Case C-125/05: Judgment of the Court (Third Chamber) of 7 September 2006 (reference for a preliminary ruling from the Østre Landsret, Denmark) — VW-Audi Forhandlerforeningen, acting on behalf of Vulcan Silkeborg A/S v Skandinavisk Motor Co. A/S (Competition — Distribution agreement relating to motor vehicles — Block exemption — Regulation (EC) No 1475/95 — Article 5(3) — Termination by the supplier — Entry into force of Regulation (EC) No 1400/2002 — Requirement to reorganise the distribution network — Period of notice — Statement of reasons — Burden of proof)
Date: 2006-10-28
Institutions: Court of Justice
Subjects: exclusive distribution agreement, interpretation of the law, termination of a contract

28.10.2006

EN

Official Journal of the European Union

C 261/5

2. Within the scope of Directive 80/987, as amended, the general
principle of equality, as recognised in the Community legal order,
requires that when, under national rules such as those at issue in
the main proceedings, statutory compensation payable on termina-
tion of an employment contract and fixed in a judgment
is
payable by a guarantee institution in the event of an employer's
insolvency, compensation of the same nature, fixed in an agree-
ment between the employee and the employer which was entered
into under the supervision and with the approval of a court, must
be treated in the same way.

3. The national court must disapply a national rule which, in breach
of the principle of equality as recognised in the Community legal
order, precludes the payment by the competent guarantee institu-
tion of compensation on termination of a contract fixed in an
agreement between the employee and the employer which was
entered into under the supervision of and with the approval of a
court.

(1) OJ C 93, 16.4.2005.

Judgment of the Court (Third Chamber) of 7 September
2006 (reference for a preliminary ruling from the Østre
Landsret, Denmark) — VW-Audi Forhandlerforeningen,
acting on behalf of Vulcan Silkeborg A/S v Skandinavisk
Motor Co. A/S

(Case C-125/05) (1)

(Competition — Distribution agreement relating to motor
vehicles — Block exemption — Regulation (EC) No 1475/95
— Article 5(3) — Termination by the supplier — Entry into
force of Regulation (EC) No 1400/2002 — Requirement to
reorganise the distribution network — Period of notice —
Statement of reasons — Burden of proof)

(2006/C 261/08)

Language of the case: Danish

Referring court

Østre Landsret

Parties to the main proceedings

Applicant: VW-Audi Forhandlerforeningen, acting on behalf of
Vulcan Silkeborg A/S

Defendant: Skandinavisk Motor Co. A/S

Re:

Reference for a preliminary ruling — Østre Landsret — Inter-
pretation of Article 5(3) of Commission Regulation (EC) No
1475/95 of 28 June 1995 on the application of Article 85(3)
of the Treaty to certain categories of motor vehicle distribution
and servicing agreements (OJ 1995 L 145, p. 25) — Termina-

tion of the agreement by the supplier in a case where it is
necessary to reorganise the whole or a substantial part of the
network — Obligation to state reasons and extent of such an
obligation

Operative part of the judgment

The Court rules:

The first indent of Article 5(3) of Commission Regulation (EC) No
1475/95 of 28 June 1995 on the application of Article [81](3) of
the Treaty to certain categories of motor vehicle distribution and servi-
cing agreements is to be interpreted as meaning that:

the network’

— in order for it to be ‘necessary to reorganise the whole or a
substantial part of
there must be a significant
change, both substantively and geographically, to the distribution
structures of the supplier concerned, which must be convincingly
justified on grounds of economic effectiveness based on objective
circumstances internal or external to the supplier's undertaking
which, failing a swift reorganisation of the distribution network,
would be liable, having regard to the competitive environment in
which the supplier carries on business, to prejudice the effectiveness
of the existing structures of the network. Any adverse economic
consequences which would be liable to affect a supplier in the
event that it were to terminate the distribution agreement with a
two years' notice period are relevant in that regard. It is for the
national courts and arbitrators to determine, having regard to all
the evidence in the case before them, whether those conditions are
satisfied.

— where the validity of a termination with one year's notice is chal-
is for the
lenged before the national courts or arbitrators,
supplier to prove that the conditions laid down under that provi-
sion for the exercise of the right to terminate on one year's notice
are satisfied. The procedure for establishing such proof is a matter
for national law.

it

— it does not require a supplier which terminates a distribution
agreement pursuant to that provision to provide a formal state-
ment of the reasons for the decision to terminate nor does it
require the supplier to draw up a reorganisation plan prior to
taking such a decision.

— the

entry

into force of Commission Regulation (EC) No
1400/2002 of 31 July 2002 on the application of Article 81(3)
of the Treaty to categories of vertical agreements and concerted
practices in the motor vehicle sector did not, of itself, require the
reorganisation of the distribution network of a supplier within the
meaning of the first indent of Article 5(3) of Regulation No
1475/95. However, that entry into force may, in the light of the
particular nature of the distribution network of each supplier, have
required changes that were so significant that they must be truly
considered as representing a reorganisation within the meaning of
that provision. It is for the national courts or arbitrators to deter-
in the light of all the evidence in the case before them,
mine,
whether that is the position.

(1) OJ C 143, 11.6.2005.