2006/431/EC: Commission Decision of  5 October 2005  relating to a proceeding pursuant to Article 81 of the EC Treaty against Automobiles Peugeot SA and Peugeot Nederland NV (Cases COMP/E2/36623, 36820 and 37275 — SEP and others/Automobiles Peugeot SA)  (notified under document number C(2005) 3683)   (Text with EEA relevance)
Date: 2005-10-05
Institutions: European Commission
Subjects: competition law, concessionaire, fine, infringement procedure (EU), motor vehicle industry, restriction on competition

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COMMISSION DECISION

of 5 October 2005

relating to a proceeding pursuant to Article 81 of the EC Treaty against Automobiles Peugeot SA
and Peugeot Nederland NV
(Cases COMP/E2/36623, 36820 and 37275 — SEP and others/Automobiles Peugeot SA)

(notified under document number C(2005) 3683)

(Only the French text is authentic)

(Text with EEA relevance)

(2006/431/EC)

On 5 October 2005, the Commission adopted a decision relating to a proceeding pursuant to Article
81 of the EC Treaty. In accordance with the provisions of Article 30 of Council Regulation (EC) No
1/2003 (1), the Commission herewith publishes the names of the parties and the main content of the
decision, including any penalties imposed, having regard to the legitimate interest of undertakings in the
protection of their business secrets. A non-confidential version of the full text of the decision can be
found in the authentic languages of the case and in the Commission’s working languages at DG
COMP’s website at http://europa.eu.int/comm/competition/index_en.html

1. SUMMARY OF THE INFRINGEMENT

1.2. The facts

1.1. Introduction

1.2.1. The undertakings and the product concerned

(1)

In response to complaints from several French interme-
diaries, on 5 October 2005 the Commission adopted a
decision under Article 7 of Regulation (EC) No 1/2003
the Decision) addressed to Automobiles
(hereinafter
Peugeot
and
a motor
SA,
vehicle manufacturer,
its wholly-owned subsidiary
Peugeot Nederland NV,
responsible for importing Peugeot vehicles into the Neth-
erlands (hereinafter PNE), for infringement of Article 81
of the Treaty. These undertakings had, in collusion with
the dealers belonging to the Peugeot network in the
Netherlands, infringed Article 81 by implementing two
measures aimed at impeding cross-border car sales from
that country to final consumers in other Member States,
particularly France. The first measure, which was imple-
mented from 1997 until 2003, consisted of a system of
bonuses to dealers which discriminated against export
sales and which, when viewed from the angle of
its
objective modus
operandi, went beyond what was
necessary to induce Dutch dealers to devote their best
territory. The second
sales efforts
measure, which was
implemented from 1997 until
2001, consisted of Automobiles Peugeot SA bringing
pressure to bear on dealers active in export sales — a
direct measure which strengthened the impact of the
discriminatory bonus.

to their contract

(2)

1.2.1.1. T h e u n d e r t a k i n g s

Peugeot SA (hereinafter called PSA), the secondlargest
European motor manufacturer accounting in 2002 for
15,5 % of all sales (passenger cars and light commercial
vehicles), comprises the Peugeot and Citroën makes.
Automobiles Peugeot SA is a generalist motor manu-
facturer, wholly owned by PSA, which develops,
produces and distributes cars under the Peugeot name.
In each of the 25 Member States, Peugeot products and
services are distributed by a national retail distribution
network. In the Netherlands the network is organised
and run by an importer wholly controlled by Auto-
mobiles Peugeot SA, namely PNE, whose headquarters
are in Utrecht.

(3)

In the Netherlands, the Peugeot network is made up of
dealers and agent resellers contractually tied to those
dealers. The number of dealers and agent
resellers
belonging to the Peugeot network in the Netherlands
fell appreciably between 1995 and 2003.

(1) OJ L 1, 4.1.2003, p. 1. Regulation as amended by Regulation (EC)

No 411/2004 (OJ L 68, 6.3.2004, p. 1).

1.2.1.2. T h e r e l e v a n t m a r k e t

(4)

The passenger car market can be divided into a number
of segments. The restriction of competition to which the
Decision relates is a restriction ‘by object’, which remains

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case

to this

and the

appreciable not only when the market is viewed from
the perspective of each of the relevant segments taken
individually, but also if it is considered that a segment of
relevance
two neighbouring
segments overlap to form a relevant market or if it is
considered that the latter is made up of all the segments
mentioned in the recitals to the Decision.
is not
necessary, therefore, to take a definitive decision here
as to which segment is to be considered the relevant
market or to settle the question whether the market
for passenger cars comprises
the Community as a
whole or whether each Member State is a distinct
geographic market.

It

(5)

(6)

Between 1995 and 2002,
the total number of new
passenger cars registered each year in the European
Union and the European Economic Area went up from
12 034 316 to 14 398 718 units. The Peugeot make on
its own accounted for a total of 861 696 registrations in
jumping
1995 and 1 277 738 registrations in 2002,
in the
among makes
from sixth to third place
European Union with a market share up from 7,2 % in
1995 to 8,9 % in 2002 (1). The Peugeot make also
experienced strong, steady market share growth in the
Netherlands, increasing from 6,5 % in 1997 to 10,7 % in
2003 in the case of passenger cars.

(8)

1.2.2. The agreement at issue

The Decision concerns an infringement
committed
against the background of the exclusive, selective distri-
bution agreements governing relations between Peugeot
and its Dutch dealers. The infringement hinged on two
specific measures liable to restrict parallel trade: a dealer
vehicle’s
remuneration system dependent
geographic destination, and pressure on dealers actively
involved in exporting.

on the

target

This bonus could be obtained by a Dutch dealer only if
the cars he sold were registered in the Netherlands. The
system introduced by Peugeot distinguished between two
phases of the bonus grant mechanism. Acquisition of
entitlement to the bonus was based on a progressive
scale of achievement of a target agreed at year’s
beginning, being a sales
in the
dealer’s territory. Subsequently, once the sales target
had been met, payment of the entitlement thus gained
was also made on the basis of vehicles sold in that
territory. Registration in the Netherlands was required
by Automobiles Peugeot SA for
the purpose of 1.
achieving any sales target leading to the acquisition of
entitlement to the bonus and the determination of the
level of discount per car, and 2. identifying each vehicle
sold by Automobiles Peugeot SA eligible for such remu-
neration (payment of the bonus).

to be met

During the period between 1 January 1997 and
31 December 1999, Automobiles Peugeot SA operated
a dealer remuneration system which consisted in paying
(‘bonus’ and
the dealer a flat-rate additional amount
‘superbonus’) for the sale of all passenger car models
registered in the Netherlands after 1 January 1997.
Subsequently, during the period between 1 January
2000 and 1 October 2003, Automobiles Peugeot SA
modified the dealer remuneration system in order to
introduce a variable margin component while retaining
a ‘quantity bonus’ paid to dealers who achieved their
targets for the registration of Peugeot vehicles in the
Netherlands. The principle of the quantity bonus varied
little during these two periods. For the purposes of
applying the bonus, dealers were divided into categories
according to the number of cars in their target. The
bonus was determined on the basis of the model of
car, the category of dealer and the percentage of target
attained.

1.2.2.1. D i s c r i m i n a t o r y b o n u s

(7)

In the Netherlands, dealers’ remuneration was made up
of a fixed part (the margin on invoices (2)) and a part
linked to the dealer’s results (the bonus (3)), which the
dealer needed in order to earn a profit from his business.

(1) PSA held, with the Peugeot and Citroën makes, a growing market
share of between 12 % (in 1995) and 15,3 % (in the first six months
of 2003) on the basis of new registrations, making it as from 1999
the secondlargest supplier of passenger cars in Europe behind the
Volkswagen group.

(2) The dealer’s margin is the difference between the net recommended
list price of a given model and the price at which the dealer buys the
car from his supplier. This amount serves to cover the dealer’s
distribution costs and overheads as well as the discounts which he
has to grant most of the time to final consumers.

(3) The bonus consists of a flat-rate payment made to the dealer by his
supplier at regular intervals for each vehicle sold in accordance with
the terms applicable. Payment of the bonus is subject to the dealer’s
meeting certain quality and quantity targets.

(9)

From January 1997, the annual circulars to all dealers
concerning implementation of the new bonus scheme
stipulated — as is borne out by other evidence — that
only passenger cars registered in the Dutch market
would as a rule count towards payment of the bonus.

1.2.2.2. P r e s s u r e o n d e a l e r s

(10)

The second of
the two measures referred to above
concerns the exerting of pressure on dealers by Auto-
mobiles Peugeot SA, which pressure strengthened the
impact of
the discriminatory bonus scheme through
direct action against dealers or attempts to limit, by
threatening to restrict
the export business
supplies,
they had plainly developed.

(11)

(12)

(13)

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(15)

should be noted that Automobiles Peugeot SA’s
It
strategy of limiting exports from the Netherlands was
known to the members of
the distribution network,
who feared the long-term effects of exports on their
profits and who indicated, at three meetings with the
importer,
the measures
they shared the aim of
requested by it. Peugeot was keen to ensure that all
members of the Dutch network toed the line:
if any
exporting took place,
the importer would intervene
with direct threats and supply restrictions in order to
restore discipline.

that

In the present case, as far as the discriminatory bonus is
the agreement was between Automobiles
concerned,
its Dutch network.
Peugeot SA and the members of
The practical
the
Peugeot network between 1997 and 2003 show that
there was tacit acquiescence on the part of the Peugeot
dealers in the Netherlands, and therefore a concurrence
of wills, when each sales transaction took place (1).

for operation of

arrangements

the export

To begin with, PNE applied direct pressure by occa-
sionally acting to limit
sales of certain
dealers. It brought such pressure to bear among other
things through its Account Managers Dealernet (AMDs),
In
who were employed by its Car Sales Department.
the inspection reports drawn up by these
some of
sales of vehicles
AMDs, mention was made of
to
consumers
comments by these
living abroad. The
AMDs mentioned in the Decision make sense only if
exports were, from Automobile Peugeot SA’s point of
view, to remain altogether exceptional. There are other
examples of pressure being brought to bear with the
same end in view, otherwise than through the AMDs.
Direct action affected eight dealers between 1997 and
2001.

supplies,

to reduce

including of

the Dutch market:

From 1997 onwards, the pressure also took the form of
threats
the most
exported models such as the 806.
In 1997 certain
models such as the 406 Airline and the 106 Accent
their
were strictly reserved for
export constituted improper conduct
for which the
exporting dealer would be held responsible. The threats
to restrict supplies,
followed by sporadic restrictions,
affected among others the 306 Estate model. That the
(VPDN) also
association of Dutch Peugeot Dealers
supported,
adoption of
the
measures to restrict the supply of certain models and
remove the most exported models from the range is
In 1998
clear
dealers in the west of the country put on record their
wish to see an end to exports of the 206 model.

from a number of meeting records.

from 1997 onwards,

2. LEGAL ASSESSMENT

(14)

2.1. The agreement on the measures at issue

The measures taken by Automobiles Peugeot SA to
restrict export sales and intra-brand competition were
not unilateral practices. On the contrary,
they fell
within the scope of Article 81(1) of the Treaty. They
formed part of the contractual relations between Auto-
mobiles Peugeot SA, on the one hand, and the dealers
belonging to its selective, exclusive distribution networks
in the Netherlands, on the other, concerning the sale of
Peugeot vehicles and other contract goods.

through the VPDN a clear call

(16) As far as pressure on dealers is concerned, starting in
1997 at the latest, Automobiles Peugeot SA issued to its
Dutch dealers
for
discipline in limiting exports to other Member States.
The episodes of pressure on dealers described in the
Decision show that the call by Automobiles Peugeot/PNE
to its dealers to ensure that their exporting activities
remained exceptional was endorsed in principle by all
members of
to the occasional
action by the manufacturer to maintain the discipline
thus brought about.

the network, subject

2.2. The object of the infringement involving the
two measures

(17) Automobiles Peugeot SA and PNE adopted a strategy
limiting export sales from the Netherlands.
aimed at
This strategy, which was implemented in agreement
with the dealers and in conjunction with VPDN, had,
like each of the measures constituting it, as its object
and effect a restriction of competition within the
meaning of Article 81(1).

(18)

2.2.1. A discriminatory bonus liable to hinder exports

In its reply to the statement of objections, Automobiles
Peugeot SA argued that the quantity bonus introduced in
the Netherlands was pro-competitive and had the ‘sole,
manifest objective’ of motivating dealers by offering
them the necessary economic incentives,
in the form
of bonuses, to concentrate their best sales efforts on
their contract territory and thereby enable Automobiles
Peugeot SA to increase its market share in the Neth-
erlands.

(1) The manufacturer’s will was embodied in the circular received by the
dealer at the beginning of each year, laying down the conditions for
the dealer’s remuneration (margin and bonus). Those conditions
were accepted by the dealer each time he sought to have a vehicle
ordered by him counted towards the sales targets (on which the
bonus depended) and asked for payment of the bonus for each
vehicle registered (once the sales targets had been achieved). The
dealer’s acceptance was signified by the action of entering the car’s
order details in the database by which the manufacturer managed
relations with its network (DIALOG). The measure at issue was thus
consented to by the dealers concerned since,
in any event, they
carried out sales within this system.

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(19)

its

to tailor

commercial policy

It should be noted in this connection that the Decision
does not call into question the possibility for the manu-
facturer
to the
requirements of different national markets with a view
to achieving better penetration rates in those markets. It
challenges neither the manufacturer’s freedom to agree
with its dealers sales targets set in terms of sales to be
achieved in the contract territory nor its freedom to
adopt appropriate incentives, in the form of performance
in order to urge its dealers to
bonuses in particular,
increase their sales volumes in the territory allocated to
them. This possibility, which stimulates
inter-brand
is furthermore expressly provided for in
competition,
Commission Regulation (EC) No 1475/95 (1)
(the
exemption Regulation).

(20) However, from January 1997, the annual circulars to all
dealers concerning implementation of the new bonus
scheme stipulated — as is borne out by other evidence
— that only passenger cars registered in the Dutch
market would count
towards payment of the bonus.
Consequently, any dealer who had fully achieved his
territorial sales targets and had therefore acquired en-
titlement
to the bonus was nevertheless denied the
benefit of the bonus thus acquired when it came to
payment of that entitlement with respect to sales to
non-resident consumers. Such a scheme, viewed from
the standpoint of its objective modus operandi, therefore
went beyond what was necessary to encourage Dutch
to their
dealers
contract territory. It was in the nature of one of the
hardcore restrictions mentioned in Regulation (EC) No
1475/95, Article 6(1)(8) which provides
the
exemption does not apply where ‘the supplier, without
any objective
remunerations
reason, grants dealers
calculated on the basis of the place of destination of
the motor vehicles resold or the place of residence of
the purchaser’. What is more, PNE made it less easy for
dealers to get round the scheme by checking the car
order data input by the dealer
in the database by
which the manufacturer managed its relations with its
network (DIALOG) against the data obtained from the
national registration authority.

to devote their best

sales efforts

that

(21)

In its reply to the statement of objections, Automobiles
Peugeot SA questioned the effectiveness of
such a
measure, maintaining that
the bonus
was too small for its non-payment to act as a disin-
centive for dealers to export.

the amount of

(1) OJ L 145, 29.6.1995, p. 25. Article 4(1): The exemption shall apply
notwithstanding any obligation whereby the dealer undertakes to: …
(3) endeavour to sell, within the contract territory and during a
specified period, a minimum quantity of contract goods, determined
by the parties by common agreement or,
in the event of
disagreement between the parties as to the minimum number of
contractual goods to be sold annually, by an expert third party,
account being taken in particular of sales previously achieved in
the territory and of forecast sales for the territory and at national
level.

(22)

(23)

The defence put forward by Automobiles Peugeot SA is
intrinsically contradictory. On the one hand,
it argues
that the level of the bonus on offer between 1997 and
2003 was too low to have had any effect on dealers’
behaviour. On the other, it stresses that the scheme at
issue, and in particular the level of the discounts granted
to dealers who had achieved their sales targets, was
essential
incentives
to providing appropriate financial
to ensure that dealers devoted their best sales efforts to
the
their
evidence gathered during the course of the investigation
bears out the objections about the measures’ significant
impact by showing that the bonus was important to
its loss on
dealers throughout
in
interest
sales
export
selling to non-resident consumers.

the period and that
significantly affected dealer

territories. Moreover,

respective

contract

2.2.2. The exerting of pressure as proof of Peugeot’s intention

to hinder exports

like the aspects of

From 1997 onwards and until a more recent period in
2001, Automobiles Peugeot SA occasionally intervened
to deter certain Dutch dealers from supplying vehicles to
final consumers in other Member States. The pressure
put on Dutch dealers,
the remu-
neration system that de facto discriminated against
exports, was intended to hinder cross-border trade in
cars between dealers in the Netherlands and those in
other Member States with a view to walling off the
Dutch market from the other markets in the European
Union.
the
documents held on file concerning the pressure on
dealers should be assessed.

is in the context of

this strategy that

It

2.3. Significant, quantifiable impact of the measures

(24)

Parallel exports from the Netherlands declined after
1997, the year in which the remuneration system was
implemented, falling by about 50 % after 1999. In its
reply to the statement of objections, Automobiles
Peugeot SA attributes this to factors other than the
remuneration system in dispute, namely the ‘essential
role’ played by diminishing price differentials. However,
several factors contradict this analysis.

(25)

First,
there was no significant variation in the price
differential at Community level during the period in
question.

(26)

Second, an internal PNE memo dating from 2002 quan-
tified the remuneration system’s impact on parallel trade
by estimating the volume of additional sales to non-
resident
final consumers compared with the previous
year achievable if the bonus were in fact paid in 2003
in respect of vehicles sold for export.

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restriction strategy with direct warnings and
export
instructions to several dealers. As to the termination of
the infringement, there is nothing on file to indicate that
the infringement continued after November 2001 as far
as the pressure on dealers is concerned, or after October
2003, when the remuneration system to which the
Decision relates was modified.

(31)

There are neither any mitigating nor any aggravating
circumstances in this case.

4. DECISION

(32) Automobiles Peugeot SA and its subsidiary Peugeot
Nederland NV infringed Article 81(1) of the Treaty by
concluding agreements with dealers in the Peugeot distri-
bution network in the Netherlands having as their object
and effect the impeding of sales to final consumers in
other Member States, whether in person or represented
by intermediaries acting on their behalf. The infrin-
gement commenced at the beginning of January 1997
and continued until the end of September 2003.

(33)

To the extent that they have not already done so, the
undertakings referred to in Article 1 must bring the
found in that article to an end. They
infringement
must
refrain in future from implementing anew or
continuing to implement any measure constituting the
said infringement and from taking any measures having
an equivalent object or effect.

(34)

For the infringement referred to in Article 1, a fine of
EUR 49,5 million is imposed on Automobiles Peugeot
SA and its subsidiary Peugeot Nederland NV, which are
jointly and severally liable.

(27)

Third, in relation to the pressure on dealers, a total of 22
French consumers complained to the Commission about
the loss caused by delivery delays coupled with threats
from Peugeot.

3. FINE

(28)

(29)

The Commission considered that a fine should therefore
be imposed commensurate with the gravity of the infrin-
gement, the deterrent effect of which would prevent any
repeat offending. In fixing the amount of the fine, the
the appropriate
Commission took into account all
circumstances,
and
gravity
these being criteria
duration of
explicitly mentioned in Article 23(3) of Regulation (EC)
No 1/2003.

and in particular
infringement,

the

the

Peugeot

SA and

In the light of the above, the infringement of Article 81
its
committed by Automobiles
subsidiary PNE was characterised as very serious, an
assessment which held good both for
the policy
regarding bonuses and for the other pressure exerted
by Automobiles Peugeot SA. The Commission and the
Court of Justice have already had occasion to rule on
remuneration systems that discriminate according to a
vehicle’s destination (1). The assessment of the gravity of
the infringement
the
Guidelines on the method of setting fines (2).

is based on the provisions of

(30)

is also one of significant duration.
The infringement
From the beginning of
January 1997 to the end of
September 2003, Automobiles Peugeot SA renewed
each year the discriminatory system of remuneration
for exports in its annual circulars. Between 1997 and
2001, Automobiles Peugeot SA also supplemented its

(1) Commission Decision 98/273/EC of 28 January 1998 in Case
IV/35.733 — Volkswagen (OJ L 124, 25.4.1998, p. 60), recital
129; Commission Decision 2001/146/EC of 20 September 2000
in Case COMP/36.653 — Opel (OJ L 59, 28.2.2001, p. 1), recital
117.

(2) Guidelines on the method of setting fines imposed pursuant to
Article 15(2) of Regulation No 17 and Article 65(5) of the ECSC
Treaty. Published in OJ C 9, 14.1.1998. Point A defines very serious
‘They will generally be … practices which
infringements thus:
jeopardise the proper functioning of the single market, such as the
partitioning of national markets’, which is the case here.