planning forecast for the commercial network incorporating predetermined lists of goods subject to quotas, thus precluding the opening of new shops when the market is deemed, in accordance with the plan, to be adequately served already; 2. legislation requiring an opinion to be obtained from a collective body whose members include representatives of traders already operating on the market both when the plan is drawn up and when new licences are granted.’ In Case C-141/94 the national court also refers to Article 30 of the Treaty on the ground that the plaintiff in the main proceedings is a subsidiary of a company established in another Member State.

13. By the first question, the national court asks, in effect, whether Articles 11 and 12 of the Law are compatible with Articles 85 and 86 of the Treaty. The orders for reference state that Articles 11 and 12 of the Law give communes the power to plan the number of commercial outlets for each class of marketable goods without previous investigation and that this leads to the automatic exclusion of new businesses from the market once the relevant list of outlets for selling the particular category of marketable goods has been filled in accordance with the forecasts made in the development plan.

14. The referring court asks whether the system constitutes a restriction on competition on the ground that the ability of an undertaking to enter the market is not determined by the forces of supply and demand, but, primarily, by the advance forecasts made every four years by the administrative authorities as to the likely extent of demand, having regard to the needs of the habitually resident and floating population. Alternatively, it asks whether the system of licensing in question could result in the undertakings, which already operate in the market, gaining a dominant position which they might abuse by imposing selling prices which are unfair or, in any case, different from those which would be applicable in conditions of perfect competition.

15. By the second question, the referring court essentially questions the compatibility with Article 85 of the Treaty of the role of the committees under the Law and, particularly, the requirement contained in Articles 15 and 16 of the Law that they must be consulted on the granting of trading licences and in relation to the drawing up of the development plan referred to in Article 11 of the Law. ( 8 )

16. The referring court states that Article 24 of the Law, by requiring the mayor to seek the opinion of the committee in relation to all licence applications, directly involves the representatives of traders, already operating in the market, in the decision-making process regarding the commercial proposals of their competitors, and that it may reasonably be assumed that those who have an interest in opposing the opening of a new shop will do so. Similarly, with regard to the formulation of a development plan, the Law provides for the mandatory consultation of a committee which includes members with an economic interest in opposing the enlargement of the commercial distribution network and the entry of business competitors on the market. The national court states that the Law has considerable potential, if not actual, limiting effects on the extent of competition on the Italian retail market.

17. Case C-141/94 raises the possibility of the provisions of the Law being contrary to Article 30 of the Treaty. Having made an express reference to the fact that the applicant in this case, S. r. 1. LIDL Italia, is the Italian subsidiary of a German company, which suffers adversely as a result of the Law, the national court proceeds to query, in particular, whether the requirement that a person may open a shop, only in accordance with the forecasts made in the development plan, may constitute a measure having an effect equivalent to that of a quantitative restriction on imports contrary to Article 30, since it could potentially restrict trade between Member States. ( 9 )

C — Observations of the Parties

18. The Court received observations only from the applicants and the Commission.

(i) The Applicants

19. The applicants submit, in reference to the first question, that the Law has, in itself, significant anticompetitive effects on the retail market in Italy. It restricts competition because it allows the national administrative authorities to interfere with the free play of market forces by refusing private economic operators the right to enter the market, on the ground that the existing traders are capable of satisfying consumer demand. They claim that in its judgments in Meng, ( 10 )Reiff ( 11 ) and Ohra ( 12 ) the Court did not exclude the possibility that a national legislative measure might in itself be contrary to Articles 85 and 86 of the Treaty, if it was such as to deprive those articles of their effectiveness.

20. The applicants state that, while it might be permissible to restrict access to the market for reasons concerning hygiene, safety or town planning, it is not, however, permissible to do so by a system which determines in advance the extent of retail selling space. Articles 3(g), 85 and 86 of the Treaty do not allow the national authorities to determine in advance the level of supply of such selling space which, in a market where conditions of free competition prevail, should result only from the interplay of market forces.

21. The applicants submit that the anticompetitive effects of the Law are not limited geographically to the various municipalities and that the Law affects inter-State trade as required for Articles 85 and 86 of the Treaty to be applicable. The Law applies across Italy. ( 13 ) Given that there is a single commercial market in Italy, the applicants claim that the Court can presume the existence of agreements between undertakings at national level which are reinforced by the Law at local level. They submit that even anticompetitive conduct which does not have a direct effect on trade between Member States may fall within the scope of the application of Articles 85 and 86 once it has the potential of affecting such trade in accordance with the judgment of the Court in Batista Morais. ( 14 )

22. The applicants submit, in reference to the second question, that, even if it were accepted that Articles 85 and 86 of the Treaty do not prohibit national legislative or administrative measures as such, the system established by the Law is incompatible with these articles because it not only favours the adoption of agreements, decisions or concerted practices among private undertakings contrary to Article 85 and reinforces their effects but, also, in fact, presupposes the existence of such conduct. This behaviour is rendered decisive because, not only is it mandatory to seek the opinion of the committee, but the opinion is effectively binding in practice, as the mayor departs from it only in exceptional circumstances (even where he or she enjoys a discretion), and may not do so without giving reasons. ( 15 )

23. Finally, they submit that the Italian State has deprived the Law of its official character by delegating to private traders responsibility for taking decisions affecting the economic sphere. ( 16 ) At the oral hearing, it was stated that the committees are in reality controlled by representatives of economic operators already existing on the market and are not constrained by any public interest criteria in formulating what are almost invariably negative opinions on applications for newlicences. ( 17 )

(ii) The Commission

24. With regard to Article 85 of the Treaty, the Commission states that the alleged restriction of competition is not the result of any concerted practices or agreements but flows directly from the Law and the administrative acts adopted for its implementation. The Commission refers to the judgments of the Court in Meng, Reiff and Ohra, ( 18 ) which it regards as exhaustive and definitive. It observes that the Court held in those cases that Article 85 is, in itself, concerned solely with the conduct of undertakings and not with measures adopted by Member States by law, regulation or otherwise. However, it accepts that Article 85, read in conjunction with Article 5, requires the Member States not to introduce or to maintain in force measures, even of a legislative nature, which may render ineffective the competition rules applicable to undertakings. This would be the case if a Member State were to require or to favour the adoption of agreements, decisions or concerted practices contrary to Article 85, to reinforce their effects or to deprive its own rules of the character of legislation by delegating to private economic operators responsibility for taking decisions affecting the economic sphere. ( 19 )

25. The Commission states that the judgments of the Court in Meng, Reiffand Ohra demonstrate that measures adopted by a Member State do not infringe Article 85 of the Treaty solely by virtue of the fact that they produce effects equivalent to those produced by an agreement prohibited by that article. Such measures would infringe Article 85 only if a Member State delegated to private economic operators responsibility for taking decisions affecting the economic sphere. However, the committees provided for in Articles 15 and 16 of the Law act in a consultative capacity only, the decision being taken by the mayor. The Commission points out that, in taking a decision, the mayor must observe the criteria fixed by the development plan and, consequently, where the opinion of the committee departs from those criteria, the mayor must ignore it. It is only in those cases where no such plan exists (including where an existing plan has lapsed) that the opinion is binding.

26. Even where the mayor is bound to follow the opinion of the committee, it cannot be said that the provisions of the Law are contrary to Article 85 of the Treaty since the representatives of the existing traders are in a minority on the relevant committee. The Commission thus concludes that the Law is not contrary to Articles 5 and 85. ( 20 )

27. The Commission also observes that the Law is not incompatible with Article 86 of the Treaty. It is neither inevitable nor even probable that the regime established by the Law will lead to the existing undertakings having a dominant position in the market. In fact, that is rather unlikely to be the case given the geographical level at which the Law operates.

28. With regard to Article 30 of the Treaty, the Commission states that, although the requirement to obtain a licence may restrict the total number of retail selling establishments, it does not necessarily restrict the volume of trade; nor does it render more difficult or expensive the importation of goods from other Member States. It suggests that the judgment of the Court in Keck and Mithouard is inapplicable to this case. ( 21 ) Since the trading licence has to be obtained before any goods are sold and is concerned with the very existence of the shop, it is not concerned with ‘selling arrangements’ as understood in that case. The Commission refers to the judgment of the Court in Matteo Peralta ( 22 ) and claims that the provisions of the Law do not infringe Article 30 because: (i) they make no distinction according to the origin of the goods; (ii) their purpose is not to regulate trade in goods with other Member States; (iii) the restrictive effects which they may have on the free movement of goods are too uncertain and indirect to render them capable of hindering trade between Member States.

D — Consideration of the first question

29. In its first question, the national court proceeds from the assumption, advanced by the applicants in the main action, that the Law institutes a system, which is inherently inimical to the operation of competitive forces in retail trading, throughout Italy. In essence, it is asking whether the existence of such a system in one Member State is contrary to the Treaty. It cannot, indeed, be denied that the Italian licensing system goes beyond the mere reconciliation of retail trading to physical planning objectives. Such planning laws, as they exist in the Member States, implement physical planning objectives with environmental interests in view, such as preservation of historic buildings, traffic and pollution control, efficient provision of public services and respect for aesthetic or other standards. Community law interacts with such national laws. ( 23 ) The applicants accept the legitimacy of licensing control on such grounds. The Law at issue here is of quite a different kind. The municipal plan limits the physical extent (in terms of quantity of selling space) permitted for the sale of classes of goods, based, not on any physical planning criteria, but on forecasts of consumer demand for goods made by those responsible for drafting and adopting the plan. It is clearly arguable that such a system jeopardizes the ‘equality of opportunity that must be preserved for all operators’, but its operation is restricted to the Italian market. ( 24 )

30. This first question is framed in terms of the compatibility of the Law with Articles 5, 85 and 86 of the Treaty. While the Court is not competent, within the framework of a preliminary reference under Article 177 of the Treaty, to determine the validity, having regard to Community law, of provisions of national law, it has jurisdiction, in pursuance of the duty of judicial cooperation provided for by that article and on the basis of the material presented to it, to provide a national court with information on the interpretation of Community law, which may be useful to the latter in assessing the effects, including the validity, of the impugned provisions. ( 25 ) Essentially the question may, therefore, be reformulated as raising the compatibility with Articles 5, 85 and 86 of a national measure -which is designed to regulate, through the adoption at regional, provincial or local level of development plans, the total number of retail outlets which may be licensed to operate within such regions, provinces or localities for the sale of specified categories of marketable goods.

31. The institution and maintenance of a system ensuring that competition on the internal market is not distorted is a ‘prerequisite for the proper functioning of the Common Market which is the rock on which economic integration is to be founded’ ( 26 ) and is ‘indispensable for the achievement of the Community's tasks’. ( 27 ) This conclusion flows from Article 3(g), formerly 3(f), of the Treaty, adopting this objective for the Community and it affects the interpretation of other more detailed Treaty provisions on the subject. In pursuit of that objective Articles 85 and 86 impose certain obligations on undertakings, and, in their own terms, only on undertakings, to refrain from anticompetitive conduct capable of affecting trade between Member States. The Treaty thus regards the maintenance of effective competition between undertakings as an essential means of giving effect to the goal of Article 3(g). No similar obligation is placed on Member States who retain the competence, subject to the constraints of other Treaty provisions, such as Articles 9, 30, 52 and 59, to name but a few, to enact measures which alter or affect, in the national public interest, the free play of competitive forces on their domestic markets.

32. At this point, it becomes clear that the decision on this question requires a careful review of the position of Member States in the face of Treaty obligations addressed, not to them, but to undertakings engaged in trade in the internal market. While the transfer of sovereignty implied by membership of the Community does not deprive the Member States of their power to legislate in respect of matters not affected by the Treaty, it goes without saying that they may not adopt laws which directly conflict with Treaty provisions. ( 28 ) Nor may they act so as to deprive Community law of its full and uniform application. ( 29 ) In what was described as a remarkable turning point in the Court's case-law in this field, ( 30 ) the Court in its judgment in INNO v ATAB ( 31 ) stated, in reliance on Article 3(f), as it then was, and Article 5(2) of the Treaty that: ‘While it is true that Article 86 is directed at undertakings, nonetheless it is also true that the Treaty imposes a duty on Member States not to adopt or maintain in force any measure that could deprive that provision of its effectiveness.’

33. Accordingly, in what is now a wellestablished line of case-law (considered further in reference to the second question), it has been held that Member States are bound by Article 5 of the Treaty to abstain from adopting any measures, including legislative measures, which could jeopardize the attainment of the objectives of the Treaty. Consequently, since Articles 85 and 86 are concerned with the maintenance of effective competition between undertakings, Member States must not undermine the full application and effectiveness of these articles. This does not prevent them from regulating competitive conditions on their domestic markets in the pursuit of public interest objectives defined in national law.

34. The Court in the notable Meng, Reiff and Ohra ( 32 ) cases did not accept the argument, based largely on certain academic writings, that Article 85 or 86 of the Treaty could be invoked, in conjunction with Article 5(2) of the Treaty, against any legislative or other regulatory action on the part of Member States operating in a manner similar to, or having effects analogous to, anticompetitive conduct between undertakings. ( 33 ) Expressing itself in identical terms in each ruling, the Court referred to the consistent case-law in which it had confirmed that Article 85 applied only to the conduct of undertakings, while also confirming that, read in conjunction with Article 5 of the Treaty, it requires Member States not to introduce or maintain in force measures which may have the result of rendering ineffective the competition rules which apply to undertakings. ( 34 )

35. The Court in each of the above cases assessed whether the various rules at issue could be regarded as having such an effect. While it must be said that the Court expressly refrained from any categoric attempt to define the types of situations where national measures might have such an effect, the Opinions of Advocates General Tesauro and Darmon contain a comprehensive analysis of the Court's case-law and a detailed, and ultimately harmonious, conclusion that the Treaty does not prohibit State measures merely for their anticompetitive effect, when that effect has no link with the conduct of undertakings, that is to say when it does not in any way cloak, directly or indirectly, conduct — actual and not merely ostensible conduct — on the part of undertakings. ( 35 )

36. The justification for not applying Article 85 of the Treaty to Member States in the absence of some link with concerted conduct on the part of private economic operators may be summarized as follows: (i) Article 3(g) cannot be regarded as imposing any definitive or binding obligations on Member States although it defines an objective which is to be pursued through other Treaty provisions; ( 36 ) (ii) similarly, Article 5(2) which requires Member States to ‘abstain from any measure which could jeopardize the attainment of the objectives of this Treaty’, contains an obligation of a general kind, whose precise application normally depends on the subsequent, more specific provisions of the Treaty and cannot, in any event, be invoked by individuals before national courts to oppose allegedly anticompetitive national measures; ( 37 ) (iii) to invalidate national laws solely because of their anticompetitive effects would widen the scope of Article 85, which, in its application to undertakings, requires proof of the existence of an agreement or concerted practice; (iv) Articles 85 and 86 of the Treaty, in contrast with other directly effective Treaty provisions, are addressed only to undertakings, and should not necessarily be interpreted so as to prevent Member States from regulating competition on a particular domestic market in a manner which does not operate to hinder inter-State trade; (v) Member States are subject to a specific duty pursuant to Article 90 of the Treaty not to adopt measures which enable or facilitate undertakings, upon which they have conferred special or exclusive rights, to act in contravention of the Treaty competition rules, but this does not impose on them a general prohibition of regulating private economic operators with whom they have no special relationship; (vi) the important question of exemption from the provisions of Article 85 presents major problems in the present context. On the one hand, the Commission has exclusive competence; on the other, Article 85(3) does not cater for the exemption of State measures. By contrast, in the case of other Treaty provisions addressed to Member States, such as Article 36, the Court is competent to assess whether measures restrictive of trade contrary to Articles 30 to 34 can be justified. To use Advocate General Van Gerven's words: ( 38 ) ‘Central to Community competition policy is the Commission. Article 9 of Regulation No 17 gives the Commission exclusive competence to declare the provisions of Article 85(1) of the EEC Treaty to be inapplicable on the basis of Article 85(3); it may exercise this power by means of an individual decision or, where it is authorized to do so by the Council, by means of a generic exemption regulation ... . It is not for the national court or for the Court of Justice to extend the content of a block exemption beyond the normal interpretation of those provisions: the Commission has sole competence to declare Article 85(1) to be inapplicable by virtue of Article 85(3). The courts do not have that power’; (vii) in the majority of cases where anticompetitive national measures, giving support to private concerted behaviour affecting inter-State trade, are adopted by Member States, individuals will have the right to challenge such measures before their national courts pursuant to the directly effective Treaty provisions addressed to Member States; ( 39 ) (viii) it must not be overlooked that Article 101 of the Treaty provides a specific mechanism enabling differences between national laws which are ‘distorting the conditions of competition in the common market’ and where ‘the resultant distortion needs to be eliminated’ to be addressed, if necessary by Community legislation, following consultations with the Member States concerned, by the Commission and the Council. ( 40 )

37. In many cases in which the Court has been asked to assess State measures, affecting competitive conditions on the relevant national markets, the Court has rejected suggestions that the Member States concerned have violated the principle of effet utile of Articles 85 and 86 of the Treaty. The Court has, therefore, refused to invoke the Treaty as a guarantor of unimpeded free trade, thus circumscribing the Member States' prerogatives to decide to pursue alternative economic policies. ( 41 ) The pertinent case-law has been so fully reviewed in the Opinions of Advocates General Darmon and Tesauro, to which I have referred, that repetition by me would serve no useful purpose.

38. The national measures which have survived this scrutiny include control of retail prices of tobacco products, ( 42 ) petrol, ( 43 ) and books, ( 44 ) regulation of bank deposit interest rates, ( 45 ) a legislative restraint on the grant of financial incentives by insurance intermediaries, ( 46 ) and the regulation of road haulage rates, ( 47 ) all of them in some degree interferences with the free play of competition.

39. To employ the analogy cited by Advocate General Darmon in his Opinion in Reiff, it is one thing for economic operators to come together and agree on opening hours (thus removing competition inter se in that sphere), but quite a different matter for Member States to regulate such hours in the public interest. ( 48 ) It is not the effects of the impugned measure which are therefore crucial but, rather, the means by which those effects are brought about.

40. I would emphasize that it is not for the Court to impose its own conception of legitimate (national) public interests and ‘in some degree become a legislator’ in areas of domestic social, economic or monetary policy. ( 49 ) That is not to say that the Member States have complete autonomy to impose on their domestic markets all manner of restrictions on competition but, rather, to recognize that, as is clear from the case-law of the Court concerning national laws undermining the effectiveness of Articles 85 and 86 of the Treaty, Member States may regulate domestic economic affairs while respecting the rights of individuals flowing from the direct effect of Treaty provisions.

E — Consideration of the second question

41. Through its second question, the national court raises a more specific issue regarding national laws claimed to undermine, in the light of what has been called the doctrine of effet utile, the application of Treaty provisions on competition. In essence, I have to consider whether private economic operators are accorded such a decisive role in the implementation of the Law as to deprive it of its official character. The relevant case-law can again be traced in the Opinions of Advocates General Tesauro and Darmon in the Meng, Reiff and Ohra trilogy of cases. ( 50 ) I am heavily indebted to those Opinions and I believe the task of the Court in the present case is to apply the principles of Community law so clearly delineated there and adopted by the Court in its judgments in the three cases.

42. In each of those rulings ( 51 ) the Court referred to the exposition outlined in its earlier decision in Van Eycke, ( 52 ) which reads as follows: ‘Articles 85 and 86 of the Treaty per se are concerned only with the conduct of undertakings and not with national legislation. The Court has consistently held, however, that Articles 85 and 86 of the Treaty, in conjunction with Article 5, require the Member States not to introduce or maintain in force measures, even of a legislative nature, which may render ineffective the competition rules applicable to undertakings. Such would be the case, the Court has held, if a Member State were to require or favour the adoption of agreements or concerted practices contrary to Article 85 or to reinforce their effects, or to deprive its own legislation of its official character by delegating to private traders responsibility for taking decisions affecting the economic sphere.’

43. The classification in the second sentence need not be exhaustive. The Court, through the use of the formulation, ‘such would be the case’, has left open the possibility that other categories of national measures might equally render ineffective the competition rules applicable to undertakings. An obvious example would be an allegation, such as that referred to by both the national court and the applicant in this case, where, by sustaining and facilitating the abuse of a collective dominant position, a national measure has impaired the effectiveness of Article 86 of the Treaty. ( 53 ) It may be that further categories also exist, particularly within the framework of the Member States' obligation not to weaken the application of Article 85 to undertakings. However, in my opinion, the allegations advanced by the applicants in these cases can be considered exclusively by reference to the existing classification.

(i) Effect on trade between Member States

44. Before addressing the issue whether the Law can be properly regarded as falling foul of any of the existing categories, it is necessary to determine whether it can be regarded as having the requisite effect on inter-State trade. For, just as it would be illogical for the Court to apply Articles 85 or 86 of the Treaty to State measures in the absence of any connection with the conduct of undertakings, it would be more so to give those articles a wider scope in the case of State action than would be required in the case of conduct of undertakings. It follows, therefore, that it is only if the impugned State measure has a potentially appreciable effect on trade between Member States, that it is necessary to examine the extent to which it interferes adversely with the effectiveness of the competition rules applicable to undertakings.

45. The Court has consistendy held that it is not essential for an agreement to have an actual effect on trade between Member States, once it can be demonstrated that it has at least the potential to affect such trade. ( 54 ) In a number of decisions affecting the distribution sector, the Court has confirmed that even attempts to regulate the distribution of products within a single Member State are capable potentially of affecting inter-State trade. As the Court ruled in Papiers Peints v Commission, which concerned an agreement between four of the five wallpaper manufacturers in Belgium, ‘the fact that a price fixing arrangement ... only covers the marketing of products in a single Member State does not rule out the possibility that trade between Member States may be affected’, because, ‘a restrictive agreement extending over the whole of the territory of a Member State is by its nature hable to have the effect of reinforcing the compartmentalization of markets on a national basis, thereby holding up the economic interpénétration which the Treaty is designed to bring about’. ( 55 )

46. The applicants submit that the planning system enables existing traders to use the Law as a means of isolating the retail trade in Italy from outside competition. At the oral hearing they claimed that the Italian market is effectively foreclosed. In other words, any new entrant to the market has to find a development plan where the full quota of licences has not been issued and then seek to persuade the local authorities to grant a licence. They refer to the Opinion of Advocate General Jacobs in Batista Morais in support of their submission that even a situation which would, for the purposes of the freedom of movement of persons as provided by the Treaty, be regarded as purely internal, may, none the less, be regarded as capable of precluding access to the affected market for new national and non-national competitors, and thus capable of affecting trade between Member States for the purposes of Article 85 of the Treaty. ( 56 )

47. The Batista Morais case, cited by the applicants, does not assist them to establish that the operation of the Law here potentially forecloses the Italian retail market from new competition and can, thus, be regarded as having an adverse effect on competition in inter-State trade. That case concerned a Portuguese decree-law which prevented driving schools from operating outside the municipalities in which they were established. The effect of the territorial requirement was that driving lessons could not be given outside the assigned geographical area. Mr Morais, a driving instructor from a Lisbon school, was prosecuted for giving a lesson on a motorway located in an adjoining municipality. ( 57 ) In rejecting the allegation that such a measure could be challenged by reference to Article 85(1) of the Treaty the Court ruled that: ‘[Without the need] to examine whether, and to what extent, legislation of the type at issue in the main proceedings encourages, renders obligatory or renders unavoidable any one of the business practices referred to in Article 85 of the Treaty, it is sufficient to note that the provision can only be applied to the extent to which [the] allegedly anticompetitive practices may affect trade between Member States. That condition would be satisfied only if it could be established that the national legislation, operating in a like manner to a network of agreements made in a reference market, would have the effect of denying access to that market to new national and foreign competitors (see the judgment in Case C-234/89 Delimitis v Henninger Bräu AG [1991] ECR I-935). However, national legislation of the type at issue in the main proceedings is not capable of having such an effect.’ ( 58 )

48. According to the applicants, the Lawfavours and reinforces anticompetitive practices between existing traders, which is the mechanism through which the Italian retail market is said to be foreclosed. In other words, they say, there is a network of agreements in practice, actual or potential, which leads to that result. Such a contention requires to be submitted to the Delimitis analysis. The requisite effect on intra-Community trade and, more generally, on competition could be shown by linking it with concerted behaviour or other anticompetitive conduct on the part of existing traders or their representatives at municipal level in Italy, which itself forms part of a network or pattern of similar conduct carried out across the entire Member State and which, cumulatively, has the effect of foreclosing the Italian market. ( 59 ) By undertaking such an analysis and applying it, mutatis mutandis, to assess the foreclosing effects of the impugned national law, one would be in a position to determine whether it operates as, and not merely ‘in a like manner’ to, a network of private agreements. While the applicants have forcefully stressed what they perceive to be the self-evidently concerted nature of the activities and common purpose of the distributor and retail representatives on these advisory committees which operate across Italy, they have not referred to any evidence which would be sufficient to justify a conclusion that, as a result of the application of the Law, such a network of collusion either subsists or has been encouraged in Italy.

49. It must be emphasized that, if it were established that, whether or not under the operation of the Law, existing traders were engaging in anticompetitive conduct for the purpose of foreclosing to an appreciable extent the Italian retail market from potential competition, such conduct could be challenged directly before Italian courts by virtue of the direct effect of Article 85 of the Treaty. In other words, if the applicants' contentions regarding the existence of anticompetitive concerted behaviour by undertakings on the Italian market can be proved, those undertakings are directly amenable to the national court for infringement of the Treaty. ( 60 ) Consequently, there would be no question of the Treaty articles being deprived of their effet utile by the existence of Law No 426. The applicants are not deprived of their remedy if they can prove what they allege.

50. In order to establish the existence of such a network with partitioning effect, careful regard ought to be paid to the criteria set out in the Delimitis case. ( 61 ) The Delimitis test is not a mechanical one, but one which requires the national court to engage in a dynamic economic and legal analysis in which it should determine the extent, if any, of the collusion, the relevant product and geographical markets, the market shares of the parties involved, the alternative means of access to the relevant market for potential competitors and the cumulative effect of such behaviour across Italy on the overall accessibility of the market. Such an analysis is at present completely absent, but, in the context of a preliminary reference under Article 177 of the Treaty, it is for the referring court to make all necessary findings of fact.

(ii) Infringement of Article 85 of the Treaty

51. The question of the compatibility of the Law with Article 85 of the Treaty would arise if the Court were to conclude that the effects of the Law do not only operate on a purely local, municipality by municipality, basis but, rather, protect the entire national market from effective competition. Does the Law favour the adoption of anticompetitive conduct on the part of undertakings or does it reinforce the effects of any such existing activities?

52. The applicants' case in this respect is based (like their allegations concerning the existence of an abuse of a dominant position contrary to Article 86 of the Treaty) largely on the presumed existence of the impugned behaviour. As the Commission rightly points out in its written and oral observations, no attempt has been made to establish the existence of any agreement or concerted action on the part of existing Italian traders, designed to avail of the position of influence afforded to them by the operation at communal level of the Law, in order to further the protection of their own commercial positions on the relevant retail markets. Nothing of probative value emerges from the written or oral procedure to indicate that the representatives of existing traders on the advisory committees have, as result of the operation of the Law, been enabled to enforce existing or potential agreements, or concerted practices, so as to resist, through systematic efforts, applications from potential competitors.

53. In my opinion the Court may not presuppose the existence of such agreements. While it is true that the Court has never required proof of the existence of a perfect or fully-elaborated agreement, attributable to a State measure, when applying Article 5 in conjunction with Articles 85 and 86 of the Treaty, it is equally clear that a presumed predisposition on the part of retailers to act in a certain manner, without any direct or indirect evidence of concerted contact or coordination of behaviour, cannot in itself justify the conclusion that the Law allowed those retailers to develop or extend in a concerted fashion their mutual efforts across Italy. ( 62 ) It is not, indeed, self-evident that all traders will see their interests as being best served by rigid exclusion of newcomers from the market. At least some will own chains of shops and may wish to extend them. Even this point is speculative. The real point is that, in the absence of evidence, the Court should not speculate.

54. The applicants also submit that the Law cannot, in reality, be considered as constituting a genuine public measure for the purpose of the application of Article 85 of the Treaty. While the national court in its orders for reference queries the legitimacy of representatives of the distribution and retail trade being permitted to influence competition in that trade, the Commission, having regard to the case-law culminating in Reiff, confirmed subsequently in the Delta Schiffahrts-und Speditionsgesellschaft case, ( 63 ) rightly emphasized the minority position prescribed for the representatives of such traders, the merely advisory role of traders in appointments to the smaller committees, the legal requirement constraining the committees (and the mayor as the deciding authority) to render their opinions in accordance with the public interest criteria set out in Articles 11 and 12 of the Law, and, above all, the nonbinding nature of the opinions of the committee except where there is no development plan.

55. There can be no doubt that the circumstances of modern governance, where decision-making has become so complex and technical, argue strongly in favour of the consultation of parties likely directly to be affected. ( 64 ) However, the case-law of the Court clearly establishes that it is the relevant legislative, governmental or public authority (depending on the case) which must make the actual decision which affects competition in accordance with the public interest. In the context of preliminary references, where the Court will often not be in possession of all the relevant information, it is the national court which must assess both the legitimacy and the de facto application of public objectives advanced in support of impugned national rules. ( 65 )

56. Judicial review at national level is the proper means of ensuring that the proclaimed purposes of national laws are not undermined by those responsible for their administration. While criticisms have been advanced, particularly at the oral hearing, of the efficacy of the Italian system of judicial review of administrative action, these relate to matters which are not within the proper competence of this Court when answering preliminary questions. In any event, it was acknowledged that an Italian court has power to review a refusal to issue a licence and to remit the matter to the administrative authorities with instructions to reconsider it, all of which I would regard as a perfectly normal judicial function. The criticism is that the judge, faced with a negative decision, i. e. a refusal, has no power to order its suspension and replacement by a positive act. Although, I repeat, these are essentially matters for the national court, none of these considerations suggests that the Italian courts are powerless to deal with the alleged deep-rooted subversion of the public interest objectives of the law.

57. While it may not always be possible clearly to define or determine where acceptable lobbying ends and where unlawful delegation of public responsibilities begins, or indeed entirely to separate public from private interests (there may quite often be a substantial overlap), the Court has through its case-law developed a number of criteria which can be of considerable assistance to national courts in making that vital assessment on a case by case basis.

58. Even where it can be established that representatives of private interests exercise their powers, largely or exclusively, in order to advance the interests of their private sector masters, one cannot necessarily conclude that the Member State concerned has abdicated its public legislative function to private interests. One must also carefully examine whether the decision-making body, regardless of its formal structure, is obliged to exercise its powers in accordance with public interest objectives. Thus, while the Court adopted a rather formal approach to assessing the likely concerns of the various industry representatives on the tariff commissions at the centre of the disputes in the Reiff and Delta cases, this approach must be seen in the context of the extensive scheme of checks and balances built into the German system. ( 66 )

59. Detailed public interest criteria were set out in the relevant German legislation for the purpose of pursuing a stated public interest objective (balancing competitive conditions on the various transport sectors with a view to promoting rail and waterway transport), the relevant minister was obliged to ensure that these criteria were respected by the tariff commissions when approving their proposals and the administrative courts had the ultimate responsibility of ensuring that the tariff commissions did not become a breeding ground for the pursuit of the interests of private cartels. This contrasted rather sharply with the earlier French cases involving the cognac industry, where the national legislation merely provided a forum which brought together the representatives of the various branches of the industry within a legal framework established by the State. Those representatives were then in a position to determine fundamental commercial matters, which included conditions of supply and payment, marketing rules and prices, secure in the knowledge that the relevant minister would (and did in the instant cases), on request, make the agreement legally binding on every economic operator engaged in the market. ( 67 )

60. Upon consideration of the national court's enumeration of the public interest criteria underpinning the Law (see paragraph 4 above), I cannot avoid noting the general and somewhat vague manner in which they appear to be formulated in the Law. Ambiguity can be the enemy of proper public control. The applicants have, moreover, strongly contended that the real effect of the Law is to accord to private undertakings, already present on retail markets across Italy (despite their apparent minority position on both types of committee and the decisionmaking role formally envisaged for the major), a decisive influence on the grant or refusal of trading licence applications by potential competitors. It is not for this Court, in the context of a preliminary reference, ultimately to determine either issues proper for consideration by the national court or disputed factual issues. None the less, on the basis of the evidence actually before the Court, it cannot be said that Italy has, through the Law, unlawfully delegated its public regulatory powers to the trade representatives on the committees established pursuant to Articles 15 and 16 of the Law in frustration of Article 85 of the Treaty.

(iii) Remaining issnes

a. Article 86 of the Treaty

61. As I have already mentioned, the compatibility of the Law with Article 86 of the Treaty was raised by the national court in the grounds supporting its first question and (briefly) by the applicants in their written submissions. Does this Law facilitate the creation of a collective dominant position between existing retailers and does it permit them to abuse that position by enabling them to impose selling prices which they could not have imposed had there been more effective competition on the market? I find myself fully in agreement with the observations made by the Commission in this respect.

62. The Commission observes that a collective dominant position by the undertakings which already have trading licences presupposes that there is already no or limited competition among those undertakings. However, the legislative imposition of limits on the total number of shops does not restrict competition between those shops which already exist. In any event, as the present cases concern restrictions on competition within communes, the Commission also contended that the Law could not lead to the establishment of a dominant position in a substantial part of the common market as required for the application of Article 86 of the Treaty.

63. It appears to me that, before even considering whether a commune or group of communes could constitute a substantial part of the common market for the purposes of applying Article 86 of the Treaty, some attempt should be made, but none has been by the applicants, to define the relevant product market. Thus, the distribution and retail committee representatives in different communes, having an opportunity to influence the outcome of licence applications, might not necessarily represent similar trading concerns. In other words, I would have grave reservations as to whether it can necessarily be said, for example, that jewellery (Case C-140/94) and hardware products for domestic use (Case C-141/94) are sufficiently interchangeable to constitute a uniform, relevant product market, or that the representatives of those sectors are necessarily going to have similar views on Učence applications. As the Court has ruled, the ‘possibilities of competition can only be judged in relation to those characteristics of the products in question by virtue of which those products are particularly apt to satisfy an inelastic need, and are only to a limited extent interchangeable with other products’. ( 68 ) In the absence of any detailed information about the product markets affected by the Law, it would seem to me to be impossible to maintain that any abuse of a dominant position, collective or otherwise, arises for consideration in this reference.

64. The concept of collective dominance cannot be used to substitute for the lack of any direct evidence of the existence, and still less of any abuse, of a dominant position (namely by an individual undertaking already present in some or all of the 8000 affected communes). The Court of First Instance stated in the Società Italiano Vetro & Ors v Commission case that: ‘There is nothing, in principle, to prevent two or more economic entities from being, on a specific market, united by such economic links that, by virtue of that fact, together they hold a dominant position vis-à-vis the other operators on the same market. This could be the case, for example, where two or more independent undertakings jointly have, through agreements or licences, a technological lead affording them the power to behave to an appreciable extent independently of their competitors, their customers and ultimately their consumers.’ ( 69 )

65. Leaving aside the dispersed nature of the markets at issue in these cases, there is nothing in the orders for reference or the submissions before the Court which suggests that some or all of the existing traders act, or possess distinctive commercial features, on their respective markets which in any way, with respect any to their suppliers, competitors or customers, enable them effectively to behave as a single economic unit. As the Court of First Instance also rightly pointed out in the same judgment, an abuse of a collectively dominant position cannot be established simply by recycling what is essentially, if anything at all, an Article 85 concerted practice case. I would, therefore, conclude that the tentative reference to the possibility that such an abuse may have been facilitated by the operation of the Law in this case ought to be rejected.

b. Article 30 of the Treaty

66. In the LIDL reference (Case C-141/94) the compatibility of the Law with Article 30 of the Treaty is raised. Unlike Articles 85 and 86 of the Treaty which are addressed to undertakings, Article 30 is addressed to Member States and may be relied upon to attack the compatibility with that article of a national law before national courts.

67. The only reason advanced by the national court for referring to Article 30 of the Treaty is that the LIDL undertaking is a subsidiary of a German company. During the oral hearing the applicants submitted that, because the Law operated effectively to exclude new entrants, many of whom would be non-Italian operators desirous of establishing large-scale and sometimes discount outlets which might sell more non-Italian goods than existing traders, it was likely, either actually or at least potentially, to hinder intra-Community trade.

68. I believe that this argument must be rejected. As the Commission righdy observes, while the Law limits the overall number of trading licences, it does not necessarily produce an overall decrease in the number or value of goods sold on the Italian market nor does it necessarily render more difficult the sale of imports as opposed to domestic goods. ( 70 ) I accept the Commission's observation that this type of provision is not capable of hindering intra-Community trade and, thus, falls outside the prima facie scope of Article 30 of the Treaty. ( 71 )

69. In my opinion, it is necessary to examine whether the Law ought to be regarded as a ‘selling arrangement’ within the meaning of the principle established in Keck and Mithouard, ( 72 ) or whether it must be assessed by reference to the approach formulated in the Dassonville and Cassis de Dijon cases. ( 73 ) The Court has confirmed in recent decisions its tendency not to interpret the concept of a selling arrangement narrowly. Thus, it concluded in its ruling in Leclerc-Siplec v TF1 Publicité and M6 Publicité that a French provision precluding the distribution sector from advertising on television was a selling arrangement ‘since it prohibits a particular form of promotion (televised advertising) of a particular method of marketing products (distribution)’. ( 74 )

70. I do not find the Commission's distinction between a restraint on selling arrangements per se and a restraint on the opening of a shop, in the first place, to be convincing. It seems to me that this constitutes a distinction without a real difference and masks the real distinction which, according to the Keck and Mithouard judgment itself, must be made in these cases; namely that between rules which regulate selling (though in a nondiscriminatory way) and those which impose substantive conditions by reference to the product, such as dimension, ingredients, labelling or other peripheral characteristics.

71. If the national law were to provide that new retail traders could open as many new outlets (over and above the figure specified in the relevant plan) as they wished, but simultaneously imposed severely limited trading hours, such a law would surely be classified as a ‘selling arrangement’ (the regulation of opening hours must be one of the most obvious forms of national selling arrangements), yet it could operate to exclude new traders as effectively as the law at issue in the instant cases. Thus, in my opinion, this Law, if it is to be regarded as being subject to scrutiny under Article 30 of the Treaty at all, ought to be classified as a ‘selling arrangement’. Moreover, on applying the Keck and Mithouard principle, it would also not appear to pose any difficulty from the perspective of Article 30, since it contains no form of discrimination, in law or in fact, against goods imported from other Member States.

Conclusion

72. Accordingly, I am of the opinion that the questions referred by the Tribunale Amministrativo Regionale per il Veneto should be answered as follows: (1) legislation providing for a planning forecast for the commercial network incorporating predetermined lists of goods subject to quotas, thus precluding the opening of new shops when the market is deemed, in accordance with the plan, to be adequately served, is not in itself contrary to either Article 85 or 86 of the Treaty; (2) legislation requiring an opinion to be obtained from a collective body, whose members include representatives of traders already operating on the market, both when the plan is drawn up and when new licences are granted, is not contrary to either Article 85 or 86 of the Treaty; (3) such legislation is not capable of hindering intra-Community trade for the purposes of the application of Article 30 of the Treaty so long as, in law or in fact, it does not distinguish between imports and domestic products.

( *1 ) Original language: English.

( 1 ) Official Journal of the Italian Republic No 168 of 6 July 1971.

( 2 ) Ibid., p. 9.

( 3 ) At the oral hearing the applicants stated that these are trading organizations.

( 4 ) Official Journal of the Italian Republic, Ordinary Supplement, General Series No 141 of 18 April 1994.

( 5 ) The two most notable amendments in so far as the system for obtaining trade licences is concerned are as follows: (i) if the public authorities do not respond to a licence application within 90 days, the licence is deemed to be granted; (ii) the mayor is no longer obliged to obtain the opinion of the committee prior to granting a licence.

( 6 ) It was confirmed during the oral hearing that Bassano del Grappa is a commune comprising less than 50000 inhabitants.

( 7 ) It appears that this list includes foodstuffs and other products of general consumption normally sold in supermarkets.

( 8 ) See paragraph 4 above.

( 9 ) Some emphasis was placed at the oral hearing on the restrictive effects of the operation of the Law on the ability of new retailers, many of whom might be subsidiaries of non-Italian undertakings, to enter the Italian market. However, the compatibility of any such restrictions with Article 52, or possibly Article 59, of the Treaty was not raised by the Italian court and, therefore, as in proceedings under Article 177 of the Treaty, ‘it is for the national court alone to assess the relevance of such arguments and to make a fresh reference if it considers that it is necessary to obtain a further ruling on the interpretation of Community law for the purpose of giving its judgment’ (see, e. g., Case 311/84 CBEM v C LT and IPB [19851 ECR 3261, paragraph 10 of the judgment), it does not arise for consideration in this case.

( 10 ) Case C-2/91 [1993] ECR I-5751.

( 11 ) Case C-185/91 [1993] ECR I-5801.

( 12 ) Case C-245/91 [1993] ECR I-5851.

( 13 ) A figure of some 8000 communes was mentioned at the oral hearing.

( 14 ) Case C-60/91 [1992] ECR I-2085.

( 15 ) At the oral hearing it was suggested that this resulted largely from the fact that the committee is regarded as performing a public function and that, therefore, a mayor would be slow to disregard its opinion. Reference was made to a very recent letter from the secretary-general of the town of Chioggia staring that, in his 30 years working for that municipality, the municipal authorities had never departed from the opinion of the committee. It was not stated, however, that the opinions of the Chioggia committee were in all cases adverse to applications for trade licences.

( 16 ) Reference is made to Case 267/86 Van Eycke v ASPA [1988] ECR 4769, paragraph 16 of the judgment.

( 17 ) Although not mentioned in the applicants' written submissions, reference was made at the oral hearing to a number of procedural factors which allegedly have the effect of reinforcing the substantive control by existing traders of these committees despite what is, formally, their minority position as set out in Articles 15 and 16 of the Law.

( 18 ) Cited in notes 10 to 12 above.

( 19 ) See Reiff, cited in note 11, paragraph 14 of the judgment.

( 20 ) The Commission stated at the hearing that the Law was clearly against the principle of free competition, but that this was not sufficiënt to bring it into conflict with the Treaty.

( 21 ) Joined Cases C-267 & C-268/9I [1993] ECR I-6D97.

( 22 ) Case C-379/92 [1994] ECR I-3453.

( 23 ) Sec, e. g., Council Directive 85/337/EEC of 27 June 1985 on the assessment of the effects of certain public and private projects on the environment, OJ 1985 L 175, p. 40.

( 24 ) See the introduction to the Commission's DC Annual Report on Competition Policy, p. 10.

( 25 ) See, e. g., Case 137/84 Ministère Public v Mutsch [1985] ECR 2681, paragraph 6 of the judgment.

( 26 ) DC Annual Report on Competition Policy, Introduction p. 9.

( 27 ) Case 6/72 Europemballage and Continental Can v Commission [1973] ECR 215, p. 244.

( 28 ) The extensive nature of this obligation is illustrated by the broad scope of the enforcement action procedures set out, inter alia, in Articles 169 and 170 of the Treaty, by the general terms of Article 5 of the Treaty and by the very nature of the Community as one which is based on the rule of law.

( 29 ) See, e. g., Case 229/83 Leclerc v Au Blé Vert [1985] ECR 1 and Case 231/83 Cullet v Leclerc [1985] ECR 305.

( 30 ) See the Opinion of Advocate General Darmon in Case 229/83, loc. cit., paragraph 8.

( 31 ) Case 13/77 [1977] ECR 2115.

( 32 ) Cited in notes 10 ct 12.

( 33 ) See, e. g. Verstrynge, J. ‘The Obligations of Member States as Regards Competition in the EEC Treaty’ (1988) Fordham Corp. Law Institute 17-1; Gyselen, L. ‘State Action and the Effectiveness of the EEC Treaty's Competition Provisions’ (1989) 26 CMLRev 33 and a more recent post Mens, Aeģļf and Ohra discussion in Chan-Mo, C. ‘The Relationship between State Regulation and EC Competition Law: Two Proposals for a Coherent Approach’ (1995) 2 ECLR 87.

( 34 ) See paragraph 14 of the judgment in Meng and Reiff and paragraph 11 in Ohra, cited in notes 10 to 12.

( 35 ) See Advocate General Tesauro's Opinion, paragraph 25.

( 36 ) See the Opinion of Advocate General Slynn in Case 355/85 Driancourt v Cogner [1986] ECR3231, p. 3236 where he stated that it was ‘plain that Article 3(f) of the Treaty cannot and does not have direct effect in itself. It only operates through the substantive provisions on competition such as those in Article 85’.

( 37 ) See Case 78/70 Deutsche Grammophon v Metro [1971] ECR 487, paragraph 5 of the judgment.

( 38 ) Sec Case C-234/89 Delimais v Henninger Bräu AC [1991] ECR I-935, paragraphs 5 and 10 of the Opinion.

( 39 ) Advocate General Tesauro points out in his joined Opinion in Meng and Ohra (see paragraph 30) that the cases requiring the application of Amele 85 of the Treaty directly to Assess the validity of anticompetitive State measures should be purely residual, because the majority of such measures would be, in any case, incompatible with Articles 30 or 59.

( 40 ) Article 102 of the Treaty furnishes a not dissimilar procedure in relation to the proposed adoption (or amendment) by Member States of measures which may potentially distort competitive conditions.

( 41 ) See Marenco, G. ‘Le traité CEE interdit-il aux Etats Membres de restreindre la concurrence?’ (1984) 20 RTDE 527.

( 42 ) Joined Cases 177 and 178/82 Van de Haar [1984] ECR 1797.

( 43 ) Case 231/83 Cullet v Ledere, cited in note 29.

( 44 ) Case 229/83 Leclerc v Au Blé Ven, cited in note 29.

( 45 ) Case 267/86 Van Eycke v ASPA, cited in note 16.

( 46 ) See Meng, cited in note 10.

( 47 ) See Reiff, cited in note 11.

( 48 ) Paragraph 38 of the Opinion.

( 49 ) Ibid., the Opinion of Advocate General Darmon, paragraph 73.

( 50 ) Cited in notes 10 to 12.

( 51 ) See paragraph 14 of the judgment in Meng and Äetllf respectively and paragraph 11 in Ohra.

( 52 ) Cited in note 16, paragraph 16 of the judgment.

( 53 ) This allegation, though hardly sustainable on the facts as they appear from the orders for reference and not relied upon by the applicants at the oral hearing, is discussed briefly infra, paragraphs 61 to 65.

( 54 ) See Joined Cases 56 and 58/64 Consten & Grundig v Commission [1966] ECR 299.

( 55 ) Case 73/74 [1975] ECR 1491, paragraphs 25 and 26 of the judgment See also Case 126/80 Salonia v Poidomam and Giglio [1981] ECR 1563, which concerned a dispute arising in Sicily regarding refusal to supply certain newspapers, stationery and books to a retailer by a local wholesaler because the retailer was not on the Italian publishers' association approved list of retailers, where the Court ruled that the mere fact that an agreement was confined to national products did not prevent it from being regarded as having potentially detrimental repercussions on other non-national products.

( 56 ) Case C-60/91, cited in note 14.

( 57 ) In effect, the requirement placed driving schools located in municipalities where there were no motorways at a commercial disadvantage.

( 58 ) Loc. cit. supra note 56, paragraphs 12 and 13 of the judgment. The Court was not obliged in Batista Morais to give any indication of how the Delimitis test ought to be applied to a restrictive system created by a nationallaw, as opposed to a private network of agreements between undertakings. It is also important to note that the Delimitis test was developed in order to furnish criteria for determining whether an agreement, in that case an exclusive purchasing agreement, which does not have as its object the restriction of competition, may nevertheless ‘have the effect of preventing, restricting or distorting competition’ (Delimitis v Henninger Bräu AG, paragraph 13, emphasis added).

( 59 ) It is noteworthy that Advocate General Jacobs in his Opinion in Batista Morais, cited in note 14, while expressing his view that the Portuguese decree ‘appears to be anticompetitive, and no convincing reason for it has been advanced’ (see paragraph 8), found no evidence of any connection between the measure and anticompetitive behaviour by Portuguese driving schools.

( 60 ) Such privately operated cartels could also be the subjectmatter of a complaint direcdy to the Commission under Regulation No 17. The Commission has recendy confirmed its view that an undertaking cannot escape the application of Article 85 simply because its behaviour has been encouraged by public authorities. The Commission also stated that, even if the State could be rendered hable, this would at most serve to reduce the amount of a fine to which the undertaking might be hable, but would not exclude the application of the competition rules to it {see Commission Decision 95/188/EC of 30 January 1995 relating to a proceeding under Article 85 of the EC Treaty, Coapi, OJ 1995 L 122, p. 37, paragraphs 44 to 48).

( 61 ) Loc. cit.

( 62 ) See paragraph 99 of Advocate General Darmon's Opinion in Reiff, cited in note 11, where he states that the Court does not require, for the combined application of Articles 3(f), 5 and 85, proof of a perfect cartel. A State measure must be shown to be linked with some form of cartel-like activities by, or on the part of undertakings, in order for it to be subject to scrutiny under Articles 5 and 85 of the Treaty.

( 63 ) Case C-153/93 [1994] ECR I-2517.

( 64 ) In relation to the decision-making process established by the Community Treaties, it may be said that a similar principle is now expressed in the Treaty on European Union which, in Article A, refers to ‘an ever closer union among the peoples of Europe, in which decisions are taken as closely as possible to the citizen’.

( 65 ) In this regard I would draw attention to the note of caution expressed by Professor Bach in his case-note on the Reiff, Ohra and Meng, (1994) 31 CMLRev 1357, where, at footnote 14, he comments that, ‘instead of presuming corporate rulemaking to be in the public interest, however, it seems much more justified to presume that this kind of rule follows the economic interests of those participating in the rulemaking and creates restrictive conditions for newcomers and outsiders’.

( 66 ) Cited in notes 11 and 63. See the comprehensive discussion of these controls in the Opinion of Advocate General Darmon.

( 67 ) See Case 123/83 BNIC v Clair [1985] ECR391 and Case 136/86 BNIC v Aubert [1987] ECR 4789.

( 68 ) Sec Case 6/72 Europemballage and Continental Can v Commission, cited in note 27, paragraph 32 of the judgment.

( 69 ) Joined Cases T-68, T-77 and T-78/89 [1992] ECR II-1403, paragraph 358 of the judgment.

( 70 ) This might be the case if the Law encouraged existing traders to sell, or rendered a successful licence obligation subject to a commitment or understanding that the applicant would endeavour to sell, as many local or national products as possible. No such allegation was advanced in relation to the operation of the Law in Italy.

( 71 ) The Commission refers to the recent Case C-379/92 Matteo Peralta, cited in note 22. Mr Peralta argued that the application to ships flying the Italian flag of a prohibition of the discharge of various substances into the sea, whether within Italian territorial waters or on the high seas (the latter provision not being applicable to non-Italian ships), effectively increased the costs of transport on Italian snips and thus also the costs of importing goods into Italy. The Court had little difficulty in rejecting the argument that such a measure had potentially restrictive effects on the free movement of goods as being ‘too uncertain and indirect for the obligation which it lays down to be regarded as being of such a nature as to hinder trade between Member States’ (paragraph 24 of the judgment).

( 72 ) Cited in note 21.

( 73 ) Case 8/74 Procureur du Roi v Dassonville [1974] ECR 837 and 120/78 Rewe-Zentral v Bundesmonopolverwaltung fur Branntwein [1979] ECR 649.

( 74 ) Case C-412/93, judgment of 9 February 1995, not yet reported, paragraph 22. See abo the Opinion of Advocate General Cosmas in Case C-63/94 Groupement national des négociants en pommes de terre de Belgique v SA ITM Belgium and SA Vocarex delivered on 23 March 1995 in which, y way of extension from the Keck and Mithouard ruling itself, the Advocate General expressed the view that a rule which prevented the sale of potatoes at an extremely low profit margin also constituted a ‘selling arrangement’. See further the judgment of 29 June 1995, [1995] ECR I-1621, in Case C-391/92 Commission v Greece where the Court held that national legislation which reserves the sale of processed milk for infants solely to pharmacies should be regarded as constituting a ‘selling arrangement’.