Proposal for a Council Regulation (EC) amending Regulation No 19/65/EEC on the application of Article 85(3) of the Treaty to certain categories of agreements and concerted practices
Date: 1998-09-30
Institutions: European Commission
Subjects: competition policy, control of restrictive practices, exemption from restrictive-practice authorisation, single market, vertical agreement

26.11.98

EN

Official  Journal  of  the  European  Communities

C  365/27

II

(Preparatory  Acts)

COMMISSION

Proposal  for  a  Council  Regulation  (EC)  amending  Regulation  No  19/65/EEC  on  the
application  of  Article  85(3)  of  the  Treaty  to  certain  categories  of  agreements  and  concerted
practices

(98/C  365/06)

(Text  with  EEA  relevance)

COM(1998)  546  final  -  98/0287(CNS)

(Submitted  by  the  Commission  on  20  October  1998)

THE  COUNCIL  OF  THE  EUROPEAN  UNION,

Having  regard  to  the  Treaty  establishing  the  European
Community,  and  in  particular  Article  87  thereof,

common  market,  or  whereby  one  party  agrees  with
the  other  to  purchase  only  from  that  other  certain
goods  for  resale,  or  whereby  the  two  undertakings
enter 
in
respect  of  exclusive  supply  and  purchase  for  resale;

into  such  obligations  with  each  other 

Having  regard  to  the  proposal  from  the  Commission,

Having 
Parliament,

regard 

to 

the  opinion  of 

the  European

Having  regard  to  the  opinion  of  the  Economic  and
Social  Committee,

(1)(cid:217)Whereas  by  Regulation  No  19/65/EEC(cid:216)(˛),  as  last
amended  by  the  Act  of  Accession  of  Austria,
Finland  and  Sweden,  the  Council  empowered  the
Commission,  without  prejudice  to  the  application  of
Council  Regulation  No  17(cid:216)(ˇ):  First  Regulation
implementing  Articles  85  and  86  of  the  Treaty,  as
last  amended  by  the  Act  of  Accession  of  Austria,
Finland  and  Sweden,  and 
in  accordance  with
Article  85(3)  of  the  Treaty,  to  adopt  regulations
declaring  that  Article  85(1)  does  not  apply  to
certain  categories  of  agreements,  and  in  particular
to  categories  of  agreements  to  which  only  two
undertakings  are  party  and  whereby  one  party
agrees  with  the  other  to  supply  only  to  that  other
certain  goods  for  resale  within  a  defined  area  of  the

(˛)(cid:217)OJ  36,  6.3.1965,  p.  533/65.
(ˇ)(cid:217)OJ  13,  21.2.1962,  p.  204/62.

(2)(cid:217)Whereas,  pursuant  to  Regulation  No  19/65/EEC,
the  Commission  has  in  particular  adopted  Regu(cid:220)
lations  (EEC)  No  1983/83(cid:216)(—)  and  (EEC)  No
1984/83(cid:216)((cid:209))  regarding  the  application  of  Article
85(3)  of  the  Treaty  to  categories  of  exclusive
distribution  agreements  and 
to  categories  of
exclusive  purchasing  agreements,  respectively,  both
of  which  were  last  amended  by  Regulation  (EC)
No  1582/97(cid:216)((cid:210)),  and  also  Regulation  (EEC)  No
4087/88(cid:216)((cid:211)),  as  amended  by  the  Act  of  Accession  of
the
Austria,  Finland  and  Sweden, 
to
application  of  Article  85(3)  of 
categories  of  franchise  agreements;

regarding 
the  Treaty 

(3)(cid:217)Whereas  on  22  January  1997  the  Commission
published  a  Green  Paper  on  vertical  restraints  in
EC  competition  policy(cid:216)((cid:212)),  which  was  intended  to
generate  a  wide(cid:220)ranging  public  debate  on 
the
application  of  Article  85(1)  and  (3)  of  the  Treaty  to
agreements  or  concerted  practices  entered  into  by
undertakings  each  operating  at  a  different  stage  of
the  economic  process  in  respect  of  the  supply  or
purchase,  or  both,  of  goods 
resale  or
in  respect  of  the  marketing  of
processing,  or 
including  exclusive
services  (vertical  agreements), 

for 

(—)(cid:217)OJ  L  173,  30.6.1983,  p.  1.
((cid:209))(cid:217)OJ  L  173,  30.6.1983,  p.  5.
((cid:210))(cid:217)OJ  L  214,  6.8.1997,  p.  27.
((cid:211))(cid:217)OJ  L  359,  28.12.1988,  p.  46.
((cid:212))(cid:217)COM(96)  721  final.

C  365/28

EN

Official  Journal  of  the  European  Communities

26.11.98

exclusive 

agreements, 

distribution 
purchasing
agreements,  franchising  agreements  and  selective
distribution  agreements;  whereas 
this  class  of
agreement  does  not 
include  vertical  agreements
between  actual  or  potential  competitors,  unless  the
agreement  is  a  non(cid:220)reciprocal  one  and  none  of  the
parties  have  an  annual  turnover  exceeding  ECU
100  million,  or  is  between  an  association  of  retailers
and  its  members,  or  between  such  an  association
and 
the
association  are  small  or  medium(cid:220)sized  enterprises  as
defined  in  the  Annex  to  Commission  Recommen(cid:220)
dation  96/280/EC(cid:216)(˛).

the  members  of 

suppliers,  and 

its 

the  European  Parliament, 

(4)(cid:217)Whereas  the  response  to  the  Green  Paper  from  the
Member  States, 
the
Economic  and  Social  Committee,  the  Committee  of
the  Regions  and  interested  parties  in  business  and
the  legal  professions  has  been  generally  in  favour  of
reform  of  Community  competition  policy  on
vertical  agreements;  whereas  the  block  exemption
regulations  already  referred  to  should  accordingly
be  revised;

(5)(cid:217)Whereas  any  such  reform  must  meet  the  two
requirements  of  ensuring  effective  protection  of
competition  and  providing  adequate  legal  certainty
for  firms;  whereas  the  pursuit  of  those  objectives
should  take  account  of  the  need  as  far  as  possible
to  simplify  administrative  supervision  and  the  legis(cid:220)
lative  framework;

themselves 

to  defining 

(6)(cid:217)Whereas  the  exempting  regulations  already  referred
to  do  not  confine 
the
categories  of  agreement  to  which  they  apply  and  to
specifying  the  restrictions  or  clauses  which  are  not
to  be  contained  in  the  agreements,  but  also  list  the
restrictive  clauses  exempted;  whereas  this  legislative
approach 
is  generally
perceived  to  be  over(cid:220)rigid  in  an  economic  context
where  distribution  structures  and  techniques  are
rapidly  changing;

to  contractual 

relations 

(7)(cid:217)Whereas 

to 

the 

regulations 

refer  only 

those
categories  of  bilateral  exclusive  agreements  entered
into  with  a  view  to  resale  which  are  concerned  with
the  exclusive  distribution  or  purchase  of  goods,  or
in
both,  or  which 
relation  to  the  assignment  or  use  of 
industrial
property  rights;  whereas  they  exclude  from  their
scope  agreements  between  more  than  two  under(cid:220)
the
takings  operating  at  different 
economic  process,  selective  distribution  agreements,

include  restrictions 

stages  of 

imposed 

(˛)(cid:217)OJ  L  107,  30.4.1996,  p.  4.

substantial  number  of 

agreements  for 
the  marketing  of  services,  and
agreements  concerning  the  supply  or  purchase,  or
both,  of  goods  intended  for  processing;  whereas
a 
vertical  agreements
consequently  cannot  qualify  for  exemption  under
Article  85(3)  of  the  Treaty  until  they  have  been
examined  individually  by  the  Commission,  which
may  reduce  the 
legal  certainty  available  to  the
undertakings  concerned  and  make  administrative
supervision  unnecessarily  burdensome;

(8)(cid:217)Whereas  the  debate  which  followed  the  publication
of  the  Green  Paper  also  drew  attention  to  the  fact
that  in  determining  the  manner  in  which  Article
85(1)  and  (3)  are  to  apply  proper  account  needed
to  be  taken  of  the  economic  effects  of  vertical
agreements;  whereas  any  economic  criteria  limiting
the  scope  of  the  block  exemption  by  reason  of  the
anticompetitive  effects  which  an  agreement  may
produce  must  necessarily  take  into  consideration
the  share  of  the  relevant  market  accounted  for  by
the  goods  covered  by  the  agreement;

legislation  with 

legislation  which 

(9)(cid:217)Whereas,  therefore,  it  would  be  advisable  to  replace
the  existing 
is
simpler,  more  flexible  and  better  targeted,  and
which  covers  all  kinds  of  vertical  agreement;
whereas  if  the  scope  of  the  exempting  regulation
covering  such  agreements  is  to  be  broadened  in  this
way,  there  should  be  criteria  such  as  market(cid:220)share
thresholds  to  specify  the  circumstances  where,  in
view  of  the  economic  effects  of  the  agreement,  that
regulation  ceases  to  be  applicable;

(10)(cid:217)Whereas  the  povers  conferred  on  the  Commission
by  Regulation  No  19/65/EEC  do  not  allow  it  to
conduct  such  a  reform  of  the  rules  currently  in
force;  whereas  the  scope  of  Article  1(1)(a)  and
(2)(b)  thereof  should  consequently  be  broadened  to
cover  all  kinds  of  vertical  agreement  caught  by
Article  85(1)  of  the  Treaty  which  are  entered  into
by  two  or  more  undertakings,  each  operating  at  a
different  stage  of  the  economic  process,  and  which
concern  the  supply  or  purchase,  or  both,  of  goods
for  resale  or  processing,  or 
the  marketing  of
including  exclusive  distribution  agree(cid:220)
services, 
ments,  exclusive  purchasing  agreements,  franchising
agreements  and  selective  distribution  agreements,  or
any  combination  of  these;

(11)(cid:217)Whereas  the  exempting  regulations  already  referred
to  empower  the  Commission,  in  accordance  with
to
Article  7  of  Regulation  No  19/65/EEC, 
withdraw  the  benefit  of  application  of  those  regu(cid:220)
lations  wherever,  in  a  particular  case,  an  agreement
has  certain  effects  which  are  incompatible  with  the

26.11.98

EN

Official  Journal  of  the  European  Communities

C  365/29

conditions  laid  down  in  Article  85(3);  whereas  in
order  to  ensure  effective  supervision  of  markets  and
greater  decentralisation  in  the  application  of  the
Community  competition  rules,  it  is  appropriate  to
provide  that  where  the  effects  of  such  an  agreement
are  felt  in  a  Member  State  which  possesses  all  the
characteristics  of  a  distinct  market  the  competent
authority  in  that  Member  State  may  withdraw  the
benefit  of  the  block  exemption  in  its  territory  and
adopt  a  decision  aimed  at  eliminating  those  effects;
whereas  Article  7  thereof  should  accordingly  be
supplemented  so  as  to  specify  the  circumstances  in
which  the  competent  authorities  in  the  Member
States  may  withdraw  the  benefit  of  application  of
the  block(cid:220)exemption  regulation;

(12)(cid:217)Whereas,  in  order  to  guarantee  an  effective  control
in  a  given  market  from
of  the  effects  arising 
similar
the  existence  of  parallel  networks  of 
agreements,  a  block(cid:220)exemption 
regulation  may
establish  the  conditions  under  which  those  networks
of  agreements  are  excluded  from  its  application;
whereas  such  conditions  may  be  based  on  structural
criteria,  such  as  the  market  coverage  rate  of  these
agreements;  whereas  such  conditions  will  not  be
the  companies
applicable  automatically  because 
to  precise
concerned  may  not  have  access 
sector(cid:220)wide  data;  whereas  the  Commission  will
accordingly  be  empowered  to  establish  that  in  a
given  market  the  relevant  agreements  fulfil  the
conditions;  whereas  in  such  a  case,  the  Commission
will  have  to  fix  a  transitional  period  of  not  less  than
six  months,  at  the  expiry  of  which  the  block
exemption  will  cease  to  be  applicable  to  the  relevant
agreements,

HAS  ADOPTED  THIS  REGULATION:

-(cid:217)the  agreement 

is  between  actual  or
is  a
potential  competitors,  unless 
non(cid:220)reciprocal  agreement  none  of 
the
parties  to  which  have  an  annual  turnover
exceeding  ECU  100  million,  or

it 

-(cid:217)the  agreement  is  between  an  association  of
retailers  and  its  members,  or  between  such
an  association  and  its  suppliers,  unless  the
members  of  the  association  are  small  or
medium(cid:220)sized  enterprises  as  defined 
in
Commission  Recommendation  96/280/
EC(cid:216)(*);

in 

relation 

imposed 

(b) categories  of  agreements  to  which  only  two
include
undertakings  are  party  and  which 
restrictions 
the
to 
acquisition  or  use  of  industrial  property  rights
- 
in  particular  of  patents,  utility  models,
designs  or  trade  marks  -  or  to  the  rights
arising  out  of  contracts  for  assignment  of,  or
the  right  to  use,  a  method  of  manufacture  or
knowledge  relating  to  the  use  or  to  the
application  of  industrial  processes.

(*)(cid:217)OJ  L  107,  30.4.1996,  p.  4.’

(b) In  paragraph  2(b),  the  words  "the  clauses  which
in  the  agreements,  or’  are

must  be  contained 
deleted.

(c) paragraph  3  is  replaced  by  the  following:

"3.(cid:218)(cid:217)Paragraphs  1  and  2  shall  apply  by  analogy
to  categories  of  concerted  practices.’

Article  1

(d) the  following  paragraph  4  is  added:

Regulation  No  19/65/EEC 
follows:

is  hereby  amended  as

1.(cid:217)Article  1  is  amended  as  follows:

(a)(cid:217)paragraph  1  is  replaced  by  the  following:

"4.(cid:218)(cid:217)For  purposes  of  paragraph  1,  an  agreement
between  competitors  means  an  agreement  which  is
entered  into  by  manufacturers  or  distributors  of
identical  products  or  products  considered  by
consumers  to  be  similar  by  reason  of  their  charac(cid:220)
teristics,  price  and  use,  and  which  relates  to  such
products.’

"1.(cid:218)(cid:217)Without  prejudice 
the  application  of
Regulation  No  17  and  in  accordance  with  Article
85(3)  of  the  Treaty  the  Commission  may  by  regu(cid:220)
lation  declare  that  Article  85(1)  shall  not  apply  to:

to 

(a)(cid:217)categories  of  agreements  between 

two  or
more  undertakings,  each  operating  at  a
different  stage  of  the  economic  process,  in
respect  of  the  supply  or  purchase,  or  both,  of
goods  for  resale  or  processing,  or  in  respect
of  the  marketing  of  services,  except  where:

2.(cid:217)in  Article  7  the  following  two  paragraphs  are  added:

"A  regulation  pursuant  to  Article  1  may  stipulate  the
conditions  which  exclude  from  its  application  certain
parallel  networks  of  similar  agreements  or  concerted
practices  operating  on  a  particular  market;  when  these
the  Commission  may
circumstances  are 
establish  this  by  means  of  decision  and  fix  a  period  at
the  expiry  of  which  the  regulation  would  no  longer  be
applicable  in  respect  of  the  relevant  agreements  or

fulfilled 

C  365/30

EN

Official  Journal  of  the  European  Communities

26.11.98

concerted  practices;  such  period  must  not  be  shorter
than  six  months.

persons  claiming  a  legitimate  interest  withdraw  the
benefit  of  application  of  that  regulation.’

Where  in  any  particular  case  agreements  or  concerted
practices  to  which  a  regulation  adopted  pursuant  to
Article  1  applies  have  certain  effects  which  are  incom(cid:220)
patible  with  the  conditions  laid  down  in  Article  85(3)
of  the  Treaty  in  the  territory  of  a  Member  State,  or  in
a  part  thereof,  which  has  all  the  characteristics  of  a
distinct  market, 
that
Member  State  may  on  its  own  initiative  or  at  the
request  of  the  Commission  or  of  natural  or  legal

the  competent  authority 

in 

Article  2

This  Regulation  shall  enter  into  force  on  the  third  day
following  that  of  its  publication  in  the  Official  Journal  of
the  European  Communities.

This  Regulation  shall  be  binding 
directly  applicable  in  all  Member  States.

in 

its  entirety  and

Proposal  for  a  Council  Regulation  (EC)  amending  Regulation  No  17:  First  Regulation
implementing  Articles  85  and  86  of  the  Treaty

(98/C  365/07)

(Text  with  EEA  relevance)

COM(1998)  546  final  -  98/0288(CNS)

(Submitted  by  the  Commission  on  20  October  1998)

THE  COUNCIL  OF  THE  EUROPEAN  UNION,

Having  regard  to  the  Treaty  establishing  the  European
Community,  and  in  particular  Article  87  thereof,

Having  regard  to  the  proposal  from  the  Commission,

Having 
Parliament,

regard 

to 

the  opinion  of 

the  European

Having  regard  to  the  opinion  of  the  Economic  and
Social  Comittee,

thereto,  and 

the  only  parties  thereto  are  undertakings  from  one
Member  State  and  the  agreements,  decisions  or
practices  do  not  relate  either  to  imports  or  exports
between  Member  States,  or  where  not  more  than
the
two  undertakings  are  party 
agreements  only  restrict  the  freedom  of  one  party  to
the  contract  in  determining  the  prices  or  conditions
of  business  upon  which  the  goods  he  has  obtained
from  the  other  party  to  the  contract  may  be  resold;
whereas  this  exemption  is  not  therefore  such  as  to
cover  most  agreements  or  concerted  practices
between  undertakings  each  at  a  different  stage  of  the
economic  process 
the  supply  or
purchase,  or  both,  of  goods  for  resale  or  processing,
or  in  respect  of  the  marketing  of  services  ("vertical
agreements’),  that  are  likely  to  fall  within  the  scope
of  Article  85;

in  respect  of 

(1)(cid:217)Whereas  Article  4(2)  of  Regulation  No  17(cid:216)(˛),  as  last
amended  by  the  Act  of  Accession  of  Austria,  Finland
and  Sweden,  exempts  a  number  of  agreements,
the
concerted 
decisions 
requirement  of  notification  under  Article  4(1);

practices 

from 

and 

(2)(cid:217)Whereas 

to
agreements,  decisions  and  concerted  practices  where

this  exemption  relates 

in  particular 

(3)(cid:217)Whereas  on  22  January  1997 

the  Commission
published  a  Green  Paper  on  vertical  restraints  in  EC
competition  policy(cid:216)(ˇ)  which  was 
to
intended 
the
generate  a  wide(cid:220)ranging  public  debate  on 
application  of  Article  85(1)  and  (3)  of  the  Treaty  to
from
vertical  agreements;  whereas 
Member  States, 
the
Economic  and  Social  Committee,  the  Committee  of
the  Regions  and  interested  parties  in  business  and

the  European  Parliament, 

the  response 

(˛)(cid:217)OJ  13,  21.2.1962,  p.  204/62.

(ˇ)(cid:217)COM(96)  721  final.