EUR-Lex - 31978D0155 - EN

1. The two agreements of 29 September 1975 (paragraphs 18 and 19 above) have the object, as can be seen from their manifest content (paragraph 20), of appreciably preventing, hindering and distorting competition in the common market. Where a distribution network operated by a motor vehicle manufacturer, based on sales by selected dealers throughout the common market and on concentration of sales promotion by each dealer primarily in his allotted territory, is reinforced by a general prohibition on exports by dealers even if in one Member State only no particular proof is required of the extent to which appointed dealers have been dissuaded by the export prohibition from selling to consumers outside their own allotted territory or would have been able to effect such sales in the absence of the prohibition. As stated clearly in its Decision of 13 December 1974 (1) and on other occasions (2), the Commission will exempt selective distribution systems in the motor industry under Article 85 (3) of the EEC Treaty, regarding the restrictions of competition inherent therein as indispensable for that purpose, only if there is no other restriction on the freedom of consumers to buy new cars anywhere in the common market or to effect such purchases by agents. An exemption always requires an examination as to whether potential competition remains between all the selected dealers in the common market, so that they are compelled through competitive pressures to react to each other's price structures and to respond to low prices quoted by other dealers. The export prohibition concerned in these proceedings sought to eliminate such pressures and insulate the market operated by Belgian dealers for new BMW vehicles from the markets operated by other dealers for these vehicles in the common market.

The finding that there was intentional restriction and distortion of competition is not invalidated, as the firms concerned allege, by the fact that the export prohibition was formally operated only for the fairly brief period 29 September 1975 to 20 February 1976. The decision as to whether an agreement of initially unlimited duration is incompatible with the common market and prohibited by Article 85 (1) of the EEC Treaty cannot depend on the length of time during which competition was actually disrupted. If it did, the Commission could take no action until competition had been disrupted, which cannot be the meaning of a prohibition on restrictive practices which is designed to protect competition. The fact also remains that BMW Belgium was obliged to revoke its circular of 29 September 1975 only because of the measures taken by the applicants (paragraphs 8 to 14) and the prompt reaction of the Commission (paragraph 17). (1)OJ No L 29, 3.2.1975, p. 1. (2)Fourth Commission report on competition policy (1974), pp. 24 and 25 and 57 to 65 ; fifth Commission report on competition policy (1975), pp. 23 and 24 and 49 to 52.

The further allegation by the undertakings concerned that, immediately after they issued their circular, market circumstances had changed and consumer prices in Belgium had been aligned with prices in other Community countries is also of no relevance. They themselves do not deny that before and at the time of the circular there were price differences which meant that reimports were both possible and, from the consumer's point of view, economically desirable. BMW Belgium and the firms that signed the agreements of 29 September 1975 could not foresee, furthermore, whether consumer prices in the various Community countries might again diverge. The fall in re-exports to the Federal Republic of Germany noted by BMW Belgium after 1 November 1975 (paragraph 15) in no way invalidates the finding that the object of the agreements was to restrict competition appreciably.

Finally the BMW dealers concerned allege that they could not have infringed Article 85 (1) because the distribution agreement with BMW Belgium made them so dependent on BMW Belgium for business purposes that there was no question for them of failing to comply with BMW's request that they sign the circular. The distribution agreement does indeed create a degree of dependence, notably through its inherent prohibition of competition, the duration of the agreement, the opportunities for the examination of business records and for varying the treatment of individual dealers. However, the fact that of the 90 addressees of the circular, only 48 BMW dealers (one of whom has since died) signed, shows that there were 42 dealers who were not willing to enter into a written agreement to infringe the rules of competition of the EEC Treaty. The 47 dealers could have refused and ought to have done so.

1. Since it has been shown that the agreement had the object of appreciably restricting and distorting competition, there is no need, for a finding of an infringement, to proceed to consider the extent to which it also had the effect of restricting and distorting competition. It is accordingly unnecessary to determine what consumers were unable to obtain new BMW vehicles after 29 September 1975 as a result of the agreements and whether the applicants, in attempting to obtain more BMW vehicles, were acting solely as agents for consumers outside Belgium.

1. The fact that the general export prohibition in the agreement, which has the object of restricting and distorting competition in the common market, is such as appreciably to affect trade between Member States also follows from the very nature of such a prohibition. It related directly to inter-State trade in a specific branded product. Belgian BMW dealers retain the freedom to meet orders from consumers in the territory allotted to another Belgian BMW dealer, but are deprived of that freedom in inter-State trade. Yet, as the Commission has always held (1), trade in new BMW vehicles through distribution channels other than those set up by BMW Munich is precisely that which Article 85 (1) of the EEC Treaty aims to protect.

1. Accordingly the agreements of 29 September 1975 are incompatible with the common market and prohibited by Article 85 (1) of the EEC Treaty. The undertakings party to the agreements acted contrary to that prohibition until 20 February 1976. The requirements for a decision under Article 3 (1) of Regulation No 17 finding that there has been an infringement are accordingly satisfied.

III. Inapplicability of Articles 4 (2) (1) and 15 (5) of Council Regulation No 17 25. BMW Belgium has notified the Commission of its selective distribution system, which excludes unauthorized dealers from selling new BMW vehicles and consequently from exporting them from Belgium to other Community countries. However, no agreement prohibiting any export by Belgium BMW dealers from Belgium or sales to consumers in other Member States, which in both cases would go beyond the content of the distribution agreement as notified, has been notified to the Commission under Article 4 (1) of Regulation No 17.

There can be no doubt that persons agreeing to a general prohibition on exports cannot rely on Article 4 (2) (1) of Regulation No 17. The Commission does not therefore have to consider whether Article 85 (3) of the EEC Treaty applies to an agreement between BMW Belgium and 47 of its 90 Belgian appointed dealers by which a general export prohibition was introduced. An export prohibition which goes beyond a simple prohibition on sales to unauthorized dealers directly affects exports to other Member States for the purpose of this provision.

As no notification has been made, the Commission is not prevented by Article 15 (5) of Regulation No 17 from imposing a fine under Article 15 (2) (a) thereof in respect of the infringement. (1)Commission Decision of 28 September 1964 in Grundig-Consten (OJ No 161, 20.10.1964, p. 2545/64). Judgment of the Court of Justice of 13 July 1966 in Joined Cases 56 and 58/64, Grundig-Consten [1966] ECR 299. Commission Decision of 13 December 1974 in BMW (OJ No L 29, 3.2.1975, p. 1). Fourth Commission report on competition policy (1974), pp. 24 and 25 and 57 to 65. Fifth Commission report on competition policy (1975), pp. 23 and 24 and 49 to 52.

IV. Applicability of Article 15 (2) (a) of Council Regulation No 17

This provision empowers the Commission by decision to impose on undertakings fines of from 1 000 to 1 000 000 units of account where they intentionally or negligently infringe Article 85 (1) of the EEC Treaty. 26. BMW Belgium and the eight undertakings of which the proprietors or managers are members of the Belgian Dealers' Advisory Committee (paragraph 5) intentionally agreed to persuade all Belgian BMW dealers to participate in any agreement to refrain from all re-exports (paragraphs 19, 20, 21, 23 and 24). They consistently took part in the subsequent agreement between BMW Belgium and the 47 Belgian BMW dealers, this infringement being also intentional (paragraphs 18, 20, 21, 23 and 24). In the light of the Commission Decision of 13 December 1974 in the BMW case, the judgments of the European Court and the Commission Decisions concerning export prohibitions in distribution agreements (1), BMW Belgium and the eight members of the Belgian Dealers' Advisory Committee were aware that in agreeing a general export prohibition they were infringing Article 85 (1) of the EEC Treaty. This follows, in particular, from the fact that in their circular letter they subscribed to formulations of the general export prohibition which are not necessary for and go beyond a selective distribution system.

In fixing the amount of the fine under Article 15 (2) of Regulation No 17 regard shall be taken of both the gravity and the duration of the infringements (last sentence of Article 15 (2)).

The gravity of the infringement in this case lies in the fact that a selective distribution system which itself restricts competition has been compounded by a general export prohibition based on a prohibited agreement.

As to the question of the amount of the fine to be imposed on BMW Belgium, there is the aggravating circumstance that BMW Belgium invited others to commit the infringement and was in a position to exert and did exert economic pressure on the members of the Advisory Committee. By acting in such a manner BMW Belgian bears a major responsibility for the infringement, and hence liability to a fine. The indications given by BMW Munich made BMW Belgium perfectly aware that it was acting in breach of the prohibition in Article 85 (1) of the EEC Treaty (paragraph 3, in particular the letter from BMW Munich dated 22 July 1975). It cannot be pleaded in BMW's favour that German and Dutch BMW dealers had demanded action against re-exports. By not confining its action to enforcing the obligations of a selective system and by not advising of the need to adjust prices, BMW Belgium reacted improperly by resorting to territorial protection for BMW dealers outside Belgium by means of a prohibited restrictive practice.

On the other hand, as regards the amount of the fine to be imposed on the eight undertakings represented by members of the Belgian BMW Dealers' Advisory Committee, there are mitigating circumstances. As has already been said, they are dependent for business purposes on BMW Belgium (end of paragraph 21). However, they too cannot escape the charge that as spokesman for the Belgian BMW dealers they should not have taken part in a prohibited restrictive practice and they should not have sought its occurrence.

The fines to be imposed on BMW Belgium and these eight undertakings should reflect the fact that the agreement existed for only a relatively brief period and that its effects cannot be quantified precisely.

The turnovers of the undertakings in question and particularly their turnovers in new BMW vehicles (see paragraph 16) also determine the amount of the fine. The turnovers achieved give indications of the relevant market positions of the undertakings involved and thereby indicate the gravity of their involvement in the infringement. The turnovers are also important for the purpose of determining the degree to which the undertakings are affected by the fines imposed.

The fines to be imposed on the eight undertakings, the owners or managers of which form the Advisory Committee, are to be relatively small in view of the circumstances of the case. The fact that some of these undertakings had a relatively small turnover is also a factor to be taken into account in fixing the fine.

1. The other BMW dealers involved in the infringement (paragraphs 18, 20, 21, 23 and 24) were at least negligent by being unaware, when signing the agreement, that they were engaging in a prohibited restrictive practice. On reasonable reflection, they should have realized without difficulty that in signing the circular letter they agreed to a general export prohibition which went beyond the needs of a selective distribution system and thereby infringed the competition rules of the EEC Treaty. In the light however of their degree of involvement, the imposition of the lowest possible fine is appropriate. It therefore follows that no account can be taken of their differences in turnover, (1)See note (1) of this Official Journal.

HAS ADOPTED THIS DECISION:

Done at Brussels, 23 December 1977.

For the Commission

Raymond VOUEL

Member of the Commission