EUR-Lex - 31977D0066 - EN
31977D0066
European Union
§ Article 85
Article 85 (1) of the EEC Treaty prohibits as incompatible with the common market all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the common market.
- GERO and its customers, namely the dealers, either undertakings or individuals, which deal in the relevant goods, and the large buyers which use these products, are undertakings for the purpose of Article 85 (1).
- GERO's general terms for retail sale and for wholesale sale are individual agreements made between these undertakings and may thus fall within Article 85 (1). The fact that they are standard-form agreements and that some of them are signed while others appear only on the back of GERO's invoices does not affect the situation. However, for the purpose of judging whether the statutory prohibition is directed at them, the individual agreements cannot be taken in isolation but must be considered in the light of the circumstances of fact and of law under which they were concluded.
- These agreements, taken together, have the object and effect of perceptibly restricting and distorting competition in the common market: (a) The prohibition of on-sales, which results from the obligation imposed by GERO on its customers only to sell at the retail stage, prevents the latter from supplying other dealers at the same distribution level who would be free to sell the goods on different terms, possibly more favourable to the consumer. Furthermore, the prohibition prevents dealers who receive the complete range of goods from supplying other dealers who are not allocated the complete range. Finally, these dealers are not entitled to supply wholesale customers.
(b) The prohibition on sales of products in other Member States without the manufacturer's consent is equivalent to a prohibition on exporting them. Similarly, the various export prohibitions contained in GERO's terms of sale also restrict the freedom of dealers concerned established in other Member States to sell and obtain the relevant goods. Hence the opportunities of these categories of dealers at the level of supply and demand are hindered, or at least substantially reduced. Furthermore, they are prevented from taking advantage of the benefits which some of them might possibly enjoy to extend their sales to other Member States. Potential customers are thus in their turn excluded from these benefits.
(c) Likewise, the system of imposed retail prices makes it impossible for dealers to fix their own retail prices by reference to their own costs and commercial policy. The free formation of prices and the ability to pass on to purchasers any possible resulting benefits are hindered or at least substantially reduced. The system is thus clearly contrary to the prohibition in Article 85 (1).
- These restrictions may substantially affect trade between Member States. Not only do they apply to the distribution of GERO products in the Member States where the bulk of the products are sold, but they also have the object of totally hindering trade between those Member States and the others. Even if the various export prohibitions were lifted, the system of retail prices imposed on dealers would be likely to influence trade between Member States by deflecting trade flows away from the channels which they would naturally have if prices were fixed freely.
The application of imposed retail prices means that imports and export patterns are different from what they would be if prices were fixed freely. The number of dealers affected (more than 2 000) and the share of the market in the relevant goods (estimated at about 50 % for the Netherlands) are sufficiently large for the adverse effect on trade between Member States to be regarded as appreciable.
(b) Article 85 (3)
Under Article 85 (3), the provisions of Article 85 (1) may be declared inapplicable in the case of any agreement which contributes to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, and which does not: (a) impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives;
(b) afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.
Under Articles 4 and 5 of Council Regulation No 17, agreements in respect of which the parties seek application of Article 85 (3), must be notified to the Commission. GERO's notification of the standard form of agreement is valid for all the other identical agreements entered into by GERO.
The general terms for retail sale in the Netherlands described above do not satisfy the texts of Article 85 (3), since they do not contribute to improving the production or distribution of the relevant goods nor to promoting technical or economic progress within the meaning of Article 85 (3).
The first point to be made is that the prohibition on the export of the relevant goods does not assist their distribution but on the contrary acts as a complete barrier so that no one in the other Member States can take advantage of the price benefits which may exist in the Netherlands. Likewise the obligations with regard to prices in no way assist the distribution of the relevant products or hinder the freedom of dealers to fix their own prices. The prohibition on sales to other dealers does not have the effect of improving the distribution of the relevant goods either but, on the contrary, actually restricts it, since resale of this type can help speed up and improve the availability of supplies to the consumer. Finally, it is hard to imagine what contribution could be made by this system to improving production or to promoting technical or economic progress.
Moreover, in order for these restrictions to be exempted from the prohibition on restrictive practices under Article 85 (3), the principal criterion is whether in objective terms they bring about an improvement over the situation which would have existed in their absence.
If the agreements notified are considered from this angle, it is hard to imagine in what circumstances or for what reasons competition should be allowed to act as a stimulus on the relevant markets ; the prohibition on exports, the obligations with regard to prices and the conditions of sale cannot therefore be regarded as practices which contribute to one of the positive objectives of Article 85 (3).
Finally, as regards the first test of Article 85 (3), the Commission feels that the obligations imposed by the abovementioned agreements certainly do not bring about adequate objective benefits, capable of overriding their anti-competitive effects. Since this first test is not satisfied, there is no need to consider the others in Article 85 (3). Even so, it is difficult to accept that, even supposing that these restrictions on competition did present some objective advantage, which they do not, consumers are allowed a fair share of the hypothetical benefit, since whatever cost benefits may be said to accrue cannot be passed on. Nor is it clear why these restrictions would be indispensable to the attainment of these hypothetical benefits or how competition would not be eliminated in respect of a substantial share of the relevant products, by reason of GERO's high share in the Dutch market. Accordingly the terms of sale as notified do not qualify for exemption under Article 85 (3) of the Treaty.
(c) Article 3 (1) of Regulation No 17
Under Article 3 (1) of Regulation No 17, where the Commission, upon application or upon its own initiative, finds that there is infringement of Article 85 of the Treaty, it may by decision require the undertakings or associations of undertakings concerned to bring such infringement to an end.
In the premises, the Commission proposes to find under this Article that GERO has infringed Article 85 of the EEC Treaty. The Commission accordingly proposes to order GERO to end forthwith the infringements, unless it has already done so of its own accord. Furthermore, GERO will be required to inform all its retailers and wholesalers of the contents of any decision of the Commission,
HAS ADOPTED THIS DECISION:
§ Article 1
Article 1
Those clauses of GERO wholesale and retail sales conditions, which relate to export prohibitions on resale and resale prices, constitute infringements of Article 85 (1) of the Treaty establishing the European Economic Community.
§ Article 2
Article 2
The application made by GERO-fabriek in 1963 for exemption under Article 85 (3) in respect of its retail sales conditions in the Netherlands is refused.
§ Article 3
Article 3
GERO-fabriek shall end forthwith the infringements referred to in Article 1 unless it has already done so of its own accord. It shall also inform all its retailers and wholesalers of the contents of this Decision.
§ Article 4
Article 4
This Decision is addressed to GERO-fabriek NV, Geroplein 1, Zeist 2740, Netherlands.
Done at Brussels, 22 December 1976.
For the Commission
R. VOUEL
Member of the Commission
Metadata
- Type
- Afgørelse
- År
- 1977
- Ikrafttrædelsesdato
- 1. januar 1970