DECISION OF THE EFTA SURVEILLANCE AUTHORITY No 3/94/COL of 12 January 1994 on the issuing of 10 notices and guidelines in the field of competition

THE EFTA SURVEILLANCE AUTHORITY,

Having regard to the Agreement on the European Economic Area (1), and in particular points 16 to 25 of Annex XIV to this Agreement,

Having regard to Articles 5 (2) (b) and 25 of the Agreement between the EFTA States on the establishment of a Surveillance Authority and a Court of Justice (2),

Whereas according to Article 25 of the Surveillance and Court Agreement the EFTA Surveillance Authority shall give effect to the provisions of the EEA Agreement relating to the implementation of the competition rules applicable to undertakings and, upon the entry into force of this Agreement, adopt acts corresponding to those of the EC Commission listed in Annex II to the Surveillance and Court Agreement;

Whereas the objective of the acts is to provide guidance for undertakings by indicating the principles and rules which will guide the EFTA Surveillance Authority when applying Articles 53 to 60 of the EEA Agreement to a particular case in order to ensure a uniform application of the EEA competition rules throughout the European Economic Area,

HAS ADOPTED THIS DECISION:

1. The EFTA Surveillance Authority issues the 10 notices and guidelines listed below and annexed to this Decision as Annexes I to X.

- notice of the EFTA Surveillance Authority regarding restrictions ancillary to concentrations,

- notice of the EFTA Surveillance Authority regarding the concentrative and cooperative operations under the act on the control of concentration between undertakings referred to in point 1 of Annex XIV to the EEA Agreement,

- notice of the EFTA Surveillance Authority concerning the acts referred to in points 2 and 3 of Annex XIV to the EEA Agreement on the application of Article 53 (3) of the EEA Agreement to categories of exclusive distribution and exclusive purchasing agreements,

- notice of the EFTA Surveillance Authority concerning the act referred to in point 4 of Annex XIV to the EEA Agreement on the application of Article 53 (3) of the EEA Agreement to certain categories of motor vehicle distribution and servicing agreements,

- notice of the EFTA Surveillance Authority on exclusive dealing contracts with commercial agents,

- notice of the EFTA Surveillance Authority concerning agreements, decisions and concerted practices in the field of cooperation between enterprises,

- notice of the EFTA Surveillance Authority concerning imports into the territory covered by the EEA Agreement of third countries' goods falling within the scope of the EEA Agreement,

- notice of the EFTA Surveillance Authority concerning its assessment of certain subcontracting agreements in relation to Article 53 (1) of the EEA Agreement,

- notice of the EFTA Surveillance Authority on agreements of minor importance which do not fall under Article 53 (1) of the EEA Agreement,

- guidelines of the EFTA Surveillance Authority on the application of EEA competition rules in the telecommunications sector.

2. These notices and guidelines are authentic in the English language and shall be published in the EEA Section of and the EEA supplement to the Official Journal of the European Communities.

Done at Brussels, 12 January 1994.

For the EFTA Surveillance Authority.

Knut ALMESTAD

President

(1) Hereinafter referred to as the 'EEA Agreement'.

(2) Hereinafter referred to as the 'Surveillance and Court Agreement'.

ANNEX I

NOTICE OF THE EFTA SURVEILLANCE AUTHORITY REGARDING RESTRICTIONS ANCILLARY TO CONCENTRATIONS

A. The present notice is issued pursuant to the rules of the Agreement on the European Economic Area (EEA Agreement) and the Agreement between the EFTA States on the establishment of a Surveillance Authority and a Court of Justice (Surveillance and Court Agreement).

B. Annex XIV to the EEA Agreement lists notices and guidelines issued by the EC Commission before 31 July 1991. These non-binding acts contain principles and rules which the Commission follows in the field of competition. The EEA Agreement obliges the EFTA Surveillance Authority to take due account of these principles and rules.

C. The EFTA States (1) have included in Article 25 of the Surveillance and Court Agreement the obligation for the EFTA Surveillance Authority to adopt acts corresponding to those of the EC Commission mentioned above.

D. In accordance with this obligation the EFTA Surveillance Authority adopts the present notice exercising the power conferred to it in Article 5 (2) (b) of the Surveillance and Court Agreement. It intends to follow the principles and rules laid down in this notice when applying the relevant EEA competition rules to a particular case. The notice corresponds to the Commission notice regarding restrictions ancillary to concentrations referred to in point 16 of Annex XIV to the EEA Agreement and, respectively, point 1 of Annex II to the Surveillance and Court Agreement.

E. For EEA purposes, the text of Council Regulation (EEC) No 4064/89 has been divided into substantive rules which are contained in the act referred to in point 1 of Annex XIV to the EEA Agreement (Regulation (EEC) No 4064/89) and procedural rules which are contained in Chapter XIII of Protocol 4 to the Surveillance and Court Agreements. This is the reason why these two references appear in the text below.

I. Introduction

1. The act on the control of concentrations between undertakings referred to in point 1 of Annex XIV to the EEA Agreement (Regulation (EEC) No 4064/89) (hereinafter referred to as 'the Act') states in recital 25 that its application is not excluded where the undertakings concerned accept restrictions which are directly related and necessary to the implementation of the concentration, hereinafter referred to as 'ancillary restrictions'. In the scheme of the Act, such restrictions are to be assessed together with the concentration itself. It follows, as confirmed by Article 8 (2), second subparagraph, last sentence of Chapter XIII of Protocol 4 to the Surveillance and Court Agreement, that a decision declaring the concentration compatible also covers these restrictions. In this situation, under the provisions of Article 22, paragraphs 1 and 2 of Chapter XIII of Protocol 4 to the Surveillance and Court Agreement, the Act and Chapter XIII of Protocol 4 to the Surveillance and Court Agreement are solely applicable, to the exclusion af Chapter II of Protocol 4 to the Surveillance and Court Agreement as well as the acts referred to in points 10 and 11 of Annex XIV to the EEA Agreement (Council Regulations (EEC) No 1017/68 and (EEC) No 4056/86) and Chapters VI, IX and XI of Protocol 4 to the Surveillance and Court Agreement. This avoids parallel proceedings by the EFTA Surveillance Authority, one concerned with the assessment of the concentration under the Act, and the other aimed at the application of Articles 53 and 54 of the EEA Agreement to the restrictions which are ancillary to the concentration.

2. In this notice, the EFTA Surveillance Authority sets out to indicate the interpretation it gives to the notion of 'restrictions directly related and necessary to the implementation of the concentration'. Under the Act and Chapter XIII of Protocol 4 to the Surveillance and Court Agreement such restrictions must be assessed in relation to the concentration, whatever their treatment might be under Articles 53 and 54 of the EEA Agreement if they were to be considered in isolation or in a different economic context. The EFTA Surveillance Authority endeavours, within the limits set by the Act and Chapter XIII of Protocol 4 to the Surveillance and Court Agreement, to take the greatest account of business practice and of the conditions necessary for the implementation of concentrations.

This notice is without prejudice to the interpretation which may be given by the EFTA Court.

II. Principles of evaluation

3. The 'restrictions' meant are those agreed on between the parties to the concentration which limit their own freedom of action in the market. They do not include restrictions to the detriment of third parties. If such restrictions are the inevitable consequence of the concentration itself, they must be assessed together with it under the provisions of Article 2 of the Act. If, on the contrary, such restrictive effects on third parties are separable from the concentration they may, if appropriate, be the subject of an assessment of compatibility with Articles 53 and 54 of the EEA Agreement.

4. For restrictions to be considered 'directly related' they must be ancillary to the implementation of the concentration, that is to say subordinate in importance to the main object of the concentration. They cannot be substantial restrictions wholly different in nature from those which result from the concentration itself. Neither are they contractual arrangements which are among the elements constituting the concentration, such as those establishing economic unity between previously independent parties, or organizing joint control by two undertakings of another undertaking. As integral parts of the concentration, the latter arrangements constitute the very subject matter of the evaluation to be carried out under the Act and Chapter XIII of Protocol 4 to the Surveillance and Court Agreement.

Also excluded, for concentrations which are carried out in stages, are the contractual arrangements relating to the stages before the establishment of control within the meaning of Article 3, paragraphs 1 and 3 of the Act. For these, Articles 53 and 54 of the EEA Agreement remain applicable as long as the conditions set out in Article 3 are not fulfilled.

The notion of directly related restrictions likewise excludes from the application of the Act and Chapter XIII of Protocol 4 to the Surveillance and Court Agreement additional restrictions agreed at the same time which have no direct link with the concentration. It is not enough that the additional restrictions exist in the same context as the concentration.

5. The restrictions must likewise be 'necessary to the implementation of the concentration', which means that in their absence the concentration could not be implemented or could only be implemented under more uncertain conditions, at substantially higher cost, over an appreciably longer period or with considerably less probability of success. This must be judged on an objective basis.

6. The question of whether a restriction meets these conditions cannot be answered in general terms. In particular as concerns the necessity of the restrictions, it is proper not only to take account of its nature, but equally to ensure, in applying the rule of proportionality; that its duration and subject matter, and geographic field of application, do not exceed what the implementation of the concentration reasonably requires. If alternatives are available for the attainment of the legitimate aim pursued, the undertakings must choose the one which is objectively the last restrictive of competition.

These principles will be followed and further developed by the practice of the EFTA Surveillance Authority in individual cases. However, it is possible to indicate the attitude the EFTA Surveillance Authority will take to those restrictions most commonly encountered in relation to the transfer of undertakings or parts of undertakings, the division of undertakings or of their assets following a joint acquisition of control, or the creation of concentrative joint ventures.

III. Evaluation of common ancillary restrictions in cases of the transfer of an undertaking

A. Non-competition clauses

1. Among the ancillary restrictions which meet the criteria set out in the Act and in Chapter XIII of Protocol 4 to the Surveillance and Court Agreement are contractual prohibitions on competition which are imposed on the vendor in the context of a concentration achieved by the transfer of an undertaking or part of an undertaking. Such prohibitions guarantee the transfer to the acquirer of the full value of the assets transferred, which in general include both physical assets and intangible assets such as the goodwill which the vendor has accumulated or the know-how he has developed. These are not only directly related to the concentration, but are also necessary for its implementation because, in their absence, there would be reasonable grounds to expect that the sale of the undertaking or part of an undertaking could not be accomplished satisfactorily. In order to take over fully the value of the assets transferred, the acquirer must be able to benefit from some protection against competitive acts of the vendor in order to gain the loyalty of customers and to assimilate and exploit the know-how. Such protection cannot generally be considered necessary when de facto the transfer is limited to physical assets (such as land, buildings or machinery) or to exclusive industrial and commercial property rights (the holders of which could immediately take action against infringements by the transferor of such rights).

However, such a prohibition on competition is justified by the legitimate objective sought of implementing the concentration only when its duration, its geographical field of application, its subject matter and the persons subject to it do not exceed what is reasonably necessary to that end.

2. With regard to the acceptable duration of a prohibition on competition, a period of five years has been recognized as appropriate when the transfer of the undertaking includes the goodwill and know-how, and a period of two years when it includes only the goodwill. However, these are not absolute rules; they do not preclude a prohibition of longer duration in particular circumstances, where for example the parties can demonstrate that customer loyalty will persist for a period longer than two years or that the economic life cycle of the products concerned is longer than five years and should be taken into account.

3. The geographic scope of the non-competition clause must be limited to the area where the vendor had established the products or services before the transfer. It does not appear objectively necessary that the acquirer be protected from competition by the vendor in territories which the vendor had not previously penetrated.

4. In the same manner, the non-competition clause must be limited to products and services which form the economic activity of the undertaking transferred. In particular, in the case of a partial transfer of assets, it does not appear that the acquirer needs to be protected from the competition of the vendor in the products or services which constitute the activities which the vendor retains after the transfer.

5. The vendor may bind himself, his subsidiaries and commercial agents. However, an obligation to impose similar restrictions on others would not qualify as an ancillary restriction. This applies in particular to clauses which would restrict the scope for resellers or users to import or export.

6. Any protection of the vendor is not normally an ancillary restriction and is therefore to be examined under Articles 53 and 54 of the EEA Agreement.

B. Licences of industrial and commercial property rights and of know-how

1. The implementation of a transfer of an undertaking or part of an undertaking generally includes the transfer to the acquirer, with a view to the full exploitation of the assets transferred, of rights to industrial or commercial property or know-how. However, the vendor may remain the owner of the rights in order to exploit them for activities other than those transferred. In these cases, the usual means for ensuring that the acquirer will have the full use of the assets transferred is to conclude licensing agreements in his favour.

2. Simple or exclusive licences of patents, similar rights or existing know-how can be accepted as necessary for the completion of the transaction, and likewise agreements to grant such licences. They may be limited to certain fields of use, to the extent that they correspond to the activities of the undertaking transferred. Normally it will not be necessary for such licences to include territorial limitations on manufacture which reflect the territory of the activity transferred. Licences may be granted for the whole duration of the patent or similar rights or the duration of the normal economic life of the know-how. As such licences are economically equivalent to a partial transfer of rights, they need not be limited in time.

3. Restrictions in licence agreements, going beyond what is provided above, fall outside the scope of the Act. They must be assessed on their merits according to Article 53 (1) and (3). Accordingly, where they fulfil the conditions required, they may benefit from the block exemptions provided for by the act on patent licences referred to in point 5 of Annex XIV to the EEA Agreement (Commission Regulation (EEC) No 2349/84) or the act on know-how licences referred to in point 9 of Annex XIV to the EEA Agreement (Commission Regulation (EEC) No 556/89).

4. The same principles are to be applied by analogy in the case of licences of trademarks, business names or similar rights. There may be situations where the vendor wishes to remain the owner of such rights in relation to activities retained, but the acquirer needs the rights to use them to market the products constituting the object of the activity of the undertaking or part of an undertaking transferred.

In such circumstances, the conclusion of agreements for the purpose of avoiding confusion between trademarks may be necessary.

C. Purchase and supply agreements

1. In many cases, the transfer of an undertaking or part of an undertaking can entail the disruption of traditional lines of internal procurement and supply resulting from the previous integration of activities within the economic entity of the vendor. To make possible the break up of the economic unity of the vendor and the partial transfer of the assets to the acquirer under reasonable conditions, it is often necessary to maintain, at least for a transitional period, similar links between the vendor and the acquirer. This objective is normally attained by the conclusion of purchase and supply agreements between the vendor and the acquirer of the undertaking or part of an undertaking. Taking account of the particular situation resulting from the break up of the economic unity of the vendor such obligations, which may lead to restrictions of competition, can be recognized as ancillary. They may be in favour of the vendor as well as the acquirer.

2. The legitimate aim of such obligations may be to ensure the continuity of supply to one or other of the parties of products necessary to the activities retained (for the vendor) or taken over (for the acquirer). Thus, there are grounds for recognizing, for a transitional period, the need for supply obligations aimed at guaranteeing the quantities previously supplied within the vendor's integrated business or enabling their adjustment in accordance with the development of the market.

Their aim may also be to provide continuity of outlets for one or the other of the parties, as they were previously assured within the single economic entity. For the same reason, obligations providing for fixed quantities, possibly with a variation clause, may be recognized as necessary.

3. However, there does not appear to be a general justification for exclusive purchase or supply obligations. Save in exceptional circumstances, for example resulting from the absence of a market or the specificity of products, such exclusivity is not objectively necessary to permit the implementation of a concentration in the form of a transfer of an undertaking or part of an undertaking.

In any event, in accordance with the principle of proportionality, the undertakings concerned are bound to consider whether there are no alternative means to the ends pursued, such as agreements for fixed quantities, which are less restrictive than exclusivity.

4. As for the duration of procurement and supply obligations, this must be limited to a period necessary for the replacement of the relationship of dependency by autonomy in market. The duration of such a period must be objectively justified.

IV. Evaluation of ancillary restrictions in the case of a joint acquisition

1. As set out in recital 24, the Act is applicable when two or more undertakings agree to acquire jointly the control of one or more other undertakings, in particular by means of a public tender offer, where the object or effect is the division among themselves of the undertakings or their assets. This is a concentration implemented in two successive stages; the common strategy is limited to the acquisition of control. For the transaction to be concentrative, the joint acquisition must be followed by a clear separation of the undertakings or assets concerned.

2. For this purpose, an agreement by the joint acquirers of an undertaking to abstain from making separate competing offers for the same undertaking, or otherwise acquiring control, may be considered an ancillary restriction.

3. Restrictions limited to putting the division into effect are to be considered directly related and necessary to the implementation of the concentration. This will apply to arrangements made between the parties for the joint acquisition of control in order to divide among themselves the production facilities or the distribution networks together with the existing trademarks of the undertaking acquired in common. The implementation of this division may not in any circumstances lead to the coordination of the future behaviour of the acquiring undertakings.

4. To the extent that such a division involves the break up to a pre-existing economic entity, arrangements that make the break up possible under reasonable conditions must be considered ancillary. In this regard, the principles explained above in relation to purchase and supply arrangements over a transitional period in cases of transfer of undertakings should be applied by analogy.

V. Evaluation of ancillary restrictions in cases of concentrative joint ventures within the meaning of Article 3 (2), subparagraph 2, of the Act

This evaluation must take account of the characteristics peculiar to concentrative joint ventures, the constituent elements of which are the creation of an autonomous economic entity exercising on a long-term basis all the functions of an undertaking, and the absence of coordination of competitive behaviour between the parent undertakings and between them and the joint venture. This condition implies in principle the withdrawal of the parent undertakings from the market assigned to the joint venture and, therefore, their disappearence as actual or potential competitors of the new entity.

A. Non-competition obligations

To the extent that a prohibition on the parent undertakings competing with the joint venture aims at expressing the reality of the lasting withdrawal of the parents from the market assigned to the joint venture, it will be recognized as an integral part of the concentration.

B. Licences for industrial and commercial property rights and know-how

The creation of a new autonomous economic entity usually involves the transfer of the technology necessary for carrying on the activities assigned to it, in the form of a transfer of rights and related know-how. Where the parent undertakings intend none the less to retain the property rights, particularly with the aim of exploitation in other fields of use, the transfer of technology to the joint venture may be accomplished by means of licences. Such licences may be exclusive, without having to be limited in duration or territory, for they serve only as a substitute for the transfer of property rights. They must therefore be considered necessary to the implementation of the concentration.

C. Purchase and supply obligations

If the parent undertakings remain present in a market upstream or downstream of that of the joint venture, any purchase and supply agreements are to be examined in accordance with the principles applicable in the case of the transfer of an undertaking.

(1) For the purpose of this notice, any reference to EFTA States shall be understood to mean those EFTA States in respect of which the EEA Agreement has entered into force. See the relevant texts of Article 2 (2) of the Protocols adjusting the EEA Agreement and the Surveillance and Court Agreement.

ANNEX II

NOTICE OF THE EFTA SURVEILLANCE AUTHORITY REGARDING THE CONCENTRATIVE AND COOPERATIVE OPERATIONS UNDER THE ACT ON THE CONTROL OF CONCENTRATIONS BETWEEN UNDERTAKINGS REFERRED TO IN POINT 1 OF ANNEX XIV TO THE EEA AGREEMENT (COUNCIL REGULATION (EEC) No 4064/89)

A. The present notice is issued pursuant to the rules of the Agreement on the European Economic Area (EEA Agreement) and the Agreement between the EFTA States on the establishment of a Surveillance Authority and a Court of Justice (Surveillance and Court Agreement).

B. Annex XIV to the EEA Agreement lists notices and guidelines issued by the EC Commission before 31 July 1991. These non-binding acts contain principles and rules which the Commission follows in the field of competition. The EEA Agreement obliges the EFTA Surveillance Authority to take due account of the principles and rules.

C. The EFTA States (1) have included in Article 25 of the Surveillance and Court Agreement the obligation for the EFTA Surveillance Authority to adopt acts corresponding to those of the EC Commission mentioned above.

D. In accordance with this obligation the EFTA Surveillance Authority adopts the present notice exercising the power conferred to it in Article 5 (2) (b) of the Surveillance and Court Agreement. It intends to follow the principles and rules laid down in this notice when applying the relevant EEA competition rules to a particular case. The notice corresponds to the Commission notice regarding the concentrative and cooperative operations pursuant to Council Regulation (EEC) No 4064/89 on the control of concentrations between undertakings referred to in point 17 of Annex XIV to the EEA Agreement and, respectively, point 2 of Annex II to the Surveillance and Court Agreement.

E. For EEA purposes, the text of Regulation (EEC) No 4064/89 has been divided between substantive rules which are contained in the act referred to in point 1 of Annex XIV to the EEA Agreement (Regulation (EEC) No 4064/89) and procedural rules which are contained in Chapter XIII of Protocol 4 to the Surveillance and Court Agreement. This is the reason why these two references appear in the text below.

I. Introduction

1. Article 3 (1) of the act referred to in point 1 of Annex XIV to the EEA Agreement (Regulation (EEC) No 4064/89) (hereinafter referred to as 'the Act') contains an exhaustive list of the factual circumstances which fall to be considered as concentrations. In accordance with recital 23, this term refers only to operations that lead to a lasting change in the structures of the participating undertakings.

By contrast, the Act does not deal with operations whose object or effect is the coordination of the competitive activities of undertakings that remain independent of each other. Situations of this kind are cooperative in character. Accordingly, they fall to be assessed under the provisions of the acts referred to in points 10 and 11 of Annex XIV to the EEA Agreement (Council Regulations (EEC) No 1071/68 and (EEC) No 4056/86) and Chapter II, VI, IX or XI of Protocol 4 to the Surveillance and Court Agreement. The same applies to an operation which includes both a lasting structural change and the coordination of competitive behaviour, where the two are inseparable.

If the structural change can be separated from the coordination of competitive behaviour, the former will be assessed under the Act and Chapter XIII of Protocol 4 to the Surveillance and Court Agreement and the latter, to the extent that it does not amount to an ancillary restriction within the meaning of Article 8 (2), second subparagraph of Chapter XIII of the Surveillance and Court Agreement, falls to be assessed under the other acts referred to in Annex XIV to the EEA Agreement or under the chapters of Protocol 4 to the Surveillance and Court Agreement which implement Articles 53 and 54 of the EEA Agreement.

2. The purpose of this notice is to define as clearly as possible, in the interests of legal certainty, concentrative and cooperative situations. This is particularly important in the case of joint ventures. The same issue is raised in other forms of association between undertakings such as unilateral or reciprocal shareholdings and common directorships, and of certain operations involving more than one undertaking, such as unilateral or reciprocal transfer of undertakings or parts of undertakings, or joint acquisition of an undertaking with a view to its division. In all these cases, operations may not fall within the scope of the Act, where their object or effect is the coordination of the competitive behaviour of the undertakings concerned.

3. This notice sets out the main considerations which will determine the view of the EFTA Surveillance Authority to what extent the aforesaid operations are or are not caught by the Act. It is not concerned with the assessment of these operations, whether under the Act or any other applicable provisions, in particular Article 53 and 54 of the EEA Agreement.

4. The principles set out in this notice will be followed and further developed by the practice of the EFTA Surveillance Authority in individual cases. As the operations considered are generally of a complex nature, this notice cannot provide a definitive answer to all conceivable situations.

5. This notice is without prejudice to the interpretation which may be given by the EFTA Court.

II. Joint ventures within the meaning of Article 3 of the Act

6. The Act in Article 3 (2) refers to two types of joint venture: those which have as their object or effect the coordination of the competitive behaviour of undertakings which remain independent (referred to as 'cooperative joint ventures') and those which perform on a lasting basis all the functions of an autonomous economic entity and which do not give rise to coordination amongst themselves or between them and the joint venture (referred to as 'concentrative joint ventures'). The latter are concentrations and as such are caught by the Act. Cooperative joint ventures fall to be considered under other acts referred to in Annex XIV to the EEA Agreement or under the chapters of Protocol 4 to the Surveillance and Court Agreement which implement Articles 53 and 54 of the EEA Agreement.

A. Concept of joint venture

7. To define the term 'joint venture' ('JV') within the meaning of Article 3 (2), it is necessary to refer to the provision of Article 3 (1) (b) of the Act. According to the latter, JVs are undertakings that are jointly controlled by several other undertakings, the parent companies. In the context of the Act the term JV thus implies several characteristics:

(a) Undertaking

8. A JV must be an undertaking. That is to be understood as an organized assembly of human and material resources, intended to pursue a defined economic purpose on a long-term basis.

(b) Control by other undertakings

9. In the context of the Act, a JV is controlled by other undertakings. Pursuant to Article 3 (3) of the Act, control means the possibility of exercising, directly or indirectly, a decisive influence on the activities of the JV; whether this condition is fulfilled can only be decided by reference to all the legal and factual circumstances of the individual case.

10. Control of a JV can be based on legal, contractual or other means, within which the following elements are especially important:

- ownership or rights to the use of all or some of the JV's assets,

- influence over the composition, voting or decisions of the managing or supervisory bodies of the JV,

- voting rights in the managing or supervisory bodies of the JV,

- contracts concerning the running of the JV's business.

(c) Joint control

11. A JV under the Act is jointly controlled. Joint control exists where the parent companies must agree on decisions concerning the JV's activities, either because of the rights acquired in the JV or because of contracts or other means establishing the joint control. Joint control may be provided for in the JV's constitution (memorandum or articles of association). However, it need not be present from the beginning, but may also be established later, in particular by taking a share in an existing undertaking.

12. There is no joint control where one of the parent companies can decide alone on the JV's commercial activities. This is generally the case where one company owns more than half the capital or assets of the undertaking, has the right to appoint more than half of the managing or supervisory bodies, controls more than half of the votes in one of those bodies, or has the sole right to manage the undertaking's business. Where the other parent companies either have completely passive minority holdings or, while able to have a certain influence on the undertaking, cannot, individually or together, determine its behaviour, a relative majority of the capital or of the votes or seats on the decision-making bodies will suffice to control the undertaking.

13. In many cases, the joint control of the JV is based on agreements or concertation between the parent companies. Thus, a majority shareholder in a JV often extends to one or more minority shareholders a contractual right to take part in the control of the JV. If two undertakings each hold half of a JV, even if there is no agreement between them, both parent companies will be obliged permanently to cooperate so as to avoid reciprocal blocking votes on decisions affecting the JV's activity. The same applies to JVs with three or more parents, where each of them has a right of veto. A JV can even be controlled by a considerable number of undertakings that can together muster a majority of the capital or the seats or votes on the JV's decision-making bodies. However, in such cases, joint control can be presumed only if the factual and legal circumstances - especially a convergence of economic interests - support the notion of a deliberate common policy of the parent companies in relation to the JV.

14. If one undertaking's holding in another is, by its nature or its extent, insufficient to establish sole control, and if there is no joint control together with third parties, then there is no concentration within the meaning of Article 3 (1) (b) of the Act. Articles 53 or 54 of the EEA Agreement may however be applicable on the basis of Chapter II of Protocol 4 to the Surveillance and Court Agreement or implementing acts referred to in Annex XIV to the EEA Agreement or reproduced in other chapters of Protocol 4 to the Surveillance and Court Agreement (see III (1) of this notice).

B. Concentrative joint ventures

15. For a joint venture to be regarded as concentrative it must fulfil all the conditions of Article 3 (2), subparagraph 2 of the Act, which lays down a positive condition and a negative condition.

(a) Positive condition: joint venture performing on a lasting basis all the functions of an autonomous economic entity

16. To fulfil this condition, a JV must first of all act as an independent supplier and buyer on the market. JVs that take over from their parents only specific partial responsibilities are not to be considered as concentrations where they are merely auxiliaries to the commercial activities of the parent companies. This is the case where the JV supplies its products or services exclusively to its parent companies, or when it meets its own needs wholly from them. The independent market presence can even be insufficient if the JV achieves the majority of its supplies or sales with third parties, but remains substantially dependent on its parents for the maintenance and development of its business.

17. A JV exists on a lasting basis if it is intended and able to carry on its activity for an unlimited, or at least for a long, time. If this is not the case there is generally no long-term change in the structures of the parent companies. More important than the agreed duration are the human and material resources of the JV. They must be of such nature and quantity as to ensure the JV's existence and independence in the long term. This is generally the case where the parent companies invest substantial financial resources in the JV, transfer an existing undertaking or business to it, or give it substantial technical or commercial know-how, so that after an initial starting-up period it can support itself by its own means.

18. A decisive question for assessing the autonomous character of the JV is whether it is in a position to exercise its own commercial policy. This requires, within the limits of its company objects, that it plans, decides and acts independently. In particular, it must be free to determine its competitive behaviour autonomously and according to its own economic interests. If the JV depends for its business on facilities that remain economically integrated with the parent companies' businesses, that weakens the case for the autonomous nature of the JV.

19. The JV's economic independence will not be contested merely because the parent companies reserve to themselves the right to take certain decisions that are important for the development of the JV, namely those concerning alterations of the objects of the company, increases or reductions of capital, or the application of profits. However, if the commercial policy of the JV remains in the hands of the parent undertakings, the JV may take on the aspect of an instrument of the parent undertakings' market interests. Such a situation will usually exist where the JV operates in the market of the parent undertakings. It may also exist where the JV operates in markets neighbouring, or upstream or downstream of, those of the parent undertakings.

(b) Negative condition: absence of coordination of competitive behaviour

20. Subject to what is said in paragraph 1 of this notice a JV can only be considered to be concentrative within the meaning of Article 3 (2), subparagraph 2 of the Act, if it does not have as its object or effect the coordination of the competitive behaviour of undertakings that remain independent of each other. There must not be such coordination either between the parent companies themselves or between any or all of them on the one hand and the JV on the other hand. Such coordination must not be an object of the establishment or operation of the JV, nor may it be the consequence thereof. The JV is not to be regarded as concentrative if as a result of the agreement to set up the JV or as a result of its existence or activities it is reasonably foreseeable that the competitive behaviour of a parent or of the JV on the relevant market will be influenced. Conversely, there will normally be no foreseeable coordination when all the parent companies withdraw entirely and permanently from the JV's market and do not operate on markets neighbouring those of the JV's.

21. Not every cooperation between parent companies with regard to the JV prevents a JV from being considered concentrative. Even concentrative JVs generally represent a means for parent companies to pursue common or mutually complementary interests. The establishment and joint control of a JV is, therefore, inconceivable without an understanding between the parent companies as concerns the pursuit of those interests. Irrespective of its legal form, such a concordance of interests is an essential feature of a JV.

22. As regards the relations of the parent undertakings, or any one of them, with the JV, the risk of coordination within the meaning of Article 3 (2) will not normally arise where the parent undertakings are not active in the markets of the JV or in neighbouring or upstream or downstream markets. In other cases, the risk of coordination will be relatively small where the parents limit the influence they exercise to the JV's strategic decisions, such as those concerning the future direction of investment, and when they express their financial, rather than their market-oriented, interests. The membership of the JV's managing and supervisory bodies is also important. Common membership of the JV's and the parent companies' decision-making bodies may be an obstacle to the development of the JV's autonomous commercial policy.

23. The dividing line between the concordance of interests in a JV and a coordination of competitive behaviour that is incompatible with the notion of concentration cannot be laid down for all conceivable kinds of case. The decisive factor is not the legal form of the relationship between the parent companies and between them and the JV. The direct or indirect, actual or potential effects of the establishment and operation of the JV on market relationships, have determinant importance.

24. In assessing the likelihood of coordination of competitive behaviour, it is useful to consider some of the different situations which often occur:

(a) JVs that take over pre-existing activities of the parent companies;

(b) JVs that undertake new activities on behalf of the parent companies;

(c) JVs that enter the parent companies' markets;

(d) JVs that enter upstream, downstream or neighbouring markets.

(a) JVs that take over pre-existing activities of the parent companies

25. There is normally no risk of coordination where the parent companies transfer the whole of certain business activities to the JV and withdraw permanently from the JV's market so that they remain neither actual nor potential competitors - of each other nor of the JV. In this context, the notion of potential competition is to be interpreted realistically, according to established practice (2). A presumption of a competitive relationship requires not only that one or more of the parent companies could re-enter the JV's market at any time: this must be a realistic option and represent a commercially reasonable course in the light of all objective circumstances.

26. Where the parent companies transfer their entire business activities to the JV, and thereafter act only as holding companies, this amounts to complete merger from the economic viewpoint.

27. Where the JV takes on only some of the activities that the parent companies formerly carried on independently, this can also amount to a concentration. In this case, the establishment and operation of the JV must not lead to a coordination of the parent companies' competitive behaviour in relation to other activities which they retain. Coordination of competitive behaviour between any or all of the parent companies and the JV must also be excluded. Such coordination is likely where there are close economic links between the areas of activity of the JV on one side and of the parent companies on the other. This applies to upstream, downstream and neighbouring product markets.

28. The withdrawal of the parent companies need not be simultaneous with the establishment of the JV. It is possible - so far as necessary - to allow the parent companies a short transitional period to overcome any starting-up problems of the JV, especially bottlenecks in production or supplies. This period should not normally exceed one year.

29. It is even possible for the establishment of a JV to represent a concentration situation where the parent companies remain permanently active on the JV's product or service market. In this case, however, the parent companies' geographic market must be different from that of the JV. Moreover, the markets in question must be so widely separated, or must present structures so different, that, taking account of the nature of the goods or services concerned and of the cost of (first or renewed) entry by either into the other's market, competitive interaction may be excluded.

30. If the parent companies' markets and the JV's are in different parts of the territory covered by the EEA Agreement or neighbouring third countries, there is a degree of probability that either, if it has the necessary human and material resources, could extend its activities from the one market to the other. Where the territories are adjacent or very close to each other, this may even be assumed to be the case. At least in this last case, the actual allocation of markets gives reason to suppose that it follows from a coordination of competition behaviour between parent companies and the JV.

(b) JVs that undertake new activities on behalf of the parent companies

31. There is normally no risk of coordination in the sense described above where the JV operates on a product or service market which the parent companies individually have not entered and will not enter in the foreseeable future, because they lack the organizational, technical or financial means or because, in the light of all the objective circumstances, such a move would not represent a commercially reasonable course. An individual market entry will also be unlikely where, after establishing the JV, the parent companies no longer have the means to make new investments in the same field, or where an additional individual operation on the JV's market would not make commercial sense. In both cases there is no competitive relationship between the parent companies and the JV. Consequently, there is no possibility of coordination of their competitive behaviour. However, this assessment is only true if the JV's market is neither upstream nor downstream of, nor neighbouring, that of the parent companies.

32. The establishment of a JV to operate in the same product or service market as the parent companies but in another geographic market involves the risk of coordination if there is competitive interaction between the parent companies' geographic market and that of the JV.

(c) JVs that enter the parent companies' market

33. Where the parent companies, or one of them, remain active on the JV's market or remain potential competitors of the JV, a coordination of competitive behaviour between the parent companies or between them and the JV must be presumed. So long as this presumption is not rebutted, the EFTA Surveillance Authority will take it that the establishment of the JV does not fall within Article 3 (2), subparagraph 2 of the Act.

(d) JVs that operate in upstream, downstream or neighbouring markets

34. If the JV is operating in a market that is upstream or downstream of that of the parent companies, then, in general, coordination of purchasing or, as the case may be, sales policy between the parent companies is likely where they are competitors on the upstream or downstream market.

35. If the parent companies are not competitors, it remains to be examined whether there is a real risk of coordination of competitive behaviour between the JV and any of the parents. This will normally be the case where the JV's sales or purchases are made in substantial measure with the parent companies.

36. It is not possible to lay down general principles regarding the likelihood of coordination of competitive behaviour in cases where the parent companies and the JV are active in neighbouring markets. The outcome will depend in particular on whether the JV's and the parent companies' products are technically or economically linked, whether they are both components of another product or are otherwise mutually complementary, and whether the parent companies could realistically enter the JV's market. If there are no concrete opportunities for competitive interaction of this kind, the EFTA Surveillance Authority will treat the JV as concentrative.

III. Other links between undertakings

A. Minority shareholdings

37. The taking of a minority shareholding in an undertaking can be considered a concentration within the meaning of Article 3 (1) (b) of the Act if the new shareholder acquires the possibility of exercising a decisive influence on the undertaking's activity. If the acquisition of a minority shareholding brings about a situation in which there is an undertaking jointly controlled by two or more others, the principles described above in relation to JVs apply.

38. As long as the threshold of individual or joint decisive influence has not been reached, the Act is not in any event applicable. Accordingly, the assessment under competition law will be made only in relation to the criteria laid down in Articles 53 and 54 of the EEA Agreement and on the basis of the usual procedural rules for restrictive practices and abuses of dominant position (3).

39. There may likewise be a risk of coordination where an undertaking acquires a majority or minority interest in another in which a competitor already has a minority interest. If so, this acquisition will be assessed under Articles 53 and 54 of the EEA Agreement.

B. Cross-shareholding

40. In order to bring their autonomous and hitherto separate undertakings or groups closer together, company owners often cause them to exchange shareholdings in each other. Such reciprocal influences can serve to establish or to secure industrial or commercial cooperation between the undertakings or groups. But they may also result in establishing a 'single economic entity'. In the first case, the coordination of competitive behaviour between independent undertakings is predominant; in the second, the result may be a concentration. Consequently, reciprocal directorships and cross-shareholdings can only be evaluated in relation to their foreseeable effects in each case.

41. The EFTA Surveillance Authority considers that two or more undertakings can also combine without setting up a parent-subsidiary relationship and without either losing its legal personality. Article 3 (1) of the Act refers not only to legal, but also to economic concentrations. The condition for the recognition of a concentration in the form of a combined group is, however, that the undertakings or groups concerned are not only subject to permanent, single economic management, but are also amalgamated into a genuine economic unit, characterized internally by profit and loss compensation between the various undertakings within the groups and externally by joint liability.

C. Representation on controlling bodies of other undertakings

42. Common membership of managing or supervisory boards of various undertakings is to be assessed in accordance with the same principles as cross-shareholdings.

43. The representation of one undertaking on the decision-making bodies of another is usually the consequence of an existing shareholding. It reinforces the influence of the investing undertaking over the activities of the undertaking in which it holds a share, because it affords it the opportunity of obtaining information on the activities of a competitor or of taking an active part in its commercial decisions.

44. Thus, common membership of the respective boards may be the vehicle for the coordination of the competitive behaviour of the undertakings concerned, or for a concentration of undertakings within the meaning of the Act. This will depend on the circumstances of the individual case, among which the economic link between the shareholding and the personal connection must always be examined. This is equally true of unilateral and reciprocal relationships between undertakings.

45. Personal connections not accompanied by shareholdings are to be judged according to the same criteria as shareholding relationships between undertakings. A majority of seats on the managing or supervisory board of an undertaking will normally imply control of the latter; a minority of seats at least a degree of influence over its commercial policy, which may further entail a coordination of behaviour. Reciprocal connections justify a presumption that the undertakings concerned are coordinating their business conduct. A very wide communality of membership of the respective decision-making bodies - that is, up to half of the members or more - may be an indication of a concentration.

D. Transfers of undertakings or parts of undertakings

46. A transfer of assets or shares falls within the definition of a concentration, according to Article 3 (1) (b) of the Act, if it results in the acquirer gaining control of all or of part of one or more undertakings. However, the situation is different where the transfer conferring control over part of an undertaking is linked with an agreement to coordinate the competitive behaviour of the undertakings concerned, or where it necessarily leads to or is accompanied by coordination of the business conduct of undertakings which remain independent. Cases of this kind are not covered by the Act; they must be examined according to Articles 53 and 54 of the EEA Agreement and under the appropriate implementing acts.

47. The practical application of this rule requires a distinction between unilateral and reciprocal arrangements. A unilateral acquisition of assets or shares strongly suggests that the Act is applicable. The contrary needs to be demonstrated by clear evidence of the likelihood of coordination of the parties' competitive behaviour. A reciprocal acquisition of assets or shares, by contrast, will usually follow from an agreement between the undertakings concerned as to their investments, production or sales, and thus serves to coordinate their competitive behaviour. A concentration situation does not exist where a reciprocal transfer of assets or shares forms part of a specialization or restructuring agreement or other type of coordination. Coordination presupposes in any event that the parties remain at least potential competitors after the exchange has taken place.

E. Joint acquisition of an undertaking with a view to its division

48. Where several undertakings jointly acquire another, the principles for the assessment of a joint venture are applicable, provided that within the acquisition operation, the period of joint control goes beyond the very short term. In this case the Act may or may not be applicable, depending on the concentrative or cooperative nature of the JV. If, by contrast, the sole object of the agreement is to divide up the assets of the undertaking and this agreement is put into effect immediately after the acquisition, then, in accordance with recital 24, the Act applies.

(1) For the purpose of this notice, any reference to EFTA States shall be understood to mean those EFTA States in respect of which the EEA Agreement has entered into force. See the relevant texts of Article 2 (2) of the Protocols adjusting the EEA Agreement and the Surveillance and Court Agreement.

(2) See the Thirteenth report by the Commission of the European Communities (1983) on competition policy, point 55.

(3) Reference is made to the judgment of the Court of Justice of the European Communities in Joined Cases 142 and 156/84 BAT and Reynolds, ECR [1987], p. 4566.

ANNEX III

NOTICE OF THE EFTA SURVEILLANCE AUTHORITY CONCERNING THE ACTS REFERRED TO IN POINTS 2 AND 3 OF ANNEX XIV TO THE EEA AGREEMENT (COMMISSION REGULATIONS (EEC) No 1983/83 AND (EEC) No 1984/83) ON THE APPLICATION OF ARTICLE 53 (3) OF THE EEA AGREEMENT TO CATEGORIES OF EXCLUSIVE DISTRIBUTION AND EXCLUSIVE PURCHASING AGREEMENTS

A. The present notice is issued pursuant to the rules of the Agreement on the European Economic Area (EEA Agreement) and the Agreement between the EFTA States on the establishment of a Surveillance Authority and a Court of Justice (Surveillance and Court Agreement).

B. Annex XIV to the EEA Agreement lists notices and guidelines issued by the EC Commission before 31 July 1991. These non-binding acts contain principles and rules which the Commission follows in the field of competition. The EEA Agreement obliges the EFTA Surveillance Authority to take due account of these principles and rules.

C. The EFTA States (1) have included in Article 25 of the Surveillance and Court Agreement the obligation for the EFTA Surveillance Authority to adopt acts corresponding to those of the EC Commission mentioned above.

D. In accordance with this obligation the EFTA Surveillance Authority adopts the present notice exercising the power conferred to it in Article 5 (2) (b) of the Surveillance and Court Agreement. It intends to follow the principles and rules laid down in this notice when applying the relevant EEA competition rules to a particular case. The notice corresponds to the Commission notice concerning Commission Regulations (EEC) No 1983/83 and (EEC) No 1984/83 on the application of Article 85 (3) of the Treaty to categories of exclusive distribution and exclusive purchasing agreements referred to in point 18 of Annex XIV to the EEA Agreement and, respectively, point 3 of Annex II to the Surveillance and Court Agreement.

I. Introduction

1. A certain amount of interpretative guidance is called for concerning the acts referred to in points 2 and 3 of Annex XIV to the EEA Agreement (Regulations (EEC) No 1983/83 and (EEC) No 1984/83, hereinafter referred to as 'Regulation (EEC) No 1983/83' and 'Regulation (EEC) No 1984/83'). This will assist undertakings in bringing their agreements into line with the legal requirements and will also help ensure that the said acts are applied uniformly in the territory covered by the EEA Agreement.

2. In determining how a given provision is to be applied, one must take into account, in addition to the ordinary meaning of the words used, the intention of the provision as this emerges from the preamble. For further guidance, reference can also be made to the principles that have been evolved in the case-law of the Court of Justice of the European Communities and in the EC Commission's decisions on individual cases.

3. This notice sets out the main consideration which will determine the view of the EFTA Surveillance Authority of whether or not an exclusive distribution or purchasing agreement is covered by the block exemption. This notice is without prejudice to any interpretation that may be given by other competent authorities, and in particular by the national courts and the EFTA Court.

II. Exclusive distribution and exclusive purchasing agreements (Regulations (EEC) No 1983/83 and (EEC) No 1984/83)

A. Similarities and differences

4. The said acts are both concerned with exclusive agreements between two undertakings for the purpose of the resale of goods. Each deals with a particular type of such agreements. Regulation (EEC) No 1983/83 applies to exclusive distribution agreements, Regulation (EEC) No 1984/83 to exclusive purchasing agreements. The distinguishing feature of exclusive distribution agreements is that one party, the supplier, allots to the other, the reseller, a defined territory (the contract territory) on which the reseller has to concentrate his sales effort, and in return undertakes not to supply any other reseller in that territory. In exclusive purchasing agreements, the reseller agrees to purchase the contract goods only from the other party and not from any other supplier. The supplier is entitled to supply other resellers in the same sales area and at the same level of distribution. Unlike an exclusive distributor, the tied reseller is not protected against competition from other resellers who, like himself, receive the contract goods direct from the supplier. On the other hand, he is free of restrictions as to the area over which he may make his sales effort.

5. In keeping with their common starting point, the said acts have many provisions that are the same or similar in both acts. This is true of the basic provision in Article 1, in which the respective subject-matters of the block exemption, the exclusive supply or purchasing obligation, are defined, and of the exhaustive list of restrictions of competition which may be agreed in addition to the exclusive supply or purchasing obligation (Article 2 (1) and (2)), the non-exhaustive enumerations of other obligations which do not prejudice the block exemption (Article 2 (3)), the inapplicability of the block exemption in principle to exclusive agreements between competing manufacturers (Articles 3 (a) and (b), 4 and 5), the withdrawal of the block exemption in individual cases (Article 6 of Regulation (EEC) No 1983/83 and Article 14 of Regulation (EEC) No 1984/83), and the inclusion of concerted practices within the scope of the said acts (Article 9 of Regulation (EEC) No 1983/83 and Article 18 of Regulation (EEC) No 1984/83). In so far as their wording permits, these parallel provisions are to be interpreted in the same way.

6. Different rules are laid down in the said acts wherever they need to take account of matters which are peculiar to the exclusive distribution agreements or exclusive purchasing agreements respectively. This applies in Regulation (EEC) No 1983/83, to the provisions regarding the obligation on the exclusive distributor not actively to promote sales outside the contract territory (Article 2 (2) (c)) and the inapplicability of the block exemption to agreements which give the exclusive distributor absolute territorial protection (Article 3 (c) and (d)) and, in Regulation (EEC) No 1984/83, to the provisions limiting the scope and duration of the block exemption for exclusive purchasing agreements in general (Article 3 (c) and (d)) and for beer-supply and service-station agreements in particular (Titles II and III).

7. The scope of the two acts has been defined so as to avoid any overlap (Article 16 of Regulation (EEC) No 1984/83).

B. Basic provision (Article 1)

8. Both acts apply only to agreements entered into for the purpose of the resale of goods to which not more than two undertakings are party.

(a) 'For resale'

9. The notion of resale requires that the goods concerned be disposed of by the purchasing party to others in return for a consideration. Agreements on the supply or purchase of goods which the purchasing party transforms or processes into other goods or uses or consumes in manufacturing other goods are not agreements for resale. The same applies to the supply of components which are combined with other components into a different product. The criterion is that the goods distributed by the reseller are the same as those the other party has supplied to him for that purpose. The economic identity of the goods is not affected if the reseller merely breaks up and packages the goods in smaller quantities, or repackages them, before resale.

10. Where the reseller performs additional operations to improve the quality, durability, appearance or taste of the goods (such as rustproofing of metals, sterilization of food or the addition of colouring matter or flavourings to drugs), the position will mainly depend on how much value the operation adds to the goods. Only a slight addition in value can be taken not to change the economic identity of the goods. In determining the precise dividing line in individual cases, trade usage in particular must be considered. The EFTA Surveillance Authority applies the same principles to agreements under which the reseller is supplied with a concentrated extract for a drink which he has to dilute with water, pure alcohol or another liquid and to bottle before reselling.

(b) 'Goods'

11. Exclusive agreements for the supply of services rather than the resale of goods are not covered by the acts. The block exemption still applies, however, where the reseller provides customer or after-sales services incidentally to the resale of the goods. Nevertheless, a case where the charge for the service is higher than the price of the goods would fall outside the scope of the acts.

12. The hiring out of goods in return for payment comes closer, economically speaking, to a resale of goods than to provision of services. The EFTA Surveillance Authority therefore regards exclusive agreements under which the purchasing party hires out or leases to others the goods supplied to him as covered by the acts.

(c) 'Only two undertakings party'

13. To be covered by the block exemption, the exclusive distribution or purchasing agreement must be between only one supplier and one reseller in each case. Several undertakings forming one economic unit count as one undertaking.

14. This limitation on the number of undertakings that may be party relates solely to the individual agreement. A supplier does not lose the benefit of the block exemption if he enters into exclusive distribution or purchasing agreements covering the same goods with several resellers.

15. The supplier may delegate the performance of his contractual obligations to a connected or independent undertaking which he has entrusted with the distribution of his goods, so that the reseller has to purchase the contract goods from the latter undertaking. This principle is expressly mentioned only in Regulation (EEC) No 1984/83 (Articles 1, 6 and 10), because the question of delegation arises mainly in connection with exclusive purchasing agreements. It also applies, however, to exclusive distribution agreements pursuant to Regulation (EEC) No 1983/83.

16. The involvement of undertakings other than the contracting parties must be confined to the execution of deliveries. The parties may accept exclusive supply or purchase obligations only for themselves, and not impose them on third parties, since otherwise more than two undertakings would be party to the agreement. The obligation of the parties to ensure that the obligations they have accepted are respected by connected undertakings is, however, covered by the block exemption.

C. Other restrictions on competition that are exempted (Article 2 (1) and (2))

17. Apart from the exclusive supply obligation (Regulation (EEC) No 1983/83)) or exclusive purchase obligation (Regulation (EEC) No 1984/83), obligations defined in Article 1 which must be present if the block exemption is to apply, the only other restrictions of competition that may be agreed by the parties are those set out in Article 2 (1) and (2). If they agree on further obligations restrictive of competition, the agreement as a whole is no longer covered by the block exemption and requires individual exemption. For example, an agreement will exceed the bounds of the said acts if the parties relinquish the possibility of independently determining their prices or conditions of business or undertake to refrain from, or even prevent, cross-border trade, which the said acts expressly state must not be impeded. Among other clauses which in general are not permissible under the said acts are those which impede the reseller in his free choice of customers.

18. The obligations restrictive of competition that are exempted may be agreed only for the duration of the agreement. This also applies to restrictions accepted by the supplier or reseller on competing with the other party.

D. Obligations upon the reseller which do not prejudice the block exemption (Article 2 (3))

19. The obligations cited in this provision are examples of clauses which generally do not restrict competition. Undertakings are therefore free to include one, several or all of these obligations in their agreements. However, the obligations may not be formulated or applied in such a way as to take on the character of restrictions of competition that are not permitted. To forestall this danger, Article 2 (3) (b) of Regulation (EEC) No 1984/83 expressly allows minimum purchase obligations only for goods that are subject to an exclusive purchasing obligation.

20. As part of the obligation to take measures for promotion of sales and in particular to maintain a distribution network (Article 2 (3) (c) of Regulation (EEC) No 1983/83 and Article 2 (3) (d) of Regulation (EEC) No 1984/83), the reseller may be forbidden to supply the contract goods to unsuitable dealers. Such clauses are unobjectionable if admission to the distribution network is based on objective criteria of a qualitative nature relating to the professional qualifications of the owner of the business or his staff or the suitability of his business premises, if the criteria are the same for all potential dealers, and if the criteria are actually applied in a non-discriminatory manner. Distribution systems which do not fulfil these conditions are not covered by the block exemption.

E. Inapplicability of the block exemption to exclusive agreements between competing manufacturers (Articles 3 (a) and (b), 4 and 5)

21. The block exemption does not apply if either the parties themselves or undertakings connected with them are manufacturers, manufacture goods belonging to the same product market, and enter into exclusive distribution or purchasing agreements with one another in respect of those goods. Only identical or equivalent goods are regarded as belonging to the same product market. The goods in question must be interchangeable. Whether or not this is the case must be judged from the vantage point of the user, normally taking the characteristics, price and intended use of the goods together. In certain cases, however, goods can form a separate market on the basis of their characteristics, their price or their intended use alone. This is true especially where consumer preferences have developed. The above provisions are applicable regardless of whether or not the parties or the undertakings connected with them are based in the territory covered by the EEA Agreement and whether or not they are already actually in competition with one another in the relevant goods inside or outside the territory covered by the EEA Agreement.

22. In principle, both reciprocal and non-reciprocal exclusive agreements between competing manufacturers are not covered by the block exemption and are therefore subject to individual scrutiny of their compatibility with Article 53 of the EEA Agreement, but there is an exception for non-reciprocal agreements of the abovementioned kind where one or both of the parties are undertakings with a total annual turnover of no more than ECU 100 million (2) (Article 3 (b)). Annual turnover is used as a measure of the economic strength of the undertakings involved. Therefore, the aggregate turnover from goods and services of all types, and not only from the contract goods, is to be taken. Turnover taxes and other turnover-related levies are not included in turnover. Where a party belongs to a group of connected undertakings, the world-wide turnover of the group, excluding intra-group sales (Article 5 (3)), is to be used.

23. The total turnover limit can be exceeded during any period of two successive financial years by up to 10 % without loss of the block exemption. The block exemption is lost if, at the end of the second financial year, the total turnover over the preceding two years has been over ECU 220 million (Article 5 (2)).

F. Withdrawal of the block exemption in individual cases (Article 6 of Regulation (EEC) No 1983/83 and Article 14 of Regulation (EEC) No 1984/83)

24. The benefit of the block exemption can only be withdrawn by a decision in an individual case following proceedings under Chapter II of Protocol 4 to the Surveillance and Court Agreement. Such a decision cannot have retroactive effect. It may be coupled with an individual exemption subject to conditions or obligations or, in an extreme case, with the finding of an infringement and an order to bring it to an end.

G. (no text) (3)

25. (no text) (4)

H. Concerted practices (Article 9 of Regulation (EEC) No 1983/83 and Article 18 of Regulation (EEC) No 1984/83)

26. These provisions bring within the scope of the said acts exclusive distribution and purchasing arrangements which are operated by undertakings but are not the subject of a legally binding agreement.

III. Exclusive distribution agreements (Regulation (EEC) No 1983/83)

A. Exclusive supply obligation (Article 1)

27. The exclusive supply obligation does not prevent the supplier from providing the contract goods to other resellers who afterwards sell them in the exclusive distributor's territory. It makes no difference whether the other dealers concerned are established outside or inside the territory. The supplier is not in breach of his obligation to the exclusive distributor provided that he supplies the resellers who wish to sell the contract goods in the territory only at their request and that the goods are handed over outside the territory. It does not matter whether the reseller takes delivery of the goods himself or through an intermediary, such as a freight forwarder. However, supplies of this nature are only permissible if the reseller and not the supplier pays the transport costs of the goods into the contract territory.

28. The goods supplied to the exclusive distributor must be intended for resale in the contract territory. This basic requirement does not, however, mean that the exclusive distributor cannot sell the contract goods to customers outside his contract territory should he receive orders from them. Pursuant to Article 2 (2) (c), the supplier can prohibit him only from seeking customers in other areas, but not from supplying them.

29. It would also be incompatible with Regulation (EEC) No 1983/83 for the exclusive distributor to be restricted to supplying only certain categories of customers (e.g. specialist retailers) in his contract territory and prohibited from supplying other categories (e.g. department stores), which are supplied by other resellers appointed by the supplier for that purpose.

B. Restriction on competition by the supplier (Article 2 (1))

30. The restriction on the supplier himself supplying the contract goods to final users in the exclusive distributor's contract territory need not be absolute. Clauses permitting the supplier to supply certain customers in the territory - with or without payment of compensation to the exclusive distributor - are compatible with the block exemption provided the customers in question are not resellers. The supplier remains free to supply the contract goods outside the contract territory to final users based in the territory. In this case the position is the same as for dealers (see paragraph 27).

C. Inapplicability of the block exemption in cases of absolute territorial protection (Article 3 (c) and (d))

31. The block exemption cannot be claimed for agreements that give the exclusive distributor absolute territorial protection. If the situation described in Article 3 (c) obtains, the parties must ensure either that the contract goods can be sold in the contract territory by parallel importers or that users have a real possibility of obtaining them from undertakings outside the contract territory, if necessary outside the territory covered by the EEA Agreement, at the prices and on the terms there prevailing. The supplier can represent an alternative source of supply for the purposes of this provision if he is prepared to supply the contract goods on request to final users located in the contract territory.

32. Article 3 (d) is chiefly intended to safeguard the freedom of dealers and users to obtain the contract goods in other EFTA States or EC Member States. Action to impede imports into the territory covered by the EEA Agreement from third countries will only lead to loss of the block exemption if there are no alternative sources of supply in the territory covered by the EEA Agreement. This situation can arise especially where the exclusive distributor's contract territory covers the whole or the major part of the territory covered by the EEA Agreement.

33. The block exemption ceases to apply as from the moment that either of the parties takes measures to impede parallel imports into the contract territory. Agreements in which the supplier undertakes with the exclusive distributor to prevent his other customers from supplying into the contract territory are ineligible for the block exemption from the outset. This is true even if the parties agree only to prevent imports into the territory covered by the EEA Agreement from third countries. In this case it is immaterial whether or not there are alternative sources of supply in the territory covered by the EEA Agreement. The inapplicability of the block exemption follows from the mere fact that the agreement contains restrictions on competition which are not covered by Article 2 (1).

IV. Exclusive purchasing agreements (Regulation (EEC) No 1984/83)

A. Structure of the act

34. Title I of the act contains general provisions for exclusive purchasing agreements and Titles II and III special provisions for beer-supply and service-station agreements. The latter types of agreement are governed exclusively by the special provisions, some of which (Articles 9 and 13), however, refer to some of the general provisions; Article 17 also excludes the combination of agreements of the kind referred to in Title I with those of the kind referred to in Title II or III to which the same undertakings or undertakings connected with them are party. To prevent any avoidance of the special provisions for beer-supply and service-station agreements, it is also made clear that the provisions governing the exclusive distribution of goods do not apply to agreements entered into for the resale of drinks on premises used for the sale or consumption of beer or for the resale of petroleum products in service stations (Article 8 of Regulation (EEC) No 1983/83).

B. Exclusive purchasing obligation (Article 1)

35. The act only covers agreements whereby the reseller agrees to purchase all his requirements for the contract goods from the other party. If the purchasing obligation relates to only part of such requirements, the block exemption does not apply. Clauses which allow the reseller to obtain the contract goods from other suppliers, should these sell them more cheaply or on more favourable terms than the other party are still covered by the block exemption. The same applies to clauses releasing the reseller from his exclusive purchasing obligation should the other party be unable to supply.

36. The contract goods must be specified by brand or denomination in the agreement. Only if this is done will it be possible to determine the precise scope of the reseller's exclusive purchasing obligation (Article 1) and of the ban on dealing in competing products (Article 2 (2)).

C. Restriction on competition by the supplier (Article 2 (1))

37. This provision allows the reseller to protect himself against direct competition from the supplier in his principal sales area. The reseller's principal sales area is determined by his normal business activity. It may be more closely defined in the agreement. However, the supplier cannot be forbidden to supply dealers who obtain the contract goods outside this area and afterwards resell them to customers inside it or to appoint other resellers in the area.

D. Limits of the block exemption (Article 3 (c) and (d))

38. Article 3 (c) provides that the exclusive purchasing obligation can be agreed for one or more products, but in the latter case the products must be so related as to be thought of as belonging to the same range of goods. The relationship can be founded on technical (e.g. a machine, accessories and spare parts for it) or commercial grounds (e.g. several products used for the same purpose) or on usage in the trade (different goods that are customarily offered for sale together). In the latter case, regard must be had to the usual practice at the reseller's level of distribution on the relevant market, taking into account all relevant dealers and not only particular forms of distribution. Exclusive purchasing agreements covering goods which do not belong together can only be exempted from the competition rules by an individual decision.

39. Pursuant to Article 3 (d), exclusive purchasing agreements concluded for an indefinite period are not covered by the block exemption. Agreements which specify a fixed term but are automatically renewable unless one of the parties gives notice to terminate are to be considered to have been concluded for an indefinite period.

V. Beer-supply agreements (Title II of Regulation (EEC) No 1984/83)

A. Exclusive purchasing obligation (Article 6)

40. The beers and other drinks covered by the exclusive purchasing obligation must be specified by brand or denomination in the agreement. An exclusive purchasing obligation can only be imposed on the reseller for drinks which the supplier carries at the time the contract takes effect and provided that they are supplied in the quantities required, at sufficiently regular intervals and at prices and on conditions allowing normal sales to the consumer. Any extension of the exclusive purchasing obligation to drinks not specified in the agreement requires an additional agreement, which must likewise satisfy the requirements of Title II of Regulation (EEC) No 1984/83. A change in the brand or denomination of a drink which in other respects remains unchanged does not constitute such an extension of the exclusive purchasing obligation.

41. The exclusive purchasing obligation can be agreed in respect of one or more premises used for sale and consumption of drinks which the reseller runs at the time the contract takes effect. The name and location of the premises must be stated in the agreement. Any extension of the exclusive purchasing obligation to other such premises requires an additional agreement, which must likewise satisfy the provisions of Title II of Regulation (EEC) No 1984/83.

42. The concept of 'premises used for the sale and consumption of drinks' covers any licensed premises used for this purpose. Private clubs are also included. Exclusive purchasing agreements between the supplier and the operator of an off-licence shop are governed by the provisions of Title I of Regulation (EEC) No 1984/83.

43. Special commercial or financial advantages are those going beyond what the reseller could normally expect under an agreement. The explanations given in recital 13 are illustrations. Whether or not the supplier is affording the reseller special advantages depends on the nature, extent and duration of the obligation undertaken by the parties. In doubtful cases usage in the trade is the decisive element.

44. The reseller can enter into exclusive purchasing obligations both with a brewery in respect of beers of a certain type and with a drinks wholesaler in respect of beers of another type and/or other drinks. The two agreements can be combined into one document. Article 6 also covers cases where the drinks wholesaler performs several functions at once, signing the first agreement on the brewery's and the second on his own behalf and also undertaking delivery of all the drinks. The provisions of Title II do not apply to the contractual relations between the brewery and the drinks wholesaler.

45. Article 6 (2) makes the block exemption also applicable to cases in which the supplier affords the owner of premises financial or other help in equipping them as a public house, restaurant, etc. and in return the owner imposes on the buyer or tenant of the premises an exclusive purchasing obligation in favour of the supplier. A similar situation, economically speaking, is the transmission of an exclusive purchasing obligation from the owner of a public house to his successor. Pursuant to Article 8 (1) (e) this is also, in principle, permissible.

B. Other restrictions of competition that are exempted (Article 7)

46. The list of permitted obligations given in Article 7 is exhaustive. If any further obligations restricting competition are imposed on the reseller, the exclusive purchasing agreement as a whole is no longer covered by the block exemption.

47. The obligation referred to in paragraph 1 (a) applies only so long as the supplier is able to supply the beers or other drinks specified in the agreement and subject to the exclusive purchasing obligation in sufficient quantities to cover the demand the reseller anticipates for the products from his customers.

48. Pursuant to paragraph 1 (b), the reseller is entitled to sell beer of other types in draught form if the other party has tolerated this in the past. If this is not the case, the reseller must indicate that there is sufficient demand from his customers to warrant the sale of other draught beers. The demand must be deemed sufficient if it can be satisfied without a simultaneous drop in sales of the beers specified in the exclusive purchasing agreement. It is definitely not sufficient if sales of the additional draught beer turn out to be so slow that there is a danger of its quality deteriorating. It is for the reseller to assess the potential demand of his customers for other types of beer, after all, he bears the risk if his forecasts are wrong.

49. The provision in paragraph 1 (c) is not only intended to ensure the possibility of advertising products supplied by other undertakings to the minimum extent necessary in any given circumstances. The advertising of such products should also reflect their relative importance vis-à-vis the competing products of the supplier who is party to the exclusive purchasing agreement. Advertising for products which the public house has just begun to sell may not be excluded or unduly impeded.

50. The EFTA Surveillance Authority believes that the designation of types customary in inter-State trade and within the individual EFTA States or EC Member States may afford useful pointers to the interpretation of Article 7 (2). Nevertheless the alternative criteria stated in the provisions itself are decisive. In doubtful cases, whether or not two beers are clearly distinguishable by their composition, appearance or taste depends on custom at the place where the public house is situated. The parties may, if they wish, jointly appoint an expert to decide the matter.

C. Agreements excluded from the block exemption (Article 8)

51. The reseller's right to purchase drinks from third parties may be restricted only to the extent allowed by Articles 6 and 7. In his purchases of goods other than drinks and in his procurement of services which are not directly connected with the supply of drinks by the other party, the reseller must remain free to choose his supplier. Pursuant to Article 8 (1) (a) and (b), any action by the other party or by an undertaking connected with or appointed by him or acting at his instigation or with his agreement to prevent the reseller exercising his rights in this regard will entail the loss of the block exemption. For the purposes of these provisions it makes no difference whether the reseller's freedom is restricted by contract, informal understanding, economic pressures or other practical measures.

52. The installation of amusement machines in tenanted public houses may by agreement be made subject to the owner's permission. The owner may refuse permission on the ground that this would impair the character of the premises or he may restrict the tenant to particular types of machines. However, the practice of some owners of tenanted public houses to allow the tenant to conclude contracts for the installation of such machines only with certain undertakings which the owner recommends is, as a rule, incompatible with Regulation (EEC) No 1984/83, unless the undertakings are selected on the basis of objective criteria of a qualitative nature that are the same for all potential providers of such equipment and are applied in a non-discriminatory manner. Such criteria may refer to the reliability of the undertaking and its staff and the quality of the services it provides. The supplier may not prevent a public house tenant from purchasing amusement machines rather than renting them.

53. The limitations of the duration of the agreement in Article 8 (1) (c) and (d) does not affect the parties' right to renew their agreement in accordance with the provisions of Title II of Regulation (EEC) No 1984/83.

54. Article 8 (2) (b) must be interpreted in the light both of the aims of the competition rules of the EEA Agreement and of the general legal principle whereby contracting parties must exercise their rights in good faith.

55. Whether or not a third undertaking offers certain drinks covered by the exclusive purchasing obligations on more favourable terms than the other party for the purposes of the first indent of Article 8 (2) (b) is to be judged in the first instance on the basis of a comparison of prices. This should take into account the various factors that go to determine the prices. If a more favourable offer is available and the tenant wishes to accept it, he must inform the other party of his intentions without delay so that the other party has an opportunity of matching the terms offered by the third undertaking. If the other party refuses to do so or fails to let the tenant have his decision within a short period, the tenant is entitled to purchase the drinks from the other undertaking. The EFTA Surveillance Authority will ensure that exercise of the brewery's or drinks wholesaler's right to match the prices quoted by another supplier does not make it significantly harder for other suppliers to enter the market.

56. The tenant's right provided for in the second indent of Article 8 (2) (b) to purchase drinks of another brand or denomination from third undertakings obtains in cases where the other party does not offer them. Here the tenant is not under a duty to inform the other party of his intentions.

57. The tenant's rights arising from Article 8 (2) (b) override any obligation to purchase minimum quantities imposed upon him pursuant to Article 9 in conjunction with Article 2 (3) (b) to the extent that this is necessary to allow the tenant full exercise of those rights.

VI. Service-station agreements (Title III of Regulation (EEC) No 1984/83)

A. Exclusive purchasing obligation (Article 10)

58. The exclusive purchasing obligation can cover either motor vehicle fuels (e.g. petrol, diesel fuels, LPG, kerosene) alone or motor vehicle fuels and other fuels (e.g. heating oil, bottled gas, paraffin). All the goods concerned must be petroleum-based products.

59. The motor vehicle fuels covered by the exclusive purchasing obligations must be for use in motor-powered land or water vehicles or aircraft. The term 'service station' is to be interpreted in a correspondingly wide sense.

60. Regulation (EEC) No 1984/83 applies to petrol stations adjoining public roads and fuelling installations on private property not open to public traffic.

B. Other restrictions on competition that are exempted (Article 11)

61. Pursuant to Article 11 (b) only the use of lubricants and related petroleum-based products supplied by other undertakings can be prohibited. This provision refers to the servicing and maintenance of motor vehicles, i.e. to the reseller's activity in the field of provision of services. It does not affect the reseller's freedom to purchase the said products from other undertakings for resale in the service station. The petroleum-based products related to lubricants referred to in paragraph (b) are additives and brake fluids.

62. For the interpretation of Article 11 (c), the considerations stated in paragraph 49 apply by analogy.

C. Agreements excluded from the block exemption (Article 12)

63. These provisions are analogous to those of Article 8 (1) (a), (b), (d) and (e) and 8 (2) (a).

Reference is therefore made to paragraphs 51 and 53.

(1) For the purpose of this notice, any reference to EFTA States shall be understood to mean those EFTA States in respect of which the EEA Agreement has entered into force. See the relevant texts of Article 2 (2) of the Protocols adjusting the EEA Agreement and the Surveillance and Court Agreement.

(2) For the purpose of this notice 'ecu' means the European currency unit as defined in Council Regulation (EEC) No 3180/78. The value of the ecu is published daily in the 'C' series of the Official Journal of the European Communities.

(3) Point G has no text since it, in the corresponding EC notices, deals with Article 7 of Regulation (EEC) No 1983/83 and Article 15 of Regulation (EEC) No 1984/83, which shall not apply, as stated in Annex XIV to the EEA Agreement.

(4) See footnote 2.

ANNEX IV

NOTICE OF THE EFTA SURVEILLANCE AUTHORITY CONCERNING THE ACT REFERRED TO IN POINT 4 OF ANNEX XIV TO THE EEA AGREEMENT (REGULATION (EEC) No 123/85) ON THE APPLICATION OF ARTICLE 53 (3) OF THE EEA AGREEMENT TO CERTAIN CATEGORIES OF MOTOR VEHICLE DISTRIBUTION AND SERVICING AGREEMENTS

A. The present notice is issued pursuant to the rules of the Agreement on the European Economic Area (EEA Agreement) and the Agreement between the EFTA States on the establishment of a Surveillance Authority and a Court of Justice (Surveillance and Court Agreement).

B. Annex XIV to the EEA Agreement lists notices and guidelines issued by the EC Commission before 31 July 1991. These non-binding acts contain principles and rules which the Commission follows in the field of competition. The EEA Agreement obliges the EFTA Surveillance Authority to take due account of these principles and rules.

C. The EFTA States (1) have included in Article 25 of the Surveillance and Court Agreement the obligation for the EFTA Surveillance Authority to adopt acts corresponding to those of the EC Commission mentioned above.

D. In accordance with this obligation the EFTA Surveillance Authority adopts the present notice exercising the power conferred to it in Article 5 (2) (b) of the Surveillance and Court Agreement. It intends to follow the principles and rules laid down in this notice when applying the relevant EEA competition rules to a particular case. The notice corresponds to the Commission notice concerning Regulation (EEC) No 123/85 on the application of Article 85 (3) of the Treaty to certain categories of motor vehicle distribution and servicing agreements referred to in point 19 of Annex XIV to the EEA Agreement and, respectively, point 4 of Annex II to the Surveillance and Court Agreement.

E. In the act referred to in point 4 of Annex XIV to the EEA Agreement (Regulation (EEC) No 123/85 on the block exemption of motor vehicle distribution agreements, hereinafter referred to as 'the Act', it is recognized that exclusive and selective distribution in this industry is in principle compatible with Article 53 (3) of the EEA Agreement. This assessment is subject to a number of conditions. This notice sets out some of those conditions and lays down certain administrative principles for the procedures which the EFTA Surveillance Authority might initiate pursuant to Article 10, points 3 and 4 of the Act.

I

1. Freedom of movement of European consumers and limited availability of vehicle models

The EFTA Surveillance Authority starts from the position that the EEA Agreement affords advantages to European consumers, and that this is especially so where there is effective competition. Accordingly, the Act presupposes that in the motor vehicles sector effective competition exists between manufacturers and between their distribution networks. The European consumer must derive a fair share of the benefits which flow from the distribution and servicing agreements. Admittedly, the consumer may benefit from the fact that servicing is carried out by specialists (Article 3, points 3 and 5) and that such service can be obtained thoughout the network from dealers and repairers who are obliged to observe minimum requirements (Article 4 (1)).

However, the European consumer's basic rights include above all the right to buy a motor vehicle and to have it maintained or repaired wherever prices and quality are most advantageous to him.

(a) This right to buy relates to new vehicles from a manufacturer each of whose dealers offers them in a form and specification mainly required by final consumers in the dealer's contract territory (contract goods).

(b) In the interests of competition at the various stages of distribution in the territory covered by the EEA Agreement and in those of European consumers, a certain limited availability of other vehicles within the distribution system is also considered indispensable. Any dealer within the distribution system must be able to order from a supplier within the distribution system any volume-produced passenger car which a final consumer has ordered from him and intends to register in another EFTA State or Member State, in the form and specification marketed by the manufacturer or with his consent in that State (passenger cars corresponding to those in the contract programme, Article 5 (1), point 2 (d), and Article 13, point 10 of the Act.

This provision does not oblige the manufacturer to produce vehicles which he would not otherwise offer within the territory covered by the EEA Agreement. Nor does it oblige the manufacturer to sell particular vehicle models in any particular part of the territory covered by the EEA Agreement where he does not, nor does not yet, wish to market them. He is only obliged to supply to a dealer within his distribution system a new passenger car required by that dealer to fulfil a contract with a final consumer and intended for another EFTA State or EC Member State where that dealer's contract programme includes cars of a corresponding kind.

2. Abusive hindrance

The European consumer must not be subject to abusive hindrance either in the exporting country, where he wishes to buy a vehicle, or in the country of destination, where he seeks to register it. The restrictions inherent in an exempted exclusive and selective distribution system do not represent abuses. However, further agreements or concerted practices between undertakings in the distribution system that limit the European consumer's final freedom to purchase do jeopardize the exemption given by the Act, as do unilateral measures on the part of a manufacturer or his importers or dealers which have a widespread effect against consumers' interest (Article 10, point 2). Examples are: dealers refuse to perform guarantee work on vehicles which they have not sold and which have been imported from other EFTA States or EC Member States; manufacturers or their importers withhold their cooperation in the registration of vehicles which European consumers have imported from other EFTA States or EC Member States; abnormally long delivery periods.

3. Intermediaries

The European consumer must be able to make use of the services of individuals or undertakings to assist in purchasing a new vehicle in another EFTA State or EC Member State (Article 3, points 10 and 11). However, except as regards contracts between dealers within the distribution system for the sale of contract goods, undertakings within the distribution system can be obliged not to supply new motor vehicles within the contract programme or corresponding vehicles to or through a third party who represents himself as an authorized reseller of new vehicles within the contract programme or corresponding vehicles or carries on an activity equivalent to that of a reseller. It is for the intermediary or the consumer to give the dealer within the distribution system documentary evidence that the intermediary, in buying and accepting delivery of a vehicle, is acting on behalf and for account of the consumer.

II.

The EFTA Surveillance Authority may withdraw the benefit of the application of the Act where it finds that in an individual case an agreement which falls within the scope of the Act nevertheless has effects which are incompatible with the provisions of