2002/190/EC: Commission Decision of 21 December 2000 relating to a proceeding under Article 81 of the EC Treaty Case COMP.F.1/35.918 — JCB) (Notifications IV-28.694, IV-28.695, IV-28.696, IV-28.697, IV-28.700, IV-28.702) (Notified under document number C(2000) 3887)
Date: 2000-12-21
Institutions: European Commission
Subjects: concessionaire, construction equipment, refusal to sell, restriction on competition, spare part, trade agreement

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II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 21 December 2000

relating to a proceeding under Article 81 of the EC Treaty

Case COMP.F.1/35.918 (cid:151) JCB)

(Notifications IV-28.694, IV-28.695, IV-28.696, IV-28.697, IV-28.700, IV-28.702)

(Notified under document number C(2000) 3887)

(Only the English text is authentic)

(2002/190/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Whereas:

Having regard to the Treaty establishing the European
Community,

I. FACTS

Having regard to Council Regulation No 17 of 6 February
1962, First Regulation implementing Articles 81 and 82 of the
Treaty (1), as last amended by Council Regulation (EC) No
1216/1999 (2), and in particular Articles 3, 15(2) and 16(1)
thereof,

Having regard to the application for negative clearance and the
notification
JC Bamford
Excavators Ltd, pursuant to Articles 2 and 4 of Regulation No
17, of 30 June 1973,

exemption

submitted

for

by

Having regard to the complaint lodged on 15 February 1996
by Central Parts SA,

Having given the undertakings concerned the opportunity of
being heard on the matters to which the Commission has
taken objection, in accordance with Article 19(1) of Regulation
No 17 read in conjunction with Commission Regulations No
99/63/EEC and (EC) No 2842/98 on the hearings provided for
in Article 19(1) and (2) of Council Regulation No 17 (3),

Having consulted the advisory Committee on Restrictive
Practices and Dominant Positions,

(1) OJ 13, 21.2.1962, p. 204/62.
(2) OJ L 148, 15.6.1999, p. 5.
(3) OJ 127, 20.8.1963, p. 2268/63 and OJ L 354, 30.12.1998, p. 18.

(1)

(2)

A. INTRODUCTION: GENERAL

the

case

concerns

agreements

This
and practices
governing the distribution in the Community of
construction and earthmoving equipment and spare
parts manufactured and sold by the JCB Group ((cid:145)JCB(cid:146)
hereinafter, unless a more specific name for a subsidiary
JCB’s
is used).
behaviour,
the
agreements notified to the Commission by JCB since
1973. However,
to the
complainant’s allegations nor to the agreements notified.
It also draws on evidence gathered through inspections,
requests for information and JCB’s factual and legal
arguments throughout the procedure.

Following
complaint
the case includes an examination of

the case is limited neither

regarding

a

1. THE COMPLAINT AND THE PROCEDURE

On 15 February 1996, Central Parts SA, a company
incorporated under French law, lodged a complaint with
the Commission. Central Parts was formed in 1984 for
the purposes of importing and selling construction and
earthmoving machinery.
are near
OrlØans, and it has branches in France at Besan(cid:231)on,
Bordeaux and N(cid:238)mes. Its turnover in 1995 amounted to
some FRF 25 million (about ECU 4 million). Its activities
focus on equipment manufactured by
JCB. The
complaint alleged that, from 1987, JCB had taken active
steps to prevent Central Parts from obtaining supplies of

Its headquarters

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(3)

(4)

(5)

JCB equipment from sources in the United Kingdom,
where prices were appreciably lower than in France (4).

JCB, of

In order to check and supplement the information at its
disposal, the Commission undertook an inspection at
the premises of
its subsidiary company in
France, JCB SA, and of two of its distributors in the
United Kingdom, Gunn JCB Ltd in Altrincham and
Watling JCB Ltd in Leicester, under Article 14(3) of
inspection began on 5
Regulation No 17. That
November 1996.

that

the Commission initiated the
On 24 March 1998,
procedure and sent a statement of objections to JCB. In
its written (5) and oral submissions at the hearing held
on 16 October 1998,
JCB pointed out, among other
things,
the Commission had not recognised the
earlier notification of its agreements. The Commission
took into account
JCB’s comments and sent a new
statement of objections on 30 July 1999, on which JCB
presented written (6) and oral submissions at a hearing
held on 16 January 2000.

2. THE PARTIES

The JCB Group comprises 28 companies, excluding
dormant companies, 26 of which are direct or indirect
subsidiaries of Transmissions and Engineering Services
Netherlands BV, the other two being owned directly by
the Bamford family. Transmissions and
members of
Engineering Services Netherlands BV owns JCB Service,
which, with the Bamford family, owns and controls
directly (100 %) or indirectly (50 %, with the Bamford

(4) JCB has brought proceedings against Central Parts on grounds of
unfair competition before the French courts. In a first judgment,
the tribunal of Commerce in Paris described JCB’s behaviour in
France as clear attempts to create barriers to the free movement of
products in the EC and awarded damages to Central Parts (Tribunal
de Commerce de Paris, 1’Łre chambre A,
judgment of 11
December 1995 (Main file I, pp. 109-111)). This judgment has
however been reversed in appeal by the Paris Court of Appeal on 8
April 1998. The judgment on appeal did not deal with these
found Central Parts guilty of unfair
barriers any further, but
competition by deliberately misleading customers as to its status of
unofficial
JCB distributor, reversed the previous order awarding
damages to Central Parts and awarded damages to JCB. According
to JCB, the acts committed by Central Parts justify in themselves a
refusal of supplies and indeed, JCB SA declared to the Court of
Appeal
that JCB’s actions were aimed at curbing Central Parts’
unlawful acts (e.g. in respect of JCB’s trademark) and certainly not
at preventing parallel imports made by Central Parts (Reply dated 6
July 1998 from JCB to the Statement of Objections, Appendix 14,
Judgment dated 8 April 1998, p. 13, which reads: (cid:145)ConsidØrant que
la SociØtØ JCB SA (cid:133) soutient que les actions qu’elle a dirigØes
contre celle-ci (Central Parts) sont essentiellement destinØes (cid:224) faire
cesser les actes fautifs et dØloyaux qu’elle a commis et certainement
pas (cid:224) l’empŒcher d’effectuer des
is not
appropriate in this decision to re-examine either the factual and
legal allegations submitted or omitted by JCB ad Central Parts in
that litigation or the judgments of the French courts.

importations parallŁles(cid:146)).

It

(5) Reply to the Statement of Objections dated 6 July 1998 ((cid:145)RSO I(cid:146)

hereafter).

(6) Reply to the Statement of Objections dated 13 December 1999

((cid:145)RSO II(cid:146) hereafter).

family also holding 50 %) the companies of the JCB
Group. The principal activities of the JCB Group are the
design, manufacture and distribution of excavating,
earthmoving, materials
agricultural
machines and the provision of
related spare parts.
Group sales in 1997 totalled more than GBP 770
million (ECU (1 150 million).

handling

and

B. THE RELEVANT MARKETS AND JCB’S POSITION

1. PRODUCT MARKETS

(a) Construction equipment

covers

a wide

Construction equipment
range of
machines that are used in the preliminary phases of
engineering. These
building construction and civil
level and displace over a
machines excavate, remove,
short distance earth, stones and other materials. They
prepare the site where works are carried out.

has

indicated

repeatedly

Commission

The
that
construction and earthmoving equipment include light
scale
equipment products, primarily used for
construction
heavy
or maintenance works,
construction products, primarily used for large scale
construction
including
building
infrastructure works (7).

small
and

works,

and

of

light
JCB manufactures 57 different models
loaders, excavators,
equipment machines of five sorts:
telescopic handlers,
rough terrain forklifts and skid
steers. Machines may be classified according to their
traction, the degrees (180(cid:176) or 360(cid:176)) through which they
can turn and, above all, the functions performed. Sales
for each product group manufactured by JCB are not
closely correlated to other groups in the EC. JCB’s main
Its market
commercial success is the backhoe loader.
share in the United Kingdom is [in excess of 40 %](*).
sales are also mainly driven by one
Competitors’
particular group. Market
leaders differ accordingly:
wheeled loaders, tracked excavators for Caterpillar, skid
(Bobcat), mini
steer
excavators for Volvo (8).

Ingersoll Rand

loaders

for

(6)

(7)

(8)

(9)

Documents copied at JCB’s premises and other market
show statistics broken down by groups of
surveys
If competition took place equally over the
machines.

(7) Commission decision of 18 December 1998 in Case IV/M.1235 (cid:151)
New Holland/Orenstein & Koppel (points 8 and 13); Commission
decision of 28 October 1999 in Case M-1571 (cid:151) New
Holland/Case, OJ C 130, 11.5.2000, p. 11 (points 55-56).

(8) RSO I , pp. 17-19.
(*) Passages between brackets

[]
confidential information deleted.

indicate business

secrets or

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whole of the construction and earthmoving machinery
market, it would be useless to track down market shares
at a lower level of aggregation. This is an indication,
among others, of
the existence of relevant product
markets in which companies compete effectively.

parts. For instance, sales objectives on spare parts are
JCB
based, among other
machines operating in JCB distributor’s
territories,
weighted by the age of such machines (the (cid:145)six-year
park(cid:146)) (12).

things, on the stock of

(10)

The Commission has also indicated that each product
group, and in particular, the backhoe loader, forms a
distinct product market, owing to a number of factors.
In particular, no two products can perform exactly the
same functions; for instance, backhoe loaders and rough
terrain forklifts may be used for lifting whilst digging
might be performed either with a backhoe loader or a
small 360(cid:176) excavator, but not with a forklift. Similarly, a
telescopic handler may in no useful way perform the
functions carried out with an excavator. Products within
different groups are used by different customers. There
are also substantial price variations from one product
group to another. A small (5 to 10 %) but permanent
relative price increase in either product group would
not
lead customers to switch to other products or
combinations of products such as to make the price rise
unprofitable (9).

JCB contests the Commission’s view and argues that the
relevant product market is that for earthmoving and
be
construction
inappropriate to further break down into individual
product categories (10).

equipment,

would

which

it

(11)

The Commission has no reason to depart in this case
from its previous assessment that each product group
forms a distinct product market.
the
to be explored
precise market definition needs not
further. As further shown below, under JCB’s proposed
definition the likely effects of
the agreements and
practices within JCB distribution network on trade
between Member States and competition would also be
appreciable.

In any event,

(b) Spare parts

(12)

Construction machines are primary products in respect
of spare parts. Sales of spare parts are dependent on
to frequency of
previous sales of machines, subject
use (11). Market shares in past sales of machines are a
proxy of current market shares for all related spare

(9) Commission decision in New Holland (cid:151) Case (points 62-65 and
72-73). The final market delineation did not follow the parties’
initial submission postulating a broader product market (paragraph
63). In its decision in New Holland (cid:151) Orenstein Koppel (point 13),
the Commission also mentioned strong indications that different
categories of machines pertain to different product markets.

(10) Letter from JCB to the Directorate-General for Competition dated

4 February 2000.

(11) See the principles of assessment

the
Commission notice on the definition of the relevant market for
the purposes of Community competition law (OJ C 372,
9.12.1997).

in paragraph 56 of

amounts

spare part
that

(13) However, prices for spare parts are a low proportion of
the prices for the machine and remain low in relation to
residual value over a long period; a
the machins’
particular
very minor
to a
proportion of
ration. Although producers are
assumed to minimise abnormally the high demand for
spare parts, machine use under demanding conditions
makes it absolutely necessary to replace some parts, in
situations where delays are costly. Accordingly, pricing
policies on spare parts
constrained by
competition than for new machines. Though related to,
their
therefore, pertain to the
product markets of each machine group.

spare parts do not

less

are

(14)

Spare parts fall into four broad categories, set out below
in decreasing order, according to the degree of control
held by the manufacturer of machines:

(a) parts manufactured by manufacturers themselves (cid:145)in
like fabricated elements, booms, dippers,

house(cid:146),
axles, transmissions;

(b) parts

supplied by third parties on an original
equipment manufacturer (OEM) basis in accordance
with manufacturers’ designs, specifically for their
equipment, like oil coolers;

(c) parts

and

consumable

specifically
engineered or devised for specific manufacturers, but
branded with a machine manufacturer’s trademark,
like engine parts, brakes, radiators;

items

not

(d) parts

and

items

consumable

specifically
engineered or devised for specific manufacturers and
a machine manufacturer’s
not
trademark,
filters, hydraulic oil and
batteries.

branded with

like tyres,

not

(15)

The proportion of spare parts manufactures (cid:145)in house(cid:146)
and then assembled in each machine depends on the
degree of vertical integration. JCB has an inventory of
about 90 000 different parts. The value of JCB’s parts

(12) Internal

file, pp.
JCB Document 1995 Dealer Review (Insp.
2053-2106). The correlation between the stock of six-year old
machines and the net sales of parts in each distributor’s territory
within the whole official distributor network in France is in a
range between [0 and 1] from 1993 to 1995 ((cid:145)Analyse rØsultat
par CA/MC NET annØe 1994(cid:146) dated 11.1.1995 (Insp.
file, p.
1402); (cid:145)ActivitØ piŁces de rechange 1993(cid:146) dated 20.1.1994 (Insp.
file, p. 1964);
(cid:145)ActivitØ piŁces de rechange 1995/94 (cid:224) fin juin(cid:146)
dated 6.7.1995 (Insp. file, p. 1740); own calculations.

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is split

into [between 0 % and 50 %]

business
for
(cid:145)in-house(cid:146) parts, [between 0 % and 50 %] for third-party
engineered parts in accordance with JCB’s designs (both
referred to below as (cid:145)JCB specific parts(cid:146)) and [between
50 % and
and
consumables (13).

non-specific

100 %]

parts

for

the

spare

distribution

parts. Non-specific

from competition with equivalent

differ between specific
parts

and
Competition patterns
and
non-specific
consumables are substitutable with those of other
makes. Within
network,
official
exclusive purchase obligations may shelter JCB branded
parts
third-party
puts machine
branded
manufacturers and official distributors in a favourable
competitive position regarding purchases of non-specific
spare parts. However, direct supply from third-party
manufacturers acts as a competitive constraint in the
market.

loyalty

Brand

parts.

These constraints do not play a significant role for JCB
specific spare parts. For commercial, technical and safety
reasons, any competing production of specific spare
parts fitted in JCB machines is not conceivable in
extent. There being no
practice
JCB holds
substitutes,
considerable market power on such JCB specific spare
parts, as regards the stock of
JCB machines under
operation.

significant
can

to a
it

inferred

that

be

(16)

(17)

(18)

The relevant product markets as regards spare parts are,
therefore, both the market for JCB specific spare parts
fitted in JCB machines, on the one hand, and the market
for non-specific spare parts and consumables assembled
in or used in the operation of construction and
earthmoving machines, on the other.

2. GEOGRAPHIC MARKET

(a) Construction equipment

(19) As shown below, JCB’s market share for each machine
group is particularly high in the UK, where it has
remained stable over twenty years, compared to other
Member States. Were demand for machines
to be
EC-based to a predominant extent, the appointment of a
limited number of exclusive distributors covering several
Member States or centralised distribution from a single
location in the EC would ensure timely distribution.
Neither JCB nor its competitors organise distribution on
such a supranational basis. The local scope of demand
explains why JCB and its competitors set up dense
distribution networks throughout the EC, structured on
a national basis, through a subsidiary or an exclusive

(13) RSO I, p. 15.

importer, without which market penetration would be
minor.

(20) On the other hand, in its New Holland (cid:151) Case decision,
for
the Commission concluded that
construction and earthmoving equipment are EEA-wide,
owing
costs, harmonised legal
requirements and demand patterns, and assessed the
concentration accordingly.

to low transport

the markets

(21)

In any event, with regard to the objections related to
artificial market partitioning,
the Commission has to
take into account
JCB’s position in those national
markets where the restrictive agreements or practices
are effected.

(b) Spare parts

(22)

The market for spare parts is driven by demand for
construction and civil engineering services, which is
scattered, predominantly stems from small entities and
follows national or regional patterns. The supply of
spare parts relies essentially on local presence. Parts
must be available rapidly to prevent costly delays in
on-site works. The magnitude of
in
proportion to the value of the parts and the need for
installation services
further confine demand within
national or regional boundaries.

search costs

(23) Were

to be

demand

EC-based

for parts

to a
predominant extent, centralised distribution from a
single
timely
location in the EC would ensure
distribution. In order to cope with the local scope of
set up dense
demand,
distribution networks in the EC, structured on a national
basis, through a subsidiary or an exclusive importer,
without which market penetration would be minor.

JCB and its

competitors

(24)

In any event, with regard to the objections related to
artificial market partitioning,
the Commission has to
take into account
JCB’s position in those national
markets where the restrictive agreements or practices
are effected.

(25) Moreover, whatever the geographic delineation for the
90 000 parts on JCB’s list, EC for some parts (14) and
national for others, the question can ultimately be left
open with regard to JCB’s market position.

3. JCB’S POSITION

(26)

In 1995 JCB ranked fifth among manufacturers
worldwide, with a share of 7,9 % of total sales (23,1 %

(14) The Commission indicated in its decision of 23 February 1998 in
Case IV/M.1094 Caterpillar (cid:151) Perkins Engines
(OJ C 94,
28.3.1998, p. 23, points 22-23) that the upstream market for
diesel engines supplied for construction equipment on an OEM
basis cannot be enlarged beyond the EEA.

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for backhoe loaders). Major competitors are Caterpillar
(22,9 %), Komatsu/Fai (20,8 %), Ingersoll Rand (11,2 %),
Case (9,6 %) and Hitachi (7,1 %).

especially in the United Kingdom and Ireland. Its market
penetration was and remains far lower in other product
markets dominated by its competitors (18).

(27)

In 1995/96, JCB had a share of some 13 % to 14 % in
volume of all construction and earthmoving machines
sold in the EC, ranging between 2,4 % in Germany to
36,8 % in the United Kingdom and Ireland. This share
has been roughly constant from 1993 to 1996 (15). In
1995, individual shares for other Member States were:
13,1 % in France, 15,2 % in Italy, 19,8 % in Spain,
22,8 % in Portugal, 6,5 % for Benelux, 12,8 % in
Austria. In terms of value, JCB estimates its own share
at 8,9 % in the EC and 23,7 % in the United
Kingdom. (16).

(28)

JCB’s market shares for specific groups of machines
within the EC and individual Member States were as
follows (1995) (17):

(30)

(31)

(cid:151) backhoe loaders: [(cid:133)] (range [(cid:133)] Sweden to [(cid:133)] UK

and Ireland),

(cid:151) tracked excavators 360(cid:176): [(cid:133)] (range [(cid:133)] Sweden to

[(cid:133)] UK and Ireland),

(cid:151) wheeled excavators 360(cid:176): [(cid:133)] (range [(cid:133)] Italy to

[(cid:133)] UK and Ireland),

Sales of spare parts and attachments amounted in 1995
to a noticeable proportion [between 10 % and 20 %] of
JCB’s turnover (19), split between specific parts up to
[between 0 % and 50 %] and non-specific parts up to
the average
[between 0 % and 50 %].
turnover
and services within the
distributor network was [between 10 % and 20 %] of
the total in 1996 (20).

in spare parts

In France,

its

for

six-year park of machines

JCB estimates its market share in non-specific parts and
in
consumables
operation to be less than [between 20 % and 40 %].
Consequently, its EC market share for such parts related
to backhoe loaders would then be [between 10 % and
20 %], assuming that other makes of non-specific parts
can be safely fitted in JCB backhoe loaders. Where only
JCB specific parts can be safely used in JCB machines
under operation, JCB’s position and market power are
much higher.

(32) As regards construction and earthmoving machines,
whatever the product and geographic market definition
among those outlined above, JCB’s position is such that
the effects of
the agreements or practices described
below on intra-Community trade and competition are
appreciable (21).

(cid:151) skid steer loaders: [(cid:133)] (range [(cid:133)] Benelux to [(cid:133)]

Finland),

(cid:151) wheeled loading shovels: [(cid:133)] (range [(cid:133)] Denmark,

Finland to [(cid:133)] UK and Ireland),

(33)

(cid:151) mini tracked excavators: [(cid:133)] (range [(cid:133)] Sweden to

[(cid:133)] Portugal).

the operation of

Regarding the secondary market for spare parts and,
particularly, JCB specific spare parts, which are essential
the
for
geographic market defined (either EEA or national),
taking account of JCB’s position in the primary markets
for machines, the importance of the part business for

JCB machines, whatever

(29)

Such market shares in the EC have similar patterns as in
1974 to 1975. JCB’s market share for backhoe loaders
was in a bracket between [(cid:133)] in the United Kingdom
and Ireland and [(cid:133)] in Italy. Market shares for other
products were between [(cid:133)] EC-wide,
the United
Kingdom and Ireland being JCB’s main market in those
products as well. JCB has maintained its leadership in
the backhoe loader product market over twenty years,

(15) JCB Group Business review 1995/96, Private and confidential

document signed Sir A. Bamford (Insp. file, p. 1086).

(16) RSO I, pp. 25-26 and Appendix 10, p. 78.
(17) CECE Flash retails June 1996, Internal JCB memo dated 23.7.1996
(Insp. file, pp. 958-994). The CECE reports, which are distributed
to most senior JCB management to monitor market penetration,
record sales in volume and not in value.

(18) Attachment to letter from ETD Leadbeater to DG IV dated 11

March 1976 (File IV/28.694, p. 66).

(19) JCB Group Business review 1995/96, Private and confidential
document signed Sir A. Bamford (Insp. file, p. 1086). According
to JCB, this share is less than 10 %, excluding attachments (1997)
(RSO, paragraph 3.13, p. 15).

(20) Attachment to internal note from Mrs Rausch, JCB France to ETD
Leadbeater dated 17 September 1996: French dealer profile (Insp.
file, p. 1435).

(21) See also Commission decision in New Holland (cid:151) Case (points
72-75 and 90-92). The proposed concentration between New
Holland and Case would have raised serious doubts as to its
compatibility with the common market in relation to the EEA
market for backhoe loaders, on which the merged entity and JCB
would have had incentives and market power to carry out parallel
anti-competitive behaviours, their positions not being likely to be
challenged by actual or potential competitors. In order to allay
these concerns, the parties undertook to divest the Fermec brand
of backhoe loaders and its distribution assets to a third party.
Subject to these undertakings, the operation was deemed not to
create or to reinforce a dominant position in that distinct market.

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the

JCB and its distributors and their position in respect of
agreements or
demand,
on
concerted
intra-Community
also
appreciable.

likely effects of
practices
trade

the
described

competition are

below

and

C. THE NOTIFICATION OF JCB’S DISTRIBUTION AGREEMENTS

(34) On 30 June 1973, JCB notified to the Commission its
distribution agreements for the Member States of the EC
at the time (22), except for France. JCB also notified its
distribution agreements applicable in other countries
which have since become Member States of the EC (23)
or the EEA (24), as well as in other continents.
In
accordance with Commission Regulation (EEC) No
1133/68, the agreements were enclosed with form A/B,
which described the activities being notified.

(38)

(35) On 18 December 1975, JCB furnished modified versions
of the agreements to replace some of those notified in
1973. These new versions
concerned the United
Kingdom, on the one hand, and other Member States of
the EC at that time, except France, on the other. On 18
JCB provided a copy of its distribution
March 1976,
agreement with its subsidiary in France (25).
In 1980
and 1995,
its
distribution agreements, which concerned only the
United Kingdom.

JCB furnished revised versions of

1. THE CONTENTS OF THE AGREEMENTS NOTIFIED BY JCB

ON 30 JUNE 1973

(a) Distribution agreements in the United Kingdom

(36) As notified, distribution of JCB products in the United
Kingdom was governed by
the
Distributor Agreement with seven distributors each for a
given territory of the United Kingdom (26) and a Main
Dealer Agreement for one territory within the United
Kingdom (27). Main dealers operated in part of
the
territory allocated to a distributor.

two agreements,

(39)

(37)

The territory was defined in both the Distributor and
Main Dealer Agreements as (cid:145)the Distributor’s (Main

(22) Export Sales and Service Agreement DK (IV 28.694); Distributor
Agreement Export IRL (IV 28.695); Distributor Agreement UK (IV
28.696); Main Dealer Agreement UK (IV 28.697); Distributor
Agreement JCB International Inc. DE-BENELUX-IT (IV. 28.702).
(23) Sweden (IV 28.695); Finland, Spain, Portugal (IV 28.694); Austria,

Greece (IV 28.700).

(24) Iceland, Norway (IV 28.694).
(25) IV 28.694, pp. 68-72.
(26) IV 28.696, pp. 12-17.
(27) IV 28.697, pp. 12-18.

dealer’s) area of prime responsibility for the sale of JCB
(clause 1
products and the service of
(cid:145)Definitions(cid:146)).

JCB Machines(cid:146)

read:

agrees

In connection with (cid:145)WHOLESALE AND RETAIL SALES(cid:146)
(clause 4),
(cid:145)The
the Distributor Agreement
to sell B products (28)
distributor hereby
wholesale only to, for resale by, a main dealer in the
region or an approved sub-dealer in the territory and to
loading shovels
sell A products
derivatives) and parts wholesale only to, for resale by,
an approved sub-dealer in the territory and to sell retail
within the United Kingdom(cid:146). For the same clause 4 the
Main Dealer Agreement read:
(cid:145)The main dealer hereby
agrees to sell JCB products wholesale only to, for resale
by, an approved sub-dealer in the territory and to sell
retail within the United Kingdom(cid:146).

(excavator

loaders,

In connection with (cid:145)SALES OUTSIDE THE UNITED
KINGDOM(cid:146)
(clause 5), both the Main Dealer and
Distributor Agreements for the United Kingdom notified
on 30 June 1973 read:
(cid:145)The main dealer (distributor)
will not sell JCB products directly or indirectly outside
the United Kingdom without the prior written consent
of JCB unless, in the case of a JCB machine, 12 months
have elapsed since the sale by a distributor or main
dealer of such JCB machine to a purchaser in the United
Kingdom and the hour meter on such machine shows a
reading in excess of 1 000 hours. The main dealer
to avoid
(distributor) will
selling JCB products
in the United
Kingdom for resale outside the United Kingdom. Where
JCB’s permission to sell any JCB products outside the
United Kingdom is given to the main dealer (distributor)
it will be given subject to such conditions as JCB may

reasonable steps

to a purchaser

take all

(28) Excavators, four-wheel drive loaders, crawler loaders.

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Official Journal of the European Communities

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consider appropriate having regard to the best interests
of retail customers in the country concerned(cid:146).

In the two forms A/B filled in for the United Kingdom,
JCB was requested to provide information as to the
contents of the agreement or concerted practice and,
more specifically, under section II(3)(f), as to (cid:145)sanctions
which may be taken against participating undertakings
(penalty clause, expulsion, withholding of supplies, etc.)(cid:146).
In both forms, the response given was (cid:145)No(cid:146) (29). This
response was not provided negligently or mechanically.
In form A/B accompanying the agreement notified for
Denmark also on 30 June 1973, a penalty of GBP 250
or 3 times the prices of spare parts purchased from
other sources than JCB was reported.

(b) Distribution agreement notified on 30 June 1973

for other Member States

thereby

(cid:151) exclusive purchase of JCB products only from JCB
from other
UK,
authorised
the
of
agreement for Denmark and 7 of the Distributor
Agreement Export for Ireland).

excluding purchases

distributors

(clauses

3(vi)

(43)

In the distribution agreements for five out of the initial
six founding Member States of the EC, there was no
restriction on sales to resellers within the EC. For other
new Member States in 1973, such sales were prohibited
or restricted by means of a high service fee. JCB UK was
designated as exclusive supplier,
thereby preventing
cross-network supplies.

2. COMMISSION REACTION TO THE AGREEMENTS

NOTIFIED ON 30 JUNE 1973

(40)

(41)

(i)
Ireland
Export) (30),

JCB notified four distinct distribution agreements for,
and
respectively,
(Distributor
(ii) Belgium, Netherlands,
Agreement
(iii)
Luxembourg,
Denmark, Finland, Spain, Portugal (32) (Export Sales and
Service agreement) and (iv) Greece, Austria and other
countries (33).

Italy and Germany (Contract) (31),

Sweden

(44)

(42)

The following provisions were included in the notified
agreements:

(cid:151) Article 4 of the agreement for Ireland and Sweden
provided for the imposition of a service fee on
transactions outside
In the
version initially notified, JCB itself was setting the
amount of the fee, capped at 15 % of
the retail
price;

allotted territories.

(cid:151) Article 3(ii) of

the Export Sales

and Service
subsequent
for Denmark (and other
agreement
Member States of the EC) provided for an express
prohibition on new machines being sold outside
allotted territories. In the event of such sales; Article
3(iii) provided for a service fee of 15 % of the retail
price to be payable to the distributor in whose
territory the machine was operated. Article 3(iv)
provided for resale prices to be set in agreement
with JCB;

(29) IV 28.694, p. 5.
(30) IV 28.695, pp. 18-21.
(31) IV 28.702, p. 14-22.
(32) IV 28.694, p. 18-21.
(33) IV 28.700, p. 12-18.

27

the

letter

dated

1975,

October

agreements

view that

By
the
Directorate-General for Competition informed JCB of its
preliminary
included
restriction which appeared to contravene Article 85(1)
of the EC Treaty (now Article 81(1)). Such restrictions,
to be
which are described below, did not appear
indispensable to the attainment of the objectives set out
in Article 85(3) (now article 81(3)), either individually
therefore
or by their
effect.
requested to amend or delete
in
question (34).

JCB was
the provisions

cumulative

(45) More specifically, the letter reads:

(cid:145)Such provisions are
first those which prevent or impede your dealers from
freely selling JCB products to customers and dealers
outside
specified areas and from purchasing such
products from outside these areas. I refer specifically to
provisions.
the
distribution
following
agreements for
the UK (28.296, 28.697), Clause 5
expressly prohibits dealers from exporting JCB products
from the United Kingdom. An export prohibition of this
nature falls under Article 85(1) and cannot be exempted
under Article 85(3). The clause should therefore be
deleted and any present application of
it suspended.
Clauses 4, 8(iv) of both distributor agreements for the
UK (28.296, 28.697) ((cid:133)). Clauses 2(ii), (iii), 3(vi) of the

both

In

(34) Letter from Mr D. Thompson, Director DG IV, to JCB Sales Ltd

dated 27 October 1975 (IV 28.694, pp. 24-28).

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Export Sales and Service Agreement (28.694). Clauses
the Distribution Agreement Export
4(ii)(b), 7(v) of
28.695 ((cid:133))(cid:146).

outside their territories were allowed, provided sales and
service were satisfactorily promoted (36).

(46)

(47)

(48)

The provisions objected to concerned the following
restrictions on direct or
sales or
purchases:

indirect

export

(cid:151) obligations to (cid:145)take reasonable steps to avoid selling
JCB products to a purchaser in the United Kingdom
for resale outside the United Kingdom(cid:146), to (cid:145)sell retail
JCB new
in the United Kingdom(cid:146) and not to sell
indirectly
machines and spare parts
(cid:145)directly or
the prior
outside the United Kingdom without
written consent of
the
United Kingdom agreements), as well as prohibitions
of new machines being sold outside
allotted
territories;

(clauses 4 and 5 of

JCB(cid:146)

(cid:151) service support fees with a fixed amount determined

ex ante by JCB;

(cid:151) resale prices set in agreement with JCB;

(cid:151) exclusive purchase of JCB products only from JCB
UK, i.e. excluding other authorised distributors.

The letter dated 27 October 1975 also informed and
provided JCB with a copy of the decision adopted on 13
December 1974 as regards BMW’s distribution system
in Germany (35). The letter stated that
that decision
provided guidance
restrictions of
competition in motor vehicle distribution agreements
may be accepted under article 85(3).

to how far

as

The BMW distribution agreements prevented official
distributors from selling contract goods to unauthorised
distributors, except spare parts for repairers, having
branches or depots or selling to resellers outside their
territory and,
soliciting
customers outside such territory if the undertaking to
promote
service within their
territory was not fulfilled. In other words, active sales

in particular, advertising or

and after-sales

sales

3. SUBSEQUENT MODIFICATIONS OF

THE NOTIFIED

AGREEMENTS

(49) A meeting between staff from the Directorate-General
for Competition and JCB took place on 18 December
1975. JCB brought revised versions of the agreements
for the United Kingdom and other Member States of the
EC at that time, except France (37). JCB declares that the
amendments were made in the light of
the BMW
decision enclosed in the Commission warning letter (38).

(a) Distributor agreements in the United Kingdom
furnished to the Commission between 1975 and
1994

(50)

(51)

the definition of

In the modified agreements furnished on 18 December
the territory in both the
1975,
Distributor and Main Dealer Agreements
(clause 1
(cid:145)Definitions(cid:146)) was
left unchanged compared to the
version notified on 30 June 1973.

Both agreements had been modified in similar terms.
the Main
Regarding WHOLESALE SALES (clause 4),
Dealer Agreement read: (cid:145)The main dealer hereby agrees
not to sell JCB products wholesale for resale except to
an approved sub-dealer(cid:146). The Distributor Agreement
JCB
read (cid:145)The distributor hereby agrees not
to sell
products wholesale for resale except
to an approved
sub-dealer or in the case of B products to a main
dealer(cid:146). That wording was present in the version notified
on 30 June 1973 (clause 4).

(52)

The previous clause (cid:145)SALES OUTSIDE THE UNITED
(cid:145)SERVICE
KINGDOM(cid:146), became

in both agreements

agreement

to replace

and main dealer

(36) BMW decision, paragraph 3(ii) and (iii).
(37) The internal summary of the meeting between DG IV and JCB on
18 December 1975 reads: (cid:145)JCB brought to the meeting new forms
of distributor
(i.e. Distributor
Agreement (cid:151) Export, Distributor and Main Dealer Agreements (cid:151)
UK)
those which had been notified. The new
agreements contained no express prohibitions on exports, nor did
they protect dealers’
and (cid:147)approved
sub-dealers(cid:148) were no longer of any economic importance in the
UK. The JCB Distributor Agreement (cid:151) Export would be used for
EEC countries other than France. The new agreements and the
information given at
the meeting substantially answered the
questions in our letter of 27 October 1975(cid:146) (IV 28.694, p. 33).

territories. Distributors

(35) OJ L 29, 3.2.1975, p. 1.

(38) RSO II, p. 6, paragraphs 20 and 51.

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Official Journal of the European Communities

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for

sales

service

dealers

and efficient

in whose territory or

SUPPORT FEE (cid:151) SALES OUTSIDE THE REGION OR
(clause 5). As stated in the clause, JCB’s
TERRITORY(cid:146)
concern regarding sales outside the territory was that
JCB distributors would not be in a position to provide
prompt
JCB
after
machines. To ensure that the purchaser received a high
the JCB machine was
standard of service wherever
period, main
during
and
the warranty
(cid:145)to pay to the distributor or
distributors undertook:
main dealer
region the JCB
machine then is, a service support fee to compensate
such distributor or main dealer
for assuming full
responsibility for
service during the
carrying out
warranty period. The amount of such service support
fee shall be agreed between the distributor and the
distributor or main dealer in whose territory or region
the JCB machine has been sold or used or in default of
agreement between the parties shall be the sum which
JCB shall reasonably determine having regard to all the
circumstances of the case, the cost of the service carried
out and a reasonable profit element(cid:146).

(53)

To meet Commission concerns, JCB lifted in December
1975 any restriction on direct (retail or wholesale sales
abroad restricted by the previous clause 4) or indirect
(sales in the UK to a reseller intending to export from
the United Kingdom, restricted by the previous clause 5)
exports on the part of
its official distributors in the
United Kingdom, which was the Member State where
JCB had the highest market shares in the EC.

(54)

Except for the rewritten clause 4, the service support fee
(clause 5) and the obligation not to establish premises
for the sale and service of
JCB products outside the
territory without the written consent of JCB (clause 9(i)),
no other restrictions on out-of-territory sales, whether
solicited or unsolicited, direct or indirect, were included
in the notified agreements as regards sales to other
Member
the BMW
particular,
agreements subject to the Commission decision of 13
December 1974, the possibility of selling outside the
allotted territory from premises based in the territory
was unrestricted. Such sales were not made subject to

States.

unlike

In

any particular undertaking regarding promotion and
services being fulfilled within the territory.

Consequently,
the Commission wrote to JCB on 13
January 1976. The letter stated that the new forms of
distribution agreements notified on 18 December 1975
resolved many of the problems raised in its letter dated
27 October 1975. However, the letter stated that some
amendments to the agreements or justifications were
necessary before the Commission could consider an
exemption under Article 85(3). For obvious reasons, no
reference is made therein to clauses deleted in the newly
notified agreements.
Issues to be resolved before the
Commission could consider an exemption which it
identified in the letter related to sales of products, either
machines or parts, competing with JCB’s and the
reservation to JCB of rights to sell to certain authorities
and manufacturers.

That the Commission relied on the principles laid down
in the BMW decision dated 13 December 1974 to
assess JCB’s agreements is also apparent in the letter
dated 13 January 1976 to JCB, which assessed the issue
of restrictions on sales of products competing with JCB’s
with reference
in BMW’s
distribution agreements.

to relevant provisions

By letter dated 11 March 1976, JCB provided detailed
explanations regarding the outstanding issues identified
in the letter dated 13 January 1976. A meeting between
JCB and
for
Competition was held on 18 March 1976 to discuss
these issues. No new version of
the agreement was
furnished shortly after the meeting.

from the Directorate-General

staff

(55)

(56)

(57)

(58) On its own initiative,

JCB sent a new version of its
Distributor Agreement for the United Kingdom on 6
March 1980 (39). No new form A/B was attached. No
Main Dealer Agreement was enclosed. JCB outlined that
minor alterations and additions had been made to the
previously notified agreement. In particular, the allotted
territory (i.e. as in the previous version, (cid:145)the distributor’s
area of prime responsibility for the sale of JCB products
and the service of JCB machines(cid:146) (clause 1. Definitions))
was therein defined by reference to postal codes.

(39) Letter from JCB dated 6 March 1980 (IV 26.696, p. 33).

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Official Journal of the European Communities

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(59)

The new version of the distribution agreement regarding
the United Kingdom contained clause 4 specifying that
JCB distributors
in the United Kingdom were not
allowed (cid:145)to sell JCB products wholesale for resale except
to a dealer(cid:146)
(defined in the agreement as (cid:145)a person,
persons or corporate body who with the approval of
JCB has been appointed as a dealer by a Distributor(cid:146)) (cid:145)or
approved sub-dealer(cid:146) (40). Except for that limitation, that
in clause 9(i) making the establishment of premises for
the sale and service of JCB products outside the territory
the service
subject
support
limitation was
included as regards sales outside the territory.

to JCB’s agreement, and that of
fee (clause 5), no particular

(60)

The Commission did not react to this newly furnished
agreement for the United Kingdom.

(b) Current distribution agreements in the United

Kingdom furnished to the Commission

(61)

(62)

copy of

JCB sent to the
By letter dated 29 December 1995,
a new version of
its
Commission one
Distributor Agreement
for the United Kingdom. The
principal change stated by JCB is that, to reflect changes
in its organisation, the appointment of distributors of
construction and industrial products would be separate
from that of agricultural products. No new form A/B
was attached.

Pursuant to the United Kingdom Distributor Agreement,
JCB distributors, which cannot sell products
official
competing with JCB’s, are allocated exclusive territories
within which JCB undertakes not to sell its products and
not to enter into the same distribution agreements with
other distributors (clause 10). The territory remains
defined as (cid:145)the distributor’s area of prime responsibility
for the sale of
JCB
machines(cid:146) (clause 1. Definitions) (41).

JCB products and the service of

without JCB’s prior written agreement which shall not
be withheld without objectively valid reasons(cid:146).

(64) Under clause 10, JCB undertakes to pay or to give credit
for work carried out by the official distributor and
accepted by JCB under
its manufacturer’s warranty.
Clause 5 ((cid:145)service support fee(cid:146)) remains unchanged form
the version that JCB furnished in December 1975 and
March 1980. Except for the provisions of clause 9(i),
which makes the establishment of premises for the sale
and service of JCB products outside the territory subject
to JCB’s agreement, no other noticeable limitation is
included as regards sales outside the territory.

(65) Official distributors in the United Kingdom agree also to
purchase parts, equipment and ancillary products for
use with or repair of JCB products only from JCB or
from another JCB distributor or a JCB dealer or such
other source as JCB may in writing authorise. Official
distributors also undertake to use or to supply only JCB
products in connection with warranty or modification
work on JCB machines (clause 8(vii) and (viii)). These
in the agreements were not amended,
restrictions
following JCB’s
in
earthmoving equipment should be treated differently
from that in motor vehicles, which JCB raised in writing
and during the meeting between JCB and Commission
staff held on 18 March 1976.

stressing that

arguments

trade

(66)

The Commission did not specifically react to this new
agreement.

(c) Currently notified distribution agreements in other

Member States than the United Kingdom

(63)

Clause 4 reads: (cid:145)The Distributor hereby agrees not to sell
JCB products supplied in pursuance of this agreement
to a JCB Distributor or
wholesale for resale except
another
an approved Sub Dealer
appointed in each case in relation only to JCB products

JCB Dealer or

(67)

(40) Version enclosed in letter from JCB dated 6 March 1980 (IV
26.696, pp. 33-53) and Article 4 JCB Distributor Agreement UK
with Watling JCB dated 21 January 1992 (Insp.
file, pp.
1123-1143).

(41) Article 4 JCB Distributor Agreement copied at Watling JCB’s

of

versions

agreements

JCB submitted in December 1975 and March 1976
to meet
the
modified
Commission concerns. Such concerns were obviously
focused on those agreements applicable in EC Member
States at that time. The agreements furnished for all
Member States of the EC in 1976, except the United
into two sorts, according to
Kingdom, were split
internal records: a single Distributor Agreement Export
(standard form) (42), and the agreement between JCB

premises (Insp. file, pp. 1146-1169).

(42) IV 28.694, pp. 34-37.

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Official Journal of the European Communities

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and its subsidiary JCB SA France (signed on 17 February
1975) (43). No new form A/B was attached.

Commission that
the agreements
the provisions of
notified for the United Kingdom were applicable in
other Member States.

(68)

(69)

(72)

The agreement with JCB France did not contain any
direct or indirect restrictions on out-of-territory sales of
JCB products, except JCB France’s undertaking to use its
best endeavours to promote such products within its
territory (clause 4(b)). Pursuant
to these intra-group
arrangements,
JCB France was appointed exclusive
distributor (clause 2) and agreed to purchase and resell
JCB products from JCB UK (clause 3(1)) on its own
account (clause 4(a)), i.e. not acting as JCB UK’s agent
(clause 5(b)). According to clause 2(2), the prices of JCB
products
JCB Sales UK
to exceed the net
(intra-group pricing) were not
ex-works prices
to United
Kingdom distributors.

sold to JCB France by

charged by JCB Sales

before

still necessary

justifications were

The Commission’s letter to JCB dated 13 January 1976
informed JCB that some amendments to the agreements
or
the
Commission could consider an exemption under Article
85(3). However, no new version concerning the
agreement
than the UK
following that of 1975 and, for France, following that of
1976, has been furnished. The agreements furnished for
Germany, Benelux, Italy and France concerned Member
States where JCB has incorporated subsidiaries. Their
distribution agreements within their national territories
have never been notified.

for other Member States

In the new version of the Distributor Agreement Export
furnished by JCB, following the Commission warning of
27 October 1975 referred to above,
the provision
regarding the service fee had been amended. As in the
new United Kingdom agreement, which had the same
wording, the amount of the fee was first to be agreed
between official distributors, instead of being set by JCB
at the outset, except where the distributors concerned
failed to agree (clause 4 SERVICE SUPPORT FEE (cid:151)
SALES OUTSIDE THE TERRITORY). The territory is
defined as (cid:145)the Distributor’s area of prime responsibility
for the sale of JCB Products and JCB Machines(cid:146) (clause 1
DEFINITIONS) into which the distributor agrees to sell
JCB products and to use its best endeavours to promote
the sales and the service of such products (clause 5
SALES OBLIGATION OF THE DISTRIBUTOR). The
distributor also agrees not to establish premises for such
sales and service outside the territory without
JCB’s
prior consent (clause 8(iv) GENERAL OBLIGATIONS OF
THE DISTRIBUTOR).

(73)

The Commission has not adopted a definitive position
either by way of a decision or by sending a comfort
letter regarding the agreements notified or furnished by
JCB, prior to this decision.

D. JCB’S CURRENT DISTRIBUTION NETWORK IN EUROPE AND
INTRA-GROUP PRICING

(74)

The JCB Group has operating subsidiaries in France,
Germany, Belgium, the Netherlands, Italy and Spain and
six main manufacturing sites in the United Kingdom,
where its headquarters are also located. JCB maintains
an EC network of 135 to 140 independent approved
distributors, which are allotted exclusive territories (44).
As a result, the official JCB network services covers each
geographic area of the EC. JCB Sales Ltd (UK) or the
relevant national
such official
distributors and draw up their distribution agreements
in national territories. In this latter case, orders from
official
are
addressed to the local JCB subsidiary.

distributors within the

JCB network

subsidiary

appoint

(70) Official distributors

to purchase parts,
also agree
equipment and ancillary products for use with or repair
to JCB products only from JCB or from another JCB
distributor or a JCB dealer or such other source as JCB
authorises in writing (clause 7(v)).

(75)

(71) No obligation similar to that included under clause 4 of
the United Kingdom Distributor Agreement regarding
supplies wholesale for
included in the
Distributor Agreement Export. The Commission files do
the
not contain any letter by which JCB informs

resale was

JCB
invoiced by JCB UK to each national
Prices
subsidiary are generally lower than those invoiced to
official distributors in the United Kingdom.
In 1993,
intra-JCB prices for spare parts applied to JCB France
and to JCB Italy were, respectively, [between 50 % and
100 %] of those applied to official distributors in the
UK. In other words, if the French JCB subsidiary charged
its network distributors a [between 25 % and 50 %]
mark-up on the price paid to JCB UK, official French
distributors would have had the same purchase costs as
the United Kingdom official distributors.

(43) IV 28.694, pp. 68-72. Agreement sent
information dated 13 January 1976.

following request

for

(44) In the United Kingdom and Ireland, such official distributors use
their commercial denomination (e.g.

the acronym JCB after
Watling JCB, Gunn JCB, etc.).

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(76) However, whilst being at

a

stage

lower

in the
distribution chain, distributors in the United Kingdom
were frequently able to supply at
lower prices than
those of the national JCB subsidiaries between 1989 and
1996. Possible reasons among others include, combined
or in isolation, more efficient business responses to a
strong bargaining position of purchasers in the United
Kingdom, fluctuations in the pound sterling with regard
to other currencies or lower operating margins (45); for
in 1997, pre-tax profit margins for official
instance,
[between 0 % and 10 %],
distributors
however low, were [between 1 and 10] times higher
than in the UK, at [between 0 % and 10 %]; differences
may however appear from one year to another:
in
1996, such margins were [between 0 % and 10 %] in
the United Kingdom and [between 0 % and 10 %] in
France.

in France, at

country by country, prior
to any discounted code
changes(cid:146) (47). In a confidential
internal note regarding
JCB subsidiaries’ purchase prices in Europe, Germany,
Spain, France and Italy,
(cid:145)to harmonise
customer achieved pricing with the end of ending up
with a [between 0 and 20 %] band of maximum
variation(cid:146) was set forth in 1995 (48).

the objective:

(79) As an illustration of these price differences, in 1996 a
French official distributor purchased new machines and
spare parts initially sold by official distributors in the
United Kingdom,
from JCB’s subsidiary in
France (49). Despite lower ex-work prices paid by the
subsidiary and integration within the JCB Group, JCB
in competition with official
France was,
United Kingdom distributors
to
regarding supplies
French official distributors.

in practice,

instead of

(77) An internal review of the gross profitability of various
JCB subsidiaries conducted in 1993 shows that the retail
price of a representative basket of spare parts in France
was [between 0 % and 100 %] higher than in the United
Kingdom. It is therein recognised that: (cid:145)The fact remains
that on all types of parts, European prices are much
higher than the United Kingdom and that France would
appear to have much higher prices than the others,
although France do operate a generous rebate scheme
for achieving target performance which will reduce this
apparent high GP % somewhat(cid:146). As a result, gross
profits achieved by JCB for spare parts in France were
[between 0 and 30] percentage points higher than those
of JCB UK and [between 0 and 30] points higher than
those of JCB Germany in 1993 (46).
In other words,
sales of identical spare parts were more profitable in
France than in the UK for the JCB Group.

(78)

Price differences were still apparent in 1995, as shown
(cid:145)You will note that the
by an internal note as follows:
prices of some parts vary greatly between the four
countries and,
therefore some variation between the
special prices will probably remain. The summary of
dealer net and retail pricing for (cid:147)the group of parts(cid:148)
discussed in January, will help to identify the variances

(45) RSO I, paragraph 5.8, pp. 32-33, and RSO II, p. 32.
(46) Internal JCB note from N. D. Allen to J. Patterson dated 30 June

1994 (Insp. file, pp. 722-731).

(80)

Evidence shows that JCB France compensated its official
distributors on deals for machines lost in competition
with parallel traders (50) and provided ad hoc support
for margins where parallel traders were also bidding in
competition with those official distributors. Such special
support was also provided for spare parts, for which
JCB set up guaranteed fixed gross margins or lower
purchase prices (51). Evidence of retail pricing levels out

(47) Internal memorandum from A. D. L. Shaw to T. FernÆndez dated

24 February 1995 (Insp. file, pp. 1718-1719).

(48) Internal confidential note from J. Bradley to T. FernÆndez dated 11

October 1995 (Insp. file, pp. 1704-1707).

(49) Letter from F. Rausch, JCB France to Mr Malecot, SEM CEDIMA

dated 21 June 1996 (Insp. file, pp. 2155-2156).

(50) Letter from F. Rausch, JCB France to R. Pain, BPV dated 5 June
1996 (Insp.
(cid:145)Nous sommes
file, pp. 2157-2160), which reads:
prŒts (cid:224) poursuivre notre soutien jusqu’au 31 dØcembre 1996 de
fa(cid:231)on (cid:224) ne pas laisser Øchapper des ventes sur ce marchØ parallŁle
et nous vous garantissons une marge de 30 000 FF dans la mesure
oø vos prix sont de 10 000 FF supØrieurs (cid:224) ceux du marchØ
parallŁle. Par ailleurs, dans le cas oø vous perdriez une chargeuse
pelleteuse face (cid:224) un marchØ parallŁle, nous vous allouerons une
commission de service de 10 000 FF(cid:146). Letter from P. Tellier, JCB
France to BPV dated 31 March 1995 (Insp. file, p. 440).

(51) Note from E. de Montarnal, JCB France to R. Pain, BPV dated 8
December 1995, which reads: (cid:145)Dans la mesure oø BPV est obligØ
de rapprocher son prix de vente de celui de Central Parts, JCB s’en-
gage (cid:224) garantir une marge de 20 % pour toute piŁce facturØe plus
de 5 000 F et une marge de 30 % pour toute piŁce facturØe moins
de 5 000 F ceci (cid:224) la condition expresse que BPV transmette (cid:224) JCB
l’information complŁte une fois par mois: nom du client, rØfØren-
ces de la piŁce JCB et Central Parts, prix tarif de Central Parts(cid:146).
(Insp. file, p. 475) Letter from P. Tellier, JCB France to BPV dated
12 April 1994 (Insp.
letter from P. Tellier to
COLOMAT dated 1 August 1995 (Insp. file, pp. 463-464).

file, p. 450),

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of
touch with competition exists also for Germany,
where JCB set the objective that (cid:145)cost and selling prices
are related(cid:146) (52).

clause 4 of their agreement as notified (RSO II, pp.
41-45).

(81)

Those internal JCB records highlight the fact that profits
and prices were above the average in some Member
States like Germany and, especially, France. A system of
compensation for lost sales or lower margins granted to
official distributors whose territory was exposed to
competition from parallel traders was, in all likelihood,
profitable overall for the JCB Group. In any event, such
price differences on both machines and spare parts have
created obvious incentives for parallel trade, from 1989
to 1996. It is plain that such parallel trade was likely to
diminish those higher profits.

E. AGREEMENTS AND PRACTICES IN THE OPERATION OF JCB’S
DISTRIBUTION NETWORK

that

JCB alleges

In general,
the Commission has
misrepresented the facts, selectively chosen documents
or cited them out of context. Therefore,
legal
assessment proceeds, according to JCB, from a wholly
mistaken view of the facts.

its

has

into

taken

account

based. Nevertheless,

The Commission
JCB’s
comments and has accordingly reviewed and, where
reassessed the documents on which its
appropriate,
objections were
very
considerable number of facts and documents which are
still cited in this decision illustrates the existence of
restrictive agreements and support, in the Commission’s
view, the finding of an infringement. Factual elements
specific
regarding
documents
no means
exhaustively.

in respect of
below,

allegations
provided

JCB’s
are

the

by

1. RESTRICTIONS ON DIRECT OR INDIRECT EXPORT SALES

FROM THE UK TO OTHER MEMBER STATES

(a) Statements

from official United

Kingdom

distributors on sales to other Member States

(82) As evidenced in numerous letters shown below, official
United Kingdom distributors have refrained from selling
new machines and spare parts outside the United
Kingdom.

Contrary to the Commission’s interpretation, JCB relates
in the United
the behaviour of official distributors
Kingdom, and their statements, to the enforcement of

(52) Report on visit to JCB GmbH Germany on 19 May 1994 (Insp.

file, pp. 1702-1703).

(83)

In a fax sent from Gunn JCB to JCB France on 17 May
1995 concerning a machine sold by the former which
was found in France, Gunn declares that: (cid:145)We cannot be
held responsible for this customer’s actions, but as a
result from this sale we will not be trading with this
customer again(cid:146) (53). A letter from Heritage Disposals, a
reseller based in the United Kingdom purchasing from
Gunn JCB, explains the reasons why they could not
carry on supplies to France:
is because someone
notified to JCB that I was exporting new machines to
you. This was the reason we had to be very careful
when we were sending you machines, because as soon
as JCB registered the serial numbers on machines, they
would have immediately traced them back to us, and
would not have supplied us with more machines(cid:146) (54).

(cid:145)It

(84)

In reply to a query from JCB UK as to whether Gunn
JCB was supplying machines at low prices to Lyomat,
an official distributor in France, Gunn JCB justified the
transaction by stating that
the machine was not
new (55). Another letter from Gunn JCB to JCB refers to
its involvement in exports of new machines to Austria,
(cid:145)In
complained of by the Austrian official distributor:
January of this year, you instructed us to cease supply
of machines to the above (Sunrise Ltd). This was on the
basis that our (cid:147)Austrian friends(cid:148) had pointed the finger
at Sunrise and Gunns, and accused us of supplying new
machines to Austria(cid:146) (56).

(53) Insp. file, p. 317.
(54) Letter from Heritage Disposals to Central Parts dated 24 October

1994 (Main file I, p. 13).

(55) Faxes from M. J. Butler, JCB Sales UK to P. Leboucher, JCB France
and to D. Barton, Gunn JCB, dated 20 November 1992 and letter
from D. Barton to M. J. Butler dated 30 November 1992 (Insp.
file, pp. 355-357).

(56) Letter from D. Barton, Gunn JCB to C. Ingram, JCB Sales UK dated
19 May 1989 (Insp. file, p. 880). The (cid:145)Austrian friends(cid:146) referred to
in the document are, most presumably, employees from Terra,
JCB’s official distributor in Austria. A communication dated 21
March 1989 between Gunn JCB and JCB attributes the deal being
lost by Gunn JCB to unsubstantiated claims from Terra (Insp. file,
p. 878).

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the fact

According to JCB, the mere fact of Gunn JCB’s sales to
Lyomat in France referred to in paragraph 84 was not
called into question, but
it had been
that
apparently made
a below-cost price, possibly
predatory (RSO II, p. 41). Gunn’s justification shows
that either exports from the United Kingdom to France
of new machines for resale within the official
JCB
distributor network or full freedom to set resale prices
may be restricted.

at

(85)

Similarly, in applying for the Queen’s Awards for Export
Achievement 1993, Watling JCB’s Chairman recognised:
(cid:145)I am proud to have lead a team that has achieved the
following export performance.
the
company is unable to sell new machines outside its
United Kingdom territory, I hope that you will agree
with us that the used machine export achievement of
Watling JCB limited is deserving of recognition(cid:146) (57).

((cid:133)) Given that

that

they are
Regarding Watling JCB’s declarations
unable to export new machines
from the United
Kingdom referred to in paragraph 85, according to JCB,
the extract does not show that Watling considered that
it was prohibited from exporting new machines.
application by
allegedly making its
Watling was
reference to its success in increasing its exports of used
machines. Since in relation to exports of new machines
Watling was restricted in its ability actively to market
exports, its export success could not be fairly judged by
reference to new machines (RSO II, pp. 42-43). The
wording of the letter is however very clear and does not
make such a distinction. This letter clearly evidences
that Watling JCB has effectively restricted all its export
sales of new machines, whether active or passive and
whether the purchaser was an end-user or a reseller,
authorised or not. Furthermore, there is no particular
clause in the distribution agreement between JCB and
Watling JCB copied at the latter’s premises under which
active sales may be restricted, except the definition of
the allotted territory in clause 1 as (cid:145)the distributor’s area
of prime responsibility for the sale of JCB products and
(Watling JCB Distributor
the service of JCB machines(cid:146)
Agreement 1996 (Insp.
file pp. 1146-1169)). The
interpretation of this clause as allowing JCB to restrict
active cross-border sales is patently abusive.

(57) Letter from Mr. Davis, Watling JCB to the Secretary of the Queen’s
Award Office dated 26 October 1992 (Insp. file, pp. 1048-1057).

(86)

Referring to JCB France about a dispute on a service
commission claimed by the latter, Watling JCB stated
that:
(cid:145)we are disputing this service commission as this
machine was sold in good faith by ourselves as part of a
deal totalling 10 units to A&C Equipment in August
1994, prior to this order they took delivery of 15 units
in 1993 and none of these units to our knowledge have
been exported. We cannot be held responsible for our
customer exercising their legal right to sell machines at
six months old or even less(cid:146). Watling JCB further made
clear to JCB France that: (cid:145)((cid:133)) we have not and will not
knowingly sell machines abroad without JCB Sales prior
agreement(cid:146) (58).

(87)

In a letter copied at JCB’s premises, Central Parts asked
Watling JCB why they refused to supply Central Parts in
France. A handwritten note addressed to C. Coutts with
a copy to J. Patterson, both JCB executives, reads: (cid:145)Have
suggested to Watling that they just ignore this request.
Do you agree?(cid:146). Watling JCB’s refusal was confirmed
following JCB’s instructions (59).
JCB’s agreement has
been invoked thereafter as a precondition for effecting
supplies
than the United
Kingdom (60).

to Member States other

(88) Watling JCB also decided to stop supplying spare parts
to another reseller competing with JCB France, in the
following terms:
(cid:145)It has come to our notice that JCB
parts we have supplied to you may have been supplied
JCB France. We
indirectly to certain customers of

(58) Letter from J. Davis, Watling JCB to F. Rausch, JCB France dated 9

March 1995 (Insp. file, p. 1695).

(59) Letter from M. Vairon, Central Parts to M. Martin, Watling JCB
dated 16 December (Insp. file, p. 1717). The handwritten note is
dated 19 December. On 19 December 1994, Watling JCB replied
to Central Parts that they (cid:145)do not wish to supply parts to you or
any other company who is not a JCB user or dealer. If we did, it
would only cause us trouble with JCB(cid:146), (Main file I, p. 48).

(60) Handwritten note from Parts and Service Director, Watling JCB in
letter from M. Vairon to Watling JCB dated 25 January 1996
(Main file I, p. 50).

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cannot allow this to happen because of our contract
with JCB Service UK Ltd. Therefore we must terminate
your account with this company(cid:146) (61).

have autonomy to carry out sales to end-users from
other Member States, which may depend on JCB’s
approval.

(89)

Berkeley JCB, another independent JCB distributor in the
United Kingdom,
(cid:145)Because of our
recognised that:
geographic location, near to the channel ports and
differential pricing overseas, it is inevitable that we will
be continually approached by both and users and
agents. We will therefore adopt a policy of referring all
doubtful enquiries to JCB Service ((cid:133)) and they can tell
us whether or not we should supply(cid:146) (62). Furthermore,
a paragraph in the same letter to JCB states: (cid:145)Further to
our recent discussions, I have made clear to our regional
managers and Group Parts Manager that we must not
sell products outside our territory in breach of our
Dealer Agreement(cid:146). When asked for supplies, Berkeley
states on a different occasion:
(cid:145)Thank you for your
enquiry. Regret that we cannot supply parts for what
may be for resale in other countries(cid:146); the purchaser was
requested to turn to an official distributor in a French
territory (63).

(90)

(91)

(92)

JCB, replied in May 1996 that

In reply to a letter from JCB France regarding five
that operated in French territory, a UK
machines
the
distributor, Scott
(cid:145)were sold to volume customers
machines in question:
of Gunn JCB and the decision as
to whether we
continue to supply these customers lies with UK Sales(cid:146)
the United
JCB
the
(i.e.
Kingdom) (64).

department

sales

in

(cid:145)JCB’s

In response to a request from Central Parts asking why
an order had not been supplied, TC Harrison JCB
pointed out:
strict guidelines concerning the
export of spare parts and the golden rule (is that you
should) deal with local agencies when purchasing
parts(cid:146) (65). Since Central Parts was
located in and
requesting supplies to France,
(cid:145)export(cid:146) means supplies
from the United Kingdom to a different Member State.

These examples come from all but one of JCB’s official
distributors in the United Kingdom. They concern both
spare parts and machines. Their declarations are made
in the context of, or relate to, requests from resellers or
final users
from other Member States. Supply was
effectively refused or restricted on the grounds that their
agreements with JCB prevented them from doing so, the
key reason being implicitly or explicitly the geographic
the
destination of
purchaser.

sales, along with the status of

(b) Statements by JCB on sales from the United

Kingdom to other Member States

is

i.e.

and

genuine

end-users

According to JCB, the letter from Berkeley JCB referred
to in paragraph 89 recognises that Berkeley JCB was
entitled to sell to overseas purchasers who were not
(cid:145)doubtful(cid:146),
authorised
distributors (RSO II, p. 43). In this declaration made to
refraining from selling to final
JCB, Berkeley
customers, or their agents,
located in other Member
States. As to the (cid:145)doubtful(cid:146) character of such enquiries,
Berkeley does not merely commit itself to asking, in the
case of a purchasing agent, for proof that the agent is
entitled to purchase on behalf of its principal end-user.
Neither is it clear how JCB Service can, better than
Berkeley, check that an end-user asking for supply is
effectively an end-user or that an agent has been duly
authorised. Berkeley’s statement shows that it does not

(61) Letter from M. L. Smithers, Watling JCB Ltd to MJT Contracts Ltd

dated 12 May 1994 (Insp. file, p. 298).

(93)

JCB’s views as regards export sales of machines from the
United Kingdom are expressed in a letter sent by the
JCB UK Sales Director to one of its official distributors
in the United Kingdom, in the following terms: (cid:145)During
recent conversations with a number of United Kingdom

(62) Letter from Mr Roddy, Berkeley JCB to J. Patterson,

JCB Sales

dated 13 April 1995 (Insp. file, p. 249).

(63) Fax from F. de Gennaro, Berkeley JCB to Michel Vairon, Central

(64) Letter from S. C. J. Briant, Managing Director, Scott JCB to F.
Rausch, JCB France dated 21 May 1996 (Insp. file, pp. 326-329).
(65) Letter from TC Harrison JCB to Central Parts dated 21 November

Parts dated 21 November 1995 (Main file, p. 21).

1995 (Main file I, p. 24).

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that

the subject of Grey exports,
Distributor Principals
It
Contract Hire and Multiple Deal Support arose.
became
is
it
evident during my discussions
necessary for me to confirm JCB’s position on these
points. 1. Grey Exports. There is no change in JCB’s
position. We actively discourage any new machines sold
overseas whether through a UK Distributor or a third
party Plant Hire company(cid:146) (66). These views regarding
cross-border sales from the United Kingdom are further
explained as follows:
(cid:145)Obviously, as the manufacturer,
we are anxious to protect our distributors, wherever
they are, from unfair competition from whatever source,
on all products(cid:146) (67).

Parts’ assets and to appoint it as official distributor in
France, when a territory for an exclusive dealership was
free (71).

(96) When suspicions arose in 1994 of high volumes of
machines and parts being diverted towards other
Member States by Gunn JCB, [ (72) (73)].

(97)

(98)

(94)

Regarding parts, having acknowledged that resellers had
to genuine JCB parts obtained from United
access
JCB states that official
Kingdom official distributors,
distributors should act uniformly to:
(cid:145)ensure that your
Parts Managers are aware of the problem and instructed
not to supply to anyone suspected of involvement with
spurious operations(cid:146) (68). The main targets of a strategy
to fight spurious parts activity in France, Germany and
Spain were Interparts, an independent
reseller, and
Central Parts (69). A document copied at JCB’s premises
refers also to a campaign against (cid:145)Spurious competition(cid:146),
including, among other measures: (cid:145)to cut off the source
of supply to spurious outlets(cid:146) (70).

is

consistent with that of

JCB’s own statements show that its interpretation of its
its United
agreements
Kingdom official distributors. Their implementation is
not therefore unilateral conduct. Their interpretation is
identical to JCB’s own interpretation and consistent with
JCB’s implementation.

(c) The (cid:145)Multiple Deal Trading Support(cid:146) system in the

United Kingdom: description

of

to

consists basically of

new machines. According

JCB has since 1977 put
into operation a system of
allowances granted to its official distributors in the
United Kingdom (74). This system is known as (cid:145)Multiple
Deal Trading Support(cid:146).
a
It
reduction in ex-works prices paid by official distributors
intended to allow them to be more competitive in
transactions with large customers involving significant
numbers
JCB,
allowances for trading support are provided, having
regard to a range of factors including the number of
machines, the mix of products sold, the composition of
the fleet, the newness of the business relation with the
purchaser, the number and type of trade-in machines
and the identity of competitors for the transaction. The
allowance is granted on condition that the machines are
sold to an end-user. JCB justifies this condition on the
basis that its official distributors in the United Kingdom
are not entitled to sell
to unauthorised resellers and
other official distributors would not be entitled (cid:145)under
the agreements as notified to switch to competing
brands(cid:146) (75).

(95) However, there is evidence of negotiations between JCB
and Central Parts, on JCB’s initiative, to purchase Central

(66) Letter from G. Greenshields, JCB UK Sales Director to Mr Davis,

Watling JCB dated 2 June 1992 (Insp. file, pp. 3-4).

(67) Letter from C. Y. Ingram, JCB UK Sales Director to D. Barton,
Gunn JCB dated 23 May 1989 (Insp. file, p. 368). JCB states that
its letter is not directed at cross-border sales, but deals with the
impact of unfair competition generally (RSO II, p. 45).

(68) Letter from N. D. Allen, JCB Parts Director to J. Davies, Watling

JCB dated 22 October 1990 (Insp. file, pp. 2457-2458).

(69) Confidential JCB Memo from J. Patterson to M. Coyne dated 9

March 1994 (Insp. file, p. 19).

(70) Draft JCB Discussion Document: (cid:145)Spurious Competition(cid:146) (Insp. file,

pp. 251-265).

(71) Internal note from J. Patterson to P. Leboucher dated 1 July 1996
(Insp. file, pp. 2284-2285); fax from F. Rausch to J. Patterson
dated 15 July 1996 (Insp. file, pp. 99-102); internal note from J.
Patterson to Sir Anthony Bamford dated 25 October 1996 (Insp.
file, p. 2282); JCB France document: Construction re-engineering
plan dated 10 October 1996 (Insp. file, pp. 218-210); note from
F. Rausch, JCB France to J. Patterson, JCB dated 14 October 1996
(Insp. file, p. 2241).

(72) [(cid:133)].
(73) [(cid:133)].
(74) RSO I, Appendix 12 and RSO II, p. 39. Other documents in the
commission file would indicate that a similar unnotified allowance
system exists in France. Reference is made by Mrs F. Rausch, JCB
France in a note to Mr L. Forget dated 21 June 1988 to the fact
that sales made outside territories will not receive support ((cid:145)faire
l’objet d’aide(cid:146)) (Insp. file, p. 84).

(75) RSO I, point 7.2, p. 43 and RSO II, p. 39.

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(99)

although scaled

The amount is determined on an ad hoc basis for each
transaction, except for backhoe loaders, which have a
fixed
the
amount. On average,
allowances amount
to [between 0 % and 10 %] of
ex-works prices of all JCB machines and [between 0 %
for the
and 10 %] of
transactions concerned. Support has been provided on
[between 0 % and 50 %] of
JCB sales in the United
Kingdom (76).

the price of backhoe loaders,

(100) Clarifications

or

regarding

instructions

the
implementation of the (cid:145)Multiple Deal Trading Support(cid:146)
system are made through circular letters to the United
Kingdom distributor network (77). United Kingdom
distributors are entitled to claim and have been granted
the allowances, subject to the above conditions being
fulfilled. As shown in paragraph 96, where allowances
have been paid by JCB and one essential condition to
obtain support is not fulfilled (e.g. that the purchaser
must be an end-user), such payment is viewed by both
their
JCB and the official distributor as a breach of
agreements (78).

(101) The (cid:145)Multiple Deal Trading Support(cid:146) system is therefore
part of the commercial conditions agreed between JCB
and its official distributors in the UK under which the
latter may purchase JCB machines and, hence, of their
remuneration.

(d) Implementation of

the Multiple Deal Trading

Support system in the United Kingdom

(103)

(102)

JCB states:

to one of

if
franchised

In a letter
its United Kingdom official
distributors in 1992,
(cid:145)Machines are only
eligible for support
they are for use within the
tripartite
distributor
territory unless
agreement has been reached with the selling distributor,
JCB Sales and the distributor in whose territory the
machines will be working(cid:146). The letter adds (cid:145)Should a
distributor conclude a deal with a company who has a
number of locations throughout the UK, it is the selling
the
distributors

to determine where

responsibility

a

(76) RSO II, p. 39.
(77) Private and confidential
from G. Greenshields, United
letter
Kingdom Sales Director
to Messrs Moreton, Roddy, Barton,
Hillman, Shaw, Bryant, Meace, Osborne, Shields and Davis
(executives from each United Kingdom official distributor) dated
18 March 1992 (Insp. file, p. 246).

(78) RSO I, Annex 12, points 7.2, p. 43 and 7.14-20, pp. 48-49.

machines will be working.
If these machines go into
another distributor territory without prior agreement
then JCB Sales reserves the right to withhold all or part
of the support(cid:146) (79).

According to JCB (RSO II, p. 52), the letter referred to
in recital 102 is addressing the topic of deal support for
contract hire, under which the machine remains in the
distributor’s ownership. Despite JCB’s allegations,
the
letter states: (cid:145)JCB distributors as well as the competition
have used contract hire as a tool to achieve sales(cid:146) and
further makes it clear that:
(cid:145)Any machine which is
subject
to a contract hire agreement and receives
support from JCB must be clearly identified in the seven
day report ((cid:133))(cid:146). Contract hire is clearly used to increase
sales, which the support may or may not stimulate.
Such JCB distributors’ sales are obviously not stimulated
if the support is withdrawn when there is no agreement
between distributors in different territories, as requested
by JCB.

instructions

JCB also gave similar
in a
In 1992,
document
titled (cid:145)EXERCISING CAUTION(cid:146), which was
addressed to each manager within the official distributor
network: (cid:145)It is obviously not in JCB’s interest to support
deals that may go into another distributor’s territory,
either in the United Kingdom or overseas, whether
machines are purchased as in the example above or on
rental with option to purchase
contract hire or
transaction (nationals excluded).
in everyone’s
interest to exercise extreme caution when circumstances
are outside the norm and I would ask you for
cooperation in this matter(cid:146). A possible explanation of
(cid:145)everyone’s interest(cid:146) in JCB’s letter is given in the first
paragraph: (cid:145)These machines obviously received Multiple
Deal Support and are currently being offered by the

is

It

(79) Letter from G. Greenshields, United Kingdom Sales Director to Mr
Davis, Chairman of Watling JCB dated 2 June 1992 (Insp. file, pp.
3-4).

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used equipment dealer at below current market prices in
the Scottish market(cid:146) (80).

(105) Similarly, it was established that [(cid:133) (82)].

Regarding its document (cid:145)Exercising caution(cid:146), referred to
in recital 103, JCB stresses that the distributor which
was selling on the Scottish market was an unauthorised
reseller (RSO II, pp. 52-53). The distributor in question
operated as both reseller and plant hirer, which shows
that support granted to contract hire may be used to
resell the machines. JCB’s concern in the document cited
is not whether the distributor was authorised, but the
lower prices at which machines are sold in respect of
the (cid:145)Scottish market(cid:146) price and the trouble caused in
another distributor’s territory.

2. RESTRICTIONS ON SOURCES OF

SUPPLY AND/OR
PASSIVE SALES IN MEMBER STATES OTHER THAN THE
UNITED KINGDOM

(a) Italy

(1) Exclusive purchase from a JCB subsidiary

(106)

In Italy, the unnotified standard agreement between JCB
SpA and official distributors
includes an exclusive
purchase obligation, which limits purchases to the local
subsidiary. Under clause 4(v), distributors undertake not
to sell or to be involved in sales of new products which
would be in competition with those supplied by JCB
SpA without the latter’s written consent. Under clause
6(v), official distributors agree to purchase spare parts
and attachments exclusively from JCB SpA, or other
sources that JCB SpA may in writing authorise. Such
consent is thus needed to source supplies from other
official distributors in other Member States supplying
JCB machines in competition with JCB SpA. However,
according to JCB, Italian distributors have neither been
prevented from sourcing nor sought to source outside
Italy since prices in Italy have been 15-20 % lower than
in other major Member States (83).

(2) Sales outside the territory

(104) A similar connection between the Multiple Deal Trading
Support system and resale outside allotted territories is
(cid:145)Re:
evidenced in a fax from JCB to Gunn JCB:
Greyhound Plant, (cid:151) Trading support. Due to the
continued flow of new machines being retailed into
export territories by the above company all registered
that have not been
trading support on machines
JCB also stated the
delivered has been withdrawn(cid:146).
following conditions to be agreed by Greyhound Plant,
an unauthorised reseller,
the
point of purchase, there is a £ 1 500 surcharge added
on to the customer achieved price which is held by
Gunn JCB. If machines are held for 6 months or 400
hours, whichever is the first,
the customer will be
reimbursed with the £ 1 500 surcharge. If machines are
retailed by the customer under the stated period or
hours worked the £ 1 500 will be transferred to the
export distributor
in which the machine has been
retailed(cid:146) (81).

for future support:

(cid:145)At

(80) Private and confidential
letter
from G. Greenshields, United
to Messrs Moreton, Roddy, Barton,
Kingdom Sales Director
Hillman, Shaw, Bryant, Meace, Osborne, Shields and Davis
(executives from each United Kingdom official distributor) dated
18 March 1992 (Insp. file, p. 246).

(81) Fax from G. T. Boulton, Distribution Manager, JCB to Mr Shaw,

Gunn Midland dated 12 May 1992 (Insp. file, p. 269).

(107) Under Clause 4(iii), official

distributors

in Italy
undertake to sell only within their allotted territory.
Under clause 8, JCB SpA retains the right to sell directly
or through other resellers within the allotted territory to
to big
several
companies and customers purchasing for export, unless
is directly involved in securing the
the distributor
sale (84). Thus,
through
JCB SpA controls exports

types of customer and,

in particular,

(82) [(cid:133)].
(83) RSO II, p. 38.
(84) Note from G. Bonvincini, JCB SpA to C. E. Coutts, JCB Sales dated
28 June 1993 and annex (Contratto distribuzione). Clause 4 reads:
(cid:145)Il distributore si impegna: ((cid:133)) iii) a vendere I Prodotti JCB solo
entro il Territorio. v) a non vendere o essere coinvolto sia diretta-
mente sia indirettamente, nella vendita di Prodotti nuovi che siano
in qualsiasi modo in concorrenza con quelli forniti dalla JCB (i.e.
exclusively JCB SpA as defined in clause 1), se non abbia ricevuto
prima il consenso scritto della JCB(cid:146). Clause 6 reads: (cid:145)Il Distributore
se impegna nel Territorio v ad acquistare parti di ricambio, attrez-
zature e prodotti sussidiari per l’uso o le riparazioni di Prodotti
JCB solo dalla JCB o da altra fonte, previa autorizzazione per
iscritto da parte dalla JCB(cid:146). Clause 8 reads (cid:145)La JCB si riserva la
facolt(cid:224) di vendere direttamente o a mezzo di terzi prodotti JCB nel
Territorio alla Clientela appartenente a una delle seguenti catego-
rie: i) Grandi imprese (oltre 10 miliardi di lire di fatturato annuo)
salvo che ci sia un diretto coinvolgimento del Distributore nel pro-
curare la vendita; ii) clienti che aquistano per esportare, salvo che
ci sia un diretto coinvolgimento del Distributore nel procurare la
vendita.(cid:146) (Insp. file, pp. 540-559).

12.3.2002

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Official Journal of the European Communities

L 69/19

resellers, direct exports
from the official distributor
being prohibited by the obligation to sell exclusively
within the allotted territory.

supplies of
JCB machines and spare parts exclusively
from JCB SA and JCB Service (JCB France). As a distinct
obligation, they also agree not to sell competing new
machines or spare parts (86).

in this case Terra.

territory. Equally, enquiries of

(108) Regarding sales made by an official distributor in Italy
in the territory of another official distributor (Terra,
distributor for Austria and Slovakia), JCB UK stressed to
JCB Italy that: (cid:145)As employees of JCB, we cannot promote
the sale of new machines directly or indirectly into
another dealer’s
this
nature should be directed to the appropriate dealer in
In the case of used
that country,
machines, dealers are free to sell whatever they wish.
((cid:133)) Secondly, SOFIM need to be advised that
they
cannot sell into another dealers territory, either directly
or indirectly through a secondary trader(cid:146) (85). Whilst
restating its obligations towards official distributors, JCB
is also making a statement on official distributors’
commercial conduct
in
particular. This statement requesting that they do not
fully
distributor’s
sell
consistent with the unnotified JCB agreement between
JCB Italy and its network of official distributors,
whereby
are only possible within allotted
territories.

in general and on SOFIM’s,

into another

territories

sales

is

JCB considers that active and passive sales are not
restricted in Italy and that passive sales outside a
distributor’s own territory have been both permitted and
common (RSO II, pp. 38 and 49). This is contrary to
the express wording of clause 4(iii) of the unnotified
Italian distributor agreement referred to in paragraph
107 and the evidence of its implementation cited in
recital 108. Recital 124 adduces more evidence contrary
to JCB’s contention.

(b) France

(1) Exclusive purchase from a JCB subsidiary

(109) Under

article 2.2 of

distribution
agreement with JCB’s subsidiaries in France, JCB SA and
JCB distributors agree to obtain
JCB Service, official

the unnotified

(85) Private and Confidential Memo from J. Patterson,

JCB to G.

Bonvincini, JCB SpA dated 24 March 1994 (Insp. file, p. 18).

(110)

In a letter sent by JCB France to one official distributor
in France, reference is made to the fact that the latter
had obtained supplies of both new JCB machines (about
ten machines) and genuine JCB spare parts from United
Kingdom distributors, instead of JCB France. JCB viewed
this purchase policy as contrary to the continuation of
to terminate
the
the
agreement (87). Another official
JCB distributor within
the French distributor association also confirms that
such an exclusive purchase obligation is included in the

dealership,

threatened

and

(86) The relevant provision in French reads (Article 2.2):

(cid:145)Sans prØju-
dice de ce qui est dit (cid:224) l’Article 4 ci-aprŁs, le concessionnaire s’en-
gage, pour la durØe du contrat et (cid:224) titre de condition essentielle de
celui-ci, (cid:224) s’approvisionner en produits JCB et en piŁces JCB exclu-
sivement auprŁs, respectivement, de JCB SA et de JCB Service et (cid:224)
ne pas vendre, diffuser ni promouvoir (cid:151) directement ou indirecte-
ment (cid:151) pendant la durØe du prØsent contrat et sur le Territoire,
des produits directement ou indirectement concurrents des pro-
duits JCB ((cid:224) l’exception des machines d’occasion) ni des piŁces
JCB(cid:146).
JCB Spare Parts are defined as those pertaining to JCB
machines and included in JCB catalogues (Annex 1, point 2,
Contrat de Concession, Insp. file, pp. 52-83).

(87) Letter from F. Rausch, JCB SA to P. Malecot, SEM-CEDIMA dated
21 June 1996 (Insp. file, pp. 2155-2156). The relevant passages
read:
(cid:145)Entre-temps, nous avons appris et vous l’avez d’ailleurs
confirmØ (cid:224) Monsieur Dominique Fontana, que vous avez achetØ
des machines neuves JCB non pas (cid:224) nos sociØtØs Fran(cid:231)aises, mais (cid:224)
des SociØtØs anglaises. Il semble que cela concernerait une dizaine
de machines. Par ailleurs, vous nous avez Øgalement confirmØ qu’il
vous arrivait de vous approvisionner en piŁces d’origine JCB
auprŁs de SociØtØs britanniques. Nous comprenons donc, tant du
fait de cette politique d’achat qui appelle au demeurant nos plus
expresses rØserves, que d’aprŁs les derniers entretiens tØlØphoniques
que nous avons eus, que vous ne croyez pas pouvoir envisager de
mettre en (cid:156)uvre le projet de collaboration tel que nous l’avons
dØfini dans notre courrier du 23 avril 1996, qui est restØ (cid:224) ce jour
sans rØponse. En consØquence, nous vous indiquons et, en tant
que de besoin, nous vous notifions, qu’(cid:224) compter du 31 dØcembre
1996, les SociØtØs JCB SA, JCB manutention et JCB Service cesse-
ront
relations commerciales avec vos SociØtØs, SEM-
CEDIMA et K. Malecot(cid:146). JCB states that a fax from F. Rausch, JCB
France to C. E. Coutts, JCB UK states in connection with these
purchases: (cid:145)I confirm that the following machines have been sold
called
one
direct
SEM-CEDIMA/Malecot. I would like to know at what price those
machines have been sold and if they have been supported by JCB
Sales. In any case, it is creating a major problem to me. Serial
numbers are 443680:
transferred from BERKELEY to GUNN
retailed on 2.04.96 to Greyhound, 443826: sold to GUNN retailed
on 2.4.96 to GREYHOUND(cid:146) (RSO II, p. 35, Annex 2).

dealers

GUNN

toutes

our

by

to

of

L 69/20

EN

Official Journal of the European Communities

12.3.2002

exclusivity of the territory (cid:145)supposes that the distributor
does not promote the JCB card externally but he cannot
be prevented from responding to an order from an
external customer if the latter asks it(cid:146).

JCB distributors

agreement
and enforced within JCB’s network in
France (88). Official
in France are
therefore not allowed to purchase machines or spare
parts directly or indirectly supplied by other official JCB
distributors in other Member States. This restriction on
access to the whole JCB network in the EC as a source
of supplies allegedly prevented official distributors from
being competitive compared to unofficial distributors in
France, given the attractive price conditions that official
JCB distributors in the United Kingdom were in a
that French official
position to offer and the fact
distributors were not free to source supplies from the
cheapest market (89).

According to JCB, the exclusivity referred to in clause
2.2 of the French distributor agreement attaches to JCB
products and parts (as the other side of the coin to the
obligation not to sell competing products) rather than
to the source within the official network. JCB states that
there is no evidence of the enforcement of an exclusive
purchase obligation in France which precluded sourcing
from approved JCB distributors in other Member States
the unnotified
(RSO II, pp. 34-36). The
agreement cited in recital 109 does, however, clearly
state two distinct obligations: first, that JCB products
must be purchased exclusively from JCB SA and JCB
Service and, second,
the distributor cannot sell
products which compete with JCB’s. The letters cited in
recital 110 show that JCB France is only concerned by
the breach of the agreement.

text of

that

(2) Sales outside the territory

(111) Under Article 2.3 of the standard unnotified agreement
with JCB France, official distributors undertake not to
sell or to distribute JCB machines or spare parts by
means of branches or depots outside their territory. This
agreement, according to a letter from JCB France to the
(cid:145)Bureau des concessionaires(cid:146), had been revised in 1989
based on Regulation (EEC) No 1983/83 so that

(88) Letter from (confidential) to DG IV dated 10 February 1999 (Main
file, pp. 2205-2243). The letter reads:
(cid:145)Approvisionnement en
machines et piŁces dans un pays de la CEE. Si JCB n’a jamais tenu
(cid:224) formaliser par Øcrit
les interdictions d’achats de piŁces de
rechange et les matØriels de la marque en dehors des sources d’ap-
provisionnement de JCB France, celle-ci a effectuØ des pressions
sur le rØseau et sur notre sociØtØ en utilisant les moyens disponi-
bles d’un concØdant vis (cid:224) vis d’un concessionnaire pour empŒcher
cette source d’approvisionnement autre. Ces interdictions faites par
JCB sont nØanmoins aussi contractuelles puisque inscrites dans le
including the distributor
contrat de concession (Annexe 1,
agreement between 1992 and 1995)(cid:146).

(89) Letter from Mr R. Pain, BPV (official distributor in France) to F.
Rausch, JCB France dated 17 April 1996, which reads: (cid:145)L’existence
de plusieurs rØseaux pirates n’est pas compatible avec un rØseau
concessionnaires tel que vous le souhaitez. Trois solutions nous
semblent envisageables: 1) Ajuster les prix de cession (cid:151) piŁces et
matØriels (cid:151) France avec les prix de cession Angleterre, 2) Ajuster
les prix de cession Angleterre avec les prix de cession France, 3)
laisser
la possibilitØ (cid:224) vos concessionnaires d’une vraie libre
concurrence et notamment de s’approvisionner sur le marchØ le
plus attractif(cid:146) (Insp. file, pp. 508-509).

(112) A different interpretation of the obligation not to sell
outside allotted territories in France is apparent in letters
from JCB to official distributors. Without any reference
to active canvassing, JCB finds the simple fact of selling
outside the territory to be contrary to the distributor
In two letters addressed to
agreement
in France.
different JCB distributors in France,
(cid:145)More
precisely, for the sake of your own interest, we would
wish that you liaise directly with each other to avoid
this kind of practice in the future. Rather than allowing
customers
competitive
advantage
environment, it would be preferable that you exchange
information regularly or that you negotiate between
yourselves these common deals(cid:146) (90). In these instances,
JCB has encouraged collusion between its distributors to
negotiate, between themselves, orders
from outside
allotted territories.

JCB stated:

take

to

of

a

(113) The obligation to refrain from selling outside the
territory, i.e. not to carry out passive sales, is additional
to the obligation not to distribute by means of branches
or depots outside the territory, as shown by JCB’s
request that an offer made by an official distributor to a

(90) Letter from E. de Montarnal, JCB SA to Mr Pain, BPV dated 4 July
1995. The letter reads: (cid:145)((cid:133)) nous sommes intervenus auprŁs de la
sociØtØ Technicentre pour lui rappeler que, contractuellement, les
concessionnaires JCB sont engagØs (cid:224) ne pas vendre ni diffuser des
produits JCB (neufs ou dØmonstration de moins de 6 mois) en
dehors de leur territoire(cid:146) (Insp. file, p. 87). The same interpretation
of the relevant provision, with the same wording, is also found in
the letter from Mr R. Caujole, JCB SA to Messrs Matton and Mella
of SociØtØ Philippe MTP dated 10 January 1995 (Insp. file, p. 88).
Whilst
(sell)
includes passive (unsolicited) sales. As regards encouragement of
collusion, both letters have the same wording: (cid:145)Nous souhaiterions
plus concrŁtement que, dans vos intØrŒts communs et bien com-
pris, vous vous mettiez directement en relation pour Øviter dans
l’avenir ce genre de pratiques. Il est en effet prØfØrable d’Øchanger
rØguliŁrement des informations ou de nØgocier entre vous ces
affaires communes plut(cid:244)t que de faire bØnØficier le client de ce cli-
mat concurrentiel(cid:146).

(promote) refers to active sales,

(cid:145)diffuser(cid:146)

(cid:145)vendre(cid:146)

12.3.2002

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Official Journal of the European Communities

L 69/21

that

customer pertaining to the neighbour distributor’s
territory be withdrawn (91) or requests that offers made
by JCB Ile de France be diverted to the latter (92). JCB Ile
de France has an exclusive territory in France. Insofar as
JCB Ile de France is integrated in the JCB Group, the
request that such offers be diverted may be legitimate,
except
JCB Ile de France competes actually or
potentially with other distributors in France. However,
the letter
that orders
emanating from its territory and addressed to another
official distributor should be diverted towards itself. If
such out-of-territory sales take place, official distributors
may receive a lower allowance compared to those on
sales within their territory (93).

from the distributor

requests

official distributor, dependent upon JCB’s approval (94).
As evidenced above, SEM-CEDIMA used to purchase
from the United Kingdom, at lower prices than those of
its competitors within the French distribution network.
This illustrates JCB’s control over passive and active
sales, even where there are no possible conflicts with
exclusive rights conferred to another distributor, since
there was no such distributor in the French territory
referred to. As soon as a distributor was appointed,
direct and indirect sales were no longer possible.

According to JCB, the incidents referred to in France
relate to active and not passive sales (RSO II, pp. 36-37
and Appendix 3), the former being in breach of an
entirely legitimate provision of the agreement in France.
The letters cited in paragraph 112, which, according to
the Commission, show restrictions on out-of-territory
sales and encouragement of collusion among dealers to
the customer’s detriment, are taken out of context. They
were primarily aimed at reminding the distributors in
question that
territory were
prohibited, furthermore making it clear that it did not
want to arbitrate a dispute involving an end-user. The
distributors would need to negotiate who was to be
responsible for the costs of after-sales service (RSO II, p.
59).
their
anti-competitive object are however clear and do not
offer room for interpretation.

The wording

sales out of

letters

active

JCB’s

and

of

to

libres(cid:146)

through the

According to JCB, JCB France’s letter cited in recital 114
is taken out of context insofar as it records the ending
of a temporary and exceptional arrangement with
SEM-CEDIMA in 1997, according to which the latter
was authorised to sell in the Loire Valley (cid:145)dans des zones
intermediary of
provisoirement
JCB distributor in
Kleber Malecot, the former official
JCB,
that
exceptional
this
area. According
arrangement and, particularly,
to carry out
the right
active sales in that area, came to an end as soon as a
new distributor, Telliez, was appointed in that area, as
recorded in JCB France’s letter dated 17 November
1998.
JCB dated 6 June
2000). Under the agreement referred to, JCB’s approval
is not given once and for all on active out-of-territory
sales;
is necessary for each transaction,
irrespective of whether the transaction resulted from
active or passive marketing. However temporary and
the agreement between 1997 and 1998
exceptional,
aims at controlling and restricting out-of-territory sales,
which were not possibly conflicting with exclusive
rights held by another official distributor.

(Letter from Mr Hargreaves,

its approval

(114) Similarly, in another letter, JCB asks SEM-CEDIMA, one
of its official distributors, not to canvass or to effect
direct or indirect (for instance, through an intermediary)
sales outside its exclusive territory, in particular, in the
territory recently allocated to another official distributor.
The same letter refers to an agreement between JCB and
SEM-CEDIMA to make
allotted
in a specific territory where there was no
territory,

sales outside

the

(91) Letter from R. Caujole, JCB France to SociØtØ Philippe MTP dated

10 January 1995 (Insp. file, p. 2154).

(92) Letter from G. Dorval and B. Cazalbou, Pinault Equipement to JCB
dated 31 January 1996 (Insp. file, p. 2171): (cid:145)Il appara(cid:238)t que nous
sommes de plus en plus frØquemment concurrencØs, en matiŁre de
piŁces de rechanges, par votre filiale Ile de France. En effet, celle-ci
livre directement des distributeurs Aquitains ((cid:133)). Nous vous
demandons d’intervenir Ønergiquement auprŁs de JCB Ile de France
afin que les demandes de piŁces de l’Aquitaine nous soient immØ-
diatement rØpercutØes conformØment (cid:224) nos accords(cid:146).

(93) Reference is made by Mrs F. Rausch, JCB France in a note to Mr L.
Forget dated 21 June 1988 to the fact that sales made outside
territories will not receive support ((cid:145)faire l’objet d’aide(cid:146)) (Insp. file,
p. 84).

(c) Benelux

(115)

letter between JCB NV and JCB SA
In an internal
(France),
arrangements
former described price
applied to exports of machines which were making
them attractive to traders involved in exports from

the

(94) Letter from E. de Montarnal,

JCB France to S. MalØcot, SEM
(cid:145)Suite (cid:224) plusieurs entretiens
CEDIMA dated 17 November 1998:
que vous avez eus avec Monsieur DesmouliŁres,
il avait ØtØ
convenu que lorsque vous auriez une opportunitØ de vente hors
du territoire de votre concession, dans une zone non couverte par
un concessionnaire JCB, vous nous en informeriez et ne concluriez
aucune affaire commerciale avant d’avoir re(cid:231)u un accord initial de
JCB France. Aujourd’hui nous vous confirmons (cid:133) que JCB a
nommØ l’entreprise Thelliez (cid:224) Mer (41) comme concessionnaire
dans la rØgion Centre-Val-de-Loire (dØpartements 45, 41, 37, 16).
En fonction de ce qui prØcŁde, nous vous demandons de ne plus
rØaliser de prospection ni de ventes directement ou indirectement
(cid:151) par exemple par un intermØdiaire (cid:151) en dehors du territoire
exclusif de SEM-CEDIMA qui vous a ØtØ concØdØ (cid:133) Vous remer-
ciant de respecter le point important ci-dessus ØvoquØ (cid:133)(cid:146).

L 69/22

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Official Journal of the European Communities

12.3.2002

course we

Belgium and the Netherlands. The letter goes on to say:
(cid:145)We investigated why one of the traders had a quick
growing turn-over of parts, without growth of machine
sales. This is how we discovered that
this trader is,
among other things, exporting to France to a firm
named Central Parts. We regret that this happened and
of
trader
immediately(cid:146) (95). Central Parts’ name is apparently
unknown to JCB NV. The decision to stop supplies is
taken because the trader is exporting to France.
It
follows that neither the trader in question nor Central
Parts or clients in France could any longer benefit from
the price arrangements set forth by JCB NV that made
supply from the Netherlands and Belgium attractive,
compared to French prices.

stopped

supply

this

to

(116) Similar arrangements of JCB NV concerning export sales
of machines and spare parts to resellers in Greece were
similarly discontinued, despite assurances given to JCB
UK that such transactions through (cid:145)grey channels(cid:146) were
(cid:145)managed and controlled and there was no pricing
competition with the subject importer(cid:146) (96). The letter
shows that, provided the grey market
(i.e. sales to
parallel traders in Greece) (cid:145)was managed and controlled
there was no price competition(cid:146) with the
and that
official distributor in Greece, sales to parallel
traders
were
sales were
carried out by JCB NV. These
challenged by JCB UK. Moreover had JCB NV lost
control over such sales or price, competition raised
problems with the local official distributor, such sales
would not have been carried out.

as

states

concerns,

(117) Regarding the Benelux, an internal review of various
subsidiaries
follows:
JCB UK’s
(cid:145)Benelux ((cid:133)). There still remains some major tasks to
achieve, the most vital being the conversion of a (cid:147)grey
dealer(cid:148) to a JCB Compact and Service dealer. Currently
(cid:147)Carma(cid:148) are importing new and used machines, valued
at over GBP 1 000 000 and parts valued at over GBP
100 000 from Berkeley Hemel Hempstead. The more
worrying aspect is however that they insist on selling
below JCB NV’s retail parts price and with a retail

service rate below the neighbouring JCB dealer’s price.
The next 6 weeks should see this matter resolved along
with possible spurious parts supply into Luxembourg
(ADLS’s next visit in mid-May)(cid:146) (97). Before appointing it
as an official
JCB distributor, Carma’s sales at prices
below those of its JCB competitors and to Luxembourg,
which were made possible by direct purchase from the
United Kingdom instead of from JCB’s subsidiary, were
thus worrying aspects to be resolved.

(d) Germany

(118) An internal memorandum dated 31 March 1993 from
JCB Landpower to JCB Sales in the United Kingdom
describes actions taken to stop grey exports to Germany
as follows: (cid:145)Landpower have been working closely with
JCB GmbH to prevent United Kingdom machines being
exported and have stopped Holt JCB supplying R N
Lawton(cid:146). JCB’s concern is clarified two paragraphs later:
(cid:145)Could I please ask that any future construction deals for
Farm Specials are viewed with extreme caution as
clearly these grey exports are giving us severe pricing
problems in Germany(cid:146) (98).

(119)

JCB’s concern is further elucidated in a fax from its
(cid:145)We have been
German subsidiary to JCB UK Sales:
informed that the above machine was sold via Berkeley
JCB Ltd and Newland Plant Hire to our former dealer
BMH. We kindly ask you to stop these grey imports
because BMH is a competitor to our present dealer

(95) Letter from A. Krug, JCB NV to J. P. Guillemard, JCB France dated

(97) Internal note from A. D. L. Shaw, JCB Service (Parts) to Mr N. D.

4 June 1992 (Insp. file, p. 90).

Allen dated 3 May 1994 (Insp. file, p. 1681).

(96) Letter from F. J. Zeevenhooven, JCB NV to C. E. Coutts, JCB Sales

(98) Note from D. R. Bell, Managing Director JCB Landpower to G.

Ltd dated 17 March 1995.

Greenshields dated 31 March 1993 (Insp. file, p. 854).

12.3.2002

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Official Journal of the European Communities

L 69/23

Draeger+Bastian. For
the abovementioned machine,
please credit us with 5 % service fee(cid:146) (99). In another fax
addressed to its German subsidiary regarding a machine
which had been resold from the United Kingdom to
Germany, JCB declares: (cid:145)We are determined to eliminate
any grey market machines and I have spoken direct
with the Regional Director of Berkeley JCB about this
service support fee claim(cid:146) (100).

Kingdom market, where prices were lower than those
In any event, the parts in
charged by JCB Germany.
question had been initially sold by official distributors in
the United Kingdom and were purchased by official
distributors appointed by JCB in Germany, allegedly on
JCB standards of
the basis of
service. The same is true also for parts and machines
purchased by official French distributors, also challenged
by JCB.

their ability to meet

(e) Austria

(120)

In view of the fact that (cid:145)Many dealers in Germany are
believed to be purchasing from local suppliers and there
some are in contact with United
is evidence that
Kingdom dealers(cid:146), an internal note from JCB UK to JCB
Germany states in 1994 that: (cid:145)An investigation must be
started in Germany to confirm where Interparts and our
major dealers are obtaining their parts. The use of a
be
private
considered(cid:146) (101).

investigation

company

should

(121) A letter from Gunn JCB to JCB refers to the latter’s
(cid:145)In January of this
involvement in exports to Austria:
year, you instructed us to cease supply of machines to
the above (Sunrise Ltd). This was on the basis that our
(cid:147)Austrian friends(cid:148) had pointed the finger at Sunrise and
Gunns, and accused us of supplying new machines to
Austria(cid:146) (102).
JCB’s reply stresses its protection from
the
cross-border
sales
manufacturer, we
our
distributors, wherever they are, from unfair competition
from whatever source, on all products(cid:146) (103).

as
protect

(cid:145)Obviously,

as
are

follows:

anxious

to

(f) Ireland

According to JCB,
the need for an investigation in
Germany referred to in recital 120, which was never
actually carried out, arose out of complaints from JCB
Interparts and major distributors were
Germany that
receiving parts from unauthorised resellers, who had
been supplied in breach of clause 4 of
the United
Kingdom agreement (RSO II, p. 51). This would imply
that the words (cid:145)United Kingdom dealers(cid:146) do not refer to
official United Kingdom distributors.
JCB Germany’s
concern over
the United Kingdom
agreement is less plausible than its concern about its
official German distributors purchasing from the United

clause 4 of

(99) Fax from G. Bohnenkamp,

JCB GmbH to G. Greenshields, JCB

Sales UK dated 11 May 1995 (Insp. file, p. 951).

(100) Fax from R. Price, District Sales Manager JCB to G. Bohnenkamp,

JCB GmbH dated 15 May 1995 (Insp. file, p. 950).

(101) Internal memorandum from A. D. L. Shaw, JCB Sales UK (Parts)
file, pp.
JCB GmbH dated 19 May 1994 (Insp.
to G. Pauls,
1702-1703);
(cid:145)Parts & attachments report (cid:151) March 1994(cid:146) dated
15 April 1994 and note from N. D. Allen, JCB to A. D. L. Shaw
regarding the report dated 19 April 1994 (Insp.
file, pp.
1800-1806).

(122) An official distributor in Ireland, ECI

JCB, requested
another United Kingdom distributor, Watling JCB,
to
eliminate the possibility of new machines sold by the
latter ending up in Ireland and to ensure that none of
took place(cid:146),
these (cid:145)highly unsatisfactory transactions
such transactions having involved (cid:145)indirect
to
sales
end-users(cid:146) (104). ECI JCB, in close coordination with JCB,

(102) Letter from D. Barton, Gunn JCB to C. Ingram, JCB Sales UK
dated 19 May 1989 (Insp. file, p. 880). As shown later on in the
document, the (cid:145)Austrian friends(cid:146) referred to are, most presumably,
employees from Terra,
JCB’s official distributor in Austria. A
communication dated 21 March 1989 between Gunn JCB and
JCB on this issue attributes the deal being lost by Gunn JCB to
unsubstantiated claims from Terra (Insp. file, p. 878).

(103) Letter from C. Y. Ingram, JCB Sales Director to D. Barton, Gunn

JCB dated 23 May 1989 (Insp. file, p. 368).

(104) Letter from D. O’Sullivan, ECI JCB to J. Davis, Watling JCB dated

26 January 1996 (Insp. file, p. 115).

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has been consistent in applying to itself the discipline it
requested from other distributors by refusing to supply
Central Parts when the latter asked ECI JCB to supply a
list of spare parts in 1996 (105). In other instances, ECI
JCB have transmitted to JCB orders from parallel traders
involved in trade with France for authorisation (106).

3. ACTUAL IMPLEMENTATION OF THE SERVICE SUPPORT
FEE IN THE UNITED KINGDOM, FRANCE, GERMANY
AND SPAIN

to one of

(123) That JCB is involved in setting the amount of the service
its official
fee is evidenced in a fax sent
distributors in France, as follows: (cid:145)we could negotiate an
after-sales fee of [between FRF 5 000 and FRF 10 000]
for this customer, that we reserve for you once you
confirm your agreement(cid:146) (107). Out of 39 service fees
charged by JCB France to United Kingdom distributors
in 1995, 33 have the same amount of [between FRF
5 000 and FRF 15 000]. Other examples in 1995 and
1996 further show that JCB, acting through its fully
owned subsidiary in France, determines the amount of
to official United Kingdom
and charges
distributors which had sold the machines,
in the
absence of and prior to any disagreement between them
and the French official distributors in whose territory
the machines were operated (108).

the

fee

JCB also stresses

less, whether the amount

reasonable estimate of
the expected costs associated
with such a machine (RSO II, pp. 62-65 and Appendix
1).
in many instances UK
that
distributors have not actually paid the fees invoiced to
them. Similarly,
JCB views as consistent with the
provisions notified (cid:145)that JCB should seek to establish a
formula for calculating a reasonable level of service
support fee, which could be used both as guidance to
dealers and by JCB itself when determining the fee in
accordance with clause 5 ((cid:133)). Once an amount has
been accepted as a reasonable estimate of the costs of
after sales care for a particular machine, there is no
reason why an exporting dealer should pay more or an
importing dealer accept
is
determined by the dealers or by JCB(cid:146) (RSO II, p. 65).
According to JCB, an of [between FRF 5 000 and FRF
15 000] fee on backhoe loaders referred to in recital
123 is reasonable in relation to the costs incurred by an
official distributor in France and not reimbursed by JCB
(of [between GBP 500 and GBP 1 500]) in servicing it
having regard to a reasonable profit element. Such costs
are estimated as labour and travel hours (30 h) and
travel distance (600 miles) to which uniform rates are
applied (RSO II, Appendix 1). These hours, distances,
rates and profit elements for their services necessarily
vary
and
customer’s location. JCB’s unilateral setting of such costs
in lieu of
its distributor illustrates its control over
pricing elements of export sales. Under the notified
agreements, such setting by JCB should take place only
in the event of disagreement between the distributors
concerned.

distributor

depending

official

the

on

According to JCB, the similarity of the levels of service
support fee is to be expected, given that they relate to
represents a
the same machines and the amount

(105) Fax from C. E. Coutts to F. Rausch dated 31 January 1995 and

attachments (Insp. file, pp. 2332-2338).

(106) Fax from J. O. Lomasney, ECI JCB to J. Bradley, JCB dated 31
January 1995 (Insp. file, pp. 2256-2262); fax from A. Nicholson,
ECI JCB to C. Coutts, JCB Sales dated 30 March 1995 (Insp. file,
pp. 917-921).

(107) Fax from F. Rausch, JCB France to A. Bois dated 25 May 1994.
The French text reads: (cid:145)((cid:133)) nous avons pu nØgocier pour ce client
une commission aprŁs vente de 8 000 FF, que nous te rØserverons
dŁs que tu nous auras confirmØ ton accord sur ce qui prØcŁde(cid:146)
(Insp. file, p. 819). See also fax from G. Greenshields, JCB Sales to
J. Davis, Watling JCB dated 9 February 1995 (Insp. file, p. 301).

(108) Doc. (cid:145)Machines pirates(cid:146) ACG dated 22 December 1995 (Insp. file,
p. 3565);
letter from J. Davis, Watling JCB to F. Rausch, JCB
France dated 5 March 1995 (Insp. file, p. 438); faxes from F.
Rausch, JCB France to G. Greenshields, JCB Sales UK dated 22
May 1996 (Insp. file, p. 322) and 28 May 1996 (Insp. file, p.
323-325);
letter from J. Davis, Watling JCB to F. Rausch, JCB
France dated 9 March 1995 (Insp. file, p. 1695).

(124)

regarding the service support

fee are
JCB’s views
outlined in an internal memorandum:
(cid:145)John Patterson
has asked me to convene a meeting to establish the
to deal with the
policy that we should implement
identification of
the
establishment of a suitable service support fee to be
the exporting dealer(cid:146) (109). Such fixed
levied against
referred to in JCB’s
service
correspondence where the fee is found not to be high

export machines

(cid:145)penalty(cid:146)

fee, or

grey

and

as

(109) Note from C. Y.

Ingram, Export Sales Director
Greenshields dated 29 March 1993 (Insp. file, p. 856).

to Mr G.

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enough to act as a deterrent for parallel exports from
Italy if profit margins are high (110), is levied (cid:145)against(cid:146)
the exporting distributor. It may amount to a substantial
share of a distributor’s commercial margin. In settling a
dispute between an Irish official distributor on the
amount of service fees for seven machines sold in
Ireland, a United Kingdom distributor, TC Harrison JCB,
stated an amount of fees that represent 57 % of its gross
profit on the transaction (111).

any intention for Brown SA to buy this machine
because: a) with the Service Support Fee our price
would not have been competitive, he could have bought
one cheaper in France ((cid:133))(cid:146) (112).

(126) Calculation methods are also illustrated in a reply from
JCB Sales UK to JCB’s German subsidiary dated 15 May
1995. JCB Germany was seeking a 5 % service fee from
JCB UK, which replied:
fee is normally
calculated as 4 % of the local customer achieved price
and this payment should be requested directly from
Berkeley JCB(cid:146) (113). In Spain, JCB’s subsidiary consulted
JCB UK on a fee, which: should be negotiated at around
the level of 5 % of the dealer’s purchase price (114). In
these instances, JCB indicates the amount in lieu of its
distributors and irrespective of their actual costs.

(cid:145)A support

According to JCB, its correspondence in paragraph 124
is not concerned with deterring export sales (RSO II, p.
64). Yet, for instance, the fax between JCB UK and JCB
Italy cited in that paragraph reads:
(cid:145)((cid:133)) There appears
that Sofim are indeed aggressively
to be little doubt
promoting the JCB product
into Southern Austria(cid:146).
Several instances of machines being resold (cid:145)in disruption
to the market price(cid:146), at prices 19-25 % lower than those
of the Austrian JCB distributor Strobl are provided as
example, and the fax concludes:
(cid:145)It would seem that
Sofim are quite determined to continue trading outside
of their territory or in contravention of their agreement
for resale. I would appreciate your comments as to what
can be done. Obviously with such a large price
differential the imposition of a small service support fee
is unlikely to be a deterrent(cid:146). Sofim sales into Austria
are clearly export sales (see also recitals 107 and 108
above as to the JCB agreement in Italy, which obliges
official distributors to sell only within their territory).

(127) These letters evidence attempts to apply a fixed amount
of fee. In none of the cases outlined above is there any
link between the actual costs of the service which the
French distributor concerned (i.e. not JCB France) had
actually provided or was likely to provide to the user
and the amount requested (115). According to JCB, such
costs, which are not reimbursed under its warranty as
manufacturer,
include pre-delivery inspection (tests),
installation at the customer’s site, 100 hour service and
other unrecovered warranty costs (116).

(112) Letter from D. W. Stone to Mrs Gibbs, Horwood & Company

Solicitors dated 21 March 1994 (Insp. file, pp. 243-245).

(113) Fax from R. Price, District Sales Manager JCB UK Sales to G.
Bonnenkamp, JCB GmbH dated 15 May 1995 (Insp. file, p. 950),
in response to the latter’s fax dated 11 May 1995 (Insp. file, p.
951).

(114) Fax from G. Smith, JCB Maquinaria to C. E. Coutts, JCB UK dated

27 July 1994 (Insp. file, p. 953).

(115) RSO I, p. 67.
(116) RSO II, Appendix1.

(125) The effects are also described in a letter from one
official JCB distributor, as follows: (cid:145)In this example, if we
had sold Brown SA a new machine we would have had
to pay in excess of GBP 2 000 to the French JCB
distributor for him to provide warranty and after sales
service to the owner of the machine. There was never

(110) Note from F. Rausch, JCB SA to L. Forget dated 21 June 1988
(Insp. file, p. 84A), or also fax from C. Y. Ingram, JCB to C.
Fiorentini, JCB SpA dated 14 February 1996 (Insp. file, p. 2598).
(111) Letter from B. Sutton, TC Harrison JCB to ECI JCB dated 29

February 1996 (Insp. file, pp. 924-925).

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4. INVOLVEMENT IN DISTRIBUTORS’ PRICING ON THE
PART OF JCB IN THE UNITED KINGDOM AND FRANCE

product specifications should be standardised across the
dealer network(cid:146) (117).

(a) The United Kingdom

the Association of

(128) The minutes of a Dealer Principal Meeting bringing
together
in the
United Kingdom on 21 May 1991 state that: (cid:145)To avoid
confusion and cross-border disputes,
the following
arrangements were agreed for dealer discounting:

JCB distributors

Category 1 (Sales Agent Only) 3 % commission for Sales
Lead.

Category 2 (Sub-dealer (cid:151) No stock in yard, no
demos-promotions, distributor to carry out all warranty,
sub-dealer takes the part exchange). 20 % discount on
machines.

JCB Landpower dealer (carries stock
Category 3 Full
full advertising and
machines, does demonstrations,
promotions, trains engineers, does warranty) 27 % on
machines. The Secretary was requested to write to JCB
Landpower
the overall
to obtain confirmation that
margin on the Fastrac was 31 %(cid:146).

Regarding 360(cid:176) machines and Joint venture, the minutes
further state: (cid:145)It was agreed that gross margins should be
maximised on this new product range and also that

(129) Less

of

the

Secretary

JCB expressed

than one month later,
to

its
disappointment
the Dealer
Association regarding the discounts agreed by the
(cid:145)Discounts to agricultural dealers. Several
Association:
meetings were arranged with Distributors and I believed
we had an agreement with at least Holt, Berkeley and
TCH. It was therefore very disturbing to hear the Dealer
Association had agreed a 20 % discount level which is
I believe
very different
unworkable(cid:146) (118).

to our discussions and is

(130) The conflict was settled at a subsequent meeting of the
JCB Dealer association held on 18 July 1991, attended
by Mr Greenshields from JCB, the minutes of which
state:
(cid:145)It was agreed that the Secretary draft matrix be
adopted for wholesale discounting to the agricultural
dealers, with the following amendments:

(a) The requirement to place a 2 months forward order
and provide a cheque to obtain 27 % discount, be
on
replaced
collection/delivery(cid:148),

machines

(cid:147)pay

for

by

(b) A note be added that all dealers (and distributors)
franchised
solely within their Landpower

trade
territory.

(117) Minutes of the Dealer Principal Meeting held at the Motorcycle
file, pp.

Museum, Birmingham, Tuesday 21 May 1991 (Insp.
673-676).

(118) Letter from D. R. Bell, Managing Director JCB Landpower to P.
Shields, Secretary of the Dealer Association dated 19 June 1991
(Insp. file, pp. 661-662).

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for wholesales

The basic principles for 27 %, 25 %, 22,5 % and 3 %
is now agreed(cid:146) (119). The
discounts
matrix, which establishes the criteria to obtain the four
categories of uniform agreed discounts,
is attached to
the minutes of the meeting.

was issued without reference to JCB Landpower to agree
prices and specification(cid:146). These documents make it
therefore clear that uniform discounts were agreed at
the various levels of the distribution chain: distributors
to dealers and dealers to end-users.

(131)

the

the Secretary of

the need to achieve higher prices

In a confidential letter to Watling JCB dated 11 January
the JCB Dealers Association
1993,
declares: (cid:145)Individually we have all been advised (by JCB
Sales) of
for
machines(cid:146) (120). The Secretary of
JCB Dealers
Association reiterated the same concern on 20 January
1993 in another letter to Watling JCB, which states that:
(cid:145)From previous discussions and correspondence, we
know that JCB wants to improve their achieved prices(cid:146),
which were allegedly falling.
the
Secretary of the JCB Dealers Association was requested,
(cid:145)to
regarding 180(cid:176) machines in the United Kingdom:
coordinate an exercise on the movement in ex-works
and achieved pricing across the United Kingdom dealer
body(cid:146) (121).

In this context,

(132) Regarding parts pricing in the United Kingdom,

in
JCB undertook calculations to set up its price
1991,
lists, which were also discussed with the Secretary of the
JCB Dealers Association. On a request
to clarify the
logic behind JCB parts pricing moves, JCB declares: (cid:145)Our
objective was to increase the average United Kingdom
dealer parts gross profit percentage by two percentage
points(cid:146); accordingly: (cid:145)We chose to concentrate on those
parts which already have a dealer gross profit of
[between 25 % and 50 %]
excluding
attachments, breakers and tyres. All these were uplifted
to provide a 5 % higher dealer margin(cid:146) (122). If JCB list
it would be
prices were merely recommended prices,

and above

(120) Letter from P. Shields to J. Davis, Watling JCB dated 11 January

1993 (Insp. file, p. 138).

(121) Letter from P. Shields, Secretary of the JCB Dealer association to
file, pp.

J. Davis, Watling JCB dated 20 January 1993 (Insp.
677-678).

(122) Letter from N. D. Allen, JCB Parts Director to P. Shields, Holt JCB

dated 16 July 1991 (Insp. file, pp. 669-670).

(i.e.
lower prices)
evidence does not

According to JCB, who deny that the discussions among
all JCB distributors in the United Kingdom referred to in
recitals 128 to 130 concerned resale price maintenance,
the reason for its involvement was that the amount was
too low (i.e. wholesale prices to distributors were too
high), official distributors being free to apply higher
(RSO II, pp. 55-56).
discounts
JCB was
Available
show that
contesting as to its principle the application of
the
discount in which it is involved, which, as described in
the minutes dated 21 May 1991, was intended (cid:145)to avoid
confusion and cross-border disputes(cid:146). To avoid such
disputes, the next meeting, on 18 July 1991, agreed, in
the presence of Mr Greenshields from JCB, that (cid:145)a note
be added (to the draft matrix adopted) that all dealers
(and distributors) trade solely within their Landpower
franchised territory(cid:146). In that matrix, the condition (cid:145)Must
trade solely within JCB Landpower Franchised Territory(cid:146)
is ticked with a X as necessary for getting the agreed
discounts of 27 %, 25 %, 22,5 % and 3 %. Nor could
JCB be unaware that, when jointly set by all its official
United Kingdom distributors,
discount was
necessarily uniform, as there would be little point in
setting and agreeing in common a discount that would
not be applied across the board. As stated in the
minutes dated 18 July 1991 Mr D. Meace from TC
Harrison was entrusted:
the relevant
Agricultural Principals with a view to ((cid:133)) advise that
they must only operate within their Landpower
franchised territory. Advise that the consensus view is
level of a maximum of 15 %
that a retail discount
would seem to be appropriate(cid:146).
in the letter
dated 19 June 1991 from Mr Bell to the Secretary of the
Dealer Association referred to in recital 129, the former
complains that the (cid:145)Agricultural Dealer Price List ((cid:133))

(cid:145)to speak to all

Indeed,

the

(119) Minutes of the Dealer Principal meeting held at the Motorcycle
file, pp.

Museum, Birmingham, Thursday 18 July 1991 (Insp.
664-668).

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useless to increase them with a view to increasing
(cid:145)United Kingdom dealer parts gross profit(cid:146). Increases of
gross profits cannot be achieved if the retail price is not
either set forth or influenced by JCB through its price
list or a fixed multiple of such JCB list prices.

correspondence evidenced above, such collective price
increases, based upon JCB’s lists and called on by JCB,
are collectively agreed with JCB.

(b) France

(133) The objective of harmonising prices among territories
resale price
also pursued in France, where

was
maintenance is apparent on a number of occasions:

JCB to

distributors

by
resale

Furthermore,

price, which

and
involved

recommendations(cid:146).

According to JCB, the letter cited in recital 132 was
referring to an increase in the difference between the
the
charged
price
recommended
no
assumption that the distributors would sell at the list
price or otherwise guaranteed distributor margins. More
generally, JCB states that recommended retail price lists
were and always had been mere recommendations (RSO
II, p. 57). In this context, gross margins or profits would
refer to maximum or theoretical margins. This assertion
is not
in line with the evidence relied upon and
commented by JCB. The letter from Mr Allen makes
clear that JCB’s calculations were made on the basis of
actual sales by all United Kingdom distributors in 1990
and that distributor margins were uplifted in the
calculations (cid:145)in line with the Dealer Parts and Service
these
Committee
calculations and margins were communicated to all
United Kingdom distributors through the Association
and discussed at the meeting of the association three
days later. The concern expressed in the minutes dated
19 July 1991, which enclosed the letter from Mr Allen,
was
(cid:145)JCB had
some distributors believed that
provided the 2 % extra margin(cid:146) and others (cid:145)believed that
they had not(cid:146). The fact that the secretary was instructed
(cid:145)to pursue the issue on behalf of
the Association(cid:146)
the so-called (cid:145)recommended price list(cid:146)
indicates that
works among the distributors as a clear basis for setting
resale prices,
for otherwise distributors would have
simply taken note of JCB’s new list of recommended
prices. On the other hand, available evidence shows
that, collectively, JCB may advise all its United Kingdom
distributors to achieve higher prices on certain machines
from time to time. This is also evidenced in the minutes
of the meeting dated 21 May 1991, as follows:
(cid:145)The
meeting has previously agreed that all Principles were
adopting a policy of maximising gross margins and it
was further agreed that the new 4CX should be sold at
the maximum price to further promote gross margins(cid:146).
The association works as a horizontal forum in which
the meetings and
JCB participates. As a result of

that

(cid:151) in a letter from an official distributor to JCB, the
former declares: (cid:145)Please find attached a copy of our
invoice regarding Malnati for an exceptional price of
FRF 315 000 as agreed by you, having regard to the
conditions below in this case. This dealing follows
an order for a new 4CX with fork addressed to
Central Parts by this customer at FRF 310 000 net
of tax (amount of lease)(cid:146). Obviously, the amount of
FRF 315 000 relates to the retail price, which is set
by
official
in
JCB
distributor (123).

agreement

with

its

that

sales

to Malnati

JCB states
involved the
provision of support from JCB France to Souffelmat
to enable it to sell at an exceptionally low price,
which otherwise would have made it sell at a loss
(RSO II, pp. 57-58). However exceptional,
the
evidence of resale prices being set in agreement with
JCB France is not contestable;

(cid:151) available

shows

evidence

JCB’s Managing
Director warned a distributor against low prices (i.e.
a retail price of FRF 187 800 for a JCB 1CX Drott),
as follows: (cid:145)may I remind you that, on this range of

that

(123) Letter from T. Weil, Souffelmat to M. Caujole,

JCB dated 23
October 1995: (cid:145)Nous vous prions de trouver en annexe copie de
notre commande Malnati pour un prix exceptionnel de Frs
315 000 selon votre accord, vu les conditions ci-dessous men-
tionnØes dans ce dossier. Cette affaire fait suite (cid:224) une commande
passØe par le client chez Central Parks, d’un 4CX neuf au prix de
Frs 310 000 HT avec fourches (montant du crØdit-bail)(cid:146) (Insp. file,
p. 2170).

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machines, we have no competitor, thus it is out of
the question to sell them for 177 800 FF(cid:146) (124).

JCB contends that FRF 177 800 was the selling price
to the distributor and not the retail price and relies
on a letter dated 6 July 1994 from Mr Montenay to
JCB France asking for a purchase price of FRF
177 800 enabling it to resell at FRF 187 800. JCB
France may be legitimately refusing to set a selling
price to its distributor of FRF 177 800, necessary to
the price
match, with an FRF 10 000 margin,
quoted. However, the distributor had to justify its
low reselling prices and to indicate why such a price
was lower than a reference of FRF 205 000 that JCB
would have found appropriate for machines for
which JCB had no competitor.
In its letter relied
upon by JCB dated 6 July 1994 to JCB, Mr
Montenay stated that
four other machines could
follow suit if the first machine was sold to Zanetti.
Such a sale could be likely to compensate afterwards
for the lower price proposed;

(cid:151) similarly, reverting to JCB UK on a future deal with
HE Services in 1996, JCB France also stated:
(cid:145)their
objective is to operate about 100 machines before
1997 and those machines will be coming from the
United Kingdom. ((cid:133)) 3. Parts pricing: they informed
us that any time they would like to buy parts, they
would ask JCB Ile de France or United Kingdom
dealers a quotation. We need to coordinate(cid:146) (125).
Such coordination refers to prices quoted by official
United Kingdom distributors, to be coordinated by
JCB UK with prices quoted by JCB France, to avoid
HE taking advantage of price competition between
them.

(124) Fax from F. Rausch JCB France to Mr Montenay dated 18 July
1994. The text reads: (cid:145)Suite (cid:224) votre courrier concernant l’affaire
Zanetti, nous sommes surpris que vous ayez pu donner un prix
de 187 800 FF pour 1 JCB CX Drott, alors que c’est (cid:224) peu prŁs le
prix concessionnaire. Je vous rappelle que sur ce type de machi-
nes, nous n’avons pas de concurrent et il n’est pas question de
vendre ces machines (cid:224) 177 800 FF. De plus ces machines sont
vendues (cid:224) des loueurs de plus grande importance que Zanetti (cid:224)
205 000 FF pour un Øquipement similaire. Pourrez-vous me don-
ner des explications sur la fa(cid:231)on dont vous avez calculØ votre
prix?(cid:146) (Insp. file, p. 2264).

(125) Fax from F. Rausch, JCB France to G. Greenshields, JCB UK dated

10 June 1996 (Insp. file, pp. 847-848).

JCB France

clearly refers

coordination would

According to JCB, the coordination referred to was
between the two companies in the JCB Group, JCB
France and JCB Sales, since HE wanted to buy spare
parts on the same terms and conditions wherever
the purchase took place. The coordination between
the two group companies was allegedly wanted by
JCB France so that its subsidiary company JCB Ile de
France could offer a price for parts
that was
competitive with the price levels being charged by
(RSO II, p. 59).
United Kingdom distributors
to United
However,
Kingdom distributors. In any event, if, as JCB states,
this
two
companies in the JCB group, this necessarily implies
that selling prices to those distributors were to be
they received an order
increased each time that
from HE Services to make them closer to those in
France. This also implies that JCB UK was able to
track down to which purchasers or end-users United
Kingdom distributors make quotations in order to
avoid that these purchasers take advantage of price
differentials
the United
Kingdom. Whether
the coordination would take
place within the JCB group or directly between JCB
the
France
outcome is that price quotations to HE Services
were artificially harmonised.

and United Kingdom distributors,

between

between

France

occur

and

F. AWARENESS OF EUROPEAN COMMUNITY LAW

(134) The discussions and exchanges of letters that took place
between 1975 and 1976 following the notification of its
agreements to the Commission made it clear to JCB that
the Commission did not accept the clauses of its initially
notified agreements involving direct or indirect export
restrictions between Member States. Thereafter,
is
apparent from internal documents that JCB was fully
aware of provisions of EC law applicable to distribution
agreements, in which the developments were followed
very closely (126).

it

(135)

In particular, as regards distribution of construction and
earthmoving machinery, a draft reply from JCB’s Sales
from an official
Development Director
distributor copied at JCB’s premises is very telling. As a
reminder to the official distributor,
the draft reads:
this (Article 85(1)) can be
(cid:145)Article 85(3) allows that

to a letter

(126) Internal memo from C. E. Coutts to E. Eckerts et al dated 16 May
1995 (Insp. file, p. 331); letters from C. Coutts, JCB to J. Davis,
Watling JCB dated 1 and 21 December 1994 (Insp.
file, pp.
198-199); fax from F. Rausch, JCB France to A. Bois dated 25
file, p. 819); and, more recently, article on
May 1994 (Insp.
exclusive distribution by Mrs F. Rausch,
formerly Managing
Director of JCB SA, Expert before the Paris Court of Appeal and
Chairman of
the FØdØration des
Entreprises Industrielles et Commerciales Internationales de la
MØcanique
in (cid:145)La Tribune(cid:146), dated 12
November 1998 (Main file, p. 2181).

the Legal Committee of

l’Electronique

et de

L 69/30

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12.3.2002

declared inapplicable in certain cases when the benefits
to the consumer exceed the disadvantages. Exceptions
are possible either on an individual basis, or through
one of the block exemptions, which for our industry is
best regarded under Regulation 83/83. Block exemption
selective
83/83 permits
distribution network, provided that neither party makes
it difficult
for intermediaries or users to obtain the
contract goods from other dealers inside the common
market (cid:133) This has been repeated inter alia in the
Ford
Commission
Agricultural Case ((cid:133))(cid:146) (127).

of 15.12.92 in

establishment

decision

the

the

of

a

(136) That decision found that Ford had infringed Article 85
in prohibiting or restricting parallel
trade. Ford had
been applying Regulation (EEC) No 123/85 regarding
motor vehicle distribution to the distribution of tractors
until the Commission made it definitely clear that those
products were not covered by the block exemption (see
paragraphs 18 and 23). Like other manufacturers, Ford
had brought its distribution agreements into line with
the provisions of Regulation (EEC) No 1983/83 in
1990/91, except for the restrictions on parallel trade,
which were found to infringe Article 85 (128). This
the benefit of block
that
decision made it clear
exemption regulations regarding car distribution was no
longer extended to vehicles no less different from cars
than tractors, such as construction and earthmoving
machines.

II. LEGAL ASSESSMENT

A. ARTICLE 81(1) OF THE EC TREATY

competition within the

or distortion of
market, and in particular
indirectly fix selling prices or
conditions and share markets or sources of supply.

common
those which directly or
trading

any other

1. AGREEMENTS

BETWEEN

OR
CONCERTED PRACTICES HAVING AS THEIR OBJECT OR
EFFECT
OR
PREVENTION,
DISTORTION OF COMPETITION

UNDERTAKINGS

RESTRICTION

THE

and

(138) Distributors appointed as official JCB distributors, on the
its
one hand,
subsidiaries controlled by JCB Service, on the other,
manufacture or purchase products for resale. They are
therefore undertakings within the meaning of Article
81(1).

JCB Group,

comprising

the

and,

in particular,

JCB distributors

(139) Agreements and concerted practices between JCB and
official
those
described hereafter, therefore, constitute agreements and
concerted practices between undertakings. In particular,
instructions given by JCB to its contractual distributors
within the official network, who acquiesce them, are not
unilateral acts which would escape the prohibition
contained in Article 81(1). Admission to JCB’s network,
governed by an agreement drawn up in advance, implies
acceptance by distributors of the policy communicated
by JCB, which they have followed by adjusting their
behaviour in the market according to these instructions.

(140) As

is

further

shown below,

JCB and its official
distributors have implemented various agreements or
concerted practices which have as their individual object
or effect
the restriction of competition in different
Member States, within the meaning of Article 81(1).
agreement
They are
restrictive of competition within the meaning of Article
81(1) which governs the distribution of JCB machines
and spare parts in the EC. Such elements, which need
not be defined precisely as
either agreements or
concerted practices insofar as both are caught by Article
81(1), are the following:

also elements of

a broader

(137) Article 81(1) of the EC Treaty prohibits all agreements
between undertakings and concerted practices which
may affect
trade between Member States and which
have as their object or effect the prevention, restriction

(127) Draft letter from C. E. Coutts, Sales Development Director, JCB to
Donal O’Sullivan, ECI JCB (Insp. file, pp. 785-786) in response to
a letter from Donal O’Sullivan to G. Greenshields, JCB dated 19
February 1996 (Insp. file, p. 789).

(128) OJ L 20, 28.1.1993.

(cid:151) the prohibition or the restriction on official

JCB
distributors selling outside their allotted territories,
in particular to other Member States, covering active
and passive sales to end-users and to resellers, both
authorised and unauthorised;

(cid:151) the imposition of a service fee on sales made by
official distributors outside their allotted territories,
in particular to other Member States;

(cid:151) the implementation, at least in the United Kingdom,
of the remuneration system named (cid:145)Multiple Deal
Trading Support(cid:146), which makes allowances granted

12.3.2002

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L 69/31

to distributors dependent on the destination of sales
and limited to sales to end-users;

(cid:151) the determination of

retail prices or
discounts for goods purchased from JCB for resale
by official JCB distributors;

resale or

(cid:151) the obligation for official distributors to purchase
their JCB machines and
exclusively from JCB all
spare parts
in particular,
purchases from distributors in other Member States.

resale, preventing,

for

(a) Restriction of sales by official
outside their allotted territory

JCB distributors

(144)

duly appointed agents (131). TC Harrison refers to a
golden rule within the distribution network regarding
exports of dealing with local official distributors in the
relevant Member State (132). Questioned by JCB, Gunn
JCB had to justify sales made
to other official
distributors in other Member States on the grounds that
the machines were not new, which implies that it is
unable to export new machines (133). Similarly, Watling
they are unable to export new
JCB recognises that
machines from the UK (134) or assures JCB that,
in
general, sales of new machines abroad are subject to
JCB’s approval (135).

In those instances, official JCB distributors in the United
sales owing to the
Kingdom do not effect export
final
the purchaser or
geographic origin of
destination
applied
The
sales.
irrespective of whether purchasers are end-users or
resellers, authorised or not. It covers both passive and
active sales.

restriction

the

of

is

(1) Existence and duration of the agreement

(141)

In the distribution agreements that JCB furnished to the
Commission for the United Kingdom, Italy, Germany,
Benelux, Denmark and Ireland, territories are exclusively
allocated to official distributors as areas of prime
responsibility for sales and service (129). This provision
is combined with JCB’s undertaking not
to appoint
another distributor in the same territory. Furthermore,
the distribution agreement
in the United Kingdom
prevents official distributors, unless authorised by JCB,
from selling JCB machines and spare parts wholesale for
resale except
to a JCB distributor or an approved
sub-dealer (130).

(142) Besides the very wording of

have

Kingdom

the agreement, official
restricted
distributors
United
in particular to purchasers from
out-of-territory sales,
other Member States. Such distributors point out that
export sales are not possible to other Member States, or
that such sales are dependent upon JCB’s approval. This
general restriction on out of territory sales is broader
to unauthorised distributors
than a ban on sales
inherent
to a selective distribution system. Selective
distribution systems which, unlike JCB’s in the United
Kingdom, are only based on purely qualitative selection
criteria, are not necessarily restrictive of competition
within the meaning of Article 81(1).

(145) The standard agreement between JCB and its official
distributors in Italy also includes a prohibition on selling
outside allotted territories and, hence, to other Member
States. Official distributors are restricted in their ability
to make export sales from Italy; such sales are in
the
principle
reserved
implementation of
JCB
requesting that official distributors be advised not to sell
in a different
into another distributor’s
country (136).

of
the agreement also shows

Evidence

territory

JCB.

for

(146)

In France, the agreement between JCB and its official
distributors, as effectively applied, prevents or restricts
from selling outside their allotted
such distributors
territories (137). Purchasing in Benelux for
resale in
other Member States, like France and Greece, prevents
the purchaser from obtaining subsequent supplies of
JCB products (138).
Similarly,
and
Ireland (140), official
JCB distributors view sales made
outside allotted territories as contrary to the agreement
entered into with JCB, or refer such sales for approval
to JCB.

in Austria (139)

(147) These initiatives by official distributors are not unilateral
conduct. According to JCB’s own records, JCB actively
discourages sales of new machines and spare parts

(143) For instance, Berkeley JCB commits itself to referring to
JCB doubtful orders from overseas end-users or their

(129) Recitals 62 and 69 (references to recitals are also references to
footnotes and documents therein). Such references are provided
as an illustration of the facts assessed. They are not necessarily
exhaustive, as other documents quoted in this decision may also
refer to the same or similar practices.

(130) Recitals 63 and 71. The words (cid:145)wholesale for resale(cid:146) designate
irrespective of the quantity sold, as

sale for resale in practice,
opposed to sale for own use.

(131) Recital 89.
(132) Recital 91.
(133) Recital 84.
(134) Recital 85.
(135) Recital 86.
(136) Recitals 107, 108 and 124.
(137) Recitals 111 to 114.
(138) Recitals 115 to 117.
(139) Recitals 121 and 124.
(140) Recital 122.

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overseas (i.e. in other Member States), whether through
a United Kingdom distributor or a third party or
actively works to prevent exports from the United
Kingdom to Germany (141). JCB also states this policy in
respect of sales made into an Austrian territory by
official distributors in the United Kingdom or Italy (142).
JCB also states
its concern about a future official
distributor in the Netherlands purchasing in the United
into Luxembourg or United
Kingdom for
Kingdom distributors
to German
distributors (143). Similarly,
JCB views sales made by
official distributors
from the United Kingdom as
contrary to the territorial protection to which German
official distributors are entitled (144).

selling

resale

also

(148)

JCB’s attitude and action merely confirms that its official
distributors follow JCB’s instructions and distribution
policy. The prohibition or restriction on official
JCB
distributors, within their allotted territories, supplying
requests from other Member States is therefore part of
the agreement between, and implemented by, JCB and
its official distributors. Such prohibition or restriction,
which is applied by distributors irrespective of the status
of
the United
Kingdom, France, Italy, Benelux, Germany, Austria and
Ireland either as the origin or the destination of export
sales.

the purchaser,

concerns,

least,

at

(149) Evidence that JCB has warned official distributors in the
United Kingdom against cross-border sales to other
that such
Member States dates back to 1989. Proof
distributors were effectively restricted from exporting or
selling outside their allotted territories dates back to
1992 in the United Kingdom, to 1993 in Italy, to 1992
in France and to 1995 in Ireland. The latest evidence
appears in France in 1998. There is evidence of the
agreement from 1989 to 1998 at least.

(2) Restrictive object or effect

(150)

JCB regards overseas sales as unfair competition with its
local distributor in other Member States and declares
that it actively discourages such sales (145). For instance,
the prohibition of export
invoked by JCB
regarding sales made by an Italian distributor (SOFIM),

sales

is

(141) Recitals 93 and 118.
(142) Recitals 121 and 124.
(143) Recitals 117 and 120.
(144) Recitals 118 and 119.
(145) Recital 93.

severe

pricing

supplies

problems

in order to protect the territory of another distributor
(TERRA) (146). Similarly,
from the United
Kingdom to Germany are opposed by JCB because they
The
cause
undercutting of official distributors’ prices is viewed by
JCB
JCB as an impediment
distributor in the Benelux area (148). In France, JCB has
encouraged
different
exclusive territories to negotiate together out-of-territory
sales, expressly to prevent customers taking advantage
of competition between them (149).

to becoming an official

locally (147).

distributors

official

having

(151) Over and above the clear anticompetitive intent stated
by JCB in those declarations,
the prevention or
restriction of both active and passive sales aims at
sheltering exclusive territories from sales made by other
official distributors. The restriction is on a purely
geographic basis.
to all
possible purchasers,
including sales to resellers both
within and outside JCB’s distribution network and to
final users who are located in a different territory and,
especially, in a different Member State.

therefore sales

It concerns

(152) The restriction has prevented almost all official UK
distributors from maximising their potential sales to
other Member States (150). In a context of wide price
differentials within the common market between 1989
to 1996, the restriction of export sales prevented official
JCB distributors from selling at lower prices, for instance
in the United Kingdom, to resellers competing with JCB
in other Member
to final users
distributors or
States (151). As a result, official
for
JCB distributors,
instance in France, Germany, Austria,
Ireland and
Greece, have been artificially sheltered from competition
directly or
JCB
distributors, notably in the United Kingdom or Italy.

indirectly stemming from official

(153) These

or

they

have

restrictions

prohibitions

been
implemented under duress. The compensation that
Gunn JCB paid to JCB on its sales of spare parts to
other Member States between 1988 and 1993 shows
that
severely
This
compensation penalises transactions with customers in
other Member States, compared with transactions within
the allotted territory. Consequently, official distributors
either abstain from such transactions or charge higher
prices allowing for deduction of the compensation. As a

enforced (152).

were

(146) Recitals 108 and 124.
(147) Recital 118.
(148) Recital 117.
(149) Recital 112.
(150) Recitals 83 to 91.
(151) Recitals 75 to 81, 86, 108 and 112, for instance.
(152) Recital 96.

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L 69/33

result, official distributors in other Member States face
less severe price competition and end-users suffer in
consequence.

evidenced in 1988 and visible between 1994 and 1996.
The application of a fixed scale is apparent in 1995.

(154) This is not to say that JCB may have actually succeeded
in preventing all export sales. However, it is clear that
the agreement between JCB and its official distributors
aims at preventing or restricting competition within the
various territories allocated to official distributors in the
common market. This is clearly a restriction by object.

(2) Restrictive effect

(b) Imposition of a service fee on sales made outside

the allotted territories

(1) Existence and duration of the agreement

(155) The clauses included in standard distributor agreements
as notified to the Commission, which provide for a
service support fee, are part of the agreement between
JCB and its official distributors in those Member States
for which they have been notified (153).

respectively, 4 % of

(156) Besides the notified clauses, internal instructions within
JCB state that
the fee applicable by
the amount of
official distributors
throughout Germany and Spain
should be,
the local customer
achieved price and 5 % of
the distributor’s purchase
price (154). Similarly,
i.e its
in France or Germany, negotiates with
subsidiaries
United Kingdom official distributors the payment and
the amount of the fee due on machines operated in
those Member States. In France, the fee is recurrently set
[between FRF 5 000 and FRF
by JCB France at of
15 000]
for backhoe loaders sold from the United
Kingdom (155).

is apparent

JCB,

that

it

the

JCB explicitly describes

in particular when the

refers
JCB warranty

(159) The charging of a fixed amount does not conform to
incurred in
the stated objective of covering costs
providing services,
is
fee
calculated ex ante as a percentage of purchasing or
selling prices.
service
fee as a penalty levied against an exporting
support
effects (156).
distributor, or
to its deterrent
reimbursed by
Services under
JCB (157). According to JCB, the recurrent charging of
the same amount of fee is explained by the fact that the
fee relates to the same kind of machine and, in France,
by
reflects
servicing
costs
element (158).
distributors plus
However,
servicing costs necessarily differ between
distributors according to differences in wages, distances
travelled and efficiency in performing the tasks. The
imposition of a fixed service fee on the same type of
irrespective of
machine harmonises
actually and necessarily different
and stifles
competition between distributors.

incurred
reasonable profit

selling prices

the normal

costs

are

a

(160) The fee amounts to a substantial share,

for instance
57 %, of a distributor’s gross margin, which lessens the
for official distributors to supply machines to
appeal
territories other than theirs,
including other Member
States (159). The difference between the actual costs
incurred by the servicing distributor and the amount of
the service fee constitutes a de facto profit pass-over
clause which deters export sales. It penalises exporting
official
remuneration
dependent on whether they sell within or outside their
territory
territorial
reinforces
protection of other official distributors.

distributors, makes

therefore,

their

and,

the

(157) Therefore, the setting by JCB of a fixed amount or scale
for the service fee as well as the direct negotiation by
JCB with official distributors of the fee in the case of
sales into the territories of other official JCB distributors
concerted practices
is part of
implemented by JCB and its official distributors in the
United Kingdom, France, Germany and, possibly, Spain.

the agreements or

(161)

(158) The notified part of

the agreement stating that

the
amount is first to be negotiated between the distributors
involved dates back to 1975.
in
setting the amount of the service support fee is already

JCB’s involvement

the

selling prices of

It is also a direct consequence of the service support fee
that
such supplies become
artificially closer to those of the local official distributor.
As actually implemented,
insofar as the service fee is
distributors
between
not
concerned and its amount is not that of the actual costs
the service fee has also the
of the service provided,
effect of distorting or
restricting price competition
between distributors and territories.

negotiated

official

the

(153) Recital 52, 64 (United Kingdom) and 69 (other Member States of

the EEC in 1975, except France).

(154) Recital 126.
(155) Recitals 86, 119, 123, 124 and 127.

(156) Recital 124.
(157) Recital 64.
(158) Recitals 64 and 127.
(159) Recitals 124 and 125.

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(c) Remuneration system referred to as the (cid:145)Multiple

Deal Trading Support(cid:146)

(1) Existence and duration of the agreement

support on certain specific

(162) Under the (cid:145)Multiple Deal Trading Support(cid:146) system, all
official JCB distributors in the United Kingdom receive
transactions,
financial
provided certain conditions are met.
sent
circular letters to all United Kingdom official distributors
clarifying the implementation of the trading support, in
particular as regards out-of-territory sales. JCB and one
of
its official distributors view false declarations and
allowances being obtained without the above conditions
being met as a breach of their agreement (160).

JCB has

profitable. Both JCB’s discretion in granting
the
allowance subject to allotted territories being respected
and the condition itself
that machines are operated
within the allotted territory of the distributor who sold
them,
agreement between the
distributors involved, restrict competition between them
in different
territories. These conditions make their
remuneration dependent on whether they sell within or
outside their allotted territory.

absence of

in the

(167)

It is also a direct consequence that selling prices of such
supplies might become artificially closer to those of
in whose
supplies from the official
territory the machines are operated,
in particular in
other Member States.

JCB distributor

(163) The (cid:145)Multiple Deal Trading Support(cid:146) is therefore part of
the agreements between JCB and its official distributors,
at least in the United Kingdom. It has been applied since
the
1977. Evidence that,
machines concerned must be operated within the
territory allotted to the selling distributor dates back to
1992.

to obtain the allowance,

(2) Restrictive effect

According to JCB, the Multiple Deal Trading Support
must be necessarily limited to sales
to end-users,
excluding unauthorised resellers or official distributors,
who would not be entitled to switch to competing
marques under the agreements as notified. JCB’s right to
withdraw support
territory
without agreement being reached with the distributor in
whose territory they are going is needed to reimburse
the latter for providing all services. According to JCB,
this right
is also needed to ensure that appropriate
servicing is available to the users wherever the machines
may be (RSO II, p. 14-16).

if machines went out of

(164)

to

to

react

inter-brand

In general, multiple trading support allows official
competition.
distributors
However, communications from JCB to all
its official
distributors in the United Kingdom and actual examples
of its implementation show that an essential condition
for the allowances to be paid, or a repayment not to be
claimed by JCB, is that the machines are operated in the
allotted territory of
the selling official distributors.
Otherwise, the allowance is either made subject to the
agreement of the official distributor in whose territory
the machine is operated or withdrawn by JCB (161).

(165) Payment of

the allowance for machines operated in
territories other than that of
the selling distributor,
subject to the agreement of the distributors involved,
acts as a profit pass-over clause. Moreover, evidence
shows that JCB may exert its discretion in withdrawing
traded outside the
the allowances when machines
territory undercut local pricing conditions (162).

(166) Official distributors’ remuneration of up to [between
0 % and 10 %] on average of their purchase prices are
thereby made dependent upon the final destination of
sales (163). As a result, such sales to final users in
competition with other JCB distributors are made less

(160) Recitals 98 to 100.
(161) Recitals 98 to 100 and 102 to 105.
(162) Recital 103.
(163) Recital 99.

The reimbursement of services carried out on machines
sold out of territory is made possible already by direct
payments from JCB and by the service support fee. JCB
does not identify which additional services are covered
by the Multiple Deal Trading Support. The practical
effect of the support system is that, since active sales by
United Kingdom distributors are restricted and sales to
other official distributors from other Member States
cannot be granted support under
the
allowances are limited to sales in the United Kingdom
and cannot be indirectly made available to purchasers
the
from other Member
market-partitioning effect of the agreements.

States. This

the system,

reinforces

(d) Resale price maintenance

(1) Existence and duration of the agreement

(168) The minutes of a meeting held on 21 May 1991 and
attended by all official JCB distributors in the United
Kingdom describe the arrangements agreed by such
distributors
remuneration and
discounts applicable by all of them for wholesale supply

in respect of

the

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Official Journal of the European Communities

to the various categories of resellers in order to avoid
cross-border disputes. The minutes further state the
common objective of maximising gross margins on
other categories of products (164).

(169) Regarding the discounts,

JCB’s initial

reaction is to
object only to their level, insofar as it is different from
the level agreed with three such official distributors, but
not to the very principle of uniform discounts (165). The
agreement on the principle of uniform discounts and,
afterwards, their level,
is further conformed less than
two months later by the minutes of the next meeting of
in the presence of
all JCB official distributors, which,
JCB executives, adopted a different scale (matrix)
for
wholesale discounting to the various categories of
including also a retail discount level (166).
distributors,
JCB’s instructions agreed to by official distributors were
a concerted basis to achieve higher margins or profits in
respect of both machines and parts in the United
Kingdom (167).

(170)

that,

in France,

is also apparent

It
JCB has limited
official distributors’ freedom to set their resale prices, by
occasionally setting retail prices in agreement with those
distributors. JCB has warned them if their resale prices
were too low or below a certain reference point. JCB
France has also encouraged collusion between official
distributors to avoid customers taking advantage of
sought collusion with United
itself
competition or
Kingdom distributors
to harmonise prices between
France and the UK when asked for a quotation (168).

(171) Compliance with minimum or fixed price levels and
discounts agreed upon between JCB and its official
distributors regarding machines and spare parts for
resale is, therefore, part of the agreements in the United
Kingdom or at least the concerted practices in France.
The agreement between JCB and its official distributors
on discounts or prices applicable to resale is apparent
from 1991 to 1993 in the United Kingdom and from
1994 to 1996 in France.

(2) Restrictive object

(172) The agreement in question in the United Kingdom, or,
at least, the concerted practices in France, has the object
of fixing resale prices and artificially harmonising selling

and

prices
restricting or distorting price competition.

between territories,

discounts

L 69/35

thereby

(173) An agreement,

those distributors

initially concluded between all United
Kingdom distributors in the presence of JCB executives,
amended following indications from JCB, necessarily
influences
their
business conduct. The same is true for requests from
to
JCB, made known to and agreed by distributors,
achieve higher or fixed prices and to maximise margins.
Such prices would have been different otherwise,
irrespective of the exact degree to which the agreement
has been implemented. This is a restriction by object.

in the course of

(e) Exclusive
supplies

purchase,

preventing

cross-network

(1) Existence and duration of the agreement

(174) The distributor agreement

for

JCB’s
JCB’s

distributor
subsidiaries

the United Kingdom
notified to the Commission in 1975 and last furnished
in 1995, states that official distributors must obtain
their supplies of
JCB products exclusively from JCB,
within the official JCB network or from another source
authorised by JCB (169). The distributor agreement
for Ireland, Denmark and other EC Member
export
States
intra-network
in 1976 does not prevent
purchases either. However, unlike these agreements, the
agreement
unnotified
in France
in France as exclusive
designates
suppliers of JCB products for French JCB distributors,
thereby excluding other sources of supply such as other
in other Member States (170). The
JCB distributors
unnotified standard agreement for official distributors in
Italy also includes this exclusive purchase obligation
between JCB’s Italian subsidiary and its distributors (171).
Similarly,
JCB has been concerned with purchases of
spare parts by official German distributors from official
distributors in the UK instead of from JCB’s German
subsidiary (172). Moreover, a breach of the obligation
prompts JCB to threaten termination of an official
dealership in France, which would not be conceivable
had an agreement not existed (173).

(175) Therefore,

the obligation on official distributors

to
obtain their supplies of JCB machines and spare parts
exclusively from JCB’s subsidiary in France between
1992 and 1996 or in Italy since 1993 is a part of the
agreement entered into between and implemented by
JCB and its official distributors.

(164) Recital 128.
(165) Recital 129.
(166) Recital 130.
(167) Recitals 131 and 132.
(168) Recitals 112 and 133.

(169) Recitals 65 and 70.
(170) Recitals 109 and 110.
(171) Recital 106.
(172) Recital 120.
(173) Recital 110.

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(2) Restrictive object or effect

fact that JCB’s profits also varied considerably between
Member States and were particularly high in France,
where retail prices were also highest (174).

(176)

In principle, a national subsidiary within the JCB Group
would hardly be in competition with its 130 to 140
official JCB distributors throughout the common market
as source of supply of JCB machines and spare parts.
Distributors are at a lower stage in the supply chain and
charge their commercial margins. In practice, levels of
intra-group pricing, gross margins charged by JCB’s
the efficiency of some such distributors,
subsidiary,
lower profit margins or better
services,
particularly in the United Kingdom, may explain why
such distributors are actual competitors of the national
subsidiary as sources of supply.

logistic

(177) The obligation on official distributors in France and Italy
to obtain supplies exclusively from JCB’s national
subsidiary excludes other potential suppliers of new JCB
machines and spare parts within or outside the JCB
official distributor network. Therefore, within JCB’s
distribution network, this obligation has the object of
preventing official distributors in those Member States
from having access to other potential sources of supply
of genuine JCB products in other Member States. This
obligation is implemented in France to prevent imports
and cross-supplies of machines and spare parts from
one Member State to another within the network.
It
shelters
entire French and Italian distribution
networks from such cross-supplies, thereby restricting
competition.

the

(178) The exclusive purchase obligation prevents, at

least,
French official distributors from purchasing genuine JCB
machines and spare parts where it is cheaper to do so,
in Member States other than France, and notably in the
United Kingdom. As a result, such distributors are not
capable of offering competitive prices in comparison
with other non-official resellers that obtain supplies in
the United Kingdom. The interest of such resellers in
arbitrage between the United Kingdom and France, and
repeated attempts to curtail it, are partly explained by
this exclusive purchase obligation, which, according to
French official distributors, exposes
them to unfair
competition with parallel traders.

2. RESTRICTIVE

OBJECT

EFFECT
THE
OF
AGREEMENTS AS A WHOLE:
PARTITIONING OF
NATIONAL MARKETS AND ABSOLUTE TERRITORIAL
PROTECTION

AND

(179) Between 1989 and 1996, prices of

JCB
machines and spare parts varied considerably between
Member States, for instance by up to [between 0 % and
100 %] between France and the UK in the case of spare
parts and by up to [between 0 % and 50 %] for new
internal JCB notes highlight the
machines. Meanwhile,

identical

(180) Price differences between Member States that

across Member States

result
from normal market functioning are not a competition
the context of differences in
law problem. However,
prices and profits
JCB
machines and parts sheds light on JCB’s and some of its
official distributors’
interests in partitioning national
markets and fixing resale prices or discounts within the
common market so as to prevent purchasers from
taking advantage of wide price differentials across the
EC.

for

As

(181) The various elements identified above as restrictions of
competition have as their common denominator that
they limit out-of-territory sales effected by authorised
distributors.
the
combination of the above restrictions in the agreement
between JCB and its official distributors consistently
pursues
the object of partitioning national markets
within the common market with a view to providing
absolute territorial protection. This is a restriction by
object.

described

further

below,

(182) By their very nature, the arrangements on the discounts
to be applied, as well as the objective of maximising
gross margins agreed by JCB and its official distributors
across
the United Kingdom, distort and harmonise
market prices across territories. The same is true in
respect of the special financial support offered by JCB in
France to distributors, who competed with parallel
JCB has occasionally agreed with its official
traders.
special allowances and financial
French distributors
support
to
competition from unauthorised resellers (175).

in those territories which were subject

It

the limitation of
(183) This support has as its sole object
competition from parallel
the
entails
traders.
concerted implementation of differential pricing across
territories, on JCB’s
initiative, with the object of
protecting certain territories from indirect competition
stemming from United Kingdom official distributors.
Coordination between JCB France and United Kingdom
distributors on the prices to quote to a single purchaser
operating in these two Member States is also aimed at
distorting market prices and artificially harmonising
them across Member States with a view to restricting
competition from United Kingdom distributors.

(174) Recitals 75 to 80, 106, 110 and 124.
(175) Recital 80.

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(184)

sales

combine

territorial

In some Member States,
like the United Kingdom or
Ireland, although not in France or Italy, JCB distribution
exclusivity with
agreements
restrictions on out-of-territory
and selective
aspects, like the prohibition on selling to unauthorised
distributors, in particular in other Member States. They
prevent arbitrage by unofficial distributors purchasing
JCB construction and earthmoving machines for resale,
thus restricting their direct competition with official
distributors and, indirectly, competition between official
territories or Member States.
distributors in different
and
Demand
construction
fully
earthmoving machines and spare parts is not
the
mobile
official
distributors
to competition from
subject
unauthorised resellers and final users do not effectively
discipline pricing behaviour from one Member State to
another, in a context of large price differentials across
the EC. In this market context, such a combination has
the effect of partitioning national markets.

throughout
are not

from end-users

Incumbent

EC.

of

(185) On the other hand, the availability of a territory as a
precondition for, and hence a restriction on, becoming
an official JCB distributor does not directly relate to the
quality of
the service to be provided. A distributor
JCB distributor
located in an area where an official
operates to JCB’s entire satisfaction would not become a
its potential or actual
JCB distributor,
this limitation the number of
merits. As a result of
is
distributors, and competition derived therefrom,
quantitatively limited by the condition that
they are
allocated a territory. This limitation in JCB’s selective
distribution system, which is neither of a qualitative
nature nor
laid down uniformly for all potential
resellers, may be caught by Article 81(1).

irrespective of

(186) As previously stated, the agreement whereby official JCB
distributors are prevented from or restricted in effecting
passive cross-border sales restricts competition. Being on
it restricts such sales to
a purely geographic basis,
in other
resellers, authorised or not, and to users
to
Member States. The
authorised
an
and
resellers
anti-competitive goal. The prohibition of sales of new
machines to unauthorised resellers in other Member
States, unless, from 1995 onwards, authorised in writing
by JCB, is also restrictive of competition, having regard
to other provisions allegedly intended to improve
after-sales service within JCB’s distribution network in
the EC.

restriction of
users

such sales
pursues

(187)

prevented

Indeed, those United Kingdom official distributors who
are
to
unauthorised resellers are also requested to pay a service
fee on sales made outside their territory. As stated in

new machines

from selling

the United Kingdom distributor agreement, that fee is
intended to maintain JCB’s service standards, whilst
compensating for the cost to the local distributor of
providing services for a machine which it did not sell.
JCB’s official distribution network covers the whole of
the EC.

(188)

In these circumstances, the prohibition on directly or
indirectly selling machines to unauthorised resellers in
other Member States goes beyond the goal of assuring
high service standards. There are official distributors
throughout the EC, who provide product maintenance
according to JCB standards, remunerated either on a
normal commercial basis or by both the service fee and
JCB itself under its warranty, whether the machine was
sold directly by an official distributor or
indirectly
through an unauthorised reseller.
In this context, the
the object or the effect of
prohibition has,
restricting competition.

instead,

(189) The market partitioning effects of the combination of
territorial exclusivity restricting cross-border sales and
selective clauses are further increased by three other
restrictions:

(cid:151) firstly, a de facto prohibition on or restriction of
cross-supplies within the official network, which
isolates the French and the Italian markets from the
rest of the common market. In fact, this obligation
supplements the restrictions on official distributors,
for instance in the United Kingdom, that prevent
them from effecting sales outside their territory,
including sales to official JCB distributors (176);

(cid:151) secondly, a service support fee levied on sales made
outside the allotted territory, which, in so far as it is
charged irrespective of
actually
involved, penalises exports;

costs

real

the

(cid:151) thirdly, the Multiple Deal Trading Support in the
United Kingdom, which, as actually implemented,
has similar export deterrent effects to those of the
service support fee.

fee, withdrawal of

(190) By imposing additional price elements on sales outside
the territory (non-cost-related elements in the service
support
the allowance under the
Multiple Deal Trading Support, compensation in cases
of sales to unauthorised distributors) compared to sales
within it, resale prices are made artificially closer in
different territories. Assuming a 10 % gross margin, the

(176) Recital 110. Recitals 84 and 120 show indications of restrictions
on such intra-network sales from the United Kingdom to France
and Germany.

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If

total

a service

the official distributors’

Multiple Deal Trading Support makes more than one
remuneration
third of
dependent upon the geographic destination of sales,
is
which is already appreciable.
additionally charged for a transaction outside
the
territory, an official distributor may lose more than
three quarters of
its gross margin compared to a
transaction within its territory. Other examples exist of
collusion on prices with JCB’s
involvement which
further harmonise them across different Member States.
These additional price elements support the effectiveness
of the market partitioning, since purchasers have fewer
incentives to shop around within the common market.

fee

(194)

(191) The

to grant absolute

to unauthorised resellers)

restrictive objects and effects of
the agreement are,

the various
elements of
therefore, mutually
restricting imports or
supportive in preventing or
exports within and outside JCB’s distribution network in
order
territorial protection. The
combination of selective distribution (i.e. the ban on
sales
in JCB’s distribution
agreements with (i) these three categories of restrictions,
(ii) other restrictions that artificially harmonise prices
and (iii)
and discounts
in
protection
territorial
sales,
the
to other Member States, clearly has
particular
anti-competitive object of partitioning national markets
in the EC and is therefore caught by Article 81(1).

across different
restricting

territories
passive

3. APPRECIABLE RESTRICTIONS OF COMPETITION AND

EFFECT ON TRADE BETWEEN MEMBER STATES

(192)

all

groups of

JCB holds nearly 40 % of the United Kingdom market
construction and earthmoving
for
machinery and 60 % for backhoe loaders.
Its market
share across the EU is about 14 % for all construction
and earthmoving machinery and higher than 40 % for
backhoe loaders. JCB’s market share for specific spare
parts is higher than its market share on each product
market
is
and
considerable for those parts.
In analysing the specific
market for backhoe loaders, the Commission stated in
1999 that JCB’s position and market power would not
be easily challenged by competitors. This finding is
confirmed by the fact
JCB’s market share and
that
leadership in 1995 were similar to that in 1975 (177).

its market power

for machines

concerned
United Kingdom,
the
States.
products manufactured
Pricing-related agreements
in the United Kingdom
concern products likely to be resold in other Member
States.

agreements have
in

other Member

restricted

from supplying

JCB’s official distributor network in the United Kingdom
is
resellers, purchasing
machines and spare parts for resale outside allotted
territories. Pricing-related restrictions and other financial
disadvantages inhibiting passive cross-border sales may
render
such sales almost unprofitable. Trade flows
between the United Kingdom and other Member States
would have been different if sales outside the allotted
territories had not been penalised with the service
support
implemented and had
unconditionally received allowances under the Multiple
Deal Trading Support. To the extent that those elements
may diminish or even cancel out the profitability of
sales made to other Member States, official distributors
may have given up carrying them out.
is also
apparent
agreements with JCB’s official
distributors in Italy and France prevent such distributors
from purchasing JCB machines and spare parts in other
Member States.

effectively

that

the

fee

as

It

(195) When the restrictions concern resale or purchases in the
same Member State (home market), they have limited,
although noticeable, effects in the common market. The
same restrictions on sales to or purchases from other
Member States necessarily affect competition and trade
between Member States. Competition and trade between
Member States would have been much stronger
if
efficiencies and attractive pricing conditions present,
mainly but not only in the United Kingdom, had not
been artificially isolated therein by the agreements.

(196) On account of

those factors, having regard to JCB’s
position in the relevant markets and the very nature of
involving market partitioning
the above restrictions
between several Member States,
through absolute
territorial protection and price fixing, the restriction of
competition and the likely effects on trade between
Member States are appreciable within the meaning of
Article 81(1).

B. ARTICLE 81(3) OF THE EC TREATY

1. COMMISSION REGULATIONS (EEC) NO 1983/83 AND

(EC) NO 2790/99

(193)

JCB’s agreement and practices relate specifically to the
distribution of JCB’s machines and spare parts produced
or sold in some Member States for resale in other
Member States. When effected elsewhere than in the

(177) Recitals 15, 17 and 27 to 33.

(197) The block exemption under Commission Regulation
in force when the agreements or
(EEC) No 1983/83,
concerted practices were concluded or implemented,
does not apply. The agreements or concerted practices
involve taking measures to prevent distributors or users
from obtaining contract goods from Member States
outside the contract territory and restrictions on resale

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Official Journal of the European Communities

L 69/39

prices. That circumstance, by virtue of Article 3(c) and
(d), renders inapplicable the block exemption provided
in Article 1 of Regulation (EEC) No 1983/83.
for
Paragraph 8 of
that
restrictions on a distributor’s freedom to set its resale
prices or to choose its customers are not exempted.

its preamble

further

recalls

(198) The block exemption under Commission Regulation
(EC) No 2790/99 does not apply either, having regard
to JCB’s market share in the EC market for backhoe
loaders (40 % in value and 45 % in volume), which is
higher than the threshold of 30 % provided for in
Article 3.
JCB’s agreements also include hardcore
restrictions listed in Article 4, which exclude the benefit
of
in Article 2
thereof.

the block-exemption provided for

(199) Even if construction and earthmoving machines in the
EC, where JCB’s share of total sales is below 30 %, were
taken as
the relevant market, Regulation (EC) No
2790/99 would not apply to JCB’s agreements either,
having regard to Article 4(a),
(c) and (d) thereof.
JCB’s agreements with its authorised distributors, which
are buyers of
its machines and spare parts for the
purposes of resale, include:

(b),

(cid:151) restrictions on the buyer’s ability to determine its

resale prices;

(cid:151) restrictions on the territory into which passive sales

are effected by the buyer;

(cid:151) restrictions on active or passive sales to end-users or
duly appointed agents in a selective distribution
system;

(cid:151) restrictions of cross-supplies between distributors.

2. REGULATION (EC) NO 1475/95

issue,

complex

to JCB,

for highly

the kind at

technical
According
equipment of
the interests of
consumers and of distributive efficiency are best served
the kind
with an exclusive and selective system of
allowed under Regulation (EC) No 1475/95,
the
rationale of which should be applied to the distribution
the
of
In essence,
that
technical
distributors must be trained professionals capable of
providing high-quality after-sales service and accurate
information on machine improvements, modifications
and problems, which requires considerable investment
(RSO II, pp. 46-47).

JCB states
that
its machines means

its equipment.

complexity of

that

that Regulation. Article 1 declares

(200) The block exemption under Commission Regulation
(EC) No 1475/95 does not apply on account of Article
1 of
the
Regulation applies to new motor vehicles intended for
use on public roads. JCB knew this and wrote to its
distributors that its distribution arrangements regarding
construction and earthmoving machines, which are not
intended for use on public roads, needed to be viewed
under Regulation (EEC) No 1983/83.
JCB executives
were also aware that the Commission had refused to
the benefit of block-exemption
extend to tractors
Regulation (EEC) No 123/85, which was applicable to
motor vehicles prior to Regulation (EC) No 1475/95.
JCB even claimed in its letter dated 11 March 1976 to
the Commission that construction and earthmoving
should be treated differently from motor
machines
vehicles, despite its current allegations that the rationale
of Regulation (EC) No 1475/95 should be applied to its
distribution system (178).

Nonetheless, had Regulation (EC) No 1475/95 been
applicable, quod non, the agreement between JCB and
its official distributors would also render that Regulation
inapplicable. The agreement includes several provisions
listed in Article 6(1) of the Regulation, which rule out
the benefit of the exemption, namely:

(cid:151) restrictions

on

purchasing
machines and parts from other official distributors
in other Member States (Article 6(1)(3));

distributors

official

(cid:151) restrictions on official distributors’

freedom to
determine prices and discounts on contract goods
(Article 6(1)(6));

(cid:151) the fact that official distributors’ remuneration, by
virtue of both the service fee, insofar as it bears no
relation to actual costs whilst being determined by
JCB,
is made
dependent on the destination of sales and/or the
place of residence of the purchaser (Article 6(1)(8));

and the multiple deal

support,

(cid:151) the restriction on official distributors’
freedom to
their choice
obtain from a third undertaking of
spare parts which compete with contract goods and
which match their quality (Article 6(1)(9)).

3. INDIVIDUAL EXEMPTION UNDER ARTICLE 81(3)

(201) Pursuant

the
Commission may grant an individual exemption under

to Article 4(1) of Regulation No 17,

(178) Recitals 65, 111, 135 and 136.

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Article 81(3), only to the agreement that JCB notified.
As shown above in recitals 61 to 72, some provisions
agreed between or implemented by JCB and its official
distributors identified as restrictive of competition have
been notified or submitted to the Commission.

(202) No decision pursuant to Article 81(3) may be taken on
restrictive agreements or concerted practices that have
not been validly notified (179).

(cid:151) the implementation, at least in the United Kingdom,
the

the remuneration system referred to as

of
(cid:145)Multiple Deal Trading Support(cid:146);

(cid:151) the determination of resale or retail prices and or
discounts for goods purchased from JCB for resale
by official JCB distributors;

(203) The part of the agreement notified or furnished to the
Commission since 1975, on which the Commission has
not yet
the
following restrictions of competition further analysed
above:

taken any definitive position,

covers

(cid:151) the prohibition, within allotted territories of
supply wholesale

Kingdom,

on

United
unauthorised
intra-network sales) (180);

resellers

for

resale

(i.e.

the
to
selective

(cid:151) the obligation for

to purchase

French and Italian official
distributors
exclusively from JCB’s
subsidiaries in France or in Italy respectively all their
JCB products (machines and spare parts), excluding
other official distributors, subsidiaries or sources in
other Member States;

this

(cid:151) the restriction on official distributors, within their
allotted territories, supplying purchasers in other
Member States;
in the
United Kingdom, an abusive
extension in the
the notified prohibition on
implementation of
supplying wholesale to unauthorised resellers for
resale to cover, in general, export sales to authorised
resellers and end-users;

restriction includes,

(cid:151) the payment of a service fee for sales made outside
allotted territories in the United Kingdom and other
EEC Member States 1975, excluding France,
the
amount of the fee being primarily negotiated by the
in whose
selling distributor and the distributor
territory the machine is operated (181);

(cid:151) the imposition of a service fee on sales made
outside the allotted territories based on a fixed scale,
the amount of which is actually determined by JCB,
which constitutes an abusive implementation of the
notified clauses in this respect.

(cid:151) the obligation, valid in the United Kingdom and
other EEC Member States in 1976 except France, to
purchase parts, equipment and ancillary products
for use with or repair of JCB products only from
JCB, unless stated otherwise by JCB, and to use or to
in connection with
supply only JCB products
warranty
JCB
machines (182).

or modification

work

on

(205)

(204) The provisions

in the notified agreement are not
actually applied as notified or are applied in parallel
with unnotified agreements. They are also applied in
Member States for which the contracts notified do not
contain such provisions. The unnotified elements of the
agreement (183)
include the following restrictions of
competition, further analysed above:

(179) Judgment of the Court of Justice in joined Cases 209 to 215/78
and 218/78, Van Landewyck v Commission, 29 October 1980,
ECR 1980 p. 3125, 3243, points 61 and 62.

(206)

(180) Recital 63.
(181) Recitals 52, 64 and 69.
(182) Recitals 65 and 70.
(183) Recitals 61 to 65 (United Kingdom) and 67 to 72 (other Member
States)
the latest
agreements notified or made known to the Commission for each
Member State.

relevant provisions of

indicate the most

agreements

to appraise

the only possible course open to the
In principle,
Commission is
in
JCB’s
accordance with the terms notified to it (184). However,
the examination of the notification in this case cannot
be made in isolation from unnotified agreements. Such
unnotified agreements are part of
the economic and
legal context of the former. Having regard to the fact
that unnotified restrictions
reinforce the effects of
notified restrictions, notified and unnotified restrictions,
taken as a whole, infringe Article 81(1). Had JCB fully
notified its actual agreements,
the Commission could
have assessed the effects in the common market of the
combination of restrictive provisions and those of some
individual provisions in various Member States. Notified
and unnotified provisions are applied simultaneously
within JCB’s distribution network and should be
appraised as a whole.

In any event,
practices do not
Article 81(3), as further analysed below.

the actual agreements or concerted
the cumulative conditions of

fulfil

(184) Judgment of the Court in Joined Cases 43 and 63/82 VBVB and
[1984] ECR 19,

VBBB v. Commission, 17 January 1984,
summary, No 1.

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4. CUMULATIVE CONDITIONS OF ARTICLE 81(3)

by the manufacturer, the suitability to become official
JCB distributors cannot be ruled out for parallel traders
of JCB machines (185).

(a) Improving the production or distribution of goods

(207) Some of the benefits common to certain categories of
like the exclusive distribution,
distribution agreements,
exclusive purchase and distribution of motor vehicles,
may be derived from JCB’s distribution arrangements,
which in fact combine provisions present
in those
categories. Those benefits are:

(cid:151) improved planning of production for

JCB and
regular supply for its official distributors, which
facilitate or enhance sales, market penetration and
more rational output. An exclusive and dedicated
distribution network may have allowed JCB to
appropriately adjust production to each territory’s
situation;

supply

throughout

given the density of

(cid:151) improved and regular
the
JCB’s
common market,
distribution network. Such a dedicated network may
have also allowed for concentration of sales efforts
for new machines within allotted territories and
rapid on-site supply of spare parts imported from
other Member States;

(209) The combination of

territorial exclusivity with the
prohibition on selling to unauthorised distributors,
which may compete with official distributors, and
for official distributors
exclusive purchase of parts
prevents or restricts the development of the market for
maintenance, repair and provision of spare parts under
optimum safety conditions, which is separate from the
market for sales of new machines. Regarding the local
that an official distributor enjoys in
market power
respect of supplies under tight
this
combination outweighs the expected benefits for the
consumer,
JCB’s
important market share in backhoe loaders.

taking into account,

time constraints,

in particular,

(210) Meanwhile, the consumer obtains no apparent benefit
from the obligation for official distributors in France
and Italy, which meet JCB service standards, to purchase
machines or spare parts exclusively from their national
JCB subsidiary, thereby excluding suppliers of genuine
JCB products like other official distributors in other
Member States (186). Such distributors are able to supply
at a lower cost than JCB’s subsidiary. Lower purchasing
costs cannot therefore be passed on to the consumer.

that
intervals,

(cid:151) such cooperation has also allowed the provision of
efficient after-sales service within allotted territories
on machines
at
need
unpredictable
to be operated under
demanding service conditions. Since construction
and earthmoving machines are technically complex,
servicing needs to be assured by personnel capable
of meeting stringent
thereby
guaranteeing optimal service conditions.

standards,

services

service

repair

(b) Allowing consumers a fair share of the resulting

benefit

It

is

(208) Consumers can be deemed to obtain a fair share of the
objective benefits outlined above.
therefore a
legitimate concern to select distributors on the basis of
their ability to provide high service standards
to
purchasers of JCB products. Obligations on distributors
to employ staff having specialised training and to
provide customer services did not exclude the benefit of
the block exemption under Regulation (EEC) No
1983/83 on exclusive distribution. JCB’s negotiations to
appoint Central Parts as an official distributor show that,
subject to appropriate support and a territory provided

to

beneficial

the service support

(211) The application of unfavourable financial conditions
depending on the geographic destination of sales (e.g.
non-cost-related elements of
fee,
Multiple Deal Trading Support dependent on the
destination of sales, compensations for passive sales) is
the
consumers
not
differences in prices are not dependent on costs or
objective economic differences,
they face artificially
homogeneous prices throughout territories for the same
range of
agreements or
concerted practices fixing resale prices or discounts are
not beneficial to the consumer, who can no longer take
advantage of price differentials for identical products in
the EC.

either. Where

JCB products.

Similarly,

(212) However, a service support fee which covered the actual
in whose
costs
incurred by a servicing distributor
territory the machine is operated would favour the
distribution of JCB machines in the common market,
whilst being beneficial to consumers, only if the service
cannot be carried out and charged on a normal
commercial basis by the official distributor in whose
territory the machine is operated. The Commission has

(185) Recital 95.
(186) Recital 111.

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that

no evidence
allegedly
remunerated with the service support fee could not be
provided on such a basis.

service which is

the

unauthorised resellers might not be qualified to assure
thereby making it
safety standards and requirements,
indispensable to restrict passive sales of JCB spare parts.
This view cannot be upheld for a number of reasons:

(c) Imposition

of

restrictions which

are

not

indispensable to the attainment of the objectives

common market

improving the distribution of

(213) The application of unfavourable financial conditions
depending on the goegraphic destination of sales is not
indispensable for
JCB
either. Whilst
in the
products
artificially harmonising prices, the price elements which
are charged on passive sales actually discourage the
transfer of efficiencies in distribution from one territory
to another. For
the same reason, agreements and
concerted practices fixing resale prices or discounts are
not
the
the
distribution of
JCB products, were they to allow
consumers any benefit.

improvement

indispensable

to

of

(214) Passive

allowed

sales must

in an exclusive
be
distribution system to avoid the disadvantages
for
competition outweighing the benefits. Restrictions of
such sales of new machines and spare parts
to
authorised distributors or final users based on the mere
geographic destination or origin of the purchaser are
clearly not indispensable to the attainment of the above
economic benefits, it having been shown that they do
not accrue to consumers. The same is true as regards
sales of new machines
to unauthorised resellers,
provided they have access to the relevant manufacturer’s
information on technical and safety requirements.

(215) Within the

the

to the

indispensable

common market,

combination of
territorial exclusivity, restriction of active and passive
sales and selective distribution in JCB network cannot be
regarded as
improvement of
distribution of construction and earthmoving machines,
among which JCB holds an EC market share of 45 % for
backhoe loaders. Such machines are, for the most part,
operated in limited geographic areas and do not travel
over long distances and variable locations, unlike motor
vehicles. The Commission does not have evidence that a
predominant number of end-users in every Member
likely to effect arbitrage amongst different
State is
Member States. Consequently,
failing
intermediaries mandated by the purchasers, parallel
trade
is not
fragmented by official distributors who enjoy local
power in their territory to the detriment of competition
and purchasers.

common market

in this sector,

ensures

that

the

(216) By limiting support

integrated software,
in terms of
product references, microfiches and safety instructions
to the official distributor in each territory, JCB confers a
considerable commercial and competitive advantage to
argued that
It
its distributor network.

could be

exclusivity is a quantitative
unrelated

selection
(cid:151) territorial
criterion
to
providing high service standards. Authorised or not,
resellers are liable for the products and services that
they provide;

indispensable

and

not

(cid:151) users of earthmoving machines are professional
purchasers, who take into account safety constraints
in order to define their purchase and maintenance
policy. Furthermore, service support by official JCB
distributors may be subject to artificially uniform
prices.
spare parts
outside the official network in order to avoid such
uniformity being jeopardised by competition;

JCB may prevent

supply of

of

for

all manufacturers

(cid:151) finally, safety constraints for JCB products are the
earthmoving
same
machines. The Commission has no indication that
though being undoubtedly
either
substantially
specific, have
requirements
distinct
that would
its competitors
such
require selective supply of parts or
selectivity has been indispensable in allowing JCB to
assure to customers higher safety in the operation of
its machines than its competitors.

JCB machines,
safety
to those of

that

(217) The restriction of passive sales of

spare parts

to
unauthorised resellers prevents repairers from assuring
optimal safety conditions and maintenance services, in
so far as it leaves potentially suitable distributors or
repairers outside the official network. Such restriction
prevents a competitive market for repair services from
emerging and is disproportionate in order to attain the
benefits stemming from exclusive distribution of
JCB
specific spare parts. It is a paradox for a manufacturer
to claim that independent resellers and repairers cannot
assure high safety standards when such a situation is
into by
attributable
this
to agreements
manufacturer which restrict
and technical
support exclusively to the official distributor.

entered
logistic

(218) As

a

result,

the Commission does not

find it
indispensable for an improved distribution with benefits
from high safety standards accruing to users either to
restrict
the
supply of JCB machines and spare parts or to allocate
exclusive territories outside which active or, a fortiori,
passive sales are not possible.

to authorised distributors or end-users

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(219) Finally, it is certainly not indispensable for the beneficial
effects of a service support fee to accrue to consumers
that such a fee should be charged by JCB to official
distributors based on a fixed scale or amount.
is
sufficient for that purpose that the official distributors
involved determine their actual costs and negotiate a fee
accordingly on a case-by-case basis. The service allegedly
supported with the fee, which, however necessary,
is
not
included under JCB’s warranty, could be either
provided and charged by the servicing distributor on a
normal commercial basis taking its individual costs into
account or reimbursed directly by JCB. Both alternatives
are less restrictive than a fee which operates as a
disincentive to out-of-territory sales.

It

(226)

all

the

advantages

examination of

(220) Furthermore, the Commission needs not to carry out a
detailed
and
disadvantages likely to flow from an exclusive and
like JCB’s, also
selective distribution system which,
includes other indirect restrictions on out-of-territory
sales where there is evidence that such a system has
been used,
to prevent exports and
imports and,
thus, artificially partition the common
market and abusively protect distributors’ territories.

if not designed,

exceeding 10 % of

or associations of undertakings fines of from 1 000 to
1 000 000 units of account, or a sum in excess thereof
but not
in the
preceeding business year of each of the undertakings
participating
either
intentionally or negligently, they infringe Article 81(1)
of the Treaty.

infringement where,

turnover

the

the

in

to

such as

distributors

agreements were

conducive
official

JCB could not reasonably be unaware that its actions
restricting
and
its
competition
by
among
partitioning territories
in the common market. The
Commission furthermore had clearly warned JCB
export
and indirect
already in 1975 that direct
prohibitions
those which are assessed as
restrictive of competition above were likely to infringe
Article 81 (Article 85 at that time) (187). Furthermore,
restrictive
the
from the
agreements or concerted practices
intention
as
intrabrand
evidenced by JCB’s own declarations and instructions to
its official distributors or in internal documents in the
is
conduct of
therefore intentionally committed.

the
results
competition,

its business (188). The

implementation

infringement

continued

restrict

to

of

(221) Some of the cumulative conditions of Article 81(3) not
being fulfilled, it is not necessary therefore to examine
competition in
whether
respect of a substantial part of the products in question.
Nor is it necessary to assess whether some combinations
of
in the agreement
would meet the conditions of Article 81(3).

the above restrictive elements

agreements

eliminate

the

(222) Accordingly, no individual exemption may be granted,
JCB had notified its actual agreements as

even if
implemented.

C. ARTICLE 3 OF REGULATION NO 17

(223) Under Article 3(1) of Regulation No 17, where the
Commission finds that
there is an infringement of
Article 81, it may by decision require the undertakings
concerned to bring such infringements to an end. The
Commission has no evidence that the infringement has
been brought to an end and JCB denies that any such
infringement exists or has ever existed.

(224)

It is therefore necessary to require JCB to bring to an
end the infringements described above.

2. ARTICLE 15(5)

(227) Article 15(5)(a) further specifies that no fine shall be
imposed in respect of acts which have been duly
notified to the Commission, provided they fall within
the limits of the activity described in the notification.

(228) The only texts of agreements duly notified to the

Commission are the following:

(cid:151) Greece,

Portugal,

Sweden and
Finland: agreements notified with form A/B on 30
June 1973,

Spain, Austria,

(cid:151) Germany,

Italy,

Belgium,

Netherlands,
Luxembourg,
agreements
furnished on 18 December 1975 (modifying those
notified on 30 June 1973), form A/B dated 30 June
1973,

the
Denmark:

Ireland,

(cid:151) UK:

agreement

on
ultimately
December 1995, form A/B dated 30 June 1973.

furnished

29

D. ARTICLE 15 OF REGULATION NO 17

1. ARTICLE 15(2)

In particular, the agreements submitted in 1980 and
1995 for application solely in the United Kingdom and

(225) Article 15(2) of Regulation No 17 provides that the
Commission may by decision impose on undertakings

(187) Recitals 44 to 46.
(188) Recitals 93, 102, 103, 104, 108, 110, 112, 116, 118, 121, 124,

129 and 130.

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the intragroup agreement with JCB France furnished on
18 March 1976 in reply to a request for information
pursuant to Article 11 of Regulation No 17 were not
notified in accordance with the relevant Commission
regulations (189).

(a) Prohibition to supply wholesale for resale in the

United Kingdom

Abusive implementation

(229) The Commission has not taken a definitive position on
any agreements brought to its attention by JCB, whether
duly notified or not. These agreements include the
following restrictions of competition:

(231)

Kingdom,

(cid:151) the prohibition, within allotted territories of
supply wholesale

the
to
United
selective
unauthorised
intranetwork sales) (190). The application of
this
clause, exclusively in the United Kingdom, has been
made known to the Commission since 1975,

resellers

resale

(i.e.

for

on

In JCB’s distribution agreements notified in 1973, clause
5 stated that official distributors would not sell new JCB
machines (less than 12 months old) and spare parts,
directly or indirectly, outside the United Kingdom. They
would furthermore take all reasonable steps to avoid
selling JCB products
in the United
Kingdom for
the United Kingdom.
Pursuant to clause 4, official distributors agreed to sell
JCB products wholesale for resale only to approved
subdealers in their territory and to sell retail
in the
United Kingdom (193).

to a purchaser

resale outside

the amount of

(cid:151) the payment of a service fee for sales made outside
allotted territories,
the fee being
primarily negotiated by the selling distributor and
the distributor in whose territory the machine is
operated (191). This clause has been made known to
the Commission since 1975 for the United Kingdom
and other EEC Member States in 1975, excluding
France,

(cid:151) the obligations to purchase only from JCB parts,
equipment and ancillary products for use with or
repair of JCB products, and to use or to supply only
in connection with warranty or
JCB products
modification work on JCB machines, unless stated
otherwise by JCB (192). This clause has been made
known to the Commission for the United Kingdom
and other EEC Member States in 1976 since 1975.

(230) Among these three restrictions, the following two were
either abusively implemented, applied in Member States
other than those for which they were notified, enforced
out of the scope of the activities notified, reinforced
with unnotified restrictions or implemented differently
than notified:

(cid:151) the prohibition to supply wholesale for resale, and

(232) The Commission clearly objected to clauses 4 and 5 as
constituting, inter alia, an export prohibition (194). The
Commission made no distinction whether purchasers
from other Member States were purchasing for their
own use or for resale, whether authorised by JCB or
not. The United Kingdom, which was the national
market where JCB had the highest market share (56 %),
was of particular concern to avoid JCB agreements
isolating it from the rest of the common market.

is being implemented in spite of

(233) Therefore, clause 4 as communicated in 1975, 1980
and 1995, whereby official distributors agree not to sell
JCB products wholesale for resale except to an approved
subdealer,
the
Commission warning in its letter dated 27 October
1975 when it prevents official distributors from both
selling JCB new machines (less than 12 months old) and
spare parts, directly or indirectly, outside the United
Kingdom and selling JCB products to a purchaser in the
United Kingdom for resale outside the United Kingdom
(i.e. wording of clause 5 in the version notified on 30
June 1973). If clause 4 as communicated in 1975 and
afterwards were to prevent such transactions, this would
be tantamount to replacing the clauses objected to on
27 October 1975 with others having the same effect.

(cid:151) the service support fee.

(189) Commission Regulation No 27 of 3 May 1962, First Regulation
implementing Council Regulation No 17 (OJ 35, 10.5.1962, p.
1118/62. See recitals 58, 61, 67).

(190) Recital 63.
(191) Recitals 52, 64 and 69.
(192) Recitals 65, 68 and 70.

(234) However, on the other hand, JCB was also encouraged
to amend its 1973 UK agreements in the light of the
decision regarding BMW’s
distribution agreements
adopted by the Commission in 1974, which exempted
obligations not to supply unauthorised distributors for
resale. Neither this decision nor JCB’s agreement for the

(193) Version of 30 June 1973, recitals 38 and 39.
(194) Recitals 44 to 46.

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United Kingdom made any distinction as to where these
the
unauthorised resellers may come from or
products.

sell

actually implemented by JCB and a fine can be imposed
on JCB for the imposition of such sanctions.

(235) Although the implementation of clause 4 in respect of
resellers
is contrary to
from other Member States
Commission’s initial warnings in 1975, the absence of
any reaction from the Commission from 1976 until
now justifies imposing no fine on the enforcement of
that provision when such enforcement clearly concerns
sales
to
from United Kingdom official distributors
unauthorised resellers, even those from other Member
States.

Implementation in other Member States for which it has not
been notified

(236)

approval,

It is apparent that, at least in Ireland, official distributors
make supplies wholesale for
resale to unauthorised
distributors from other Member States dependent on
JCB’s
in the United Kingdom. This
restriction is not included in the agreement notified for
Ireland and other Member States (195). JCB is enforcing
an agreement which it has not notified to the
Commission.

as

the notification and having

(237) A fine can be imposed on JCB when, beyond the scope
regard to other
of
in the notified agreements (196)
restrictions present
distributors from Member States other than the United
Kingdom are prevented from or restricted in selling to
unauthorised distributors in other Member States.

Reinforcement with unnotified restrictions

(240) Official distributors

in the United Kingdom have
extended the application of clause 4 to restrict also sales
made to authorised distributors and end-users in other
Member States, following JCB’s instructions, beyond the
known to the
terms of
agreements made
Commission. The abusive extension of
the notified
clause in the United Kingdom is apparent as regards
Gunn JCB and Watling JCB at least.

the

deal

trading

(241) The restriction is reinforced also by the way in which
the unnotified multiple
is
implemented in the United Kingdom, which limits
allowances
to sales made to end-users and which
disadvantages sales made outside the allotted territory,
compared to sales within. The service support fee as
actually implemented, i.e. not as notified, also restricts
such sales and,
like the multiple deal trading support,
reinforces the notified restrictions.

support

(242) A fine can therefore be imposed on JCB where,

agreements or

in
instructions,
accordance with JCB’s
in the United Kingdom have
official distributors
restricted their
to authorised distributors or
end-users from other Member States. A fine can also be
imposed regarding the multiple deal trading support in
the United Kingdom.

sales

Enforcement out of the scope of the activities being notified

(b) Service support fee: implementation different from

text notified

(238)

JCB has imposed compensations for breach of clause 4
in the United Kingdom regarding sales of spare parts,
which do not receive support under the (cid:145)multiple deal
trading support(cid:146), to unauthorised resellers from other
Member States. The imposition of financial sanctions on
official distributors for out-of-territory sales to such
unauthorised resellers
restriction of
competition, in the context of other restrictions present
in the agreements, such as the service support fee. Yet
in form A/B describing the activities being notified, JCB
expressly declared to the Commission that no sanction
was applicable to undertakings which were a party to
the United Kingdom distributor agreement (197).

in itself a

is

(239) The activities notified to the Commission in form A/B
in the United Kingdom are therefore distinct from those

(195) Recitals 71 and 122.
(196) Recitals 67 to 72.
(197) Recitals 40 and 96.

(243) The notified provisions regarding the service support fee
in the United Kingdom and other Member States of the
European Union in 1975 provide for a service support
fee. Following the Commission warning on 27 October
1975 in respect of the provisions notified in 1973, the
amount of the fee is to be agreed between the official
distributors involved. Only in the event of disagreement
should JCB determine the amount, with reference, inter
alia, to all the circumstances of the case and to the cost
of
for an
estimate of a future cost.

the service (actually) carried out,

i.e. not

(244) Beyond

the

other

notified

provisions,

internal
instructions within JCB state the amount applicable by
official distributors throughout Germany and Spain as
respectively 4 % of the local customer achieved price
and 5 % of the distributor’s purchase price. Similarly,
JCB, through its subsidiaries in France and Germany,
negotiates with United Kingdom official distributors the
payment and the amount of the fee for sales made in

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Official Journal of the European Communities

12.3.2002

those Member States. In France, evidence shows that the
fee for backhoe loaders sold from the United Kingdom
is recurrently set by JCB at of [between FRF 5 000 and
FRF 15 000] (198). In none of these instances is the fee
negotiated first between the official distributors involved
on the basis of actual costs and circumstances of the
case, nor is there any evidence of prior disagreement
between the distributors
the
purposes of setting the amount and charging the fee,
JCB’s national
they were
independent distributors in their Member States. They
are part of the JCB Group, however.

subsidiaries

involved.

In fact,

act

for

as

if

(245) The actual implementation of the service support fee is
in fact closer to the provisions notified in 1973 objected
to by the Commission in 1975 than to the provisions
communicated thereafter. Under the initially notified
the retail price,
provisions an amount of 15 % of
determined in the agreement with JCB, was charged by
JCB to the exporting distributor (199). JCB has simply
hidden the way in which the provision is actually
implemented and submitted an agreement which is not
actually followed, since 1975. The fact
that official
distributors do not freely negotiate and set the amount
of the service support fee between themselves is liable
to attract a fine, having regard to the restrictive effect of
the fee as implemented.

JCB states that it has been concerned only with sales to
unauthorised resellers, with active selling outside allotted
territories and with the enforcement of
the service
support fees provided for in its agreements (RSO II, pp.
9-11).
its
distribution agreements in accordance with the terms
notified to and accepted by the Commission:

implemented

JCB claims

it has

that

made from premises inside the allotted territory (see
recitals 48, 54, 62, 64 and 69).

(246)

In conclusion, the argument regarding the notification
concerns whether the Commission can impose a fine on
the infringements. Article 15(5) of Regulation No 17
does not bar the Commission from imposing a fine on
JCB regarding:

(cid:151) the unnotified agreements or concerted practices
preventing or restricting out of territory sales in all
Member States for which there is evidence (200),
including sales to unauthorised distributors, except
for the United Kingdom, for which the restriction of
sales to unauthorised distributors has been notified
or made known to the Commission,

between)

cross-supplies

the service support
from what has been notified,

(cid:151) the unnotified imposition of sanctions in the United
Kingdom regarding sales to unauthorised resellers,
the unnotified restrictions of intranetwork purchases
authorised
from (i.e.
distributors through exclusive purchase obligations
in France and Italy; the extension of the agreements
to restrict sales to authorised resellers and end-users,
the implementation of
fee
the
differently
reinforcement of the restrictions with the multiple
deal trading support and the occasional fixing of
levels of resale prices or discounts in France and the
restrictions
United
intranetwork
implemented
purchases, out of
to authorised
distributors or end-users, resale price maintenance
and service fees fixed by JCB were clearly objected
to by the Commission in October 1975 and
accordingly removed from the written contracts
submitted by JCB in December 1975 (201). They
have been implemented therefore expressly against
Commission warnings.

JCB concerning
territory sales

Kingdom. Moreover,

the

by

(cid:151) what the Commission claims to be examples of JCB
preventing parallel exports constitute in fact either
the enforcement of
the notified restrictions or
enforcement of the legitimate notified obligation not
actively to sell outside territory,

3. AMOUNT OF THE FINE

(cid:151) the service support fee is intended to reflect the cost
of servicing and a reasonable profit element, so that
the same amount may be applied to the same
machine.

(247) Pursuant to Article 15(2) of Regulation No 17, in fixing
the amount of the fine, regard is to be had both to the
gravity and to the duration of the infringement. The
Commission also takes into account aggravating and
mitigating circumstances.

As regards whether the obligation not actively to sell
outside the territory is legitimate or has been notified,
the agreements made known by JCB to the Commission
provide no apparent basis on which JCB is entitled to
prevent such sales to end-users, provided such sales are

(248)

In assessing the gravity of
the
Commission takes into account their nature, their actual
impact on the market, where this can be measured, and

the infringements,

(a) Gravity

(198) Recitals 123 to 127.
(199) Recitals 42 and 44 to 46.

(200) Recitals 83 to 91, 107, 108 and 111 to 122.
(201) Recitals 41 to 46.

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the size of the relevant geographic market. Distribution
like JCB’s, have as their object the
agreements which,
partitioning of national markets within the common
market through a variety of reinforcing restrictions of
competition,
jeopardise the proper functioning of the
single market, frustrate one of the principal aims of the
as
Community and have been held for decades
infringements
in
the Treaty
of
decision-making practice and case-law.

of Article

81

(249) The implementation of

those restrictions is apparent
with certainty in respect of distributors in at
least
several Member States, which constitute a substantial
part of
the common market. Sales of earthmoving
machines in the Community amounted to EUR 7 760
million in 1997. The size of the market served by JCB is
therefore,
the
considerable. The
implemented by JCB concerns a large
restrictions
number of distributors in the Community, which have
been inhibited from exporting or
importing JCB’s
products within the Community. The restrictions are the
following:

combination

of

(b) Duration

(252) Overall, evidence shows that the different elements of
the infringements have been in force between 1988 to
1998, as follows:

(cid:151) restrictions on distributors’ ability to determine

resale prices: 1991 to 1996 (recital 171),

(cid:151) restrictions on the territory into which passive sales
can be made by distributors,
including restrictions
on passive sales to end-users or duly appointed
agents: 1989 to 1998 (recital 149),

(cid:151) distributors’

dependent

remuneration

the
territory into which they sell by virtue of the service
support fee and the multiple deal trading support,
both as implemented: 1988 to 1996 (recitals 158
and 163),

on

(cid:151) restrictions on distributors’ ability to determine

resale prices: United Kingdom and France,

(cid:151) restrictions on the territory into which passive sales
can be made by distributors: United Kingdom,
France,
including restrictions on
passive sales to end-users or duly appointed agents
in the United Kingdom,

Ireland,

Italy,

(cid:151) restrictions of cross-supplies between distributors:

1992 to 1996 (recital 175).

(253) The 11-year period in which at least one element of
these agreements or practices has been in force is
therefore, of long duration. However, all the elements
have been simultaneously implemented only from 1992
two
to 1996;
elements are apparent from 1989 to 1990;
in 1988,
1997 and 1998, only one element is apparent. In the
light of the above, the increase for the duration is 55 %
(EUR 13 750 000 in total).

in 1991, three elements are apparent;

(cid:151) distributors’

remuneration

the
territory into which they sell (multiple deal trading
support and service fee as implemented): United
Kingdom and France,

dependent

on

(254) The basic amount resulting from the gravity and the
EUR

infringement

therefore

the

is

duration
of
38 750 000.

(cid:151) restrictions of cross-supplies between distributors

through exclusive purchase: France and Italy.

(255)

(250) Although JCB is not a diversified multiproduct group,
JCB is a large undertaking with considerable strength in
some of the product and geographic markets affected,
has an effective capacity to cause significant damage to
other downstream operators through its behaviour and
has the infrastructures which should have enabled it to
realise that its conduct infringes Article 81.

(251)

those

In view of
infringements are
therefore, very serious and should attract a fine of EUR
25 000 000 on account of their gravity.

factors,

JCB’s

(c) Aggravating or mitigating circumstances

JCB has taken retaliatory measures against Gunn JCB, a
distributor participating in the infringement which did
not conform to the agreement, by imposing sanctions
worth GBP 288 271 (EUR 432 000) on it. JCB notified,
that no such sanction would be taken in
moreover,
enforcing the agreements
(see recitals 40, 61, 91).
However, the Commission does not have evidence of
other
similar
retaliatory measures.

instances where

JCB has

imposed

(256) Having regard to this aggravating circumstance,
basic amount should be increased by EUR 864 000.

the

(257) The Commission does not consider

there are
mitigating circumstances that need to be taken into
account.

that

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Official Journal of the European Communities

12.3.2002

(258) The total amount of the fine pursuant to Article 15(2) is

therefore EUR 39 614 000.

E. ADDRESSEE OF THE DECISION

(259) The agreement or concerted practices have been entered
into between various subsidiaries of the JCB group and
its official distributors.

(260) Geographic market partitioning may be beneficial

distributors,

particularly where

to
territorial
some
protection shelters their territory from sales initially
made by other, more efficient, distributors. However, in
applying the various elements of the agreement, some
these distributors have acted under duress and
of
contrary to their economic interest. Moreover,
the
Commission has no more than anecdotal or indirect
restrictive
evidence of
agreement
is no
evidence of collusive links between official distributors
in different Member States, whilst
some provisions
might also be different according to the Member State
or present in some Member States only.

enforced. Similarly,

distributors

requesting

to be

there

the

(261) Conversely,

the whole period for which there

JCB appears as a single player defining,
setting and enforcing each provision of the agreement
or concerted practice, in every Member State involved,
is
throughout
evidence. A decision finding the infringement and
requesting its termination should therefore be addressed
to JCB Service, which, according to JCB, owns and
controls
JCB Group
(commercially known as JC Bamford Excavators), that
are involved in the agreement. The fine should be
imposed on JCB Service,

subsidiaries

the

the

of

HAS ADOPTED THIS DECISION:

Article 1

JCB Service and its subsidiaries have infringed Article 81 of the
Treaty by entering into agreements or concerted practices with
authorised distributors,
the object of which is to restrict
competition within the common market in order to partition
national markets and provide absolute protection in exclusive
territories outside which authorised distributors are prevented
from making active sales and which, include the following:

(a) restrictions on passive sales by authorised distributors in
the United Kingdom,
Ireland, France and Italy, which
include sales to unauthorised distributors, end-users or
authorised distributors located outside exclusive territories
and, in particular, in other Member States;

(b) restrictions on sources of supply regarding purchases of
contract goods by authorised distributors located in France
and
between
distributors;

Italy, which

cross-supplies

prevent

(c)

fixing of discounts or resale prices applicable by authorised
distributors in the United Kingdom and France;

(d)

territories

fees on sales

service support

imposition of
to other
Member States effected by authorised distributors outside
exclusive
in the United Kingdom on the
initiative of and according to fixed scales set forth by JC
JCB
Bamford Excavators Ltd or other
Service,
remuneration
thereby making
dependent on the geographic destination of sales;

subsidiaries of

distributors’

(e) withdrawal of allowances depending on whether sales in
the United Kingdom are made within or outside exclusive
territories or whether
in the
territory of whom contractual products are used, reach an
agreement with authorised selling distributors,
thereby
making distributors’
remuneration dependent on the
geographic destination of sales.

authorised distributors,

Article 2

The application for exemption submitted by JC Bamford
Excavators Ltd on 30 June 1973 is rejected.

Article 3

JCB Service and its subsidiaries shall bring to an end the
infringements established in Article 1 on notification of this
its
Decision.
JC
JCB Service or
Bamford Excavators Ltd,
shall, within two months of
notification of this Decision:

in particular

subsidiaries,

(a)

inform their authorised distributors in the Community that
they may carry out passive sales
to end-users and
authorised distributors;

by

sales

allowing

(b) amend their agreements with their authorised distributors
either
unauthorised
passive
distributors inside other authorised distributors’ exclusive
territories and active and passive sale to unauthorised
distributors within their own territories, or by authorising
active and passive sales by authorised distributors to other
authorised
duly
appointed agents outside their exclusive territories;

end-users or

distributors,

to their

to

12.3.2002

EN

Official Journal of the European Communities

L 69/49

(c) amend their agreements with their authorised distributors
in Italy and France by allowing purchases of contract
goods
the
authorised
Community and inform all authorised distributors in the
Community accordingly;

from other

distributors

in

(d)

(e)

inform their authorised distributors in the Community that
requests emanating from its subsidiaries seeking service
support fees from authorised distributors without evidence
of prior disagreement between the distributors concerned
are void and should be ignored;

inform their authorised distributors in the United Kingdom
that allowances under the multiple deal trade support are
granted regardless of whether sales are made within the
territory or outside respectively or whether
distributors’
agreement with other distributors outside the territory has
been made;

(f)

send copies of the above correspondence and amended
agreements to the Commission.

Article 4

A fine of EUR 39 614 000 is imposed on JCB Service in
respect of the infringements referred to in Article 1, except for
the
distributors
to
on
implemented in the United Kingdom,
for which no fine is
imposed.

unauthorised

restrictions

sales

following account: Account No 642-0029000-95, of
the
European Commission with Banco Bilbao Vizcaya Argentaria
BBVA, Avenue des Arts Kunstlaan 4, B-1040 Brussels.

After three months, interest shall automatically be payable at
the interest rate charged by the European Central Bank on its
main refinancing operations on the first working day of the
month in which this Decision was
adopted, plus 1,5
percentage points, namely 8,32 %.

Article 6

With regard to the obligations mentioned in Article 3, a
penalty payment of EUR 1 000 shall be imposed on JCB
Service for each day of delay in implementing this Decision.
Such delay shall start from the expiry of the two-month period
specified for implementation.

Article 7

This Decision is
Staffordshire ST14 5JP, United Kingdom.

addressed

to JCB Service, Rocester,

This Decision shall be enforceable pursuant to Article 256 of
the Treaty.

Done at Brussels, 21 December 2000.

Article 5

The fine determined in Article 4 shall be paid in euro within
three months of the date of notification of this Decision, to the

For the Commission

Mario MONTI

Member of the Commission