UNTIL 31 JULY 1974 TERMS AND CONDITIONS OF SALE CONTAINING IN CLAUSE 9 ( EXPORTS ) THE FOLLOWING PROVISION : ' NO RECORDS ON OUR LABELS MAY BE EXPORTED . IF THIS PROVISION IS NOT COMPLIED WITH , WE MAY CEASE SUPPLYING THE SELLER AND MAY HOLD HIM LIABLE FOR ANY CLAIMS IN DAMAGES BROUGHT AGAINST US IN FOREIGN COUNTRIES IN RESPECT OF SUCH EXPORTS ' .
AFTER 1 AUGUST 1974 THE APPLICANT APPLIED NEW TERMS AND CONDITIONS OF SALE AND PAYMENT TO ITS FOREIGN AND GERMAN CUSTOMERS , CLAUSE IX ( EXPORTS ) OF WHICH WAS WORDED AS FOLLOWS : ' THE CUSTOMER SHALL AS A RULE REFRAIN FROM EXPORTING GOODS SUPPLIED TO HIM BY US . IN CASE OF BREACH OF THIS PROVISION WE MAY CEASE SUPPLYING THE CUSTOMER WHO IS IN BREACH AND MAY SEEK FROM HIM AN INDEMNITY IN RESPECT OF ANY CLAIM FOR DAMAGES BROUGHT AGAINST US IN FOREIGN COUNTRIES ' .
5FURTHER , IT HAS BEEN ESTABLISHED THAT MILLER CHARGED ITS GERMAN CUSTOMERS PRICES DIFFERING SHARPLY FROM THE EXPORT PRICES , THE LATTER BEING LOWER THAN THE PRICES CHARGED TO WHOLESALERS AND MUCH LOWER THAN THE PRICES OF PRODUCTS SUPPLIED TO DEPARTMENT STORES , RETAIL TRADE ORGANIZATIONS , RETAILERS AND PRIVATE CONSUMERS .
6ALTHOUGH THE APPLICANT DOES NOT DISPUTE THAT THESE FACTS ARE SUBSTANTIALLY CORRECT IT NEVERTHELESS MAINTAINS THAT THEY CANNOT HAVE APPRECIABLY AFFECTED TRADE BETWEEN MEMBER STATES IN VIEW OF THE INSIGNIFICANCE OF THE UNDERTAKING ON THE MARKET IN SOUND RECORDINGS , THE NATURE OF ITS PRODUCTS , WHICH ARE CHIEFLY INTENDED FOR THE GERMAN-SPEAKING PUBLIC , AND THE NATURE OF ITS CUSTOMERS .
IT CONCLUDES FROM THESE FACTORS THAT , WHILST IT IS TRUE THAT THE PROHIBITIONS ON EXPORTS ARE NOT COMPATIBLE WITH THE NATURE OF A COMMON MARKET , IT CANNOT BE CHARGED WITH INFRINGEMENT OF THE PROVISIONS OF ARTICLE 85 ( 1 ) OF THE TREATY .
FURTHERMORE , IT MAINTAINS THAT IN ITS PARTICULAR CASE THOSE PROHIBITIONS ON EXPORTS DID NOT CORRESPOND TO A BLAMEWORTHY OBJECTIVE BUT WERE MERELY ADOPTED AT THE WISH OF ITS CO-CONTRACTORS , THEIR PURPOSE BEING ' PURELY VISUAL AND PSYCHOLOGICAL ' .
7IN THIS CONNEXION IT MUST BE HELD THAT , BY ITS VERY NATURE , A CLAUSE PROHIBITING EXPORTS CONSTITUTES A RESTRICTION ON COMPETITION , WHETHER IT IS ADOPTED AT THE INSTIGATION OF THE SUPPLIER OR OF THE CUSTOMER SINCE THE AGREED PURPOSE OF THE CONTRACTING PARTIES IS THE ENDEAVOUR TO ISOLATE A PART OF THE MARKET .
THUS THE FACT THAT THE SUPPLIER IS NOT STRICT IN ENFORCING SUCH PROHIBITIONS CANNOT ESTABLISH THAT THEY HAD NO EFFECT SINCE THEIR VERY EXISTENCE MAY CREATE A ' VISUAL AND PSYCHOLOGICAL ' BACKGROUND WHICH SATISFIES CUSTOMERS AND CONTRIBUTES TO A MORE OR LESS RIGOROUS DIVISION OF THE MARKETS .
THE MARKET STRATEGY ADOPTED BY A PRODUCER IS FREQUENTLY ADAPTED TO THE MORE OR LESS GENERAL PREFERENCES OF HIS CUSTOMERS .
CONSEQUENTLY MILLER ' S STATEMENT THAT THE DISPUTED PROHIBITIONS ORIGINATED IN THE WISHES OF ITS