Council Regulation (EC) No 1215/1999 of 10 June 1999 amending Regulation No 19/65/EEC on the application of Article 81(3) of the Treaty to certain categories of agreements and concerted practices
Date: 1999-06-10
Institutions: Council of the European Union
Subjects: dominant position, inter-company agreement, restriction on competition, restrictive trade practice, trade agreement

15. 6. 1999

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Official Journal of the European Communities

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I

(Acts whose publication is obligatory)

COUNCIL REGULATION (EC) No 1215/1999

of 10 June 1999

amending Regulation No 19/65/EEC on the application of Article 81(3) of the
Treaty to certain categories of agreements and concerted practices (*)

THE COUNCIL OF THE EUROPEAN UNION,

into such obligations with each other in respect of
exclusive supply and purchase for resale;

Having regard to the Treaty establishing the European
Community, and in particular Article 83 thereof,

Having regard to the proposal from the Commission (1),

Having regard to the opinion of the European Parlia-
ment (2),

Having regard to the opinion of the Economic and Social
Committee (3),

(1) Whereas by Regulation No 19/65/EEC (4),

the
Council empowered the Commission, without pre-
judice to the application of Council Regulation No
17: first Regulation implementing Articles 81 and
82 of the Treaty (5), and in accordance with Article
81(3) of the Treaty, to adopt regulations declaring
that Article 81(1) does not apply to certain cat-
egories of agreements, and in particular to cat-
egories of agreements to which only two undertak-
ings 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 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 into

(*) Editorial Note: The title of Regulation No 19/65/EEC has
been adjusted to take account of
the
Articles of the Treaty establishing the European Community
in accordance with Article 12 of the Treaty of Amsterdam; the
original reference was to Article 85(3) of the Treaty.

the renumbering of

(1) OJ C 365, 26.11.1998, p. 27.
(2) Opinion delivered on 15 April 1999 (not yet published in the

Official Journal).
(3) OJ C 116, 28.4.1999.
(4) OJ 36, 6.3.1965, p. 533/65. Regulation as last amended by the

1994 Act of Accession.

(5) OJ 13, 21.2.1962, p. 204/62. Regulation as last amended by

the 1994 Act of Accession.

(2) Whereas, pursuant to Regulation No 19/65/EEC,
the Commission has in particular adopted Regula-
tion (EEC) No 1983/83 of 22 June 1983 on the
application of Article 81(3) of the Treaty to cat-
egories of exclusive distribution agreements (6),
Regulation (EEC) No 1984/83 of 22 June 1983 on
the application of Article 81(3) of the Treaty to
categories of exclusive purchasing agreements (7)
and Regulation (EEC) No 4087/88 of 30 November
1988 on the application of Article 81(3) of the
franchise agreements (8)
Treaty to categories of
(exemption regulations);

(3) Whereas on 22 January 1997 the Commission
published a Green Paper on Vertical Restraints in
EC Competition Policy, which generated a wide-
ranging public debate on the application of Article
81(1) and (3) of the Treaty to vertical agreements or
concerted practices;

the European Parliament,

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

(6) OJ L 173, 30.6.1983, p. 1. Regulation as last amended by
Regulation (EC) No 1582/97 (OJ L 214, 6.8.1997, p. 27).
(7) OJ L 173, 30.6.1983, p. 5. Regulation as last amended by

Regulation (EC) No 1582/97.

(8) OJ L 359, 28.12.1988, p. 46. Regulation as amended by the

1994 Act of Accession.

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(5) 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 legisla-
tive framework; whereas at the same level of market
power vertical restraints are generally considered
less harmful
to competition than horizontal
restraints;

(6) Whereas the exemption regulations referred to do
not confine themselves to defining the categories
of agreements to which they apply and to speci-
fying the restrictions or clauses which are not to be
contained in the agreements, but they also list the
exempted clauses; whereas this legislative approach
to contractual relations is generally perceived to be
over rigid in an economic context where distribu-
tion
rapidly
changing;

techniques

structures

and

are

(7) Whereas the said exemption regulations cover 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 both, or which include
restrictions imposed in relation to the assignment
or use of industrial property rights; whereas they
exclude from their scope, inter alia, vertical agree-
ments between more thn two undertakings, selec-
tive
agreements
concerning services, and agreements concerning
the supply or purchase, or both, of goods or
services intended for processing or incorporation;
whereas a substantial number of vertical agree-
ments consequently cannot qualify for exemption
under Article 81(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 adminis-
trative supervision unnecessarily burdensome;

agreements,

distribution

relevant market accounted for by the undertaking
concerned;

(9) Whereas,

therefore,

the Commission should be
empowered to replace the existing legislation with
legislation which is simpler, more flexible and
better targeted, and which may cover all types of
vertical agreements; whereas if the scope of the
exemption regulation covering such agreements is
there should be
to be broadened in this way,
criteria such as market-share thresholds to specify
the circumstances where, in view of the possible
economic effects of the agreements, the regulation
ceases to be applicable; whereas the setting of such
market share thresholds should take account of the
market power of
the undertaking concerned;
whereas certain severe anticompetitive vertical
restraints like minium and fixed resale prices and
territorial protection should be
certain types of
excluded from the application of the regulation
irrespective of the market share of the undertaking
concerned;

(10) Whereas the powers conferred on the Commission
by Regulation No 19/65/EEC do not allow it to
conduct a reform of the rules currently in force
which would cover all types of vertical agreements;
whereas the scope of Article 1(1)(a) and (2)(b)
thereof should consequently be broadened to cover
all agreements caught by Article 81(1) of the Treaty
which are entered into by two or more undertak-
ings, each operating, for the purposes of the agree-
ment, at a different
the production or
level of
distribution chain and which relate to the condi-
tions under which the parties may purchase, sell or
resell certain goods or services (vertical agreements),
including
agreements,
exclusive purchasing agreements, franchising agree-
ments and selective distribution agreements, or any
combination of these, and certain non-reciprocal
vertical
between
competing undertakings, as well as vertical agree-
ments between an association of
and
medium-sized retailers and its members or between
such an association and its suppliers;

distribution

agreements

exclusive

entered

small

into

(8) 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
81(1) and (3) are to apply proper account needs to
be taken of the economic effects of vertical agree-
ments; whereas any economic criteria limiting the
scope of a block exemption by reason of the anti-
competitive effects which an agreement may
produce should take into account the share of the

the Commission,

(11) Whereas the exemption regulations referred to
empower
in accordance with
Article 7 of Regulation No 19/65/EEC, to withdraw
the benefit of application of
those regulations
wherever, in a particular case, an agreement or a
network of similar agreements has certain effects

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which are incompatible with the conditions laid
down in Article 81(3); whereas in order to ensure
effective supervision of markets and greater decen-
tralisation in the application of the Community
competition rules, it is appropriate to provide that
where the effects of such an agreement are felt in
the territory of a Member State, or in a part thereof,
which has all
the characteristics of a distinct
market the competent authority in that Member
the block
State may withdraw the benefit of
exemption in its territory and adopt a decision
aime at eliminating those effects; whereas the said
Article 7 should accordingly be supplemented so as
in which the
circumstances
to specify
competent authorities in the Member States can
withdraw the benefit of application of the block-
exemption regulation;

the

the Commission will

(12) Whereas, in order to guarantee an effective control
of the effects arising in a given market from the
existence of parallel networks of similar agree-
ments, a block-exemption regulation may establish
the conditions under which those networks of
agreements may be excluded from its application
by means of regulation; whereas such conditions
may be based on criteria such as the market
coverage rate of
these networks of agreements;
accordingly be
whereas
empowered to establish by means of regulation that
in a given market the relevant agreements fulfil the
said conditions; whereas
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 on that market; whereas this
regulation establishing the non-application of the
block-exemption regulation for the relevant agree-
ments on a particular market has as effect
the
application of Article 81 of the Treaty by individual
examination; whereas the Commission will consult
the Advisory Committee before the adoption of
such a regulation and, on request of a Member
State, also before the publication of the draft regu-
lation,

in such a case,

HAS ADOPTED THIS REGULATION:

Article 1

‘1. Without prejudice to the application of
Regulation No 17 and in accordance with Article
81(3) of the Treaty the Commission may by regula-
tion declare that Article 81(1) shall not apply to:

(a) categories of agreements which are entered into
by two or more undertakings, each operating,
for the purposes of the agreement, at a different
level of the production or distribution chain,
and which relate to the conditions under which
the parties may purchase, sell or resell certain
goods or services,

industrial property rights,

(b) categories of agreements to which only two
undertakings are party and which include
restrictions imposed in relation to the acquisi-
tion or use of
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 indutrial
processes';

(b) in paragraph 2(b), the words ‘the clauses which
must be contained in the agreements, or' shall be
deleted;

(c) paragraph 3 shall be replace by the following:

Paragraphs 1 and 2 shall apply by analogy to

‘3.
categories of concerted practices'.

2. The following Article shall be inserted:

‘Article 1a

A regulation pursuant to Article 1 may stipulate the
conditions which may lead to the exclusion from its
application of certain parallel networks of similar
agreements or concerted practices operating on partic-
ular market; when these circumstances are fulfilled the
Commission may establish this by means of regulation
and fix a period at the expiry of which the Regulation
pursuant to Article 1 would no longer be applicable in
respect of the relevant agreements or concerted prac-
tices on that market; such period must not be shorter
than six months'.

Regulation No 19/65/EEC is hereby amended as follows:

3. Article 6(1) shall be replaced by the following:

1. Article 1 shall be amended as follows:

(a) paragraph 1 shall be replaced by the following:

The Commission shall consult

‘1.
the Advisory
Committee on Restrictive Practices and Monopolies:

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(a) with regard to a regulation pursuant to Article 1
before publishing a draft regulation and before
adopting a regulation;

(b) with regard to a regulation pursuant to Article 1a
before publishing a draft regulation if requested by
a Member State, and before adopting a regulation'.

4. In Article 7 the existing paragraph shall become para-
graph 1 and the following paragraph shall be added:

which are incompatible with the conditions laid down
in Article 81(3) of the Treaty in the territory of a
Member State, or in part thereof, which has all the
characteristics of a distinct market,
the competent
authority in that Member State may on its own initia-
tive or at the request of the Commission or of natural
or legal persons claiming a legitimate interest withdraw
the benefit of application of that regulation'.

Article 2

‘2. When in any particular case agreements or
concerted practices to which a regulation adopted
to Article 1 applies have certain effects
pursuant

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

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

Done at Luxembourg, 10 June 1999.

For the Council

The President

K.-H. FUNKE