CELEX: 31975D0073
Language: en
Date: 1974-12-13 00:00:00
Title: 75/73/EEC: Commission Decision of 13 December 1974 relating to a proceeding under Article 85 of the EEC Treaty (IV/14.650 - Bayerische Motoren Werke AG)

3 . 2. 75                           Official Journal of the European Communities                               No L 29/ 1
                                                           II
                                       (Acts whose publication is not obligatory)
                                               COMMISSION
                                              COMMISSION DECISION
                                                 of 13 December 1974
                relating to a proceeding under Article 85 of the EEC Treaty ( IV/ 14.650 —
                                           Bayerische Motoren Werke AG)
                                        (Only the German text is authentic)
                                                      (75/73/ EEC)
THE COMMISSION OF THE EUROPEAN                                 to the standard form of contract notified to the
COMMUNITIES,                                                   Commission . BMW had obliged such wholesalers and
Having regard to the Treaty establishing the European          main dealers to base their agreements with BMW
                                                               retail dealers on standard forms which BMW had also
Economic Community, and in particular Article 85
thereof ;                                                      notified to the Commission . The purpose of these
                                                               agreements was to promote sales of BMW motor vehi­
Having regard to Council Regulation No 1 7 (') of 6            cles and motor cycles, spare parts, accessories, and
February 1962, and in particular Articles 4 and 5              after-sales service in respect thereof, and to concen­
thereof ;                                                      trate efforts in the fields of sales and after-sales service
Having regard to the notification which the                    on the goods covered by the agreements, in the parti­
Bayerische Motoren Werke Aktiengesellschaft,                   cular territory within Germany assigned under the
Munich, submitted on 31 January 1963 , pursuant to             agreements . Within such territories, dealers, whether
Regulation No 17, concerning the standard forms of             wholesalers, main dealers or retail dealers, were given
contract in use for the sale of their products in              some protection against sales of BMW products by
Germany ;                                                       BMW or a third party. BMW dealers in Germany, as
                                                               was the case with all BMW dealers in other countries,
 Having regard to the publication of the essential             were prohibited from delivering new BMW vehicles to
content of that notification pursuant to Article 1 9 (3)       countries other than their own . On 3 March 1972,
of Regulation No 17, in Official Journal of the Euro­           BMW was sent a statement of the Commission's objec­
pean Communities No C 98 of 16 November 1973 ;                 tions in respect of this prohibition on exports within
 Having regard to the Opinion delivered on 26                   the common market and has no longer practised such
September 1974 by the Advisory Committee on                    a prohibition .
Restrictive Practices and Dominant Positions pursuant
to Article 10 of Regulation No 17 ;                             2 . BMW is in the course of revising all its distribu­
Whereas :                                                       tion agreements throughout the common market. In
                                                                Germany revised distribution agreements for German
                              I                                 BMW dealers came into force on 1 January 1973 . At
                                                                that time    BMW introduced one standard form of
 1 . The Bayerische Motoren Werke Aktiengesell­                 agreement for main dealers and in turn required these
schaft (BMW) had entered into distribution agree­               main dealers to use a new standard form of agreement
ments with selected German wholesalers and main                when appointing retail dealers (see clause 12 of the
dealers who buy directly from BMW, which conform                standard main dealer's agreement). These agreements
                                                                are worded almost identically. Following the publica­
(>) OJ No 13, 21 . 2. 1962, p. 204/62.                          tion of the essential content of the notification on 16
 ---pagebreak--- No L 29 /2                          Official - Journal of the European Communities                                  3 . 2 . 75
November 1973 (') pursuant to Article 19 (3) of Regu­           iv.   not without the consent of BMW, to sell, directly
lation No 17, observations on these standard agree­                   or indirectly, products of competing makes as
ments were submitted to the Commission (see 9                         specified below :
below). On the basis of these observations and the
related intervention by the Commission, BMW made
statements supplementing the notification with regard                 — new vehicles of another make ;
to the interpretation and application of certain clauses
in the standard agreements and informed all BMW                       — spare parts, exchange parts and accessories of
main dealers and retail dealers in Germany of the                          other makes to other dealers ;
content of these statements by circular letter.
                                                                      — parts of other makes, which are not of the
                                                                           BMW standard of quality, to the customer for
The following provisions containing obligations are to                     repair purposes ; this does not apply to parts
be found in the new agreements concluded with                              which are of no particular importance for the
German dealers :                                                           safety of BMW vehicles ;
3.     Each BMW dealer (main dealer or retail dealer)
is to represent the interests of BMW within the terri­                the consent of BMW may not be withheld if
tory assigned to him under his agreement, but                         reasonable cause is shown, and in this respect the
conducts business under his own name, on his own                      economic circumstances of the BMW dealer are
account and at his own risk (see clauses 2 and 3.1 , and              to be taken into consideration ; and
the first sentence of clause 3.2 of the standard agree­
ments ; save where otherwise stated , further references
are references to the standard agreements).                           not, without the consent of BMW, to become an
                                                                      agent in any way for any other motor vehicle
                                                                      manufacturer or to have any direct or indirect
Each dealer undertakes vis-à-vis the other party to the
                                                                      interest in such an agency ; such consent may
contract (the principal, i.e. BMW or a BMW main                       not be withheld if reasonable cause is shown , and
dealer) :
                                                                      the grounds for the decision to withhold consent
                                                                      must be set but in writing and state the extent to
i.    to endeavour, within the territory covered by the               which the attainment of the commercial objec­
      agreement, to sell at least such quantity of the                tives of BMW is hindered by the acceptance of
      goods covered by the agreement as is specified by               another agency (clauses 3.6 and 13 (c) of the
      BMW in agreement with the main dealer on the                    main dealer's agreement, 3.6 and 12 (c) of the
      basis of an estimate of demand and sales poten­                  retail dealer's agreement, and the BMW circular) ;
      tial in the territory and of after-service potential
      (annual sales targets — clauses 1 , 3.1 and 6) ; and
      further to place his orders monthly and give an           v.    to follow instructions given by BMW regarding*
      estimate of his requirements for the following                  advertising and to discontinue immediately any
      months (clause 5.1 );                                           advertising to which BMW objects ; in this
                                                                       respect BMW's authority extends only to adver­
                                                                      tising designed to draw attention to BMW
ii .  not to sell goods covered by the agreement to                    products and their properties, but not to the
      dealers not authorized by BMW, unless such sales                 advertising by BMW dealers of prices and condi­
      are of genuine BMW parts for repair (second                      tions of sale (clause 3 (v) and the BMW circular) ;
      sentence of clause 1.1 );
iii . not to operate branches or distribution depots or          vi . to obtain the consent of BMW before partici­
      use intermediaries outside his own territory, nor                pating in exhibitions or fairs ; BMW may with­
      to advertise or canvass in any other way, outside                hold its consent if such participation :
      his territory, unless the principal obligation
      under the agreement is fulfilled, namely the dili­
      gent promotion of sales and after-sales service                 — were to jeopardize the success of BMW's parti­
      within his territory (clauses 1 , 3.1 and 6); in any                 cipation in the exhibition or fair, or
      event he is free to advertise in publications
      having a circulation outside his territory and to                — is in breach of obligations undertaken by
      sell goods covered by the agreement in territories                    BMW under the rules of the Bureau perma­
      outside his own (second sentence of clause 3.2) ;                     nent international des constructeurs d'automo­
                                                                           biles (B.P.I.C.A.) (clauses 6.3.2 and 13 (c) or 12
(') OJ No 98, 16. 11 . 1973, pp. 5 and 6.                                  (e) and the BMW circular) ;
 ---pagebreak--- 3 . 2 . 75                            Official Journal of the European Communities                               No L 29 /3
vii . to operate a business the layout of whose prem­                  of clause 12) and to determine their field of
       ises, equipment and technical and commercial                     activity (clause 12.1 );
       management satisfy BMW's requirements (clauses
       9 to 11 , 13 and 12 (a) (b) and (d) respectively ;       iii . to terminate at BMW's request any standard agree­
       instructions relating to spare parts service under              ments concluded with appointed retail dealers
       the BMW dealer's agreement and the after-sales                 (first sentence of clause 12.3) ;
       service instructions under BMW agreements) ;
                                                                iv. to ensure that appointed retail dealers keep
viii . to operate a service department and workshop in                 adequate stocks and provide proper after-sales
       accordance with BMW's requirements, to employ                   service (clause 12.2 (a) and (b)) ;
       properly qualified staff and to ensure that they
       receive further training as required (clauses 6.2        v. to see that appointed retail dealers have the plant,
       and 7.2 and the servicing instructions referred to              equipment and staff required to cope with the
       in vii above) ;                                                 volume of business (clause 12.2 (c)).
ix.    to provide after-sales service in accordance with         5.      BMW undertakes vis-à-vis BMW main dealers
       the instructions laid down by BMW (clauses 1.2            and the latter vis-à-vis BMW retail dealers :
       and 7), including taking delivery of BMW vehi­
       cles from car delivery firms, storage and delivery        i . to deliver goods in accordance with the conditions
       to customers, servicing and maintenance, repair,               of sale and delivery published by BMW and under
       modifications, work under guarantee and                        the terms and conditions of delivery as regards the
       extended free service (clause 7.1 ; after-sales                sales of parts (clause 5) ;
       service instructions under BMW agreements) ; to
       carry out the free pre-delivery check on the              ii . to set up no branches and appoint no further
       supply of a new BMW vehicle to a customer                      dealers in the territory and not to change the terri­
       (clause 3.3 of the after-sales service instructions) ;         tory without giving the BMW main dealer or retail
                                                                      dealer at least 60 days' notice and giving him the
x.     to maintain a stock of goods sufficient to satisfy             opportunity of commenting on the planned reor­
        expected demand in the territory (clauses 6.1 and             ganization (clause 3.3).
        7.1 and the after-sales service instructions) ;
                                                                 6.       BMW undertakes vis-à-vis BMW main dealers :
xi . to grant, on sale to the customer, a guarantee in
        the terms of the guarantee granted by BMW
       (clauses 5.3, 5.3.1 and 5.3.2 ; clause 4 of the after­    i . not to sell or deliver goods whether directly or indi­
        sales service instructions for BMW dealers) ; to              rectly to persons other than fleet operators, public
        carry out work under guarantee for the customer               authorities, racing drivers, foreign tourists, and staff
                                                                      of BMW or its subsidiaries (clause 3.4) ;
        free of charge, whether or not the customer has
        purchased the BMW product from a different
                                                                 ii . to guarantee goods both towards main dealers and
        BMW dealer whether in Germany or abroad                       retail dealers in accordance with the conditions of
        (clause 4.6 of the guarantee instructions for BMW
        dealers) ;
                                                                      sale and delivery (clause 5.3) ; to give effect to the
                                                                      guarantee by repairing or replacing defective parts
xii . to use BMW trade marks without additions or                     (clause 6.2 of the conditions of sale and delivery)
        alterations and only in such manner as is justified           and to bear the reasonable costs of dismantling and
        by the method and scope of business (clause 6.4) ;            fitting and the costs of the cheapest means of
                                                                      delivery (clause 6.3 of the conditions of sale and
xiii . to supply BMW with any information required                    delivery) ; to reimburse BMW dealers for their
        on his trading situation and sales trends, market             expenditure on services provided under guarantee
        situation , stocks and expected demand (second                and extended free service, broken down into expen­
        sentence of clause 8 , clauses 8.1 and 8.2 ; after­           diture on labour, BMW replacement parts and
        sales service instructions for BMW dealers).                  goods and services supplied by third parties
                                                                      (clauses 4.7 to 4.9 of the guarantee instructions for
 4.      Every main dealer further undertakes vis-à-vis                BMW dealers).
 BMW :
                                                                  7. The standard agreements are of five years' dura­
 i.    not to conclude any standard agreements with               tion but may be terminated on six months' notice at
       BMW retail sellers or to modify or terminate               any time by the party other than the principal ; the
       existing agreements with BMW retail dealers                principal (BMW or the main dealer) may terminate
       without the consent of BMW (first sentence of              the agreements immediately, but only for a substantial
       clause 12 and second sentence of clause 12.3 of            breach ; for less substantial breaches the agreements
       the main dealer's agreement) ;                             may be terminated on three months' notice, such
 ii . to conclude agreements at BMW's request with                notice to run from a date six months after a warning
       retail dealers selected by BMW (second sentence            is given (clauses 14 to 17).
 ---pagebreak---  No L 29/4                            Official Journal of the European Communities                                3 . 2 . 75
 8 . The rules governing selective distribution                 10 . Agreements affecting BMW dealers in the other
(clauses 3 (ii), (v) to (viii), 4 and 5 (ii) appear to have     countries of the common market outside Germany are
the following application in practice. BMW's qualita­           not the subject of these proceedings . In some coun­
tive requirements of BMW dealers for their selection            tries of the common market, in which BMW distri­
and retention for the duration of the agreement are             butes its products through its own subsidiaries and not
applied uniformly. Furthermore, in making the                   through independent importers, standard agreements
quantitative decision whether to increase the number            similar to those in Germany are applied as far as
of dealers in the German network or to conclude a               market and regional conditions and national law
 new agreement to replace one that has expired, BMW             permit.
will in each case need to consider whether turnover
and service will be improved . Particular factors to be
taken into account are whether the applicant has suffi­                                      II
cient personnel and equipment to fulfil BMW's re­
quirements as to sales promotion, and whether, having            1 1 . The agreements notified to the Commission by
regard to sales expectations and the presence of                BMW (which were applied until 1972) between BMW
existing BMW dealers, he can achieve the minimum                and German BMW-wholesalers and main dealers (who
income necessary to fulfil his obligations.                     bought direct from BMW) and between the latter and
                                                                appointed BMW retail dealers (see 1 and 2 above)
                                                                were agreements falling within Article 85 ( 1 ) of the
                                                                EEC Treaty. The prohibition contained in those agree­
BMW further stated that its right under the agreement           ments on the export of new BMW vehicles by BMW
to obtain information from dealers (see 3 (xiii) above)         dealers to other Member States was one of the prin­
would not be used to prevent goods being sold outside           cipal measures which had as its object and effect the
their territory.                                                restriction and distortion of competition within the
                                                                common market, and was likely to affect trade
                                                                between Member States .
9. After publication of the essential content of the             12. The condition laid down in Article 85 (3) of the
notification pursuant to Article 19 (3) of Regulation           EEC Treaty, under which the provisions of Article 85
No 17 (see 2 above), the Commission received observa­           ( 1 ) may be declared inapplicable, were not satisfied in
tions from two national associations of wholesalers,            the case of these agreements. Because of the export
from an international association of motor vehicle              prohibition , consumers were not guaranteed a fair
traders, from a national motoring association and from          share of the benefits which might otherwise result
a BMW general importer. The observations may be                 from exclusive dealing agreements, as the export prohi­
summarized as follows :                                         bitions led to a form of territorial protection enabling
                                                                different retail prices to be charged in the various
                                                                countries of the common market. The export prohibi­
                                                                tions were not indispensable to the improvement of
Wholesale trade in spare parts and accessories is in            distribution and protection of the goods . Such
competition with BMW, so that a restriction on                  improvements are possible with less restrictive provi­
dealing in competing products imposed on BMW                    sions .
dealers which was too extensive would limit exces­
sively a wholesaler's selling outlets, to the disadvan­
tage of both the consumer and the supplier of such a                                        III
wholesaler. Moreover many suppliers, since they also
supply vehicle manufacturers with original equipment
and spare parts, are often in a position of considerable        The use by BMW of the new forms of both main
economic dependence. Dealers appointed by BMW                   dealer and retail dealer agreements (see 2 to 8 above)
should at least be allowed to deal in competing                 leads to agreements between undertakings, produces
products through subsidiaries ; their obligation to             several forms of restriction and distortion of competi­
supply BMW with information should not be too                   tion within the common market, and is likely to affect
extensive ; advertising and participation in fairs or           trade between Member States .
exhibitions should be a matter for cooperation
between the two parties to the agreement, and not                13 .   The obligations imposed on BMW dealers to
depend merely upon the wishes of BMW ; the discre­              operate a business of a certain scale (see 3 (vii) and
tion enjoyed by BMW in selecting BMW main dealers               (viii) above), to provide an after-sale service complying
and retail dealers is too wide . As far as the sale of          with instructions laid down by BMW (see 3 (ix) above),
BMW products in other countries of the Community                to maintain a certain stock of goods (see 3 (x) above)
is concerned, many of the clauses cannot be enforced            and to provide a guarantee on sale to a customer in
in the way that BMW applies them in Germany, this               the terms of the guarantee granted by BMW (see 3 (xi)
is particularly true of the prohibition on dealing in           above) specify objective criteria and constitute
competing products.                                             minimum requirements which BMW applies
 ---pagebreak--- 3 . 2 . 75                           Official Journal of the European Communities                              No L 29 5
uniformly to the selection of BMW main dealers and             (see 5 (ii) (above), potential dealers of BMW products
retail dealers in Germany. These criteria and require­         are prevented from concluding standard agreements
ments do not preclude the offer of more extensive              for the acquisition and sale of BMW products without
services of greater advantage to the customer. They do,        first consulting the authorized BMW dealer in that
however, lead to the exclusion of those undertakings           territory ; it is also made difficult for BMW simply to
which are prepared to sell BMW products but which              establish subsidiaries (see 5 (ii) above) through which
are not prepared to provide the additional service             to deliver products directly to customers and to
required by BMW for the distribution of its products           provide them with service.
or to provide the service depots mentioned above . The
combined effect of the objective criteria and obliga­
tions is to prevent, to an appreciable extent, the
appointment of undertakings as BMW dealers and
their admission to the trade in BMW products.                   16.      Because of BMW s undertaking to sell only in
                                                               specified cases, whether by itself or through its subsidi­
                                                               aries, to consumers (see 6 (i) above), direct sources of
                                                               supply are denied to the consumer in that he may not
As in any particular case BMW can exclude from                 approach the manufacturer or its subsidiaries in the
recognition as a BMW dealer even those undertakings            common market, except in the abovementioned cases.
which satisfy all the objective criteria and are prepared
:o fulfil the minimum obligations (see 8 above), the
BMW distribution system has an even more restrictive
effect on competition in BMW products, and leads to
:he quantitative selection of dealers.                          17. The prohibitions, affecting all BMW dealers, on
                                                                operating branches or distribution depots or using
                                                                intermediaries in any other territory, and on adver­
                                                                tising and otherwise canvassing in another territory,
 The obligations of BMW main dealers vis-à-vis BMW              unless they , fulfil their obligation under the agreement
 is regards selecting BMW retail dealers, placing them          to promote diligently sales and after-sales service in
 under contract, terminating or modifying their                 their own territory (see 3 (iii) above), restrict their
 standard form of agreement and determining and                 freedom to promote sales outside their territory, even
 supervising their activities (see 4 above) result in main      in respect of customers and BMW dealers appointed
 dealers having little scope, when appointing retail            in countries other than Germany.
 dealers to follow their own views on sales policy
 where these differ from those of BMW. Selection
 depends, not on varous individual decisions by BMW
 main dealers based on their respective sales policies,
 >ut on the wishes of BMW.                                       18 .    Since BMW dealers may not, without the
                                                                consent of BMW, become the agents for any other
                                                                motor vehicle manufacturers nor sell competing
 The result is to enable BMW to restrict access to trade
                                                                products for resale, and since they are allowed to use
                                                                and to sell to the customers parts of other makes
  n BMW products at all levels of distribution .                which are of particular importance for the safety of
                                                                BMW vehicles only where they satisfy BMW stand­
                                                                ards of quality (see 3 (iv) above), other manufacturers
 ( 4.    Since neitner BMW main dealers nor BMW                 and suppliers of motor vehicles and parts cannot to
  etail dealers are allowed to sell goods other than orig­      that extent use these German dealers as sales intermed­
                                                                iaries .
  nal BMW parts for repair purposes to dealers not
  uthorized by BMW (see 3 (ii) above), all independent
  lealers who are not part of the BMW distribution
 ;system are denied the opportunity of selling new
 BMW vehicles, and similarly denied the opportunity
                                                                 19 .    All the clauses mentioned ( 13 to 18) are also
 )f trading in BMW parts except where they them­
 selves use such parts in repairs rather than reselling         likely to have an appreciable effect on trade between
 :hem . This exclusion affects all independent dealers          Member States. Owing to the selective system (see 13
throughout the common market.                                   to 1 5 above), those German undertakings which are
                                                                prepared to deliver BMW products to other Member
                                                                States but have not been authorized by BMW are
                                                                thereby prevented from delivering to purchasers in
 15 .    In so far as BMW has undertaken vis-à-vis its          such countries . As BMW is also to ensure that its own
main dealers , and the latter vis-à-vis their retail            subsidiaries in other Member States will deliver only
dealers, to appoint further dealers in the territory and        in the agreed exceptional cases to consumers in
to change the territory only on certain conditions              Germany (see 16 above), trade between Member States
(prior notification and opportunity of commenting)               is to that extent affected . The intensity of trade with
 ---pagebreak--- No L 29 / 6                         Official Journal of the European Communities                                3 . 2 . 75
Member      States  is also  diminished    in  that BMW       BMW with information on their trading position ,
dealers are prevented from promoting sales outside            sales trends, the market situation , stocks and expected
their territory to consumers or selected BMW dealers          demand (see 3 (xiii) above) amounts to a restriction of
in .. other Member States (see 17 above). Finally, even       competition simply because BMW thereby learns of
the restricted scope of the prohibition on dealing in         all the ways in which BMW dealers compete among
competing products (see 18 above) has a diminishing           themselves, and in which competing products are
effect on the exchange of goods between Member                sold . A final question to be considered was whether
States, because German BMW dealers are largely                the power possessed by BMW or the BMW main
excluded from becoming distributors of competing              dealer as principal to terminate a BMW contract for
products emanating from other Member States and               substantial breach (see 7 above), or their power to alter
from selling such parts as are essential to safety and        the territory or instal further dealers in such a territory
do not satisfy BMW standards of quality.                      (see 4 and 5 (ii) above), amounted to an economic sanc­
                                                              tion which could be used to impose more extensive
Article 85 ( 1 ) is therefore applicable to the BMW           restrictions of competition on BMW dealers than
standard forms of agreement.                                  those apparent from the wording of the agreement.
                                                              Provided BMW does not recommend BMW dealers
                                                              not to sell BMW products outside the territory or not
                                                              to sell competing products, or does not maintain
                             IV                               resale prices, and offers neither incentives nor disin­
                                                              centives in order to attain these objectives, it cannot
                                                              be assumed that the opportunities afforded to the prin­
The standard forms of agreement contain further obli­
                                                              cipal to collect information , to terminate the agree­
gations which, normally applied, place no restrictions
                                                              ment and to alter the territory have a restrictive effect
on competition within the meaning of Article 85 ( 1 )
                                                              on competition (see 8 above). At the present time, the
(see also Article 2 (2) of Commission Regulation No
67/67/ EEC (').                                               Commission has no evidence to suggest that the
                                                              BMW distribution system would be operated in such a
                                                              manner .
20 .     The obligation undertaken by BMW dealers to
follow instructions given by BMW regarding adver­
tising does not amount to an appreciable restriction of
competition, provided it is confined only to adver­                                        V
tising designed to draw attention to BMW products
and their properties. The Commission has no
evidence which might suggest that BMW is operating            23 .    The Commission has to decide whether the
these provisions in a restrictive manner, especially as       selective distribution system operated by BMW,
BMW expressly stated in the circular to BMW dealers           containing a partial prohibition on dealing in
that its authority did not extend to advertising by           competing products, can be exempted under Article
BMW dealers concerning prices and conditions of sale          85 (3) from the prohibition contained in Article 85 ( 1 )
(see 3 (v) above).                                            of the EEC Treaty.
In so far as BMW is entitled to refuse to conscnt to
                                                              In considering the selective distribution system oper­
BMW dealers participating in an exhibition or fair            ated by BMW in Germany, the Commission is
under the conditions mentioned in the circular (see 3         prepared to accept that such a system may contribute
(vi) above), the Commission's decision on the scope of        both to improving the production and distribution of
this clause remains subject to the proceedings                goods and to promoting technical progress.
concerning decisions on the participation at exhibi­
tions and fairs notified by the ' Bureau permanent
international      des    constructeurs     d'automobiles '   24 .     Limiting the number of dealers can be regarded
(IV/417).                                                     as more beneficial , so far as it is based on the require­
                                                              ment by BMW of minimum standards for selection
21 . The obligation to use BMW trade marks in a               and continued employment of dealers . By such means
specified manner (see 3 (xii) above) does not come            the following can in particular be ensured :
within the scope of Article 85 ( 1 ), as the resulting
                                                              — that BMW motor vehicles are received and stored
prohibition on using these trade marks in any other
way is an incident of the protection under the law of              in technically perfect condition and arc delivered
trade marks to which BMW is entitled .                             to customers after a pre-delivery check carried out
                                                                   in accordance with BMW's instructions (see 3 (vii)
                                                                   to ( ix) and 13 above);
22 .     Furthermore it is not to be assumed that the
obligation undertaken by BMW dealers to supply                — that both maintenance and preparation and also
                                                                   services carried out under guarantee and extended
(') OJ No 57, 25. 3 . 1967, p. 849/67.                             tree service are not only sufficiently available but
 ---pagebreak--- 3 . 2 . 75                            Official Journal of the European Communities                              No L 29 /7
       are also of an adequate quality for the consumer         25 .       The restrictions imposed by BMW on its main
       (see 3 (ix) and (xi) and 1 3 above) ;                    dealers and by the latter on retail dealers as regards
                                                                the appointment of further dealers or changing the
                                                                territory (see 5) (ii) and 15 above) do not preclude the
— that any modifications to vehicles which become               conclusion of main dealer or retail dealer agreements,
       necessary may be carried out (see 3 (ix) and 13          but only delay the conclusion of such agreements in
       above) ;                                                 the interests of main dealers or retail dealers already
                                                                 appointed . The latter are thus given an opportunity to
                                                                 remedy any poor performance which has become
— that sufficient plant, equipment and BMW-trained               apparent, so that BMW or a main dealer may consider
       personnel are available for the provision of the          whether the addition of further main dealers or retail
       above services (see 3 (vii) and (viii) and 1 3 above) ;   dealers to the group already selected, or a change in
                                                                 the territory covered remains necessary. The above
                                                                 provision is closely connected with the clauses on
— that the store of spare parts is adequate in range             selection and finds its justification in the same con­
        and quality (see 3 (x) and 1 3 above) ; and              siderations as justify the latter (see 24 above).
— that BMW may rapidly and fully inform its
        appointed dealers of technical problems as they
        arise (see 3 (xiii) and 22 above).                       26 . The obligation undertaken by BMW not to sell
                                                                 vehicles directly to consumers (see 6 (i) and 16 above)
                                                                 provides a line of demarcation between the activities
                                                                 of BMW and its dealers, allows BMW to concentrate
                                                                  its marketing activity, and relieves BMW of the need
                                                                  to maintain a multitude of business relationships. It is
 BMW has in addition reserved the right to make indi­             accepted that the obligation leads to an improvement
 vidual appointments from those applicants satisfying             of sales promotion by the appointed dealers and thus
 the objective requirements for BMW dealers, on the               rationalizes distribution .
 basis of considerations for which there are no univer­
 sally predictable and objective criteria (see 8 and 1 3
 above). The reservation of such a right is to be
 accepted in the present case, in so far as it relates to
 the selection by BMW of its main dealers. The restric­
 tive influence which BMW has over the selection of               27. The restrictions imposed on BMW dealers from
 BMW retail dealers by BMW main dealers facilitates               taking certain measures to promote sales outside their
 rationalization , because BMW also cooperates directly           territory (see 3 (i), 3 (iii) and 17 above) may be simi­
 with BMW retail dealers with the aim of improving                larly conducive to concentration of efforts in selling
 service. The cooperation between BMW and its                      BMW products and to rationalization in that they
 dealers, which goes beyond the mere marketing of                 channel dealers' activities primarily towards potential
 products, provides, in the view of the Commission in              purchasers in their own territory without impeding
                                                                  sales to consumers and other BMW dealers outside
  this particular case, a major factor justifying the BMW
  selective distribution system . It can be considered to          the territory.
  be a method of rationalizing the sale and servicing of
  BMW vehicles ard parts and thereby provides a better
  service to the consumer than a system of free
  marketing to which such cooperation is not attached .
  Motor vehicles, being products of limited life, high             28 .     The fact that BMW dealers may not deal in
  :ost and complex technology, require regular mainte­             competing products, should BMW withhold its
  nance by specially equipped garages or service depots,           consent, does mean that suppliers of motor vehicles,
  jecause their use can be dangerous to life, health and           parts and accessories of makes other than BMW
   property and can have a harmful effect on the environ­          cannot normally use BMW dealers as sales intermedi­
   nent. It is therefore of importance that those respon­          aries (see 3 (iv) and 18 above). Nevertheless the advan­
   sible for the maintenance of vehicles are made aware            tages of this clause outweigh its disadvantages. Since
   jf the latest technical knowledge which the manufac­            in principle appointed BMW dealers have to concen­
     urer has acquired in the development and construc­            trate their efforts in selling vehicles and parts on
   : ion of the vehicle . Moreover, continual cooperation           BMW products, it may be expected that technical
   between BMW and its main dealers and retail dealers             expertise and advice are provided for BMW vehicles
    nay assist BMW in the preparation of its maintenance           and parts and that competition between the products
     nstructions and training programmes, and may also             of the different manufacturers of motor vehicles and
     ead indirectly to improvements in the design of                parts is strengthened at the different levels of distribu­
    /ehiclcs .                                                      tion .
 ---pagebreak--- No L 29 / 8                         Official Journal of the European Communities                                3 . 2 . 75
29 .    In the present case it can also be accepted that      BMW main dealers and BMW retail dealers, can
consumers receive a fair share of the benefit resulting       provide the kind of service which BMW considers
from the improvements and progress achieved                   necessary for the maintenance and safety of its vehi­
through the standard forms of agreement used by               cles. Since consumers have complete freedom in
BMW. The measures which are restrictive of competi­           purchasing BMW products within the common
tion (see 24 to 28 above) not only have direct advan­         market and can take delivery from any undertaking
tages for the consumer in the form of improved                they wish to act on their behalf, the restrictions
service, but also allow adequate competition at the           concerned     with  selective   distribution are   in    this
distribution level , so that there remains a pressure to      respect limited to their essential content.
pass on to consumers the benefits resulting from
rationalization . Such competition is assured by the
fact that not only are consumers free to purchase
goods and request service wherever they wish within           The obligation undertaken by BMW not to sell to
the common market, but also that BMW dealers are
                                                              consumers (see 26 above) and the restrictions imposed
free to purchase BMW products not only from the               on BMW dealers on taking certain measures to
BMW dealer for their territory but also from any other
                                                              promote sales outside their territory (see 27 above) are
BMW dealer anywhere in the common market (sec 27
                                                              similarly indispensable ; for only restrictions of this
above). A corresponding freedom is enjoyed by the
                                                              nature can provide a more effective encouragement to
consumer, who may choose parts of other makes from
                                                              promote sales within the territory. The obligation
BMW dealers, unless they are such as are of particular
                                                              undertaken by BMW dealers to sell minimum quanti­
importance for the safety of BMW vehicles and do not
                                                              ties within their territories, such minimum quantities
satisfy the standards of quality of BMW parts (see 28
                                                              being agreed by BMW with the main dealer on the
above).
                                                              basis of estimates (see 3 (i), 17 and 27 above), is also
                                                              no more restrictive than is essential . By comparing the
                                                              estimated and actual sales figures, an account can be
                                                              taken of goods covered by the agreement which the
                                                               BMW dealer did not obtain from , his principal .
30 .   The restrictions imposed on parties to the              Figures for goods required and for which payment is
standard agreements are considered to be indispens­           due, must be declared to the principal at monthly
able to the attainment of the improvements and tech­          intervals and at the same time an estimate given of
nical progress mentioned .                                    requirements for the following month (see 3 (i) above).
                                                               In giving such estimates, the BMW dealer can provide
                                                              for those quantities of goods which he expects to sell
                                                              outside his territory.
The provisions on selective distribution (see 24 and 25
above) are indispensable, because on economic
grounds a continuing cooperation between BMW and              The prohibition against dealing in competing
dealers would be subject to a limitation if BMW had            products (see 28 above) is also confined to its essential
to cooperate with all dealers prepared to sell BMW            content . BMW dealers are indeed prohibited, where
goods and provide pre- and after-sales service to              BMW withholds consent, from selling new motor vehi­
customers. The minimum requirements placed by                 cles of other makes, from selling parts of other makes
BMW on the provision of service could not be met if           to dealers, and from selling to consumers such parts as
BMW were only to issue service instructions to each           are particularly important for the safety of BMW vehi­
main dealer or retail dealer on delivery of its products .    cles and which do not comply with the standard of
Moreover, BMW has left untouched the option of                quality of BMW parts . But BMW dealers may ask
every customer to have his vehicle serviced at an inde­        their principal to relax this prohibition against dealing
pendent establishment, the latter being able to                in competing products, where they can show reaso­
purchase all its requirements of BMW parts from any            nable cause (see 3 (iv) above). In such cases they are
BMW main dealer or retail dealer .
                                                              entitled to be allowed to sell such competing products
                                                              as least interfere with the sale of BMW products . More­
                                                              over, the prohibition against dealing in competing
                                                               products does not apply to the sale to the consumer of
                                                              accessories of other makes which arc of no particular
The creation by BMW, with the assistance of                    importance for the safety of BMW vehicles. Further­
appointed dealers, of a BMW service network does not           more, the sale to the consumer of parts of other
prevent third parties from servicing BMW vehicles . In         makes and their use for repair purposes is in any case
operating the selective system , BMW is doing no               not restricted where they comply with the standard of
more than ensure that, in addition and parallel to             quality of BMW parts . A prohibition against dealing
servicing by third parties, there is a service network         in competing products which is restricted in this way
which , because of the cooperation between BMW ,               allows sellers of accessories and parts of other makes
 ---pagebreak--- 3 . 2. 75                            Official Journal of the European Communities                            No L 29 /9
adequate sales opportunities without impairing the             Article 5 ( 1 ) of Regulation No 17, before 1 February
quality of the BMW dealer's service .                          1963 . These agreements did not satisfy the conditions
                                                               laid down in Article 85 (3) (see 11 and 12 above).
31 . The BMW standard agreements provide the                   However, BMW has amended the new standard forms
parties with no opportunity to eliminate competition           of agreement (see 1 and 2 above) in such a way that
in respect of a substantial part of the goods concerned .      they do now satisfy the conditions laid down in
In the first instance, they concern BMW vehicles,              Article 85 (3). Under Article 7 ( 1 ) of Regulation No
which compete with a range of other vehicles                   17, the Commission may fix the period during which
throughout the common market ; in the second , as              the prohibition contained in Article 85 ( 1 ) shall apply.
has already been stated (see 29 and 30 above) competi­         As BMW ended the export prohibition when it
tion between BMW and competing products is main­               became clear that an exemption for such restriction
tained at the various levels of distribution within the        could not be granted in the automobile sector, the
BMW network .                                                  necessary conditions prevail for the Commission to
                                                               state that the prohibition shall not apply from 13
For none of its motor cars — even with a narrow defi­          March 1962, the date of entry into force of Regulation
nition of the market — does BMW have a share of                No 17, to 1 January 1973 , the date on which the old
the German market which would exclude competition              standard agreements were replaced by the new.
in respect of a substantial part of the products
concerned . In that respect the Commission had to              35 .    Conditions are to be attached to the Decision
consider whether the fact that in Germany BMW has              so that the Commission may be in a position to
a considerable share of the market in motor cycles of          examine whether access to trade in motor vehicles,
250 cc capacity and above militated against the                spare parts and accessories is being unreasonably
granting of an exemption . The BMW share of motor              restricted by the BMW distribution system, and
cycles of 250 cc capacity and above registered in              whether the cooperation between BMW and its
Germany in 1972 was approximately 32% . In 1973                dealers is being used to restrict competition to an
BMW produced 197 446 cars and 20 856 motor cycles              extent greater than is apparent from the content of
and sold 193 378 cars and 19 918 motor cycles ; its            the distribution agreements . Annual reports are to be
turnover for motor cars was DM 1 040 000 000 and for
                                                               submitted to the Commission giving details of any
motor cycles DM 79 035 000 . Bearing in mind the               cases where BMW has refused to conclude distribu­
lesser importance of the trade in motor cycles when            tion agreements or has terminated or amended such
compared with that in motor cars and the great simi­           agreements, or where BMW has refused permission to
larity in sales and service methods for the two                its dealers to sell competing products . These require­
products, it would be unreasonable to impose on                ments are based on Article 8 ( 1 ) of Regulation No 17,
BMW a different method of distribution for motor
cycles ; moreover, BMW is subject to effective competi­
tion in the motor cycle market in Germany and even
more    so  in  the  other countries     of the   common
market .                                                       HAS ADOPTED THIS DECISION :
All the conditions laid down in Article 85 (3) have
therefore been fulfilled .
                                                                                        Article 1
                            VI                                 The provisions of Article 85 ( 1 ) of the Treaty esta­
                                                               blishing the European Economic Community are,
32.     Pursuant to Article 6 ( 1 ) of Regulation No 17,       pursuant to Article 85 (3), declared inapplicable to the
the date of operation of the exemption under Article           standard forms of main and retail dealership agree­
85 (3) is to be 1 January 1973 , since it was on that          ment made by the Bayerische Motoren Werke Aktien­
date that BMW began to use their new standard forms            gesellschaft and used by them in Germany since 1
of agreement, which were covered by the previous               January 1973 .
notification .
                                                               This Decision shall have effect from 1 January 1973
33 . The new standard forms of agreement are valid             to 31 December 1977 .
until 31 December 1977. It is considered appropriate
to limit the period of validity of the exemption under
Article 85 (3) in accordance with Article S ( 1 ) of Regu­
                                                                                        Article 2
lation No 17 to 31        December 1977 , so that the
Commission may thereafter reexamine the operation
of the BMW distribution system .                               The prohibition contained in Article 85 ( 1 ) shall not
                                                               be applicable to the standard forms of wholesaler,
34 .    BMW had notified       the Commission       of the     main dealer and retail dealer agreement made and
earlier agreements, pursuant to the second sentence of         used in Germany by the Bayerische Motoren Werke
 ---pagebreak--- No L 29/ 10                      Official Journal of the European Communities                            3 . 2 . 75
Aktiengesellschaft during the period 13 March 1962                               Article 4
to 1 January 1973 .
                                                           This Decision is addressed to the Bayerische Motoren
                       Article 3                           Werke Aktiengesellschaft, 8 München 40 , Petuelring
                                                            1 30 .
The Bayerische Motoren Werke Aktiengesellschaft is
hereby required to submit an annual report to the
Commission, the first to be prepared by 31 December        Done at Brussels, 13 December 1974.
1975, setting out :
— any cases of refusal to conclude distribution agree­
    ments in Germany, and any termination or modifi­                                For the Commission
    cation of such agreements,                                                          The President
— any cases where BMW dealers in Germany are
    refused permission to sell competing products.                                 François-Xavier ORTOLI