CELEX: 62005CJ0376
Language: en
Date: 2006-11-30 00:00:00
Title: Judgment of the Court (Third Chamber) of 30 November 2006.#A. Brünsteiner GmbH (C-376/05) and Autohaus Hilgert GmbH (C-377/05) v Bayerische Motorenwerke AG (BMW).#Reference for a preliminary ruling: Bundesgerichtshof - Germany.#Competition - Distribution agreement relating to motor vehicles - Block exemption - Regulation (EC) No 1475/95 - Article 5(3) - Termination by the supplier - Reorganisation of the network - Entry into force of Regulation (EC) No 1400/2002 - Article 4(1) - Hardcore restrictions - Consequences.#Joined cases C-376/05 and C-377/05.

Joined Cases C-376/05 and C-377/05
      A. Brünsteiner GmbH and Autohaus Hilgert GmbH 
      v
      Bayerische Motorenwerke AG 
      (Reference for a preliminary ruling from the Bundesgerichtshof)
      (Competition – Distribution agreement relating to motor vehicles – Block exemption – Regulation (EC) No 1475/95 – Article 5(3) – Termination by the supplier – Reorganisation of the network – Entry into force of Regulation (EC) No 1400/2002 – Article 4(1) – Hardcore restrictions – Consequences)
      Summary of the Judgment
      1.        Preliminary rulings – Reference to the Court – Determination of the questions to refer – Exclusive jurisdiction of the national
            court 
      (Art. 234 EC)
      2.        Competition – Agreements, decisions and concerted practices – Not allowed – Block exemption – Agreements in the motor vehicle
            sector – Entry into force of Regulation No 1400/2002
      (Art. 81(1) EC; Commission Regulations Nos 1475/95 Art. 5(3), first para., first indent, and 1400/2002, Art. 10)
      3.        Competition – Agreements, decisions and concerted practices – Not allowed – Block exemption – Agreements in the motor vehicle
            sector – Entry into force of Regulation No 1400/2002 – Transitional period – Expiry 
      (Art. 81(1) and (3) EC; Commission Regulations Nos 1475/95 and 1400/2002, Arts 4 and 10)
      1.        In references for preliminary rulings, it is for the referring court alone to determine the subject-matter of the questions
         it intends to refer. It is solely for the national courts before which actions are brought, and which must bear the responsibility
         for the subsequent judicial decision, to determine in the light of the special features of each case both the need for a preliminary
         ruling in order to enable them to deliver judgment and the relevance of the questions which they submit to the Court.
      
      In those circumstances, where, by its requests for a preliminary ruling, a national court seeks solely to obtain an interpretation
         of provisions of a Community regulation and does not state that it has any doubts as to the validity of those provisions or
         that any such question was raised before it in the case in the main proceedings, the Court cannot be compelled to evaluate
         the validity thereof on the sole ground that that question has been put before it by one of the parties in its written pleadings,
         as Article 234 EC is not a remedy available to the parties to the proceedings before the national court.
      
      (see paras 26-28)
      2.        The entry into force of Regulation No 1400/2002 on the application of Article 81(3) EC 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 the first paragraph of Article 5(3) of Regulation No 1475/95 on the
         application of Article [81](3) [EC] to certain categories of motor vehicle distribution and servicing agreements. However,
         that entry into force might, 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 regarded as representing a reorganisation within the meaning of that
         provision. It is for the national courts or arbitrators to determine, in the light of all the evidence in the case before
         them, whether this is the case.
      
      On that point, while Regulation No 1400/2002 introduced substantial amendments in relation to the block exemption scheme established
         by Regulation No 1475/95, the changes which might be made by suppliers to their distribution network in order to be certain
         that they would continue to benefit from the block exemption could be introduced simply by adapting the agreements in force
         on the date on which the latter regulation ceased to apply, during the transitional period of a year provided for by Article
         10 of Regulation No 1400/2002. Such an adaptation would not automatically entail the need, under the applicable national law,
         for those agreements to be terminated or, in any event, for the whole or a substantial part of the distribution network to
         be reorganised.
      
      Moreover, a ‘reorganisation of the whole or a substantial part of the network’ within the meaning of the first indent of the
         first paragraph of Article 5(3) of Regulation No 1475/95 requires a significant change, both substantively and geographically,
         to the distribution structures of the supplier concerned, which may relate, inter alia, to the nature or form of those structures,
         their subject-matter, the allocation of internal duties within those structures, the manner in which the goods and services
         in question are supplied, the number or quality of the participants in those structures, or their geographical coverage. If
         there is nothing to require it, neither is there anything to prevent such a reorganisation’s resulting from the amendment
         of clauses in a distribution agreement following the entry into force of new exemption rules, such as Regulation No 1400/2002,
         which introduced substantial amendments to the block exemption scheme established under Regulation No 1475/95, by laying down
         more stringent rules than those under the latter regulation for exemption from a number of restrictions on competition subject
         to the prohibition laid down under Article 81(1) EC.
      
      With regard to the condition laid down in the first indent of the first paragraph of Article 5(3) of Regulation No 1475/95
         as to the necessity of the reorganisation, it requires the reorganisation to be capable of being 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 that network. Therefore,
         the mere fact that the supplier considers, on the basis of a subjective commercial appraisal of the position in which its
         distribution network finds itself, that a reorganisation of that network is necessary is not, of itself, sufficient to establish
         the need for such a reorganisation for the purposes of the first indent of the first paragraph of Article 5(3) of Regulation
         No 1475/95. By contrast, 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.
      
      (see paras 31-38, 41, operative part 1)
      3.        Article 4 of Regulation No 1400/2002 of 31 July 2002 on the application of Article 81(3) EC to categories of vertical agreements
         and concerted practices in the motor vehicle sector is to be interpreted to the effect that, once the transitional period
         provided for by Article 10 of that regulation has expired, the block exemption under that regulation did not apply to contracts
         satisfying the conditions for block exemption under Regulation No 1475/95 on the application of Article [81](3) [EC] to certain
         categories of motor vehicle distribution and servicing agreements which had as their object at least one of the hardcore restrictions
         listed in Article 4, with the result that all the contractual terms restrictive of competition contained in such contracts
         were liable to be caught by the prohibition laid down in Article 81(1) EC, if the conditions for exemption under Article 81(3)
         EC were not satisfied.
      
      It clearly follows from the actual wording of Article 10 of Regulation No 1400/2002, the purpose of which was to introduce
         a transitional period in order to allow all operators the time to adapt to that regulation all agreements compatible with
         Regulation No 1475/95 which were in force on the date on which that regulation ceased to be applicable and, to that end, providing
         that the prohibition laid down in Article 81(1) EC is not to apply to such agreements, that from 1 October 2003 the prohibition
         laid down in Article 81(1) EC applied to agreements that had not been adapted with a view to satisfying the conditions for
         exemption laid down by Regulation No 1400/2002.
      
      The consequences, for all other parts of the agreement or for other obligations flowing from it, of the prohibition of contractual
         terms incompatible with Article 81 EC are not, however, a matter for Community law. It is therefore for the national court
         to determine, in accordance with the national law applicable, the extent and consequences, for the contractual relation as
         a whole, of the prohibition of certain terms under Article 81 EC.
      
      (see paras 43-48, 51, operative part 2)
JUDGMENT OF THE COURT (Third Chamber)
      30 November 2006 (*)
      
      (Competition – Distribution agreement relating to motor vehicles – Block exemption – Regulation (EC) No 1475/95 – Article 5(3) – Termination by the supplier – Reorganisation of the network – Entry into force of Regulation (EC) No 1400/2002 – Article 4(1) – Hardcore restrictions – Consequences)
      In Joined Cases C-376/05 and C-377/05,
      REFERENCES for a preliminary ruling under Article 234 EC, from the Bundesgerichtshof (Germany), made by decisions of 26 July
         2005, received at the Court on 12 October 2005, in the proceedings
      
      A. Brünsteiner GmbH (C-376/05),
      
      Autohaus Hilgert GmbH (C-377/05)
      
      v
      Bayerische Motorenwerke AG (BMW),
      THE COURT (Third Chamber),
      composed of A. Rosas, President of Chamber, J. Malenovský, A. Borg Barthet, U. Lõhmus and A. Ó Caoimh (Rapporteur), Judges,
      Advocate General: L.A. Geelhoed,
      Registrar: K. Sztranc-Slawiczek, Administrator,
      having regard to the written procedure and further to the hearing on 7 September 2006,
      after considering the observations submitted on behalf of:
      –        A. Brünsteiner GmbH and Autohaus Hilgert GmbH, by F.C. Genzow and C. Bittner, Rechtsanwälte,
      –        Bayerische Motorenwerke AG (BMW), by R. Bechtold, Rechtsanwalt,
      –        the Commission of the European Communities, by A. Whelan, K. Mojzesowicz and M. Schneider, acting as Agents,
      after hearing the Opinion of the Advocate General at the sitting on 28 September 2006,
      gives the following
      Judgment
      1        The references for a preliminary ruling concern the interpretation of the first indent of Article 5(3) of Commission Regulation
         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 servicing agreements (OJ 1995 L 145 p. 25), and of Article 4 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 (OJ 2002 L 203, p. 30).
      
      2        Those references were made in proceedings brought by A. Brünsteiner GmbH (‘Brünsteiner’) and Autohaus Hilgert GmbH (‘Hilgert’)
         against Bayerische Motorenwerke AG (‘BMW’) relating to the validity of the termination by the latter, with a year’s notice,
         of the agreements it had entered into with Brünsteiner and Hilgert (“the applicants in the main proceedings”) for the distribution
         of BMW vehicles in Germany.
      
       The legal context
      3        The 19th recital in the preamble to Regulation No 1475/95 states:
      
      ‘Article 5(2)(2) and (3) and Article 5(3) lay down minimum requirements for exemption concerning the duration and termination
         of the distribution and servicing agreement, because the combined effect of the investments the dealer makes in order to improve
         the distribution and servicing of contract goods and a short-term agreement or one terminable at short notice is greatly to
         increase the dealer’s dependence on the supplier. In order to avoid obstructing the development of flexible and efficient
         distribution structures, however, the supplier should be entitled to terminate the agreement where there is a need to reorganise
         all or a substantial part of the network. …’
      
      4        Article 1 of Regulation No 1475/95 exempts from the prohibition laid down under Article 81(1) EC agreements by which a supplier
         makes an authorised reseller responsible for promoting the distribution of the contract goods within a defined territory and
         agrees to reserve the supply of vehicles and spare parts, within that territory, to that dealer.
      
      5        Article 4(1) of that regulation provides that the exemption is to apply notwithstanding any obligation by which the dealer
         undertakes to comply, in distribution, sales and after-sales servicing, with minimum standards regarding, in particular, the
         equipment of the business premises or the repair and maintenance of contract goods.
      
      6        Article 5(2) and the first indent of Article 5(3) provide that: 
      
      ‘2.      Where the dealer has, in accordance with Article 4(1), assumed obligations for the improvement of distribution and servicing
         structures, the exemption shall apply provided that:
      
      …
      (2)      the agreement is for a period of at least five years or, if for an indefinite period, the period of notice for regular termination
         of the agreement is at least two years for both parties; …
      
      3.       The conditions for exemption laid down in (1) and (2) shall not affect:
      –        the right of the supplier to terminate the agreement subject to at least one year’s notice in a case where it is necessary
         to reorganise the whole or a substantial part of the network.’
      
      7        In its explanatory brochure relating to Regulation No 1475/95, the Commission of the European Communities states as follows
         in reply to question 16(a), headed ‘Are there any possibilities for early termination of the agreement?’: 
      
      ‘The manufacturer has the right to terminate the agreement early (on one year’s notice) where it needs to restructure the
         whole or a substantial part of the network. Whether it is necessary to reorganise is established between the parties by agreement
         or at the dealer’s request by an expert third party or an arbitrator. Recourse to an expert third party or an arbitrator does
         not affect the right of either party to apply to a national court under national law (Article 5(3)). Where the supplier provides
         for himself in the contract unilateral rights of termination exceeding the limits set by the regulation, he automatically
         loses the benefit of the block exemption (Article 6(1)(5), see point 1.2 above).
      
      This possibility for early termination has been introduced to provide the manufacturer with an instrument for flexible adaptation
         to changes in distribution structures (recital 19). A need for reorganising may arise due to the behaviour of competitors
         or due to other economic developments, irrespective of whether these are motivated by internal decisions of a manufacturer
         or external influences, e.g. the closure of a company employing a large workforce in a specific area. In view of the wide
         variety of situations which may arise, it would be unrealistic to list all the possible reasons.
      
      Whether or not a “substantial part” of the network is affected, must be decided in the light of the specific organisation
         of a manufacturer’s network in each case. “Substantial” implies both an economic and a geographical aspect, which may be limited
         to the network, or a part of it, in a given Member State. The manufacturer has to reach an agreement – either with or without
         the intermediation of an expert third party or arbitrator – with the dealer, whose distribution agreement will be terminated,
         but not with other dealers who are only indirectly affected by an early termination.’
      
      8        From 1 October 2002, Regulation No 1475/95 was replaced by Regulation No 1400/2002.
      
      9        Under the 12th recital in the preamble to that latter regulation:
      
      ‘Irrespective of the market share of the undertakings concerned, this Regulation does not cover vertical agreements containing
         certain types of severely anti-competitive restraints (hardcore restrictions) which in general appreciably restrict competition
         even at low market shares and which are not indispensable to the attainment of the positive effects mentioned above. This
         concerns in particular vertical agreements containing restraints such as minimum or fixed resale prices and, with certain
         exceptions, restrictions of the territory into which, or of the customers to whom, a distributor or repairer may sell the
         contract goods or services. Such agreements should not benefit from the exemption.’
      
      10      The 36th recital in the preamble to that regulation states:
      
      ‘… Regulation No 1475/95 … is applicable until 30 September 2002. In order to allow all operators time to adapt vertical agreements
         which are compatible with that regulation and which are still in force when the exemption provided for therein expires, it
         is appropriate for such agreements to benefit from a transition period until 1 October 2003, during which time they should
         be exempted from the prohibition laid down in Article 81(1) under this Regulation’.
      
      11      The first sentence of Article 4(1) of Regulation No 1400/2002, headed ‘Hardcore restrictions’, provides that the exemption
         is not to apply to vertical agreements which, directly or indirectly, in isolation or in combination with other factors under
         the control of the parties, have as their object one or more of the restrictions listed in the rest of that provision.
      
      12      Article 10 of that regulation provides:
      
      ‘The prohibition laid down in Article 81(1) [EC] shall not apply during the period from 1 October 2002 to 30 September 2003
         in respect of agreements already in force on 30 September 2002 which do not satisfy the conditions for exemption provided
         for in this Regulation but which satisfy the conditions for exemption provided for in Regulation … No 1475/95’
      
      13      The Commission’s explanatory brochure relating to Regulation No 1400/2002, includes the following statement in reply to question
         20, headed ‘How can termination of contracts which comply with Regulation No 1475/95 be effected during the transitional period?’:
      
      ‘The expiry of Regulation No 1475/95 on 30 September 2002 and its replacement by a new regulation does not in itself imply
         that there should be a reorganisation of the network. After the entry into force of the regulation, a vehicle manufacturer
         may nonetheless decide to substantially reorganise its network. To comply with Regulation No 1475/95 and thus, to benefit
         from the transitional period, notices of regular contract termination should thus be given two years in advance unless a reorganisation
         is decided upon or if there is an obligation to pay compensation.’
      
      14      In addition, in relation to question 68, headed ‘Does the Regulation provide for minimum periods of notice?’, the brochure
         states, in the fourth paragraph of the reply to that question, as regards termination on one year’s notice:
      
      ‘The question as to whether or not it is necessary to reorganise the network is an objective one, and the fact that the supplier
         deems such a re-organisation to be necessary does not settle the matter in case of dispute. In such a case it shall be for
         the national judge or arbitrator to determine the matter with reference to the circumstances.’
      
       The disputes in the main proceedings and the questions referred
      15      In 1996 the applicants in the main proceedings entered into a contract with BMW for the distribution of motor vehicles manufactured
         by BMW. Article 11.6 of the contract provided:
      
      ‘11.6. Termination due to reorganisation of the distribution network
      Where it is necessary for BMW to reorganise the whole or a substantial part of its distribution network, it may terminate
         the contract on 12 months’ notice.
      
      The above shall apply also where the general legal situation of the contract changes in essential respects.’
      16      In September 2002 BMW terminated all the distribution agreements within its European network with effect from 30 September
         2003, on the ground that Regulation No 1400/2002 involved considerable legal and structural alterations in the vehicle distribution
         sector. BMW then concluded new contracts with most of its former distributors, taking effect from 1 October 2003 and adapted
         to the requirements of Regulation No 1400/2002.
      
      17      The applicants in the main proceedings were not offered such contracts. Accordingly they brought actions before the German
         courts with a view to challenging the lawfulness of the termination of their distribution contracts, claiming that termination
         ought not to have taken place until the expiry on 30 September 2004 of the two-year notice period.
      
      18      On 26 February 2004 those actions were dismissed on appeal by the Oberlandesgericht München (Higher Regional Court, Munich)
         on the ground that the alterations entailed by adoption of Regulation No 1400/2002 made it necessary to reorganise the BMW
         distribution network. According to that court, restrictions of competition that had hitherto been compatible with Regulation
         No 1475/95 henceforth constituted hardcore restrictions within the meaning of Article 4 of Regulation No 1400/2002, with the
         result that, even regardless of the termination of distribution contracts of 30 September 2003, all the clauses restrictive
         of competition contained in those contracts had become invalid on 1 October 2003. BMW could not accept, even only until 30
         September 2004, contracts stripped of their clauses restricting competition, or indeed no contracts at all, if they were caught
         by total invalidity under national law.
      
      19      The applicants in the main proceedings have brought an appeal on a point of law against those decisions before the Bundesgerichtshof
         (Federal Court of Justice).
      
      20      In its orders for reference that court, pointing out that according to a narrow interpretation, based on the explanatory brochures
         relating to Regulations Nos 1475/95 and 1400/2002, the need to reorganise cannot be justified solely by the entry into force
         of Regulation No 1400/2002, but must be justified by economic developments, considers that that entry into force necessarily
         has some effect on the internal structures of the distribution systems. Not only economic but also legal reasons might make
         it necessary to reorganise a distribution network. In addition, the distribution system is a structural component of the network.
         Lastly, Regulation No 1400/2002 made necessary a change of unknown proportions when it ceased to exempt the hitherto widespread
         combination of exclusive distribution and selective distribution. Manufacturers must choose one or other of those two systems.
         Now, under a selective distribution system, which will nearly always be the one chosen, territorial restrictions and protection
         of dealers’ territory is no longer authorised. In addition, sales and servicing must be separated and brand exclusivity will
         by and large disappear.
      
      21      If a manufacturer had not either adapted its contracts or terminated them and replaced them with new contracts before the
         transitional period expired, all clauses restrictive of competition would, by virtue of Article 81 EC, have become invalid
         on 1 October 2003, since the restrictions permitted by Regulation No 1475/95 constitute in part hardcore restrictions for
         the purposes of Article l4 of Regulation No 1400/2002, thus causing the exemption of all clauses restrictive of competition
         in those contracts to lapse. That would mean that, within the distribution network, there were two legal regimes, and those
         distributors who had not been willing to agree to the alterations to their contracts would find themselves freer than others.
         A manufacturer could not accept such problems. 
      
      22      That being so, the national court even wonders whether the question of the lawfulness of the termination has not in actual
         fact become devoid of purpose. Under national law, the invalidity of the clauses restricting competition would have caused
         the contracts at issue to lapse in their entirety from 1 October 2003. According to that court, the statements made by the
         Commission in its explanatory brochure on Regulation No 1400/2002 militate against such a consequence and call for a narrow
         interpretation of Article 4 of Regulation No 1400/2002.
      
      23      In those circumstances, the Bundesgerichtshof has decided to stay proceedings and to refer the following questions to the
         Court of Justice for a preliminary ruling in both the cases before it:
      
      ‘1.      Is the first indent of Article 5(3) of … Regulation … No 1475/95 to be so interpreted that the need to reorganise the whole
         or a substantial part of the network and the resulting right of the manufacturer to terminate agreements with dealers in its
         distribution network, on one year’s notice, can also arise because the entry into force of … Regulation … No 1400/2002 … required
         far-reaching changes to the distribution systems previously used by manufacturers and their dealers under Regulation … No
         1475/95 which were exempted under that regulation? 
      
      2.      If the first question is to be answered in the negative:
      Is Article 4 of Regulation … No 1400/2002 to be so interpreted that, exceptionally, the existence of agreements which are
         restrictive of competition in a motor vehicle dealership agreement which constitute hardcore restrictions (“black list” of
         prohibited terms) under that regulation did not, on expiry of the one-year transitional period on 30 September 2003 laid down
         in Article 10 of the Regulation, cause the lapse of the exemption from the prohibition under Article 81(1) EC for all agreements
         restrictive of competition in the dealership agreement, if that agreement was concluded when Regulation … No 1475/95 was still
         applicable, in accordance with the requirements of that regulation and exempted by that regulation? Is this still the case
         where the invalidity under Community law of all contractual provisions restrictive of competition leads in national law to
         the invalidity of the contract in its entirety?’ 
      
      24      By order of the President of the Court of 18 January 2006, Cases C‑376/05 and C‑377/05 were joined for the purposes of the
         written and oral procedures and of the judgment.
      
       The questions
       Preliminary observations 
      25      In its written observations before the Court of Justice and also at the hearing, BMW has challenged the validity of the provisions
         of Article 5(2) and (3) of Regulation No 1475/95 on the ground, essentially, that they are contrary to Article 81(3) EC, in
         particular because, first, they subject the application of the block exemption to additional restrictions of competition that
         are neither indispensable nor to the advantage of consumers and, second, they are motivated by social considerations unrelated
         to competition.
      
      26      According to the Court’s case-law, it is for the referring court alone to determine the subject-matter of the questions it
         intends to refer. It is solely for the national courts before which actions are brought, and which must bear the responsibility
         for the subsequent judicial decision, to determine in the light of the special features of each case both the need for a preliminary
         ruling in order to enable them to deliver judgment and the relevance of the questions which they submit to the Court (see,
         to that effect, C-159/97 Castelletti [1999] ECR I-1597, paragraph 14, and Case C-154/05 Kersbergen-Lap and Dams-Schipper [2006] ECR I‑0000, paragraph 21).
      
      27      In its requests for a preliminary ruling, the national court seeks solely to obtain an interpretation of Article 5(2) and
         (3) of Regulation No 1475/95. It does not state that it has any doubts as to the validity of those provisions or that any
         such question was raised before it in the case in the main proceedings.
      
      28      In those circumstances, Article 234 EC not constituting a means of redress available to the parties to a case pending before
         a national court, the Court cannot be compelled to evaluate the validity of the act of Community law on the sole ground that
         that question has been put before it by one of the parties in its written pleadings (see, to that effect, Case C-402/98 ATB and Others [2000] ECR I-5501, paragraphs 30 and 31, and Case C-344/04 IATA and ELFAA [2006] ECR I-403, paragraph 28).
      
      29      As a result, as the Commission correctly argued at the hearing, there are no grounds for examining the question raised by
         BMW of the validity of Article 5(2) and (3) of Regulation No 1474/95. 
      
       The first question
      30      By this question the national court seeks in substance to ascertain whether the entry into force of Regulation No 1400/2002
         could be such as to require the reorganisation of all or a substantial part of a manufacturer’s distribution network for the
         purposes of the first indent of Article 5(3) of Regulation No 1475/95 and therefore to justify the application of the right
         to terminate the agreement subject to one year’s notice provided for in that provision.
      
      31      In Case C-125/05 Vulcan Silkeborg [2006] ECR I‑0000, the Court has already answered that question, ruling that even if the entry into force of Regulation No
         1400/2002 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, that entry into force might, however, 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
         regarded as representing a reorganisation within the meaning of that provision. 
      
      32      On that point, the Court nevertheless emphasised, in paragraphs 59 to 61 of that judgment, that while Regulation No 1400/2002
         introduced substantial amendments in relation to the block exemption scheme established by Regulation No 1475/95, the changes
         which might be made by suppliers to their distribution network in order to be certain that they would continue to benefit
         from the block exemption could be introduced simply by adapting the agreements in force on the date on which the latter regulation
         ceased to apply, during the transitional period of a year provided for by Article 10 of Regulation No 1400/2002. Such an adaptation
         would not automatically entail the need, under the applicable national law, for those agreements to be terminated or, in any
         event, for the whole or a substantial part of the distribution network to be reorganised. 
      
      33      As the Court held in paragraph 64 of Vulcan Silkeborg, it is for the national courts or arbitrators to determine, in the light of all the evidence in the case before them, whether
         the changes made by a supplier constitute, in accordance with the first indent of the first paragraph of Article 5(3) of Regulation
         No 1400/2002, a reorganisation of the whole or a substantial part of its distribution network and whether that reorganisation
         was made necessary by the entry into force of Regulation No 1400/2002.
      
      34      In that regard, the Court has held in paragraphs 29 and 30 of the same judgment that a ‘reorganisation of the whole or a substantial
         part of the network’ within the meaning of the first indent of Article 5(3) requires a significant change, both substantively
         and geographically, to the distribution structures of the supplier concerned, which may relate, inter alia, to the nature
         or form of those structures, their subject-matter, the allocation of internal duties within those structures, the manner in
         which the goods and services in question are supplied, the number or quality of the participants in those structures, or their
         geographical coverage (Vulcan Silkeborg, paragraphs 29 and 30). 
      
      35      Contrary to the submissions of the applicants in the main proceedings, if there is nothing to require, neither is there anything
         to prevent, such a reorganisation’s resulting from the amendment of clauses in a distribution agreement following the entry
         into force of new exemption rules. Moreover, the Court has ruled in paragraph 54 of Vulcan Silkeborg that Regulation No 1400/2002 introduced substantial amendments to the block exemption scheme established under Regulation
         No 1475/95, by laying down more stringent rules than those under the latter regulation for exemption from a number of restrictions
         on competition subject to the prohibition laid down under Article 81(1) EC.
      
      36      With regard to the condition laid down in the first indent of the first paragraph of Article 5(3) of Regulation No 1475/95
         as to the necessity of the reorganisation, the Court stated in paragraph 37 of Vulcan Silkeborg that that condition required reorganisation to be capable of being 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 that network.
      
      37      Therefore, contrary to what the Commission maintains, the mere fact that the supplier considers, on the basis of a subjective
         commercial appraisal of the position in which its distribution network finds itself, that a reorganisation of that network
         is necessary is not, of itself, sufficient to establish the need for such a reorganisation for the purposes of the first indent
         of Article 5(3) of Regulation No 1475/95. By contrast, 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 (Vulcan Silkeborg, paragraph 38).
      
      38      The answer to the first question must accordingly be that the entry into force of Regulation No 1400/2002 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 regarded as representing a true reorganisation
         within the meaning of that provision. It is for the national courts or arbitrators to determine, in the light of all the evidence
         in the case before them, whether that is the position.
      
       The second question
      39      By this question the national court seeks to ascertain whether the fact that a distribution agreement fulfilling the conditions
         for exemption laid down in Regulation No 1475/95 contains restrictions of competition prohibited by Article 4 of Regulation
         No 1400/2002 necessarily means that, once the transitional period provided for by Article 10 of that latter regulation has
         expired, the block exemption under that regulation no longer applies to all the restrictions of competition contained in such
         an agreement, in particular when, under national law, the effect would be that the agreement would lapse in its entirety.
      
      40      The decision for reference makes it clear that this question is asked with regard to the situation in which termination of
         an agreement with a year’s notice made after the entry into force of Regulation No 1400/2002, such as the termination effected
         by BMW in this case, is considered to be contrary to the first indent of Article 5(3). According to the national court, if,
         for want of lawful termination by the supplier, such an agreement were under national law to be invalid in its entirety from
         1 October 2003, it could not in any case be performed, as the applicants in the main proceedings request, for the period until
         30 September 2004. That court wonders therefore whether, exceptionally, on a proper construction of Article 4 of Regulation
         No 1400/2002 that provision does not entail the inapplicability of the block exemption to that agreement.
      
      41      It follows from the answer given to the first question that in certain circumstances the entry into force of Regulation No
         1400/2002 may justify the application of the right to terminate on a year’s notice under the first indent of the first paragraph
         of Article 5(3) of Regulation No 1475/95. However, as indicated in paragraph 38 above, it is for the national court alone
         to determine, in the light of all the evidence in the case before it, whether the conditions laid down by that provision have
         been satisfied in the case in the main proceedings. 
      
      42      In those circumstances, given that it is not inconceivable that the termination of agreements on a year’s notice effected
         in this case does not satisfy those conditions, an answer is to be given to second question too with a view to providing the
         national court with all those elements for the interpretation of Community law which may be of assistance in adjudicating
         on the case pending before it (see, to that effect, Case C‑387/01 Weigel [2004] ECR I‑4981, paragraph 44, and Case C‑152/03 Ritter‑Coulais [2006] ECR I‑1711, paragraph 29). 
      
      43      In this regard, it is to be borne in mind that, as recital No 36 in the preamble to Regulation No 1400/2002 makes clear, it
         is the purpose of Article 10 of that regulation to introduce a transitional period in order to allow all operators the time
         to adapt to that regulation all agreements compatible with Regulation No 1475/95 which were in force on the date on which
         that regulation ceased to be applicable. To that end, that provision states that the prohibition laid down in Article 81(1)
         EC is not to apply to those provisions during the period from 1 October 2002 to 30 September 2003.
      
      44      It clearly follows from the actual wording of Article 10 of Regulation No 1400/2002 that from 1 October 2003 the prohibition
         laid down in Article 81(1) EC applied to agreements that had not been adapted with a view to satisfying the conditions for
         exemption laid down by that regulation.
      
      45      According to the actual wording of the first sentence of Article 4(1) of Regulation No 1400/2002, and as is apparent from
         the 12th recital in its preamble, the exemption provided for by that regulation is not extended to agreements which have as
         their object at least one of the hardcore restrictions listed in Article 4(1).
      
      46      It follows that, contrary to what the national court suggests, and as all the parties which have submitted observations have
         argued, after the transitional period had expired the block exemption under Regulation No 1400/2002 was, as the Advocate General
         has correctly stated in paragraph 30 of his Opinion, inapplicable to agreements that, although concluded in accordance with
         Regulation No 1475/95, had as their object one of those hardcore restrictions. 
      
      47      Where an agreement does not satisfy the conditions provided for by an exempting regulation, the contractual clauses contained
         in it may be caught by the prohibition laid down by Article 81(1) EC if the conditions for the application of that provision
         are satisfied and the conditions for exemption under Article 81(3) EC are not satisfied. 
      
      48      The consequences, for all other parts of the agreement or for other obligations flowing from it, of the prohibition of contractual
         terms incompatible with Article 81 EC are not, however, a matter for Community law. It is therefore for the national court
         to determine, in accordance with the national law applicable, the extent and consequences, for the contractual relation as
         a whole, of the prohibition of certain terms under Article 81 EC (see, to this effect, Case 10/86 VAG France [1986] ECR 4071, paragraphs 14 and 15, and Case C-230/96 Cabour [1998] ECR I‑2055, paragraph 51). 
      
      49      The applicants in the main proceedings consider, nevertheless, that having regard to the primacy of Article 5 of Regulation
         No 1475/95 and of Articles 4 and 10 of Regulation No 1400/2002, national law must be interpreted in keeping with Community
         law so that the prohibition of the contract terms restrictive of competition does not automatically entail the invalidity
         of the entire agreement. In their view, such a consequence could be contemplated only if the distributor has without good
         reason refused the contract terms proposed by the supplier with a view to adapting to the change of legal situation.
      
      50      That argument cannot be accepted. In point of fact, when the object of an agreement is one of the hardcore restrictions listed
         in Article 4 of Regulation No 1400/2002, it is in no way contrary to Community law that the prohibition of contractual terms
         restrictive of competition should entail, under national law, the invalidity of the entire agreement, given that that provision
         is, as is clear from the 12th recital in the preamble to that regulation, directed at the most serious restrictions of competition
         in the sector in question and also itself lays down the inapplicability of the block exemption to the agreement in its entirety.
      
      51      The answer to be given to the second question must therefore be that, on a proper construction of Article 4 of Regulation
         No 1400/2002, once the transitional period provided for by Article 10 of that regulation had expired, the block exemption
         under that regulation did not apply to contracts satisfying the conditions for block exemption under Regulation No 1475/95
         which had as their object at least one of the hardcore restrictions listed in Article 4, with the result that all the contractual
         terms restrictive of competition contained in such contracts were liable to be caught by the prohibition laid down in Article
         81(1) EC, if the conditions for exemption under Article 81(3) EC were not satisfied.
      
       Costs
      52      Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court,
         the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs
         of those parties, are not recoverable.
      
      On those grounds, the Court (Third Chamber) hereby rules:
      1.      The entry into force of Regulation (EC) No 1400/2002 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 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 servicing agreements. 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 regarded as representing a true
            reorganisation within the meaning of that provision. It is for the national courts or arbitrators to determine, in the light
            of all the evidence in the case before them, whether that is the position. 
      2.      On a proper construction of Article 4 of Regulation No 1400/2002, once the transitional period provided for by Article 10
            of that regulation has expired, the block exemption under that regulation did not apply to contracts satisfying the conditions
            for block exemption under Regulation No 1475/95 which had as their object at least one of the hardcore restrictions listed
            in Article 4, with the result that all the contractual terms restrictive of competition contained in such contracts were liable
            to be caught by the prohibition laid down in Article 81(1) EC, if the conditions for exemption under Article 81(3) EC were
            not satisfied.
      [Signatures]
      * Language of the case: German.